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Accident Compensation Cases

Barnett v Accident Compensation Corporation (HC, 05/12/02)

Judgment Text

RESERVED JUDGMENT OF PATERSON J 
Paterson J
Introduction 
[1]
In June 1989, Mr Barnett lodged a claim with the Accident Compensation Corporation (the Corporation). The Corporation eventually accepted the claim and paid to Mr Barnett $224,195.66 on 2 June 1998 (the first payment), $52,930.49 on 20 July 1998 (the second payment), and $56,373.00 on 26 February 1999 (the third payment). 
[2]
A claim for interest was denied by the Corporation but, on review, the Reviewer determined that the Corporation should pay interest on payments not paid within one month of 12 May 1998. Consequently, the Corporation paid to Mr Barnett in February 2001 the sum of $6270.56. Mr Barnett appealed the Reviewer's decision to the District Court and, in a decision of 12 March 2002, the Court confirmed the decision of the Reviewer. Mr Barnett now appeals against the District Court decision which denied him interest from an earlier date. 
Background 
[3]
The claim lodged in 1989 was based on personal injury by medical misadventure. In it Mr Barnett alleged that he had been prescribed Benzodiazepine for a period of 20 years or more, and this had caused him both mental and physical injury. Mr Barnett had ceased employment in December 1975 because of his physical and mental condition. 
[4]
The claim has had a protracted history. In March 1990, the Corporation declined cover and its decision was upheld on review. An appeal was then lodged with the Accident Compensation Appeal Authority (ACAA), but this appeal was settled in September 1992 when the Corporation accepted that an act of medical misadventure had occurred. It was then necessary to determine the date of that medical misadventure. On 30 August 1996 this Court fixed the date of the medical misadventure at 3 September 1976 after the Corporation had initially set it at 7 August 1993. 
[5]
A second claim for Polypharmacy was made in October 1996 and, on 11 August 1997, the Corporation having investigated that claim, accepted cover for a medical error but left unresolved certain matters relating to the claim. The date of the accident for the Polypharmacy claim was subsequently fixed on review at 3 September 1976. Mr Barnett had ceased employment in December 1975 and the Reviewer referred back to the Corporation for decision, under s 69 of the Accident Compensation Act 1982 (the Act), the issue of whether Mr Barnett should be deemed to continue to be an earner after that date. 
[6]
On 26 May 1998, the Corporation determined that Mr Barnett was entitled to earnings related compensation from 3 September 1976 to 8 September 1988 (the date when Mr Barnett became eligible for National Superannuation) on relevant earnings of $200 per week, and as a consequence of that decision the first payment of $224,195.66 was paid to Mr Barnett on 2 June 1998. 
[7]
Mr Barnett asked the Corporation to review its decision of 28 May 1998 and, as a consequence, the Corporation on 20 July 1998 accepted that the relevant earnings were $250 per week. The second payment of $53,930.49 was made on 20 July 1998 to cover the increased weekly rate for the period from 3 September 1976 to 8 September 1988. 
[8]
There were further review proceedings and a notice of appeal filed before the parties reached a settlement under which the Corporation accepted that the date of accident for the Polypharmacy claim was May 1974, and earning related compensation was payable from December 1975. In accordance with this settlement, the third payment of $56,373 was paid to Mr Barnett on 26 February 1999 for a period commencing 15 December 1975. 
[9]
In February 1999, Mr Barnett sought interest on the second and third payments from 1 July 1992. On 26 February 2001, the Corporation paid to Mr Barnett the sum of $6,270.56 being interest on the second and third payments from 12 May 1998. 
[10]
Mr Barnett then sought interest from “a date one month after the claim was lodged with the Corporation until actual payment is made, not one month after the Corporation had all the information necessary to make payment.” He was claiming interest from 1 July 1992, presumably because there was no entitlement to interest before the enactment on that date of the Accident Rehabilitation and Compensation Insurance Act 1992 (the 1992 Act). 
[11]
The Corporation declined to pay interest before 12 May 1998, advising that that was the date it received all information necessary in order to calculate the payment. Mr Barnett appealed that decision and Judge Beattie on 12 March 2002, dismissed the appeal and confirmed that the Corporation had all relevant information only on 12 May 1998 and consequently interest was payable only on the second and third payments. 
The District Court judgment 
[12]
Many of the submissions made in the District Court were repeated in this Court and will be dealt with later. In effect, the Judge, applying the findings of John Hansen J in Howley v Accident Compensation Corporation (HC Invercargill, AP29/01 of 6.12.01), determined that the only issue which he was required to determine was the date on which all necessary information was received by the Corporation. The Judge noted that counsel for the Corporation accepted that it was in possession of the necessary information as from 12 May 1998. 
[13]
Submissions on behalf of Mr Barnett that the Corporation had the necessary information when it received a letter from Mr Barnett's accountant in August 1990, or alternatively, when it received further information from an insurer on 6 August 1997, were rejected by the Judge. He noted that the date from which a claimant is entitled to weekly compensation is not the same date from which the claimant is entitled to interest. The Judge also noted there was some conjecture as to which of the two statutory provisions relating to interest applied, namely, s 72 of the 1992 Act, or s 101 of the Accident Insurance Act 1998 (the 1998 Act). However, nothing appeared to turn on that conjecture as the operative words of both statutory provisions were that the liability to pay interest arose if the Corporation had not made payment within one month after it had received all information necessary to enable it to calculate and make payment of earning related compensation. 
[14]
The relevant finding made by the Judge was: 
“The respondent does not have the benefit of a crystal ball in that until it is told of a claim and has thereupon determined that there is an entitlement and is given the information necessary to calculate that entitlement, it is only from then the interest provision comes into play. ”
(emphasis added)
[15]
After noting that the entitlement to interest has no bearing on the period to which the earnings related compensation payments may be backdated, and noting a claim was made in 1989, the Judge determined that it was not until May 1998 that the Corporation was in possession of all information necessary to calculate and make payment of the earnings related compensation. 
The points on appeal 
[16]
There were several points raised in the notice of motion of appeal and detailed submissions made on behalf of Mr Barnett in this Court. There are, in effect, two issues for determination: 
(a)
The correct interpretation of the statutory provision relating to the payment of interest, with particular reference to benefit refunds under s 78 of the 1992 Act; and 
(b)
Whether the Judge applied the correct law to the facts of this case. 
The law 
[17]
One of the appeal points is that the Judge wrongly applied s 101 of the 1998 Act when the original decision and the review were under s 72 of the 1992 Act. The relevant provisions of those sections read: 
72. (of 1992 Act) Payment of interest where Corporation … makes late payment of compensation based on weekly earnings- 
Where any payment of compensation based on weekly earnings to which a claimant is entitled is not paid by the Corporation … within 1 month after the Corporation … has received all information necessary to enable calculation of the payment, interest shall be paid on the amount payable by the Corporation … at the rate for the time being prescribed by or for the purposes of section 87 of the Judicature Act 1908 from the date on which payment should have been made to the date on which it is made. 
101. (of 1998 Act) Payment of interest when insurer makes late payment of weekly compensation- 
(1)
The insurer is liable to pay interest on any payment of weekly compensation to which the insured is entitled, if the insurer has not made the payment within 1 month after the insurer has received all information necessary to enable the insurer to calculate and make the payment. 
(2)
The insurer is liable to pay the interest - 
(a)
At the rate for the time being prescribed by, or for the purposes of, section 87 of the Judicature Act 1908; and 
(b)
From the date on which payment should have been made to the date on which it is made. ”
[18]
Another statutory provision which is relevant to the issues is s 78 of the 1992 Act which read: 
78. PAYMENTS TO AND FROM DEPARTMENT OF SOCIAL WELFARE- 
(1)
Where any payment (including a payment under section 74 of this Act) is made by the Corporation to a person who does not establish a claim to any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act but who establishes a claim to a benefit under of the Social Security Act 1964, the Department of Social Welfare (with the concurrence of the Corporation) may treat the amount so paid or so much thereof as it thinks fit as having been paid in respect of that benefit, and may refund to the Corporation, out of money appropriated by Parliament for the purpose, so much of the payment as is treated under this subsection as having been paid in respect of that benefit. Any amount that is treated under this subsection as having been paid in respect of any such benefit shall for all purposes be deemed to have been so paid. 
(2)
Where any payment is made under the Social Security Act 1964 to a person who establishes a claim to any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act, if the amount paid in respect of the benefit is in excess of the amount properly payable having regard to the compensation, the Corporation (with the concurrence of the Department of Social Welfare) may treat the amount so paid or so much thereof as it thinks fit as having been paid in respect of that treatment, service, rehabilitation, related transport, compensation, grant, or allowance and may refund to the Department of Social Welfare, so much of the payment as is treated under this subsection as having been paid in respect of that treatment, service, rehabilitation, related transport, compensation, grant, or allowance. Any amount that is treated under this subsection as having been paid in respect of that treatment, service, rehabilitation, related transport, compensation, grant, or allowance shall for all purposes be deemed to have been so paid. 
(3)
Where any amount is paid by the Corporation under this section to any person so far as the person does not establish a claim to it as treatment, service, rehabilitation, related transport, or compensation, or a grant or allowance, and the amount is not treated under subsection (1) of this section as having been paid in respect of a benefit under the Social Security Act 1964, it shall constitute a debt due to the Corporation which may be recovered by the Corporation in accordance with section 77 of this Act. ”
[19]
There have been three decisions of this Court which are relevant. The first was a full Court decision in The Estate of SB v Accident Rehabilitation and Compensation Insurance Corporation (High Court Wellington, AP393/97, 23.11.98. Doogue and Wild JJ). The issue in that case was whether the appellant was entitled to interest under s 72 of the 1992 Act. The appellant had filed a claim in October 1984 in respect of an accident deemed to have occurred in November 1982. The Corporation initially declined the claim but accepted it on 13 August 1992 after a review hearing. 
[20]
The 1992 Act came into force on 1 July 1992. Previously, an applicant had no right to claim interest on late payments. On 26 July 1995, SB sought interest from February 1983. The parties disagreed on the date by which the Corporation had all the information it needed to make an assessment of earnings related compensation. The Corporation submitted that the appellant's entitlement was to be determined under the 1992 Act, as also was his entitlement to compensation which, under that Act, did not include interest. The Corporation also submitted the appellant's entitlement to compensation was based on “relevant earnings” pursuant to the 1982 Act as a separate entity, different from the compensation based on “weekly earnings” under the 1992 Act. For reasons set out in the judgment, which I respectfully agree with, the Court determined that s 72 of the 1992 Act entitled the appellant to interest on a claim accepted under the 1982 Act. In particular, it determined that the earnings related compensation payable to him was to be regarded as calculated as “compensation based on weekly earnings”, those being the words used in s 72 of the 1992 Act. The Full Court determined that the appellant was entitled to claim interest pursuant to s 72 of the 1992 Act, but was not in a position determine the date from which the interest was payable. This was because there was a factual dispute upon which the Court could not rule. The determination relevant to this case is that interest under s 72 can be payable for a period prior to 1 July 1992. It is also apparent that the Court accepted interest could run from a date before that on which the Corporation accepted a claim. 
[21]
The Howley case was referred to in the judgment under appeal. In that case, the District Court Judge determined that the appellant was only entitled to interest on compensation arrears, backdated to 1980 but paid in 1998, from 1 July 1992, the date when the 1992 Act came into force. The District Court Judge rejected a contention that interest should be calculated from March 1985, which was the date when the appellant said the Corporation was in possession of all information necessary to enable it to make the proper calculation of the earnings related compensation. John Hansen J considered conflicting decisions of the District Court given since the SB case. Despite a submission made in this case, I see no conflict between the decision in Howley and that in SB. Both determined that interest was payable prior to 1 July 1992. In Howley, John Hansen J determined that interest should run from 28 March 1985, the date on which the Corporation was in possession of all information necessary to enable it to make a proper calculation. A factual finding made in Howley, which is relied upon by Mr Barnett, is that the Corporation, once it received the C3 form, had on its own file all necessary information. I see that finding as confined to Howley, as each case will turn on its own facts. 
[22]
Interest was also considered by Gendall J in Wardle v Accident Rehabilitation and Compensation Insurance Corporation (HC Wellington, AP134/02 of 18.10.02). In that case, the claim was lodged in 1992, declined by the Corporation, but granted on appeal by the Accident Compensation Appeal Authority in a decision dated 4 December 1998. In the intervening years, Mr Wardle received a sickness benefit from the Department of Social Welfare (WINZ). In the District Court, the Judge determined that interest should be calculated from 25 February 1999. On appeal, Gendall J considered whether s 72 of the 1992 Act or s 101 of the 1998 Act applied. He determined that s 72 applied because of the provisions of s 458 of the Act. His Honour accepted and applied the law as stated in Howley. At issue in Wardle was whether “all necessary information to enable the calculation of payments” as used in s 72 included particulars of the benefit paid to Mr Wardle by WINZ. Gendall J held that if the Corporation had considered the interest position prior to the 1998 Act coming into force on 1 July 1999, the answer would have been no. However, when it considered the matter on 17 July 1999, the 1998 Act was in force and s 373 of that Act made it mandatory to make refunds to WINZ. As such, the information from WINZ was part of the information necessary before the calculation could be made. Consequently, the Corporation's cross-appeal succeeded and interest did not commence until one month after WINZ had provided the information. 
[23]
The factual situation in Wardle suggests that His Honour accepted that the Corporation did not have the necessary information to enable it to make the calculation until 17 July 1999. This was after the Appeal Authority's decision which was received by the Corporation on 14 January 1999, and after it received details of the appellant's pre-accident earnings on 11 March 1999. The Corporation assessed the amount of earnings related compensation on 20 April 1999, a date before the 1998 Act came into force. Details of the sickness benefit received from WINZ were not provided until 17 July 1999, and it was because of the law in force on that date that His Honour determined that this information was part of the “information necessary to enable calculation of payment” under s 72. All three payments made to Mr Barnett were paid before 1 July 1999. The WINZ information was received before that date and not after, as it was in Wardle. The full factual situation may not be set out in the Wardle judgment, but if it is, I find some difficulty with applying the decision. By 11 March 1999, the Corporation had all information necessary to calculate the payment in accordance with the then statutory provisions in force at that time. It should have made payment by 11 April 1999 before the 1998 Act came into force. However, it is not necessary to go into this matter further because the only relevance of Wardle to the present case is the obiter comment that if the interest position is considered prior to the coming into force on 1 July 1999 of the 1998 Act, the WINZ information is not part of “all information necessary” as, at that time, there was no mandatory obligation to make a refund to WINZ. 
The appellant's submissions 
[24]
In detailed and complex submissions, Mr Barnett's counsel submitted that the Judge wrongly interpreted s 72 and refused to follow the decision of Howley. The fundamental error was said to be a finding that it was necessary for the Corporation to have determined that Mr Barnett had an entitlement to weekly compensation before interest could run. Such a finding, it was submitted, would encourage the Corporation to benefit from its own delays. Put another way, the Judge determined that the relevant date from which s 72 applied was the date that the Corporation confirms the existing information, or verifies the benefits. 
[25]
There were detailed submissions on the meaning of various words in s 72, and to the extent they are relevant, they will be considered later in this judgment. 
[26]
It was submitted that the current practice is for an applicant not to apply for a benefit until a claim has been accepted. It is therefore inequitable if the Corporation can delay accepting a claim and then take the point, when interest is claimed, that it did not have all the necessary information, namely, an application for a benefit, at the time it accepted the claim. 
[27]
A further submission was that the Judge wrongly applied s 101 of the 1998 Act when the original decision and the review were under s 72 of the 1992 Act. The relevance of this point is that under s 101, interest does not commence until the Corporation has all information necessary to enable it to calculate and make the payment whereas under s 72, it only needs the information necessary to calculate the payment. It was submitted that the Judge had determined that the Corporation could not “make” the payment on the information it had, whereas the test was whether it could “calculate” the payment. 
[28]
There was a further submission in respect of the time limits which are now imposed under the 1998 Act. On my view of the matter, this submission does not advance Mr Barnett's case as the matter is to be determined under the provisions of the 1992 Act. 
The respondent's submissions 
[29]
As this appeal is confined to a question of law, the Corporation's position is that the issue is the correct interpretation of s 72 of the 1992 Act, and, in particular, the construction to be placed on the following phrase: 
“ … after the Corporation … has received all information necessary to enable calculation of the payment; ”
[30]
Counsel submitted that the meaning of the word “payment” was crucial to the interpretation of the term “information necessary to enable calculation of the payment.” The Corporation's position is that the word “payment” relates to the compensation to be paid and not the calculation of “weekly compensation”. If that construction is applied, the word means the backdated amount of weekly compensation payable for the period from 1976 to 1988. A consequence of this interpretation would also be that details of any benefit from WINZ, which the Corporation determined to refund, would need to be taken into account before the amount of the “payment” could be assessed. 
[31]
Emphasis was placed by counsel on the term “all information necessary.” The Corporation's position is that the determination of whether the claimant has cover under the Act is an essential pre-requisite. Counsel submitted that if all necessary information was not provided until after the issue of cover had been determined, then the interest entitlement could not commence until after cover had been granted. On the other hand, if the Corporation denies cover, but nevertheless at that time has had supplied to it all necessary information for it to determine cover, and cover is subsequently granted on review or appeal, the claimant would be entitled, from the date that the Corporation had all necessary information, to interest irrespective of the fact that cover was not granted until some time later. I accept that this is a correct submission. The question of the entitlement to interest is not determined by the date on which cover is granted. It is determined by the date that the Corporation had all information necessary to determine whether cover should be granted. If the Corporation declines cover, and an appeal subsequently grants cover, on the same information which the Corporation had at the time it declined, interest commences from the date on which the Corporation received the necessary information. 
[32]
Counsel submitted that to determine whether the Corporation has all information necessary, it is necessary to analyse the requirements under s 59 of the Act at the relevant time. On this basis, “all information necessary” included information which would enable the Corporation to establish: 
(a)
the claimant had suffered an incapacity due to personal injury; 
(b)
the claimant was an earner at that time; 
(c)
the date of the accident. This is because compensation is only payable for “any period after the expiration of the working week comprising the day of the accident and the six days thereafter”
(d)
the claimant's “relevant earnings”. It is necessary to establish relevant earnings because the claimant is entitled to compensation in respect of that loss “at the rate of 80% of the amount of his loss of earning capacity due to the injury.” 
If the Corporation has not received the necessary information to establish any one of these criteria, it cannot, in counsel's submission, be liable for interest. It would not be then possible for the Corporation to calculate the “payment” which it is required to pay the claimant. 
[33]
It was further submitted that I should not follow the obiter remarks in Wardle and determine that prior to 1 July 1999, it was not necessary to take into account any benefits paid by WINZ to the claimant. This is because s 78 of the Act empowered the Corporation to repay the amount of a benefit to WINZ it if had made a benefit payment in the interim period. Although repayment was not mandatory, the submission was that at the time the Corporation invariably repaid WINZ, the amount of the earnings related compensation for the period. There would be very few situations where it would not be justified in doing so as WINZ was assisting the claimant until such time as the claim against the Corporation was resolved. 
[34]
Submissions made by counsel on the necessary information in this case to determine cover, the date of the accident, whether Mr Barnett was an earner, and his relevant earnings will be considered later in this judgment. There was also a submission that Mr Barnett had not provided all the details of his post-accident earnings and this matter will also be addressed. 
Discussion 
[35]
In my view, s 72 of the 1992 Act is the section applicable to Mr Barnett. Section 458 of the 1998 Act provided that notwithstanding the repeal of the 1992 Act, this section “continues in effect as if that section had not been repealed.” It is therefore not necessary to determine whether s 101 of the 1998 Act is in different terms from s 72 of the 1992 Act. 
[36]
I accept the law as stated in SB and Howley where it was determined that interest can commence to run before 1 July 1992, and can also commence to run before the Corporation accepts cover. However, it can only commence to accrue prior to the Corporation accepting cover if the Corporation had, prior to accepting cover, “all information necessary to enable calculation of the payment.” The crux of the issue is the meaning of the words “all information necessary to enable calculation of the payment” as they appear in s 72. In this case the WINZ refund status is also particularly relevant. 
[37]
Both counsel made submissions on the meaning of “any payment” as used in s 72. In my view, unless the WINZ refund needs to be taken into account for the purposes of interpreting s 72, “any payment” is the difference between the total amount of compensation which the Corporation determines is payable less any payments made on account of that compensation. Thus, if an amount of $100,000 is the amount of compensation due to the date that the determination is made, and only $75,000 has been paid prior to that date, interest is payable on the balance from one month after the Corporation has received all information necessary to enable the calculation to be made. If payment is made within the one month period, interest is not payable. I accept what is apparent from Howley and other cases, that “the date on which payment should have been made” is the date one month after the Corporation has received all information necessary. 
[38]
The determination of what constitutes “all information necessary” must depend on the facts of each case. In Howley it was the receipt of the C3 form. In other cases, and the present case is such a case, the provision of the C3 form will not be sufficient. Without necessarily accepting that the list is exclusive in every case, I accept the submissions on behalf of the Corporation that in the particular case it was necessary to determine: 
(a)
That there had been an incapacity due to personal injury; 
(b)
The personal injury was caused by an accident; 
(c)
The date of the accident; 
(d)
That Mr Barnett was an earner during the relevant period; and 
(e)
Mr Barnett's relevant earnings during the period. 
[39]
The date upon which the Corporation had all information necessary would not usually be the date of a review or an appeal decision. It is the date on which the Corporation was in possession of the necessary information to make the same decision as the Reviewer or the appeal Court has made. Although the Judge in this case did suggest that the relevant date depended on the determination of the entitlement, he in effect, determined the matter on the basis that the Corporation was in possession of all information necessary as from 12 May 1998, the date of Mr Barnett's solicitor's letter to it confirming that Mr Barnett was not in receipt of any social welfare benefit and that the correct figure of relevant earnings was $250 per week. That determination raises two issues of law. First, was the receipt of the WINZ information part of the information necessary, and secondly, does the fact that a corrected higher relevant earnings figure was provided relieve the Corporation of an obligation, if all other necessary information had been provided, to have made an earlier payment on the basis of the information then provided. 
[40]
Wardle considered a similar situation in respect of the refund to WINZ. There, it was stated that if the Corporation considered the matter before 1 July 1999, as was the case here, WINZ's refunds were not relevant because they were not mandatory at that stage. Gendall J's reasoning, which was obiter dicta, was that what had to be calculated under s 72 was the payment of compensation based on weekly earnings to which a claimant was entitled. The discretion to make a refund to WINZ might not be exercised. In other words, the required payment was capable of calculation under s 72, and it was only after that calculation had been made that the question of whether to make a refund to WINZ needed to be considered. Counsel for the Corporation submitted that these obiter comments were not correct. In his submission the Corporation was not able to calculate the compensation payment until it received confirmation that no benefit was received until it has details of any benefits received. 
[41]
Under s 59 of the Act there was a mandatory obligation on the Corporation to “pay him earnings related compensation in respect of that loss at the rate of 80% of the amount of his loss of earning capacity due to the injury.” The payment which the Corporation was obliged to make was the earning related compensation as a proportion of the loss. Under s 72 of the 1992 Act, interest was payable on “any payment of compensation based on weekly earnings to which a claimant is entitled … ”. The combined effect of s 59 of the Act and s 72 of the 1992 Act was that interest was payable on the compensation payment based on weekly earnings. The effect of these two sections was that a claimant was entitled to an amount calculated under s 59 and once that amount was calculated, was entitled to interest on it if it was not paid within two months. The necessary information to calculate the compensation payment under s 59 did not include any discretionary refund which the Corporation made to WINZ notwithstanding it may have had a practice of exercising the discretion in favour of WINZ. 

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