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Accident Compensation Cases

Caverhill v Accident Rehabilitation & Compensation Insurance Corporation (HC, 02/10/98)

Judgment Text

JUDGMENT OF POTTER J 
POTTER J
The appellant appeals against conviction and sentence imposed by the District Court. Firstly, he appeals against a decision of the District Court Judge on 24 October 1996 which found proved and convicted the appellant on all of the 11 charges brought against him, as detailed below. 
Secondly, he appeals from an order of reparation and sentence imposed on 7 March 1997. The Judge ordered $12,000 reparation and imposed 200 hours community service conditional on the reparation being paid within 28 days. 
The appeal against conviction and sentence is dated 25 March 1997 and was filed on 7 July 1997. It was accordingly filed out of time and application for leave to extend time for filing was filed on 29 August 1997. 
The appeal was heard before me on 18 December 1997. After the appellant's submissions, there was insufficient time for the respondent to be heard. I invited the respondent to present written submissions in reply by 31 January 1998. The respondent subsequently advised the Court that because of the complexity and in certain respects, the importance of the matters raised by the appeal, a rehearing was requested. The matter was therefore brought on again before me on 26 June 1998 when the hearing was resumed and completed. 
Although initially the respondent opposed the appellant's application for leave to appeal out of time, at the resumed hearing on 26 June 1998 the respondent advised that it did not oppose the application. Leave was granted accordingly. 
I shall deal first with the appeal against conviction and then with the appeal against sentence. 
Appeal Against Conviction 
Offences 
The appellant was convicted of 10 offences under s 229A(b) of the Crimes Act 1961 that on specified dates between and including 30 June 1993 and 31 January 1994 with intent to defraud, he used a document capable of being used to obtain a pecuniary advantage, namely an Accident Compensation Corporation medical certificate for the purpose of obtaining for himself a pecuniary advantage. 
The appellant was convicted of one offence under s 166(1)(b) of the Accident Rehabilitation and Compensation Insurance Act 1992 (“the Act”) that between 1 July 1993 and 20 January 1994 he wilfully omitted to inform the Accident Rehabilitation and Compensation Insurance Corporation (“ARCIC” and “the Corporation”) that he was working and receiving income during that period for the purpose of misleading a person concerned in the administration of the Act for the purpose of continuing to receive compensation under the Act. 
Grounds of Appeal 
The appeal against conviction is on the grounds — 
1.
That the District Court Judge erred in law and in fact in finding the appellant had fraudulently presented medical certificates in order to continue to receive earnings related compensation. 
2.
The District Court Judge erred in law and in fact in finding that the appellant had failed to disclose alternative income. 
Section 119 of the Summary Proceedings Act provides that appeals shall be by way of rehearing, but pursuant to that section the evidence, unless the Court orders otherwise, is brought before this Court on appeal by production of the notes of evidence and any affidavits and exhibits from the District Court hearing. Because the District Court Judge has the opportunity to hear and see the witnesses as they give their evidence the appeal Court will be slow to disturb his findings of fact based on that evidence, and his assessments as to credibility of the witnesses. In Rae v International Insurance Brokers (Nelson/Marlborough) Ltd & Anor (CA285/95, 11 August 1997), the Court of Appeal stated at p. 12 — 
“While not purporting to set out an exhaustive test, there are two conventional circumstances in which an appellate Court may differ from the trial Judge on a matter of fact. They are 
(a)
if the conclusion reached was not open on the evidence, i.e where there was no evidence to support it, and 
(b)
if the appellate Court is satisfied the trial Judge was plainly wrong in the conclusion reached ”
At p. 13 the Court said — 
“ … the ambit of an appeal on fact is very narrow. Any tendency or wish to engage in a general factual retrial must be firmly resisted. This Court will not reverse a factual finding unless compelling grounds are shown for doing so ”
Background Facts 
The appellant owned a farm property at Matata. At the time of the accident on 17 May 1993, which resulted in injury to him, he was dry stock farming and grazing cows on his farm. 
He also held a full-time job at Tasman Pulp & Paper Mill at Kawerau (“Tasman”) as a balerman where he had been employed for 17½ years prior to the accident. He was required to be fully fit for this job as it required considerable strength in attending to wet pulp bales and dislodged wet sheets of pulp from the paper machines. 
On 17 May 1993 at the mill, the appellant accidentally struck his neck on a carry roller resulting in an extension injury of his neck and a compression injury of the left pectoral muscle. He suffered pain in the left pectoral region and neck when undertaking any activity involving lifting and pulling with his left hand which is his dominant hand. Initial power to grasp in the left hand faded after a short while. He was unable to perform his duties as a balerman and being unable to work, on 26 July 1993 he took voluntary redundancy and left his employment at Tasman. 
He saw his doctor on 18 May 1993 and was declared unfit to work for 3 days. The injury did not improve and on 10 June 1993 the appellant made an application for entitlement to ARCIC which recited — 
“Loss of Tasman wages and inability to carry out farm related jobs. ”
On 16 June 1993, ARCIC wrote to the appellant advising him of his entitlement to compensation based on his wages from Tasman Pulp & Paper. The advice required him to notify the Corporation if he received any other earnings during his incapacity. 
The Corporation at that point, took no action in relation to the appellant's farming income. This was described by Ms Foster of the Corporation's Whakatane office as an error on the part of the Corporation. Ms Foster said the information as to farming income was not obtained until towards the end of 1993. If the information had been obtained in or about June 1993, then the appellant would have been entitled to slightly increased compensation — her evidence was that the relevant annual farm income for the purposes of determining compensation, when the figure ultimately became known to the Corporation, was $1288. 
Between 30 June 1993 and 13 January 1994, the appellant on 10 occasions presented medical certificates to ARCIC stating he was fully unfit for work. 
In November 1993, ARCIC commenced an investigation in relation to the appellant's compensation. In the course of that investigation the appellant completed a questionnaire in which he declared that he had received no other earnings since the time of the accident except from ARCIC. 
In the meantime, from 1 June 1993 the appellant converted his farm to dairying and entered into a sharemilking arrangement with his son Troy on a 50/50 basis for the 1993/94 season. The arrangement was not reduced to writing. From August 1993 the appellant received payments from Bay Milk Products for his share of the proceeds of the dairying business. 
For the summer of 1993/94, the appellant and his son ran a contracting business in partnership in relation to silage and hay. This involved seasonal contracting and operated from the end of November 1993 through the following summer. He received his share of the proceeds of a number of contracts completed during this period. 
The appellant did not advise ARCIC of any income derived from the Bay Milk Product payments or from the contracting partnership. The appellant claimed that because he told the Corporation about his farm income and expected it would get information from the Inland Revenue Department or from his accountants as to his farm income, he did not consider it necessary to give them information about farm earnings. The appellant apparently did not query with the Corporation that the compensation advised him on 16 June 1993 related only to his Tasman earnings. In evidence he did not explain this, nor does it appear that the question was asked of him. 
On 13 February 1994, ARCIC terminated compensation payments to the appellant. 
District Court Judge's Decision 
The judgment (given orally) records that in the appellant's application to ARCIC, the part referring to employment stated as well as Tasman — 
“ … employment on the farm as a part-time farmer. ”
It sought compensation for loss of Tasman wages and inability to carry out farm related jobs. ARCIC advised in two letters to the appellant, one on an annual basis and the other on a monthly basis, the amount to which he was entitled and stated specifically that the Tasman wages were used for the assessment. No mention was made of farm income. The District Court Judge stated that the farm income should have been mentioned in the letter. He described as “sloppy work in the office” this omission and also the failure of ARCIC to pursue enquiries as to the farm income which the appellant had advised in the application form. 
The Judge said that in the letters sent to the appellant it was very clearly pointed out to him in capital letters — 
“PLEASE ADVISE THIS OFFICE IMMEDIATELY IF YOU RECEIVE ANY OTHER EARNINGS DURING YOUR INCAPACITY ”
The Judge concluded that the income from the farm and from the contracting work were earnings. He found that the appellant did work on the farm and that he did work for the contracting firm. He stated at p.3 — 
1
He did not disclose or did not raise with the ACC any question when he got the letter about additional income that he received from the farm. 
2
He did not raise with the ACC at any stage the question of money that he received from the contracting work that was being carried out 
He then referred to a declaration made by the appellant on 25 November 1993 in the course of ARCIC's investigation and determined that at least three of the responses were false — 
“I did no work on the farm; I received no other income other than from the farm; I have received no other earnings other than accident compensation from the Commission. ”
(I agree with counsel for the appellant that the second answer is not accurately recorded in the judgment). 
He considered those answers to be “completely and absolutely false”. The Judge determined that in failing to advise ARCIC of the additional income from the farm and contracting work, the appellant deliberately and wilfully withheld information from the Corporation. He also found that the appellant failed to tell his doctors when he went to see them on a regular basis that he was doing contracting work. 
He stated — 
“Essentially it becomes a question of credibility. ”
He said there was no question in his mind and he was left in no doubt after hearing the evidence, reading the various documents produced, and seeing the defendant give his evidence in the witness box, that the defendant deliberately and wilfully held information from ARCIC for the purposes of having his benefit continued. He further concluded that there was an intent to defraud in not telling his doctors about his contracting work when he saw them on a regular basis. 
He found himself satisfied that all charges had been proved and that at all relevant times the appellant had the necessary intent. He convicted the appellant on all charges. 
Appellant's Obligation to the ARCIC 
A person who applies for or receives accident compensation has a responsibility to deal honestly with ARCIC. Section 64 of the Act imposes a statutory obligation to provide information and assist the Corporation in obtaining information including the obligation to — 
“furnish to the Corporation such other relevant information as the Corporation requires ”
The nature of the obligation has been expressed in two judgments of Tompkins J. In Holmes — Kinsella v Accident Rehabilitation and Compensation Insurance Corporation (High Court, Auckland Registry, AP93/96, 7 June 1996), at p.2 he said — 
“The ACC system is dependent upon the honesty of those claiming under it It is all too easy to defraud the system by those minded to do so. Unfortunately such a fraudulent approach is all too common. It amounts to theft from the community, frequently over a long period. ”
In Gainfort v Accident Rehabilitation and Compensation Insurance Corporation (High Court, Auckland Registry, AP220/95, 4 March 1996) at p.4 he said — 
“The proper administration of accident compensation under the Act is very dependent upon claimants being honest with the Corporation There is therefore an obligation on claimants to inform the Corporation of all events that may be relevant to their right to compensation particularly details of earnings where a person is in receipt of earnings related compensation. ”
The obligation to keep the Corporation fully informed is an ongoing responsibility and obligation of the claimant which continues uninterrupted throughout his association with the Corporation. It is not negatived by matters of process nor by error, inconsistency or mistake on the part of the claimant or the Corporation in the administration of the application or payment of the compensation. The obligation may for example, require a recipient to draw to the attention of the Corporation an error, such as an overpayment, and so provide to the Corporation the opportunity for correction. It includes the obligation described by Tompkins J, to inform the Corporation of all events that may be relevant to the claimant's right to compensation, particularly details of earnings. 
The District Court Judge referred on p.4 of his judgment in this case to an “onus” which in evidence the appellant suggested rested with the Corporation to establish the appellant's farm income. The Judge considered the two letters from the Corporation to the appellant dated 16 June 1993 advising the compensation that would be paid from 20 June 1993 placed the onus back on the appellant because those letters advised that the appellant was to immediately notify receipt of any other earnings during incapacity. 
I do not consider there to be a shifting onus. The obligation remains throughout with the claimant to provide to the Corporation all information relevant to his claim or benefit and to be completely honest and forthright with the Corporation. The Judge more accurately described (at p.2) the onus of disclosure as resting on the appellant because he accepted the “privilege of the benefit”. Issue was taken by counsel for the appellant with the word “privilege”; he considered the appellant's entitlement to be a “right”. Nothing turns on the description, whether a right, entitlement, benefit or howsoever described. When an applicant claims compensation from the Corporation and the Corporation assesses and pays a benefit, it relies significantly on honest and full disclosure by the claimant. The Corporation will make such checks as it is reasonably able, to maintain the integrity of the system for all contributors and beneficiaries. But as Tompkins J recognised, the administration of the system is dependent on the honesty of claimants and it is their continuing obligation to ensure the Corporation receives any information which may be relevant to entitlement to or receipt of compensation. This extends to any changes to information previously provided. The responsibility of honest and full disclosure rests with the claimant and underlies the whole of his relationship with the Corporation. 
In this case, the appellant understood the Corporation would seek information regarding his farm income, in the same way as it sought and obtained details of his Tasman earnings. That is a matter of process. It in no way relieved the appellant of his ongoing obligation to advise the Corporation of any changes in his earnings or other events that might affect his right to receive compensation. 
Earnings 
Detailed submissions were made to me by counsel for the appellant as to the meaning of “earnings”. The submissions were addressed to two aspects. 
1.
Whether there was an obligation on the appellant to disclose earnings from his sharemilking arrangement with his son and from his contracting partnership with his son. It was argued that these were not “earnings” which required disclosure. 
2.
In a declaration made at the request of ARCIC on 25 November 1993 in response to a question from the Corporation — 
“Have you received any earnings from the date of your injury on 17.5 93 to the date of this statement, other than weekly compensation from the Corporation? ”
the appellant replied — 
“I have received no other earnings, other than accident compensation from the Corporation. ”
It was submitted for the appellant that the response was not incorrect because of the definition of “earnings” under the Act. 
The Act defines as follows — 
‘Earnings’ ‘earnings as an employee’, and ‘earnings other than as an employee’, each has the meaning assigned to it in Regulations made under this Act. 
‘Earner’ means any natural person who engages in employment, whether or not as an employee …  
‘Employment’ means work engaged in or carried out for the purposes of pecuniary gain or profit …  ”
The Accident Rehabilitation and Compensation Insurance (Earnings Definitions) Regulations 1992 (S.R.1992/64) (“the Regulations”) are described thus in the explanatory note to the Regulations. 
“These Regulations contain machinery provisions for the administration of certain requirements of the Accident Rehabilitation and Compensation Insurance Act 1992. In particular the following matters are provided for — 
(a)
The definition of earnings (including earnings as an employee and earnings other than as an employee); 
(b)
The timing of the derivation of such earnings for premium purposes, 
(c)
The procedures to be adopted concerning the return of earnings, the ascertainment and collection of premiums, the payment of refunds of premiums, and other related matters, 
(d)
The calculation of refunds of premiums or payment of additional premiums by employers and other persons who are subject to cessation adjustments; 
(e)
Other miscellaneous machinery provisions. ”
The Regulations contain, Part I Interpretation, which contains the relevant definitions; Part II dealing with payment of premiums, divided into employer premium, earner premium and general provisions; Part III dealing with cessation adjustments which relates to adjustments of premiums when earnings cease; Part IV which contains general provisions regarding premiums. 
The Regulations contain the machinery for determining premiums payable to fund the compensation scheme established by the Act. The definitions of “earnings”, “earnings as an employee” and “earnings other than as an employee” are directed to providing an appropriate basis for assessment of premiums payable to fund the compensation scheme. They are definitions for a specific purpose. For example “earnings as an employee” as defined, include all source deduction payments under the Income Tax Act and all income derived otherwise than from source deduction payments but exclude ten specified items of income from the latter category. It is a specific definition designed for a specific purpose as described in the explanatory note to the Regulations. 
On the other hand, the New Shorter Oxford English dictionary describes “earnings” as — 
“The amount of money earned, income from work etc ”
When the Corporation asks of a claimant who is in receipt of compensation — 
“Please advise if you receive any other earnings during your incapacity ”
and — 
“Have you received any earnings from the date of your injury other than compensation from the Corporation? ”
— the Corporation is making an inquiry about earnings in the generally understood meaning of that word, i.e. have you earned any money, have you received any income from work, in the relevant period? The Corporation is not seeking the information from claimants for the purposes of determining premiums payable. That is the other side of the Corporation's function when it must seek the information necessary to determine on a proper basis, the premiums payable by employers and employees based on their “earnings” as defined by the Regulations. There, it is dealing with the income side of its ledger. When it asks of claimants to be advised of their earnings during any relevant period, it is dealing with the payments side of its ledger. It asks a straightforward question which is capable of a straightforward answer in most cases. It certainly does not present to claimants a complex definition of “earnings” and require claimants to distil their answer within the meaning of the definition provided. 
I therefore do not accept the submission of the appellant that in providing information or responding to questions by the Corporation as to earnings, the appellant was entitled to have resort to the Regulations and interpret his answer to the questions in terms of the definitions in the Regulations. Needless to say when he answered in his statutory declaration — 
“I have received no other earnings, other than accident compensation from the Corporation ”
he did not also clarify for the Corporation that he meant “earnings” in terms of the definition in the Regulations, if that was the situation. 
In my view, the questions asked of the appellant were straightforward questions which required equally straightforward answers in terms of the everyday meaning and understanding of the word “earnings” and in accordance with the appellant's obligation of honest and full disclosure to the Corporation. 
Because of the above analysis it is unnecessary for me to consider in detail further submissions on the definition of “earnings other than as an employee”, but I shall cover this aspect briefly for it was referred to by the District Court Judge in his judgment. 
The definition is as follows — 
“ … in relation to any person and any income year, means the amount of assessable income (if any) derived by the person in the income year for the purposes of the Income Tax Act 1976 which — 
(a)
Is dependent on the personal exertions of the person, and 
(b)
If the person were to suffer any incapacity, the person would cease to derive income as a consequence of such incapacity, — 
after deducting all amounts allowable as deductions to the person for the purposes of the Income Tax Act 1976 which are allowable by virtue of the person deriving the income referred to in this clause; but does not include any earnings as an employee ”
Essentially, the argument for the appellant was that he did not derive earnings in the relevant period in terms of this definition, because the assessable income he derived from the sharemilking arrangement with his son and from the contracting partnership was not dependent on his “personal exertions”. Further, even if he was involved in personal exertions, he did not cease to derive income from those sources as a consequence of his incapacity. In short, the income he derived from those sources was in the nature of investment income which did not depend on his personal exertion or input, and did not cease when he became incapacitated. 
On the evidence, I do not accept either of those assertions. The appellant's son at the relevant time was aged 17 years. The appellant was incapacitated by his injury from work at Tasman. He was at his home on the farm. He was a person of experience in the management of the farm and related businesses. He claimed he was a full-time farmer as well as maintaining full-time his job as a balerman at Tasman prior to the accident. 
Personal exertion has been interpreted particularly in relation to income tax legislation (refer Hadlee v Commissioner of Inland Revenue [1989] 2 NZLR 447, Eichelbaum J at p.464 and 465; [1991] 3 NZLR 517). It does not necessarily involve manual or physical labour; exertion by the “sweat of the brow”. Input or contribution to a business enterprise may be to management, administration, planning, strategy, structuring etc. The appellant was well experienced and able to make such a contribution and on the evidence it would be a fair inference that he made such a contribution, and that it was an essential contribution to the maintenance of income sourced from the sharemilking arrangement and the contracting partnership. The income derived from those businesses would depend essentially but certainly not exclusively, on the contribution of the person or persons who actually did the work (the farm labour/contracting), but there is much more in operating a business to produce a profit than “doing the work”
Therefore, although such a finding is not necessary to deciding the issues in this case, I conclude that the appellant derived “earnings other than as an employee” from the sharemilking arrangement and contracting partnership, within the meaning of that definition in the Regulations. I therefore disagree with the obiter comments of the District Court Judge on p.5 of his judgment. Nothing turns on that; the District Court Judge made it abundantly clear that his comments were entirely obiter and did not affect his decision. 
The Partridge Report 
The appellant sought to have produced in evicence a report from Dr B.W.O. Partridge who at the request of the Corporation examined Mr Caverhill and reported on 2 December 1993. Dr Partridge was not called. Counsel for the appellant put the report to Ms Foster a witness for the Corporation. The Judge ruled that the report could be admitted as evidence that it had been obtained but not as to its contents. Counsel for the appellant then sought to have the report produced under s 3(1)(b)(3) of the Evidence Amendment Act (No 2) 1980 as documentary hearsay evidence. He submitted that Dr Partridge could not reasonably have been expected due to the lapse of time to recollect the matters dealt with in the information he supplied. He further submitted that this was a business record of the Corporation and could be admitted under paragraph (b) of s.3. Counsel for the appellant accepted the Court's ruling at the time it was given, but now claims the ruling was wrong and that had the report been before the Court the Judge may have reached a different decision concerning the appellant's ability to work. 
Essentially, the Judge's concern in making the ruling he did, was that if the evidence in the report was to be put before the Court then Dr Partridge should be called. I do not disagree with that approach. The report contains a detailed medical diagnosis; it also contains opinion evidence outside the doctor's expertise. Experts are frequently called upon to recollect and give evidence on matters and reports of which they are the author and which they completed some time ago. There was nothing before the Court to indicate any circumstances relating to Dr Partridge's “unavailability” in terms of s 3(1). The Judge was correct in his basic approach, that if this evidence was to be put before the Court then Dr Partridge should have been called and been available for cross-examination. In that case, any parts the Court regarded as not relevant to the medical diagnosis or comprising non-expert opinion would have been ruled inadmissible. 
Charges 
It is necessary that a Judge or jury required to determine whether a defendant is guilty or not guilty of an offence charged, considers the essential elements of each offence that must be proved by the Crown, and is satisfied beyond reasonable doubt that each of those elements is proved before making a finding of guilt. 
In his judgment, the District Court Judge did not separately consider the essential elements of each offence. He considered the evidence overall and made findings of fact as he proceeded through his judgment. He then concluded that he was satisfied that all charges had been proved and that at all relevant times the defendant had the necessary intent. 
It is not necessary that the judgment sets out in any particular way the essential elements of the offences nor need the Judge's findings on each of those essential elements be separately addressed. Indeed, when a jury brings in its verdict, the verdict alone is announced and it is on that verdict that conviction is entered. However, it is helpful no doubt to the parties and also to a Judge on appeal that the process followed and the reasons for the decisions reached, are clearly and logically set out in the judgment. 
Section 166(1)(b) 
I have set out the charge in full earlier in this judgment. The essential elements of the offence are that between 1 July 1993 and 20 January 1994 the appellant — 
(a)
Omitted to inform the Corporation that he was working and receiving income; 
(b)
Did so for the purpose of misleading the Corporation; 
(c)
The omission was wilful, for the purposes of continuing to receive compensation. 
(a) It is common ground that the appellant did not advise the Corporation that he had entered into a sharemilking arrangement with his son from 1 June 1993 and that he derived income from that arrangement. It is also common ground that he did not advise the Corporation that he was involved in a contracting partnership with his son in the summer of 1993/94 and that he derived income from that partnership. Both undertakings occurred during the relevant period and from both he received income. The Judge made clear findings — 
“He did work on the farm even though it may have been of a supervisory nature …  ”
(p.3).
“He did work for the contracting firm, he admitted that in evidence ”
(p.4)
There was evidence before the Judge from which he was entitled to draw these inferences having had the benefit of seeing and hearing the witnesses and assessing their credibility. There was the evidence of Mr Snodgrass and Mr Cryderman in relation to contracting work and the evidence of the appellant himself when he said he went out to give advice regarding calving, that he would look at the grass situation and assess things, and generally supplied support and advice. There were no doubt other parts of the evidence which led the Judge to this finding and in my view it was a finding that was open to him on the evidence. 

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