Skip to Content, Skip to Navigation
Advertisement

Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters



Accident Compensation Cases

Social Security Appeal Authority Decision No 090/05 (SSAA, 19/09/05)

Judgment Text

DECISION 
Ms M Wallace - Chairperson, Ms P McKelvey - Member, Mrs H Tukukino - Member
Introduction 
[1]
The appellant appeals against a decision of the Chief Executive upheld by a Benefits Review Committee to directly deduct child weekly compensation payments paid by the Accident Compensation Corporation from the appellant's entitlement to benefit. 
Background 
[2]
The appellant was in receipt of Domestic Purposes Benefit from October 1993 to 28 April 2004 when her benefit was cancelled. Prior to her benefit being cancelled the appellant's benefit was reduced as a result of her part time employment. Three dependent children were included in her benefit. The children were a daughter now age 14 years and twins age 12 years. 
[3]
The appellant's former husband and the father of her three children died in a motor vehicle accident on 14 May 2003. The children became eligible for non taxable child care payments and weekly child compensation payments from ACC. 
[4]
Child care payments totalling $147.24 were granted by ACC from 7 January 2004. The payments were backdated to 10 May 2003. 
[5]
Child weekly compensation payments paid at $56.86 nett for each of the appellant's children ($170.58 per week) were granted on 19 March 2004. The payments were backdated to 14 May 2003. 
[6]
The appellant contacted the Ministry and advised of her child care payments. The Ministry made a decision to charge these payments as income against the appellant's entitlement to benefit. The appellant sought a review of that decision. 
[7]
In the process of conducting the internal review it became apparent that child weekly compensation payments were being received. The appellant was advised that the weekly compensation payments would need to be directly deducted from her entitlement to a Domestic Purposes Benefit in accordance with s 71A of the Act. 
[8]
Following receipt of this advice a review of the appellant's entitlement to benefit was carried out and it was assessed that the appellant had been overpaid $9,633.84 in respect of the period 10 May 2003 to 27 April 2004. Her benefit was cancelled as the money received from ACC had the effect of completely abating her entitlement to benefit. 
[9]
The appellant sought a review of the decisions to direct deduct the weekly compensation payments and establish the overpayment. 
[10]
In the course of the internal review a decision was made not to recover the debt of $9,633.84. The issue to deduct the child weekly compensation payments was referred to a Benefits Review Committee. 
[11]
The Benefits Review Committee upheld the decision of the Chief Executive. The appellant then appealed to this Authority. 
[12]
At the hearing the appellant explained that she and her former husband had been separated prior to his death. Prior to his death her husband had visited the children at their home. He had occasionally helped with costs relating to the children such as their swimming costs. He had also purchased birthday and Christmas presents for the children, purchased fire works at Guy Fawkes and Easter eggs at Easter time. He had also from time to time assisted with items such as shoes. 
[13]
As a result of the decisions by the Chief Executive to cancel her Domestic Purposes Benefit because of the compensation payments received, the appellant said she had had to increase her hours of work to make ends meet. She has increased her part time employment from 15.5 hours to 22 hours per week. The appellant noted however that she does not get paid during the holidays and overall she considers that she is worse off. As her eldest daughter is now 14 the child care payment for her is no longer paid. 
[14]
On behalf of the appellant it was submitted that: 
[a]
The child weekly compensation payments to which the appellant's children are entitled are not related to loss of earnings or loss of potential earnings of the appellant and cannot therefore be treated as income for benefit purposes under s 71A of the Social Security Act 1964. 
[b]
There are two aspects of this submission as follows: 
[i]
Within the context of s 71A(3)“weekly compensation” is directly related to the earning capacity of the beneficiary or the person entitled to receive it. 
[ii]
Section 71A refers to a person “who receives or is entitled to receive weekly compensation”. The appellant has not suffered an injury or an accident that precludes her from working. It could not be said that the appellant is entitled to weekly compensation, nor does she receive weekly compensation for any loss of earnings or loss of potential earning capacity. 
[iii]
“Loss of earnings or loss of potential earning capacity” suggests that the compensation is granted for “the loss of some action on the part of the beneficiary”. That is the earnings are attained by the beneficiary's own efforts. Similarly where the person receives compensation on behalf of a spouse or dependent child the specific definition of ‘weekly compensation’ in s 71A connotes compensation for some injury or accident that has precluded the person from attaining earnings by their own efforts. The appellant has not suffered a loss of earnings or loss of earning capacity, nor have the children suffered a loss of earning capacity. 
[iv]
The appellant receives the weekly compensation payments by virtue of s 125 of the Injury Prevention, Rehabilitation and Compensation Act 2001 which provides that their entitlement must be paid to the caregiver if the child is under 16 years. 
[c]
The second limb of the argument is that since the money is the children's entitlement as prescribed by statute it cannot be taken as the appellant's income and abated against her benefit. 
[i]
The weekly compensation payments are made pursuant to Clause 70 of the Schedule 1 of the Act. 
[ii]
The section states explicitly that the Corporation must pay weekly compensation to the child of the deceased insured. It is the child's entitlement which is being paid due to the loss of the benefit of income from the death of a caregiver. It is suggested that the appellant has not suffered any loss of benefit and is not entitled to any compensation. It is not the appellant who is entitled to the compensation but the children. 
[iii]
Despite the direction in s 125 of the IPR & C Act that the money must be paid to a caregiver the money is still the statutory entitlement of the appellant's children and not the appellant's entitlement. This is bolstered by the provisions of subs (3) which provide that the money must be applied for the maintenance, education, advancement or benefit of the children. 
[iv]
In this particular case the money is paid into the children's bank accounts and the children have been allocated tax numbers. 
[d]
The abatement of the appellant's benefit has led to an absurdity. Because the children's entitlement exceeds the rate of the appellant's Domestic Purposes Benefit, she has been forced to utilise the children's money to survive. The purpose of the legislation is to compensate the children for the loss of economic benefit resulting from the death of one of their caregivers. Had the children's father not died the appellant would still be in receipt of Domestic Purposes Benefit and the children would have the economic benefit of both parents. 
[e]
The effect of the abatement of the applicant's benefit is to totally negate any benefit the children might receive from the payments since the applicant is in a position where she has no choice but to use the payments for daily living which she would not have to do if she was still in receipt of a Domestic Purposes Benefit. 
[f]
The meaning of “payable to the person” in s 71A is related to the entitlement to compensation payable under the IPR & C Act 2001. In this instance “the person” to whom compensation is payable is the children rather than the appellant. 
[15]
On behalf of the Chief Executive it is submitted that: 
[i]
Child weekly compensation is directly related to the loss of earnings Likewise the definition of ‘weekly compensation’ in s 72A(3) relates to loss of earnings. 
[ii]
Prior to his death the children's father was paying child support. 
[iii]
If the Ministry were to accept the submission of the appellant that “weekly compensation” does not include weekly compensation payments made to the children the provisions of s 71A(1)(a) and (b) would be a nullity. 
[iv]
The specific provisions of s 71A(1)(a) and (b) clearly envisage that compensation payments made in respect of either a spouse or a dependent child must directly reduce the rate of benefit payable to any applicant. 
[v]
To hold that the meaning in subs (2) should be read down so that only the weekly compensation payable to the applicant for a benefit (and not including the compensation payable in respect of either a spouse or a dependent child) would mean that the provisions of s 71A(a) and (b) would be of no effect. 
[vi]
Section 125 of the Accident Compensation Act provides that the Corporation must pay the compensation payments to the caregiver of a child under the age of 16. If in fact the payments are being made to the children then the Corporation is breaching its own legislation. 
Legislation Relevant to this Appeal 
[16]
Section 71A of the Social Security Act 1964 provides: 
“71A
Deduction of weekly compensation from income-tested benefits 
(1)
Subject to subsection (4), this section applies to a person who is qualified to receive an income-tested benefit (other than New Zealand superannuation or a veteran's pension [unless the veteran's pension would be subject to abatement under section 74D of the War Pensions Act 1954]) where— 
(a)
the person is entitled to receive or receives weekly compensation in respect of the person or his or her spouse [or partner] or a dependent child; or 
(b)
the person's spouse [or partner] receives weekly compensation. 
(2)
Where this section applies, the rate of the benefit payable to the person must be reduced by the amount of weekly compensation payable to the person. 
[(3)
In this section, weekly compensation means weekly compensation for loss of earnings or loss of potential earning capacity payable to the person by the Corporation under the Injury Prevention, Rehabilitation, and Compensation Act 2001.] 
(4)
Subsection (2) does not apply where the person— 
(a)
was receiving the income-tested benefit immediately before 1 July 1999 and continues to receive that benefit; and 
(b)
was receiving compensation for loss of earnings or loss of potential earning capacity under the Accident Rehabilitation Compensation and Insurance Act 1992 immediately before that date; and 
(c)
section 71A(2) of this Act (as it was before it was repealed and substituted by the Accident Insurance Act 1998) required the compensation payments to be brought to charge as income in the assessment of the person's benefit. ”
[17]
Clause 70 of Schedule 1 of the Injury Prevention Rehabilitation and Compensation Act 2001 provides: 
“70
Weekly compensation for child 
(1)
The Corporation is liable to pay weekly compensation to a child of a deceased claimant. 
(2)
Compensation payable under this clause is payable from the date of the claimant's death at the rate of 20% of— 
(a)
the compensation for loss of earnings to which the claimant would have been entitled at the end of 5 weeks of incapacity, had he or she lived but been totally incapacitated; or 
(b)
the compensation for loss of potential earning capacity to which the claimant would have been entitled at the end of 6 months of incapacity, had he or she lived but been totally incapacitated. 
(3)
Subclause (2) is subject to clause 74. 
(4)
The Corporation must not cancel or suspend the child's weekly compensation because of the age that the claimant would have reached if he or she had not died. 
(5)
The child ceases to be entitled to weekly compensation on the later of— 
(a)
the end of the calendar year in which the child turns 18 years; or 
(b)
if the child is in full-time study at a place of education, the earliest of ceasing the study, completing the study, or turning 21 years. 
(6)
The Corporation must double the compensation payable for each parent if both the child's parents have died. ”
[18]
Section 125 of the Injury Prevention Rehabilitation and Compensation Act 2001 provides: 
“125
Corporation to pay amount for child to caregiver or financially responsible person 
(1)
This section applies if an entitlement (other than weekly compensation payable under clause 32 of Schedule 1) provided to a claimant who is not yet 16 years old is solely a payment of money. 
(2)
The Corporation must make the payment— 
(a)
to a person who is caring for the claimant; or 
(b)
if the Corporation considers that it would not be appropriate to make the payment to such a person, to another person or to trustees who, in either case, the Corporation considers will apply the payment as required by subsection (3). 
(3)
A person to whom a payment is made under subsection (2) must apply it for the maintenance, education, advancement, or benefit of the claimant. 
(4)
The Corporation is not under an obligation to see to the application of any money paid under this section, and is not liable to the claimant in respect of any such payment. ”
Our Findings 
[19]
Ms ******* on behalf of the appellant indicated at the outset that the appellant did not wish to pursue the issue relating to child care payments. The issue before the Authority then relates solely to whether or not the weekly compensation payments payable to the appellant's children should be deducted from the appellant's entitlement to benefit. 
[20]
The first issue is to consider whether the payments made pursuant to clause 70 of Part 1 of the IPR & C Act 2001 fall within the definition of ‘weekly compensation’ contained in s 71A(3) of the Social Security Act 1964. S 71A(3) requires that the compensation paid be for loss of earnings “payable to the person”
[21]
Clause 70 of Part 4 of Schedule 1 of the IPR & C 2001 Act describes the compensation provided under that clause as “weekly compensation”. Clause 70(2)(a) describes the compensation payable as “compensation for loss of earnings”. It provides that the rate of compensation payable is 20% of “the compensation for loss of earnings”. In our view it is clear that compensation payable under this provision is weekly compensation for a loss of earnings. 
[22]
Section 71A(3) of the Social Security Act 1964 goes on to provide that the compensation must be payable “to the person”. Ms ******* submits that the loss of earnings must be that of the person to whom compensation is paid. No such qualification is made in subs (3) itself. Moreover we do not think that the subsection can be read in isolation from subs (1). Subsection (1) provides that all of the provisions of s 71A apply to a person receiving an income tested benefit who also receives weekly compensation in respect of herself, her spouse or her children. 
[23]
We do not think that “weekly compensation” is limited to compensation for loss of earnings in respect of the beneficiary's own efforts. 
[24]
Moreover we note that the weekly child compensation payments are “payable to the person” namely the appellant by virtue of the provisions of s 125 of the IPR & C Act 2001. If in fact the payments are currently being paid into bank accounts in the children's names then the Corporation needs to be notified that it is in breach of the relevant legislation. 
[25]
We are satisfied therefore that the child weekly compensation payments are weekly compensation for loss of the earnings of the children's father. They are payable to the appellant. They therefore fall within the definition of ‘weekly compensation’ payments provided in s 71A(3) of the Social Security Act 1964. 
[26]
The subsections of s 74A cannot be read in isolation from each other. Subs (1) refers to s 74A applying “to a person” in the circumstances set out in subss (1)(a) and (b). Subsection (3) defines weekly compensation payable “to the person”. It seems reasonable to infer that this refers back to the person in the circumstances described in subs (1). Finally, subs (2) provides for what happens when the person described in subs (1) receives weekly compensation, namely the dollar for dollar deduction regime. 
[27]
The appellant is a person who receives weekly compensation in respect of her dependent children and the rate of income tested benefit she receives must therefore be reduced by the amount of weekly compensation payable. 
[28]
We think it useful to consider the nature and purpose of child weekly compensation payments. Some insight into this can be seen from the provisions of s 125 of the Act which provides that a person to whom a payment is made under subs (2) must apply it for the maintenance, education, advancement or benefit of the claimant. The amount payable is 20% of the amount that the deceased would have been entitled to had he lived and received compensation for loss of earnings. It appears to us that this provision is in effect a recognition of the deceased person's ongoing obligation to provide support for their children. In this particular case prior to the children's death their father was paying child support which was never seen by the appellant but which was retained by the State. The provision for child weekly compensation in effect replaces the child support previously paid but because of the amount involved, because the payments are regarded as being the entitlement of the children and because they are payable directly to the children's caregiver they appear to those who receive them to be different. They are in effect akin to the child support payments made by the children's father prior to his death. 
[29]
In our view the Chief Executive is obliged by the terms of s 71A to deduct the child weekly compensation payable to the appellant from her entitlement to a benefit and the rate at which the deduction is applied is the dollar for dollar rate prescribed by s 71A(2). 
[30]
The appeal is dismissed. 

From Accident Compensation Cases

Table of Contents