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Accident Compensation Cases

Re SSA20/08 (SSAA, 21/07/08)

Judgment Text

Mr R D Burnard - Chairperson, Ms P McKelvey - Member, Mrs H Tukukino - Member
Mr **** appeals against a Ministry decision to establish and recover an overpayment of an Accommodation Supplement, Special Benefit and the outstanding balance of an advance payment of benefit amounting in total to $********** for the period ** March 1999 to ** September 1999 following the retrospective grant to him of weekly payments from the Accident Compensation Corporation. 
In March 1999 Mr **** applied for a Community Wage Sickness Benefit (now known as a Sickness Benefit) together with an Accommodation Supplement and subsequently applied for a Special Benefit. These were all granted. Mr **** told the Authority that at the time of making application for these benefits he had told the Ministry that he was applying for ACC. On 20 August 1999 he advised the Ministry that he had been granted ACC which he received in backdated payments at the rate of $****** per week from ** March 1999 to ** April 1999 and then $***** gross per week from ** April to ** September 1999. 
Work and Income New Zealand undertook a review of his benefit entitlement and ascertained that the nett rate of ACC weekly compensation payments exceeded the benefit rate. Total payments had been made to him of $******** of which $******** was reimbursed to Work and Income New Zealand from ACC leaving a balance of $*******. The appellant was advised by letter on 16 September 1999 that his entitlement had been reviewed and that it had been established that he had been overpaid and recovery of $4,007.00 was sought. 
Mr **** wrote to the then Associate Minister of Social Services on 31 October 1999 and was subsequently advised of his review rights. A review of decision application was noted by the Ministry to have been received on 18 January 2000 but it was not until Mr **** queried a reduction in his then benefit payments on 20 May 2004 that a further review of decision application form was completed. The matter was referred to a Benefits Review Committee at ****, which accepted the application out of time, but subsequently upheld the Ministry's decision to recover the overpayment. 
Case for the Appellant 
Mr **** had presented a somewhat discursive letter to the Authority in support of his appeal but at the hearing before the Authority on 16 June 2008 largely confined himself to an oral submission that he had never been informed by the Ministry as to the procedure which applied if he received ACC and in these circumstances there was no contract between him and the Ministry to repay the benefit should he receive accident compensation. He said that he had made it clear when he first obtained the benefit that he was seeking ACC but had a long battle to establish his entitlement. He said it was not until ACC had made payment to him that he was informed by the Ministry that he was required to refund that part of the monies paid to him which had not already been refunded by ACC. He emphasised that he had received no document prior to September 1999 telling him that a refund of benefit may be required and maintained that the Ministry had an obligation to tell him that he had to pay the money back so that it became a debt. His argument was that because there was no agreement he did not have to pay the money back. 
Case for the Ministry 
Mr R Dennett appearing for the Chief Executive of the Ministry of Social Development in a report prepared under s 12K4(e) of the Social Security Act 1964 set out the history of the Ministry's dealings with Mr **** and submitted that it was correct to establish and seek recovery of the overpayment during the period ACC weekly compensation payments were made. Mr Dennett traversed the relevant legislation and submitted that the decision to establish and seek recovery of the Accommodation Supplement and Special Benefit (the Community Wage Sickness Benefit having already been reimbursed by ACC) was correct and should be upheld. 
Relevant Legislation 
Provision is made where compensation or damages are recoverable by an applicant for a benefit at s 71 which reads: 
Special provisions where compensation or damages recoverable by applicant 
Notwithstanding anything to the contrary in [this Act] [or the Social Welfare (Transitional Provisions) Act 1990] [or Part 6 of the War Pensions Act 1954] [or the [New Zealand Superannuation and Retirement Income Act 2001]], where any person who has recovered or is entitled to recover compensation or damages from any other person in respect of any disability caused by accident or [disease or in respect of] [wrongful and unjustifiable dismissal] claims any benefit, the following provisions shall apply: 
Where any compensation or damages have been recovered, the [[chief executive]] may refuse to grant a benefit or may grant a reduced benefit for the period of disability [or loss of expectation of employment] in respect of which the compensation or damages have been paid or are deemed by the [[chief executive]] to have been paid; and 
Where any applicant for a benefit has a claim against any person to recover any compensation or damages, the [[chief executive]] may grant a benefit subject to the condition that the whole or such part of the benefit as the [[chief executive]] may require shall be repaid to the [[chief executive]] out of any compensation or damages that may thereafter be recovered, and in any such case the amount of the benefit or that part thereof, as the case may be, shall constitute a charge on the compensation or damages and may be recovered as a debt due to the Crown from the beneficiary or from any person liable for the payment of the compensation or damages. 
For the purposes of this section the expression compensation or damages includes any ex gratia payment made in settlement of or on account of a claim for compensation or damages[; but does not include any impairment lump sum received under Schedule 1 of the Injury Prevention, Rehabilitation, and Compensation Act 2001]. ”
The deduction of weekly compensation from income tested benefits is dealt with at s 71A which reads: 
Deduction of weekly compensation from income-tested benefits 
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— 
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 
the person's spouse [or partner] receives weekly compensation. 
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. 
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.] 
Subsection (2) does not apply where the person— 
was receiving the income-tested benefit immediately before 1 July 1999 and continues to receive that benefit; and 
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 
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. ”
The Chief Executive is empowered to review benefits by s 81 of the Act which reads: 
Review of benefits 
The [chief executive] may from time to time review any benefit in order to ascertain— 
Whether the beneficiary remains entitled to receive it; or 
Whether the beneficiary may not be, or may not have been, entitled to receive that benefit or the rate of benefit that is or was payable to the beneficiary— 
and for that purpose may require the beneficiary or his or her spouse [or partner] to provide any information or to answer any relevant question orally or in writing, and in the manner specified by the [chief executive]. If the beneficiary or his or her spouse [or partner] fails to comply with such a requirement within such reasonable period as the [chief executive] specifies, the [chief executive] may suspend, terminate, or vary the rate of benefit from such date as the [chief executive] determines. 
If, after reviewing a benefit under subsection (1) of this section, the [chief executive] is satisfied that the beneficiary is no longer or was not entitled to receive the benefit or is or was entitled to receive the benefit at a different rate, the [chief executive] may suspend, terminate, or vary the rate of the benefit from such date as the [chief executive] reasonably determines.] 
If, after reviewing a benefit under subsection (1) of this section, the [chief executive] considers the beneficiary is more appropriately entitled to receive some other benefit, the [chief executive] may, in his or her discretion, cancel the benefit the beneficiary was receiving and grant that other benefit commencing from the date of cancellation. ”
Recovery of overpayments is dealt with in s 86, the relevant subsections being (1), (1A), (1)B) and (9A) which read: 
Recovery of payments made in excess of authorised rates 
The chief executive, in order to recover a debt referred to in section 85A, may— 
bring proceedings in the name of the chief executive; or 
deduct all or part of that debt from any amount payable to that person by the department as a benefit or a student allowance; or 
in the case of a debt referred to in section 85A(d), deduct all or part of that debt from any payment of a grant of special assistance under a welfare programme approved under section 124(1)(d). 
Subsection (1) is subject to subsections (9A) and (9B), and to any regulations made under section 132G. 
Nothing in section 94B of the Judicature Act 1908 or any rule of law relating to payment by or under mistake prevents recovery of a debt under subsection (1). 
The chief executive may not recover any sum comprising that part of a debt that was caused wholly or partly by an error to which the debtor did not intentionally contribute if— 
the debtor— 
received that sum in good faith; and 
changed his or her position in the belief that he or she was entitled to that sum and would not have to pay or repay that sum to the chief executive; and 
it would be inequitable in all the circumstances, including the debtor's financial circumstances, to permit recovery. ”
Authority's Findings 
At first impression there is some support for Mr ****'s contention that he should have been informed when granted a benefit of the condition that the Chief Executive might require repayment by the provisions of s 71(1)(b) which provides that the Chief Executive may give a benefit subject to the condition that it shall be repaid out of any compensation and that “in any such case” the benefit may be recovered as a debt due to the Crown. But this Authority has consistently held that the subsection does not limit recovery of benefit payments to situations where a benefit has been granted subject to an express condition of repayment. In the case of M v Chief Executive of the Department of Work and Income High Court, Wellington Registry no. AP 335/01 judgment 27 August 2002 Justice Goddard in considering an appeal from this Authority (differently constituted) said (at page 10): 
“The Authority found no inconsistency between ss 71 and 71A and also found that s 71(1)(b) did not limit the recovery of benefit payments to situations where a benefit had been granted subject to an express condition of repayment in the event of compensation subsequently being awarded. I accept the Authority's view that s 71(1)(b) simply provides a discretion for the respondent to grant a benefit to an applicant who may also have entitlement to compensation. The provision is not in any way exclusive or limiting, rather it is permissive and discretionary. ”
Of particular importance in considering the issues raised by this appeal is the further observation by Justice Goddard on the same page of the decision where she said “both sections reflect the principle that applicants should have access to only one stream of ‘state insurance’ and that a beneficiary cannot expect to receive both benefit and periodic earnings related compensation for the same period of time”
The position in the present case is that Mr **** received compensation payments at a rate which exceeded his benefit payments. Certainly the compensation payments were made some months later but the position is that the payments were for the same period. 
The relevant case law accordingly does not support Mr ****'s proposition that agreement with the Ministry was required before he needed to reimburse his benefit payments. The sections do not prohibit the recovery of benefits which have been paid for a period where there has been a retrospective payment of earnings related compensation — the object of the legislation is to permit the grant of a benefit in a situation where earnings related compensation has not been established and indeed the grant of the benefits to Mr **** must have been particularly welcome to him at the time when as a result of his accident he had no income nor had he commenced receiving accident compensation. 
The Authority has said on previous occasions that it is regrettable that beneficiaries in some circumstances are not informed or do not understand that they may be asked to repay part or all of a benefit when accident compensation is eventually received. But the Authority holds that in law the fact that the beneficiary is not so informed does not prevent the Chief Executive under the terms of the relevant sections from seeking recovery of overpayments. 
The Authority should also add that we accept the Ministry's submissions relating to the balance of an advance to the appellant of $******* which was shown as having been cleared as a debt in the Ministry's records — it is plain this arose through the manner in which the reimbursement cheque from ACC was applied. 
The Authority also notes that Mr **** did not challenge the approach put forward by Mr Dennett as to the exercise by the Chief Executive of his or her discretion under s 86(9A) of the Act. 
The outcome of this appeal will be disappointing to Mr **** who presented his appeal with some care and in a straightforward manner. Whilst acknowledging the basis for his grievance that he had no “contract” with the Ministry to repay the benefit the plain position is that the relevant legislation does not support his position. 
For the reasons given above the appeal is dismissed. 
There will be no order as to costs. 

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