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Accident Compensation Cases

Dooley v Accident Compensation Corporation (DC, 13/07/12)

Judgment Text

RESERVED JUDGMENT OF JUDGE D A ONGLEY 
Judge D A Ongley
[1]
This appeal concerns only a question of costs on a review hearing held at Nelson on 26 August 2011. 
[2]
The reason for refusing an award of costs was that the applicant for review had not provided essential information at an initial hearing, then during an adjournment taken for the purpose of finalising legal submissions, she furnished a statutory declaration containing new evidence. The Reviewer considered that the new evidence should have been provided at the first hearing. Because it was furnished after the hearing, a second hearing had to be convened and the Reviewer declined to award costs to the appellant on the second hearing. 
[3]
Mr Gibbons for the appellant says that the reason for offering further evidence was that the Corporation changed its position at the first hearing. 
Background 
[4]
The substantive issue was the appellant's liability for repayment of an overpayment of $14,250 for weekly compensation. The payments to the appellant were based on information given by the appellant concerning her earnings as a shareholder/employee in the relevant year for assessment of her weekly compensation. When company accounts were finalised, the appellant was shown to have had no earnings in the relevant year. The information had been given by the appellant honestly and it was common ground that she received the payments of weekly compensation in good faith. 
[5]
The disputed calculation of weekly compensation was taken to review, and a review decision on 15 June 2010 confirmed the Corporation's decision that no weekly compensation was payable and that the overpayments constituted a debt due by the appellant to the Corporation. 
[6]
The next question was recovery of the debt. Under s 251(2) of the Act there are criteria for recovery of overpayments received in good faith. Subs (3) provides: 
“(2)
The Corporation may not recover any part of a payment in respect of entitlements that was paid as a result of an error not intentionally contributed to by the recipient if the recipient - 
(a)
received the payment in good faith; and 
(b)
has so altered his or her position in reliance on the validity of the payment that it would be inequitable to require repayment. ”
[7]
The Corporation wrote to the appellant explaining the provisions of s 251 of the Act and inviting the appellant to provide information that might assist in deciding whether the debt should be recovered. At the time, the appellant was represented by a lawyer who wrote to the Corporation in September 2010 covering a number of relevant issues and submitting that the appellant had altered her position in reliance on the validity of the payment. The appellant also wrote, explaining that she had gone to the United States to support her parents who were ill. She also claimed that a financial investment that was otherwise available to meet the cost of her travel was regarded by her in the nature of a pension fund, that is to say that it was not used for day to day expenses and that her expenditure was influenced by the availability of weekly compensation. 
[8]
On 1 October 2010, ACC wrote to the appellant requiring repayment of all the weekly compensation. The appellant made an application for review. Mr Gibbons then took instructions to act for the appellant and he requested a copy of the Corporation's file. ACC filed review submissions on 10 January 2011 and the review was set down for hearing on 6 May 2011. Mr Gibbons did not receive a copy of the Corporation's file until about three days before the review hearing and he then prepared his submissions which he presented on the day of the hearing. 
[9]
It is reasonable to accept that Mr Gibbons was not confident in preparing submissions until he could see the file. He actively sought early delivery of the file, but the Corporation was at fault in not providing it until a few days before the hearing. 
[10]
The Corporation's delay was the subject of a complaint under the Code of Claimants' Rights. A ruling was issued by a Complaints Investigator on 21 June 2011 finding that the Corporation did not meet an acceptable standard of service and fairness, and direct that ACC apologise to Mr Gibbons. 
[11]
Meanwhile, Mr Gibbons had a copy of the Corporation's written submissions which recited the relevant events and calculations, then set out a submission on s 251 criteria. The Corporation argued that the payments were not made in error because they were calculated correctly on the information that it had, but the information was incorrect. 
[12]
As it happened, Mr Gibbons had recently dealt with a similar case and he was ready to argue that the payments were made in error. In the event, he succeeded on that point. 
[13]
In the Corporation's submissions, it was accepted that the appellant received the payments, at least partially, in good faith. Concerning alteration of position in reliance on the payments, the submissions read: 
“Has the client altered their position in reliance on the validity of the payment? 
Yes partially. In response to the s 251 letter and ACC 100 sent to the client, Ms Dooley has demonstrated that she altered her position by travelling to the US between 23/01/09 and 11/05/09 and the numerous trips to the doctors. 
This trip was completed before Ms Dooley received any documentation from ACC regarding the overpayment on 29/01/09. 
The payments were interim and therefore Ms Dooley cannot rely on the validity of the payment to alter her position. Would recovery be inequitable? 
No, Ms Dooley has considerable Assets in both: 
Tasbay Group Ltd 
$222,016.00 
ASB National Bank NZ 
$262,411.00 
ACC overpayments are a soft debt as they have no interest and penalties and repayments can be made my instalment. ”
[14]
The Corporation accepted that the appellant had “partially” altered her position in reliance on the validity of the payments. It was accepted that she had travelled to the US and incurred expenditure before being notified of the overpayment, but the Corporation argued that that she knew the payments were interim and the appellant could not rely on their validity. Mr Gibbons proposed to argue that the interim nature of the payments did not foreclose an argument that the appellant had relied on the payments. 
[15]
Mr Gibbons therefore approached the hearing on 6 May 2011 with late preparation of parts of his case, having just received the Corporation's file. He says that he relied on the apparent concession in the Corporation's submissions that the appellant had relied on the validity of the payments, at least in part. When he presented his argument concerning the legal questions raised in the Corporation's submissions, the Corporation's representative asked for further time on the ground that the appellant's submissions were late and the Corporation had not had time to respond to legal issues. 
[16]
Mr Gibbons says that the evidence and argument had taken most of the allotted hour for hearing of the review. The transcript shows that the evidence covered the circumstances in which the appellant received the payments, and briefly touched on the fact that she went to the United States in January 2009 to care for her parents. The Reviewer asked a number of questions and the Corporation's representative then asked when the appellant had arranged to go to the United States. The answers established that it was in about November 2008 when her sister asked her to travel. The matter was not taken further. 
[17]
Mr Gibbons then spoke to his submissions. He noted that the Corporation's submissions had divided the reliance question in two parts. He submitted that the appellant relied on the money being properly hers and spent it. She did not pursue a WINZ application, and she took up her sister's invitation to travel to the US. 
[18]
The Reviewer then found that she did not have written submissions from the Corporation. It is not quite clear from a discussion recorded in the transcript whether the participants were referring to the 10 January 2011 submissions or a more recent set. However the Reviewer decided to hear oral submissions and offer an opportunity for further written submissions before issuing a decision. Mr Shelton for the Corporation then addressed his submissions, including the arguments about payment made in error (denied by the Corporation), and alteration of position in reliance on a payment that was expressed as a provisional payment (the Corporation arguing that there could not be reliance). 
[19]
Mr Gibbons had not prepared evidence of detail of the appellant's expenditure. Indeed that was a very weak point of the appellant's case. It had not been addressed in detail by her lawyer, and Mr Gibbons did not investigate it while waiting for the Corporation's file, which he needed in order to prepare for the hearing. 
[20]
I accept Mr Gibbons' submissions that time can be wasted preparing a case for review without first receiving a copy of the Corporation's file. Efficient preparation depends on identifying the issues in dispute and the evidence on those issues. Disclosure from the Corporation is the logical place to start. 
[21]
A claimant's instructions may well not address the main points in contention. Mr Gibbons said that he got the Corporation's submissions from the appellant in a box of papers. Not having the file, he assumed that the argument would follow the correspondence and written submissions that focused on the argument that a claimant could not incur expenditure in reliance on payments accompanied by notice that the payments were only provisional or interim. When he received the file three days before the hearing, he was pressed for time and did not prepare full argument. As he said at the appeal hearing, it is not practical to prepare for every possible point that could be argued at review. There is a good deal of sense in that, but the problem is that alteration of position in reliance on the validity of a payment is the very essence of a s 251 argument, and it should have been addressed. 
[22]
At the end of the first hearing, Mr Shelton asked for time to make written submissions on the legal questions. Mr Gibbons objected that such an opportunity is not routinely given to applicants, so why should it be enjoyed by the Corporation with all its resources. 
[23]
The appeal is not about that question, but Mr Gibbons submits that when the Corporation was given the opportunity to improve its case, so should the appellant have been afforded at least some latitude in dealing with a point of evidence that had been missed, partly because of the Corporation's late delivery of the file. From the Reviewer's standpoint, submissions assist the decision-making process and the Reviewer was concerned to have that assistance, but not to expand the issues by a further round of evidence. 
[24]
The Reviewer directed a timetable for submissions and adjourned the hearing. Having gained a better view of the shape of the dispute, Mr Gibbons then had his client complete a statutory declaration setting out details of payments which she claimed to have made in reliance on the validity of the weekly compensation she had received. Mr Shelton protested that the adjournment was not for the purpose of further evidence. There followed an exchange of emails between Mr Shelton and Mr Gibbons about whether the Corporation's submissions had conceded the questions of reliance. Mr Gibbons emphasised that he had been unable to prepare in time because of the Corporation's failure to deliver the file. 
[25]
The Reviewer was not impressed. She issued directions in which she stated that the new evidence went to the fundamental question before the review, and that she required an explanation as to why the evidence had not been given at the hearing. She then appointed a further hearing for the appellant to bring documentary proof and to be examined. The directions also stated: 
“7.
In these circumstances I direct that the hearing be resumed because: 
I have not had a satisfactory explanation as to why this evidence had not been provided by the applicant at any stage previously. 
The evidence provided is crucial to the outcome of the review, and must, therefore, be subject to testing in the review process. ”
[26]
At the second hearing, the appellant explained that she had relied on her lawyer to advise her what evidence was required. She said that he did not attend to her case and she instructed Mr Gibbons, who had not been able to obtain the Corporation's file. She was then examined in detail about the relevant expenditure. 
[27]
In the transcript of the second hearing, I can find no submission or explanation by Mr Gibbons that he had not prepared evidence of expenditure because he relied on a concession in the Corporation's written submissions. 
[28]
The Reviewer then issued her decision. She found that the appellant was claiming on the basis of expenditure in 2009 after her weekly compensation had already been stopped in December 2008, and when she knew that the Corporation claimed that she was not entitled to weekly compensation. She had paid only one relatively small amount during 2008. Furthermore the 2009 payments were partly linked with business commitments and were, in any case, payments that the appellant would probably have made even if she had not received the weekly compensation which the Corporation sought to recover. The Reviewer found that the appellant had not altered her position in reliance on the weekly compensation. That she was not left in a worse position than if the recoverable weekly compensation had not been paid, and that there was nothing unfair in requiring her to refund the overpayment. 
[29]
The Reviewer then refused costs for the appellant on the resumed hearing. The Reviewer considered that the appellant had not provided a satisfactory explanation as to why she had not provided the information at the first hearing. She did not accept Mr Gibbons' explanation that there had not been time to discuss the matters before the first hearing, but thought it probable that the appellant and Mr Gibbons had not turned their minds to “this crucial aspect of the hearing”
[30]
The substantive finding is not contested. Mr Gibbons submits that the finding that he and the appellant had not turned their minds to the question of expenditure was unreasonable. 
[31]
At the appeal hearing, Mr Gibbons argued that his preparation had been affected by the Corporation's failure to deliver the file, and that the Corporation's written submissions focused on other points and appeared to concede the question of alteration in reliance on vailidity. He noted that if he had time to prepare written submissions the submissions would have been exchanged before the hearing and whether the question of relience expenditure was conceded would have become clear. He believed that the Reviewer had been unjustly annoyed with him to the detriment of his client, and failed to recognise the difficulty that he faced. 
Decision 
[32]
I think that the Reviewer was probably correct in stating that the evidence should have been available at the first hearing. Mr Gibbons' argument was that the s 251 criteria were not closed down by the Corporation's view that the payments were provisional and could not be relied on. It follows that the s 251 criteria had to be met and the appellant had to provide evidence. 
[33]
The central point in Mr Gibbons' submission is that he relied on the “yes partially” concession in the Corporation's submissions. Taking a generous view, it might have been open to consider, before getting the file, that it was one of those cases in which the Corporation was satisfied about induced alteration of position and confined its argument to the other point, that a claimant could not succeed when she knew the payments were provisional. But Mr Gibbons did not make that point to the Reviewer at either hearing and the Reviewer's impression that the crucial evidence had not been prepared seems to have been justified. 
[34]
The transcript of the first hearing does not refer to any discussion of a “partial” concession by the Corporation in its written submissions. Indeed, when a question arose whether Mr Gibbons had a copy, he at first said he did not know, then realised he had seen them. There was nothing to suggest that he was actively relying on a concession in the submissions. 
[35]
The transcript of the the second hearing recorded extensive questioning by the Reviewer to extract particulars of the expenditure that the appellant claimed to have made in reliance on the payments of weekly compensation. She was not satisfied that the appellant's statutory declaration contained enough information for a decision on reliance expenditure. There was more than a hint of exasperation at the difficulty in extracting evidence that should have been available at the first hearing. 
[36]
In the course of the hearing the Reviewer stated that Mr Gibbons could have applied for an adjournment if he was prejudiced by the delay in receiving the Corporation's file. Her concern was that the case could have dealt with in one hearing, but Mr Gibbons' had not obtained details of reliance expenditure and had not applied for an adjournment. 
[37]
I think that the Reviewer's decision was a little harsh on Mr Gibbons. It does seem reasonable that he would wait for the Corporation's file and he did see from the submissions that the Corporation relied on a point on which there was authority to the contrary. But even if he succeeded on that point, the appellant would still have had to provide details of expenditure. 
[38]
Proper preparation would usually be to obtain those details from the appellant at the outset. From Mr Gibbons' point of view, those details might have been on the Corporation file, so it was not entirely unreasonable to leave his preparation until obtaining the file. But all of that left loose ends and an obvious risk of an adjournment for further evidence. If he was to rely on the file it would have been a simple matter to request an adjournment until he was ready. 
[39]
Mr Gibbons also maintained that the point was conceded in ACC submissions. It was only “partially” conceded and the concession was (a) rather vague, and (b) prefacing an argument that there could not be reliance on a provisional payment. Furthermore, the appellant's evidence at the second hearing was that part of her expenditure was the purchase of a sauna, which underscored the fact that the partial concession (relating to trips to the US and trips to doctors) was never quantified against the overpaid claim of $14,250. There was no concession that reliance expenditure equated the whole overpayment. 
[40]
The appellant's case was presented on the basis that reliance expenditure had been conceded. The Reviewer understood the flow of the first hearing and was in a position to draw a conclusion that evidence of details of reliance expenditure had not been prepared. The Reviewer did not think that Mr Gibbons' explanation was good enough. It explained why the appellant's case was not ready, but did not adequately explain why Mr Gibbons had not applied for an adjournment. In refusing costs the Reviewer said “the need for the resumption was a direct result of these omissions and I do not consider that there should be an additional award of costs because of this”
[41]
There is substance in a further submission by Mr Gibbons' that so much time was taken at he first hearing dealing with the question of the appellant's good faith in supplying income details, that there was little time to enquire into reliance expenditure. He submitted that there would have had to be a second hearing anyway. That may be so, however that is not what happened and it is rather a theoretical submission. It is not an occasion to consider how long the hearing should have taken and who was responsible for taking too long. I could not find that the Reviewer failed to take that account as a ground to quash the decision to refuse costs. 
[42]
The refusal of costs is a matter in the discretion of the Reviewer. Section 148(3) of the Act provides that the Reviewer: 
“(b)
may award the applicant costs and expenses, if the reviewer does not make a review decision in favour of the applicant but considers that the applicant acted reasonably in applying for the review: ”
[43]
An award of costs under that provision is discretionary. The court could reconsider the matter if it found that the applicant acted reasonably. Acting reasonably in applying for the review includes the hearing process: McMillan [2012] NZACC 46. I do not find that the Reviewer was wrong in finding that the application did not act reasonably. The costs decision was therefore in the discretion of the reviewer 
[44]
In Trembath [2005] NZACC 279, Judge Beattie said: 
“An appeal in such circumstances is an appeal against the exercise of a discretionary power, and this Court has recognised that such an appeal is of limited scope. That limitation has been well defined by decisions of New Zealand Courts of Superior Jurisdiction, and in particular the Court of Appeal has identified that the test formulated in its decision of May v May [1984 1 NZFLR 165 at 170 is the preferred formulation. That formulation reads: 
‘An appellant must show that the Judge acted on a wrong principle; or that he failed to take into account some relevant matter or that he took account of some irrelevant matter or that he was plainly wrong. ’
Recent restatements of this formulation by the Court of Appeal are noted in its decisions on Alex Harvey Industries Ltd v Commissioner of inland Revenue (CA 36/01) and Harris v McIntosh (CA 279/98). ”
[45]
I do not find that the Reviewer took into account a wrong principle or irrelevant matter. It was within the Reviewer's discretion to require a standard of preparation commensurate with the need for efficient dispatch of review hearings. Mr Gibbons fell into a trap caused by late preparation when the Corporation failed to deliver the file to him. While he could have expected some leniency in the circumstances, I consider that the decision not to award costs was within the scope of the Reviewer's discretion. 
[46]
Therefore the appeal is dismissed. 

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