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Accident Compensation Cases

Re SSA126/05 (SSAA, 14/05/07)

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: 
(i)
deduct the weekly compensation received by the appellant from her entitlement to a Domestic Purposes Benefit and 
(ii)
to establish and recover an overpayment of $9,222 in respect of Domestic Purposes Benefit paid in the period 6 January 2003 to 18 July 2004 
Background 
[2]
The appellant is aged 21 years. She has one dependent child aged three years. 
[3]
On 19 July 2001 and 25 September 2002 the appellant made application for Independent Youth Benefit and Sickness Benefit Hardship respectively. In both applications the appellant advised that she would be receiving ACC weekly compensation payments. As a result of this advice her ACC payments were directly deducted from payments of those benefits. 
[4]
On 6 January 2003 the appellant applied for Domestic Purposes Benefit. In her application the appellant stated that her ACC payments had ceased on 7 December 2002 that being the date she turned 18 years of age. 
[5]
On 2 November 2003 when the appellant completed a Work and Income New Zealand (WINZ) renewal form for the year ending 12 October 2003, in response to a question as to whether or not she had received money from any other source over the previous 12 months the appellant ticked the “No” box. Examples of income from other sources included accident compensation. 
[6]
For reasons that have not been explained in the s 12K report the Chief Executive apparently became aware that the appellant was receiving ACC payments in 2004. As a result information was obtained from ACC relating to the appellant's payments. 
[7]
It transpired that the appellant had ceased receiving ACC payments on 31 December 2002 which was the end of the year in which she reached 18 years. However her ACC payments were reinstated in May 2003 and backdated to 1 January 2003 on the basis that she had commenced full time study and ACC legislation permitted child compensation payments to be made to a child in full-time study until the age of 21 years. 
[8]
As a result of this information a review of the appellant's entitlement to Domestic Purposes Benefit was carried out. An overpayment of Domestic Purposes Benefit amounting to $9,224.72 was established in respect of the period 6 January 2003 to 18 July 2004. The appellant was advised of this decision by letter dated 27 September 2004. 
[9]
The appellant sought a review of decision. The matter was reviewed both internally and by a Benefits Review Committee. The Benefits Review Committee upheld the decision of the Chief Executive. The appellant then appealed to this Authority. 
Case for the Appellant 
[10]
In evidence the appellant said that her father had died when she was ten years old and she had been supporting herself since the age of 15 years. After making her application for a Domestic Purposes Benefit she had many different case managers at Work and Income New Zealand (WINZ). The appellant said that all of these case managers knew about her ACC payments but did not seem to know whether or not her ACC payments should be declared. One case manager had indicated that the appellant should declare the payments but then changed her mind. The appellant said that she had called the Ministry's call centre but had been told that the payments should not be declared because they were not for loss of earnings. 
[11]
The appellant said her own view was that they should not be deducted from her entitlement to a benefit as they were not for loss of earnings but for the loss of her father. He may have been able to assist her in a number of ways had he been alive. 
[12]
The appellant said that she owns her own home but the mortgage is equal to the value of the property. She supplements her income from benefit by working as a cleaner. Repayment of the debt would not be possible. 
[13]
On behalf of the appellant Mr Dawson requested that the Authority take into account detailed written submissions presented to the Benefits Review Committee on the issue of whether or not the ACC payments should be deducted from the appellant's benefit payment. 
[14]
In addition he submitted:- 
(i)
The appellant's genuinely held belief was that the money she received was not for loss of earnings but for the loss of comfort and support of a father. 
(ii)
The Ministry was aware of the payments but did not insist on recording information about the payments. This was an error or omission on the part of the Ministry. 
(iii)
The appellant has no prospect of repaying the money. 
[15]
The written submissions prepared by the Beneficiary Advisory Service for the Benefits Review Committee hearing argue that the deduction regime contained in s 71A relates solely to weekly compensation payments paid for loss of earnings in respect of the actual beneficiary. Payments made under clause 70 of the First Schedule of the ACC Act are for loss of parental support for a dependent child rather than loss of earnings. 
[16]
It is submitted that the circumstances giving rise to the grant of weekly compensation to the appellant is entirely different from the circumstances giving rise to the entitlement to Domestic Purposes Benefit paid to her. Any principle that persons should not receive both benefit and compensation for the same period in respect of the same circumstances does not apply in this case. 
[17]
The fact that the appellant may have claimed extra social security entitlements if compensation had been directly deducted from her Domestic Purposes Benefit should be taken into account in calculating the appellant's entitlement. 
Case for the Ministry 
[18]
On behalf of the Chief Executive it is submitted that: 
[a]
The Authority has previously found that payments made pursuant to s 70 of the First Schedule of the Injury Prevention, Rehabilitation and Compensation Act 2001 (IPR&C Act) come within the definition of weekly compensation contained in s 71A(3) — see Decision Nos. 90/05 and 60/06. 
[b]
In this case the appellant received an income tested benefit. 
[c]
She also received weekly compensation. 
[d]
As a result the rate of compensation payable must be reduced by the amount of compensation received pursuant to s 71A(2) of the Social Security Act 1964. 
[e]
If the Ministry had known about the continuation of the ACC payments then they would have been deducted. There is no evidence of any error in this case. It is not a highly unusual case. The appellant made a deliberate choice not to declare the ACC payments. 
Legislation relevant to this Appeal 
[19]
Section 71A of the Social Security Act 1964 provides as follows:- 
“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.]] ”
[20]
Section 125 of the Injury Prevention, Rehabilitation and Compensation Act 2001 (IPR&C Act 2001) provides as follows:- 
“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. ”
[21]
Clause 70 of Part 4 of Schedule 1 of the IPR&C Act provides as follows:- 
“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. ”
Our Findings 
Weekly Compensation 
[22]
The first issue in this case is to consider whether the payments made pursuant to clause 70 of Part 4 Schedule 1 of the IPR&C 2001 Act fall within the definition of weekly compensation contained in s 71A(3) of the Social Security Act 1964. 
[23]
Section 71A(3) of the Social Security Act 1964 defines weekly compensation as being “for loss of earnings or loss of potential earning capacity … ”
[24]
Section 6(1) of the IPR&C Act defines “weekly compensation” as follows: 
‘Weekly compensation’ means compensation for loss of earnings, or loss of potential earning capacity, and compensation for the spouse (or partner), child or other dependent of a deceased claimant, that is payable by the Corporation. ”
[25]
Clause 70 of Part 4 of Schedule 1 of the IPR&C Act 2001 describes the compensation provided under that clause as weekly compensation. 
[26]
Clause 70(2)(a) of Part 4 of Schedule 1 of the IPR&C Act 2001 which relates to child weekly compensation provides that the rate of compensation payable is based on 20% of “the compensation for loss of earnings … ”
[27]
We do not think that compensation payments payable under clause 70 are compensation for the loss of comfort and emotional support of a parent. In Decisions 090/05 and 060/06 we noted that the purpose of these payments can be seen from the provisions of s 125 of the IPR&C Act. This section provides that a person to whom a payment is made under subs (2) must apply the payments for the maintenance, education and advancement or benefit of the child. 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 recognition of the deceased person's ongoing obligation to provide support for their children. They are payments for the loss of earnings of the deceased parent which would have been used to maintain the child if the parent was alive. 
[28]
Section 71A(3) of the Social Security Act 1964 further provides that the weekly compensation payments must be payable “to the person”. It is submitted on behalf of the appellant 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. In the context of s 71A“the person” refers to the person receiving an income tested benefit. 
[29]
We are satisfied that child weekly compensation payments are made for the loss of earnings of a childs parent. They therefore fall within the definition of weekly compensation. They are payable to the appellant who is in receipt of an income tested benefit. They must therefore be deducted from her entitlement to benefit pursuant to s 71A(2). 
Overpayment 
[30]
We then turn to consider whether or not we can direct that the overpayment not be recovered pursuant to the provision of s 86(9A) of the Act. 
[31]
In her submissions to the Benefits Review Committee the appellant noted that she had had lengthy conversations with ACC personnel and family members and as a result had decided not to mention her ACC payments on her review form. She states “As I knew very well that my previous case managers and WINZ as a whole, did not really understand why I felt I am entitled to these payments, or indeed the very reason for receiving them.” 
[32]
Before this Authority the appellant claimed that her WINZ case managers all knew that she was on ACC and that those case managers had either told her that they did not know whether she should declare her payments or that she should not declare the payments. This version of events differs significantly from the evidence given at the Benefits Review Committee hearing. 
[33]
ACC payments had been deducted from the appellant's benefit for approximately 18 months before her application for Domestic Purposes Benefit. Her statements to the Benefits Review Committee and to this Authority make it clear that she was unhappy with that deduction and could not understand the reason. 
[34]
We think it unlikely that multiple WINZ case managers would tell the appellant not to declare the income. 
[35]
We have come to the conclusion that we do not believe the appellant's claims that she was told not to declare the payments by Ministry staff. We think that she chose not to advise the Ministry that she had resumed receiving ACC payments and that she failed to disclose the receipt of payments on her review form because she disagreed with the payments being deducted. 
[36]
In considering the criteria under s 86(9A) of the Act we are first required to consider whether or not the overpayment arose as a result of an error by an officer of the Ministry. It has been suggested that because the Ministry was aware of the appellant's receipt of ACC in the past it ought to have been aware of her receipt of ACC during the period in question. This submission ignores the fact that the appellant specifically advised the Ministry in her application for Domestic Purposes Benefit that she ceased receiving ACC on 7 December 2002. We are not satisfied that there is any evidence to support the proposition that the appellant advised the Ministry that she had resumed receiving ACC payments. Moreover given the appellant's clear statement that she was not receiving the payments there was no obligation on Ministry staff to inquire further. 
[37]
In our view the overpayment did not occur as a result of an error by an officer of the Ministry. The overpayment occurred as a result of the appellant's failure to inform the Ministry when her ACC payments resumed or to disclose the payments in the subsequent review form. As the criteria of s 86(9A) cannot be made out in this case we cannot direct that the debt not be recovered pursuant to the provisions of s 86(9A). 
[38]
In Decision No. 076/06 the Authority noted that s 86(1) confers on the Chief Executive a discretion to commence an action or commence deduction from any benefit payable to a person to recover a debt. While s 86(1A) specifically provides that subs (1) is subject to subss (9A) and (9B) and to any regulations made under s 132G the Authority is of the view that this simply meant that the Chief Executive could not bring proceedings or seek to deduct an amount from any benefit in circumstances where the criteria of s 86(9A) had been made out. It does not exclude the possibility of the Chief Executive deciding not to recover in circumstances other than those specifically covered by s 86(9A) and (9B). Nor does s 86A appear to have been made subject to subss 86(9A) and (9B). 
[39]
However given that Parliament has specified the circumstances in which a debt should not be recovered in s 86(9A) the occasions the Chief Executive should exercise his discretion not to take steps to recover a debt which does not meet the criteria of s 86(9A) must be limited. See Director General of Social Welfare v Attrill 1998 NZAR 368
[40]
We think the circumstances must be either highly unusual or there might be circumstances relating to the practicality of recovering the debt that would warrant the Chief Executive exercising his discretion not to recover the debt. We do not think that there is anything highly unusual about this case. The appellant may have been youthful and unwise at the time that the overpayment arose but we do not think that that on its own, particularly in the circumstances of this case, is a reason for not recovering the debt. The Ministry will need to negotiate a suitable rate of repayment with the appellant. 
[41]
The appeal is dismissed. 

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