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Accident Compensation Cases

Prince v Accident Compensation Corporation (DC, 23/09/08)

Judgment Text

Judge P F Barber
The Issue 
The appellant has applied for leave to appeal to the High Court against the District Court decision of Judge Ongley (Decision No. 114/2007) issued on 18 June 2007 about interest on backdated compensation. ACC opposes the application on the basis that the appellant raises questions of fact only and does not raise an arguable question of law. 
The appellant had cover for a neck strain injury suffered on 15 April 1990. 
On 31 May 2001 ACC suspended entitlements on the basis the appellant's cervical spondylosis condition was wholly or substantially caused by degenerative disease. 
On 2 April 2002 the appellant commenced part time employment for the Returned Services' Association, Titahi Bay (“RSA”). 
On 12 January 2005 the District Court (per Judge Barber) issued an interim decision (9/2005) noting that prior to the appeal hearing the parties had mistakenly used “the wholly or substantially” test. The correct test was whether the appellant's condition was exclusively caused by degenerative disease. Judge Barber directed the ACC and the appellant to obtain short supplementary reports from at least one of their respective medical witnesses using the correct test. 
On 24 May 2005 the District Court issued its final decision and allowed the appeal (Decision No. 161/2005). Judge Barber found there was still some linkage between the 1990 injury and the appellant's ongoing condition. 
On 6 June 2005 ACC received a letter dated 1 June 2005, from Mr Alan Rowlett, Advocate, on behalf of the appellant. Mr Rowlett requested that weekly compensation be calculated and paid from the date of suspension (31/05/01) to the date the appellant turned 65 years of age (30/11/2004). Mr Rowlett wrote: 
“I attach medical confirmation of continued incapacity together with earnings details. Mr Prince did receive a sickness benefit for a short time but this was repaid in full to WINZ when weekly compensation was reinstated and backdated for his wife on a separate claim. ”
In an internal memorandum dated 21 June 2005, the Technical Claims Manager at Porirua Branch observed: 
“Before the relevant documents can be sent to Wellington Payment Unit for calculation we will need to write to Mr Rowlett and establish who the claimant's employer was during the period that weekly compensation will need reinstatement. 
Mr Rowlett has provided some documents which detail income derived by Mr Prince but these documents do not provide verification from an employer. ”
On 7 July 2005 the appellant advised ACC he had been employed by the RSA in Titahi Bay. On 15 July 2005 ACC faxed the appellant's earnings details to the RSA for verification. On 21 July 2005 ACC received faxed confirmation of the appellant's earnings details with RSA. On 1 August 2005 ACC paid backdated weekly compensation to the appellant. 
The appellant requested interest to be paid on backdated weekly compensation for the period 1 June 2001 to 29 November 2004. On 21 February 2006 ACC issued a decision letter declining the request for interest. The appellant lodged a review application. On 3 July 2006 the review application was dismissed. The appellant appealed to this Court. 
District Court Decision 
Judge Ongley identified that the determinative issue was whether ACC had the financial information necessary to calculate and pay arrears of weekly compensation. The central argument was the appellant's contention that: “abatement of income information was not necessary for the Corporation to caculate and pay arrears of weekly compensation”
At paragraphs 12-14 of his decision, Judge Ongley addressed Mr Rowlett's argument that post-incapacity income details were not necessary information for ACC to calculate and make payment because ACC had the power to estimate income for abatement purposes. Judge Ongley noted this argument was based on cl 50 of Schedule 1 of the Injury Prevention, Rehabilitation and Compensation Act 2001 (“IPRC Act”). Clause 50 allows ACC to estimate earnings of self employed or shareholder employees when calculating weekly compensation. However, Judge Ongley found cl 50 did not apply to a claimant's earnings as an employee. Accordingly, this submission for the appellant was rejected. 
Judge Ongley referred to the High Court decision in ACC v Knight (CIV 2005-485-1582)
His Honour accepted that ACC did not have the necessary information as to a period of non-earning until it had verification from the RSA, being the only known employer. Further, he held it was not reasonable to pay out on unauthenticated information and a further enquiry was necessary. 
Section 114 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 (the Act) prescribes where interest is payable after 1 April 2002 on late payments of weekly compensation. Section 114 reads: 
“Payment of interest when Corporation makes late payment of weekly compensation 
The Corporation is liable to pay interest on any payment of weekly compensation to which the claimant is entitled, if the Corporation has not made the payment within 1 month after the Corporation has received all information necessary to enable the Corporation to calculate and make the payment. 
The Corporation is liable to pay the interest- 
at the rate for the time being prescribed by, or for the purposes of, section 87 of the Judicature Act 1908; and 
from the date on which payment should have been made to the date on which it is made. ”
The equivalent provisions (to section 114) under the 1992 and 1998 Acts are sections 72 and 101 respectively. The language of these sections is materially the same (Robinson CA 56/06). 
My Reasons for Ruling 
Pursuant to s 162(1) of the Act, the appellant is only entitled to seek leave to appeal to the High Court on questions of law. It is settled law that the contended point of law must be capable of bona fide and serious argument to qualify for the grant of such leave to appeal. Care must be taken to avoid allowing issues of fact to be dressed up as questions of law as appeals on the former are proscribed. However, a mixed question of law and fact is a matter of law and a Judge's treatment of facts can amount to an error of law. 
Even if the qualifying criteria are made up, this Court has an extensive discretion in the grant or refusal of leave so as to ensure proper use of scarce judicial resources; and leave to appeal is not to be granted as a matter of course. 
Mr Rowlett, for the appellant, has put forward the following questions of law which I deal with in turn (with reliance on Mr Castle's most helpful submissions for ACC):- 
“Submission 1 
Where weekly compensation is suspended and the decision to do so is quashed, should the information available at the time of suspension be taken into account when considering payment of interest under s 114 or is it the information available at the time the decision is revoked that must be considered? ”
This question has been addressed by the High Court in Wardle v ARCIC (AP 134/02) in the context of s 72 under the 1992 Act. In Wardle, the appellant argued that the date from which interest is to be calculated in the event of delayed payment was the date of entitlement, that being the date upon which compensaion “should have been paid”. Interpreting s 72, Justice Gendall noted that he concurred with the following comment of Justice John Hansen in Howley v ACC (AP 29/01)
“Giving section 72 its plain meaning, interest is payable 1 month from the date on which the Corporation received all necessary information to enable calculation of payments. ”
(para 14)
Justice Gendall, adopting this interpretation of s 72, stated that the relevant date on which the necessary information was received was as follows: 
“In the present case that date is not when actual eligibility, as later determined, arose. There is a distinction between eligibility for compensation in the sense of commencement of entitlement, and the eventual payment of the entitlement. ”
(para 15)
The appellant sought leave to appeal to the Court of Appeal. The question of law was whether proper interpretation of the phrase “has received all information necessary to enable the calculation of the payment” entitled the applicant to the benefit of interest from a time one month after he should have received compensation. In declining leave, Justice Gendall opined: 
“The primary submission of the applicant was that he was entitled to interest from the date of his incapacity in 1992, that being when compensation ‘should’ have been paid. That submission, however, was rejected by this Court. Two other High Court decisions, namely, Howley v Accident Compensation Corporation (HC Invercargill Registry, AP29/01, 6 December 2001, John Hansen J); and (subsequent to this decision) Barnett v Accident Compensation Corporation (HC Auckland Registry, AP 64/SW02, 5 December 2002, Paterson J) decided that point in the same way. That is, the meaning of s 72 is that interest is payable from a date one month after the Corporation has received all information necessary to enable calculation of the payment to which the claimant is entitled. That is what the section clearly states. The meaning is well settled by decided cases and I do not consider that any bona fide or serious argument exists on a matter of public or private interest so as to warrant leave to an appeal being granted and a case stated concerning that interpretation. ”
The distinction drawn by Justice Gendall, between the date from which a compensation entitlement arises, and the eventual date of payment, was accepted by Justice Randerson in ACC v Knight (CIV 2005-485-1582). In considering interest liability under section 114 of the 2001 Act, His Honour stated at paragraphs [28]-[29]: 
I respectfully adopt the view expressed by Gendall J in Wardle v Accident Rehabilitation & Compensation Insurance Corporation (HC Wellington, AP 134/02, 18 October 2002) at [15] when he rejected the Appellant's contention that interest ran under s 72 of the 1992 Act from the date when payment of compensation was due. Gendall J drew a distinction, which I accept, between the date from which a compensation entitlement arises and the eventual payment of the entitlement. The legislation deliberately provides for interest to run from a date one month after all information necessary to enable the Corporation to calculate and make the payment is received. 
The legislation does not provide for interest to be paid from the date of commencement of the entitlement. Nor does it allow for a retrospective deeming of receipt of ‘all information necessary’ when it is later established on inquiry that, for example, there was no relevant post-accident income which would require abatement of the compensation due …  ”
The appellant also referred to the decision in Lethbridge (181/2001); and, particularly, the finding that the respondent had all details necessary to enable calculation of payment at the time of cessation, therefore the claimant was entitled to receive interest on the outstanding compensation from that date of cessation. However, this decision has been overtaken by the subsequent decision of Wardle in the High Court. This point was made by Judge Beattie in Granich v ACC (214/2005) at paragraph 40: 
“With the greatest of respect to His Honour Judge Middleton, I find that in the light of subsequent decisions, both in the High Court and this Court, the decision in Lethbridge cannot now be regarding as being good law. The date from which entitlement to backdated weekly compensation commences is not the date from which interest runs, rather interest runs from a date one month after the later of the two dates of either when the entitlement to weekly compensation is determined or when the Corporation is in receipt of all information necessary to calculate and make the payment. This is in accordance with the principles enunciated in Wardle, Robinson and others. ”
I consider that the meaning of s 114 is well settled. Judge Ongley adopted this settled interpretation and noted the relevant decisions of Knight and Wardle. There is no bona fide or serious argument to warrant leave being granted on this point. 
“Submission 2 
If it is the information available at the time the decision is revoked that must be considered, would interest be payable if the Corporation continued to obtain details of any post-accident earnings during the period that it did not pay weekly compensation? ”
Determining whether ACC had received all necessary information to enable it to calculate and make payment is a question of fact. 
In any case, this is simply a hypothetical or academic point. There is no suggestion that ACC did obtain details of post-accident earnings during the period it did not pay weekly compensation. The case was not decided on this point. 
Accordingly, this cannot be an appealable point of law as it was not part of the decision making process by the learned District Court Judge. 
“Submission 3 
When interpreting and applying section 114, should the intention of this Section, which appears to be for interest where there is a delay not attributable to difficulties in obtaining information, be taken into account i.e. is it correct that the Corporation can avoid paying interest by ceasing to obtain information it had previously been receiving? ”
The interpretation of s 114 is well settled. In paragraph 3.5 of his submissions, the appellant refers to the High Court decision in Robinson (CIV 2005 — 485 — 0127). The appellant states this supports the argument that “it is unlikely that the legislature would have intentionally allowed the Corporation to evade payment by deliberately ceasing to request information that was readily and quickly available.” However, the High Court decision of Robinson, does not alter the interpretation adopted in Wardle and Knight. Certainly the approach set out in those decisions has continued to be adopted by the District Court after the Robinson decision — refer, Reichenbach 96/2008, Kearney 301/2006). The question in Robinson was whether interest on late payments under s 72 of the 1992 Act should be calculated on a compound rather than a simple basis. The High Court found that compound interest acted as an incentive to make payment within the one month period to which s 72 refers. It did not alter the interpretation of the one month period stated in Wardle
The High Court decision, allowing compound interest, was overturned by the Court of Appeal (CA 56/06) which specifically addressed the arguments that compound interest ensured a person was not disadvantaged by late payment and that it provided an incentive to ACC, as follows at paragraphs 49 and 51: 
It is clear that Parliament wished to compensate those who did not receive payment within a month of the time at which they should have received payment. It is also true that payments based on compound interest will be more generous or advantageous to recipients than payments based on simple interest. The accident compensation legislation does not have as its principal purpose being generous to claimants. Rather it reflects a range of competing interests, one of which is affordability …  
As to the incentive argument, the Corporation must administer the 1992 Act in good faith in accordance with its terms. Its administrative structures should be designed to ensure that it complies with its responsibilities under the Act, including as to time frames. We think it improbable that Parliament intended that compound interest would be payable under s 72 so as to provide an incentive to the Corporation to comply with its timing responsibilities under the Act. Had Parliament intended such an outcome, we would have expected it to say so, clearly. ”
The comments of the Court of Appeal, on arguments of unfairness, or incentives for ACC in the context of whether interest should be compounded, do not assist the appellant. 
The argument that unfairness could arise from the application of s 72 was addressed by the High Court in Wardle. Mr Miller for the appellant argued that interest should always be payable from the time when a person was entitled to compensation because otherwise ACC could drag out non-payment. Justice Gendall noted the possibility, but stated: 
“But the clear wording of s 72 is as expressed. The Courts cannot redraft Parliament's legislation simply because a perceived element of unfairness may in some cases arise. It is for Parliament to remedy, if it wishes, its legislation. As s 72 stood, it could not possibly be interpreted as contended by the appellant. ”
(para 15)
Accordingly, the issue of potential unfairness was directly addressed by the High Court in Wardle. There is no reasonable prospect of this point succeeding on appeal. 
“Submission 4 
In conjunction with 2, would it be considered sufficient for the Corporation to rely on the appellant to advise the commencement of post-accident earnings if none were being received at the time of suspension and this was the arrangement prior to payment stopping? ”
Mr Castle put it that whether or not ACC may rely on the appellant's advice as to the commencement of post-accident earnings commencing is a factual question; but that seems to me to be a legal question of interpretation. 
At his para 18, Judge Ongley found that it was reasonable for ACC to require verification of the appellant's earnings from the employer, and I respectfully agree. 
This point is not capable of serious or bona fide argument. 
“Submission 5 
Again in conjunction with 2, can Clause 50 apply if sub-clause 2 applies but not sub-clause 1? ”
This question is not capable of serious or bona fide argument. Clause 50(1) states that the clause only applies to a claimant who is either self employed, or a shareholder employee. The appellant was neither. Accordingly, clause 50 cannot apply. 
Judge Ongley was, therefore, correct to find “It is perfectly clear by subcl(1) that cl 50 does not apply to a claimant's earnings as an employee.” (para 14). 
There is no question of law capable of bona fide and serious argument to qualify for the grant of leave. Accordingly, leave to appeal is refused. 

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