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Accident Compensation Cases

Re SSA30/11 (SSAA, 16/08/11)

Judgment Text

Ms M Wallace - Chairperson, Mrs N Te Hira - Member, Mr K Williams - Member
The appellant appeals against a decision of the Chief Executive upheld by a Benefits Review Committee to establish and seek to recover overpayments of Domestic Purposes Benefit paid in respect of the period 4 February 1993 to 28 February 1995 and Accommodation Supplement paid in the period 7 July 1993 to 28 February 1995 following the receipt of a backdated payment of Accident Compensation. 
The appellant applied for a Domestic Purposes Benefit on 28 January 1993. In her application she noted that her partner's name was xxx, she ceased living with her partner on 27 January 1993, her partner had not died and was not in prison. She gave details of her partner's employment in the Liable Parent application. 
We understand that on 1 February 1993 xxx committed suicide. On 9 February 1993 the appellant returned to Work and Income New Zealand and advised that her de facto partner had died and that she was the beneficiary of his estate. The house which xxx had owned would be changed into her name and she wished to apply for Accommodation Supplement. 
A stand-down that applied at that time was reduced to one week and the appellant was granted Domestic Purposes Benefit from 4 February 1993 and Accommodation Supplement from 9 February 1993. 
Ministry records indicate that in 1995 following an investigation the appellant's benefit was cancelled from 1 March 1995 on the basis that she was living in a relationship in the nature of marriage. An overpayment was established in respect of the period 1 March 1995 to 21 August 1995 amounting to $11,034.62. 
Ministry records indicate that the appellant did not receive any form of benefit again until 29 January 2008 when she applied for non-beneficiary Accommodation Supplement. This was cancelled on 21 May 2008 when the appellant advised that she had reconciled with her partner. 
On 16 September 2010 the Accident Compensation Corporation (ACC) advised the Ministry that the appellant had been granted backdated weekly compensation in respect of the death of her partner xxxx for the period 1 February 1993 to 28 July 2010. As a result of this advice the Ministry sent ACC information about the benefits received by the appellant in respect of the period 1 February 1993 to 28 July 2010. 
On 17 September 2010 the Ministry was advised by ACC of the weekly compensation payable to the appellant in respect of the period 4 February 1993 to 28 February 1995. 
On 21 September 2010 the appellant was advised that an overpayment of Domestic Purposes Benefit had been established in respect of the period 4 February 1993 to 28 February 1995 amounting to $16,396.18 and that this amount was to be repaid by ACC from the weekly compensation owed to her. 
The appellant was also advised of an overpayment of Accommodation Supplement of $837.16. She was advised that it would be her responsibility to repay this debt. 
The Ministry has now received reimbursement of the $16,396.18 from ACC. We understand the debt in relation to Accommodation Supplement remains owing. 
The appellant sought a review of decision. The matter was reviewed 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 
The appellant spoke passionately about the circumstances she found herself in 1993 when her former partner committed suicide. She was 22 years of age at the time. She explained the difficulties she experienced with her former partner's family and her own family. 
The appellant described an investigation she faced in 1995 and the difficulties that she had with the man who she had a relationship with at that time. She claimed that this person left her a week after her benefit was stopped and she was required to pay back $11,000. The appellant said that faced with no income and a need to support her family she became a prostitute. 
The appellant said that despite applying for a benefit and being investigated no one had told her that she was eligible for ACC payments. 
The appellant described the difficulties that her family experienced as a result of her financial circumstances. She pointed out that she had paid back the debt established in 1995 over 11 years. She questioned whether or not this debt should have been established in view of the practices of Work and Income at that time. 
She noted that her son now suffers significant difficulties. 
She pointed out that as a result of the backdated payment and the requirement that it be taxed in the year in which it was received she and her children had lost financially. 
The appellant explained that she was unaware of the possibility that she could apply for ACC until she saw a programme on Breakfast TV in 2010. The appellant said that she had received just over $200,000. Her children have also received net amounts of approximately $75,000 each. Her daughter is now aged 21 years and is at university. Her son is aged 19 years and has multiple problems. 
Case for the Ministry 
On behalf of the Chief Executive Mr Signal noted that: 
The receipt of backdated payments of Accident Compensation is not uncommon. 
Under the Social Security Act the department at the time did not have any obligation to tell the appellant of her entitlement to ACC. Furthermore the nature of New Zealand Income Support at that time was such that it would be unlikely that the appellant's eligibility for ACC would be a matter considered. 
The appellant's lawyer ought to have alerted her to her entitlement to ACC. 
The limited discretion contained in s 86A should not be exercised in this instance. 
There was neither a formal duty or responsibility or any reasonable expectation for NZISS staff to have the knowledge to refer the appellant on to ACC because of her circumstances. 
Our Findings 
Section 81 of the Social Security Act 1964 gives the Chief Executive power to review entitlement to benefits from time to time. 
The issue of the Chief Executive's power to review entitlement to benefit in the situation of the receipt of a backdated payment of Accident Compensation was considered by the High Court in M v the Chief Executive of the Department of Work and Income1
| X |Footnote: 1
AP 335/01, 27 August 2002, Goddard J 
the Court found:- 
Section 81 plainly envisages a hindsight review of benefit entitlement. This does not mean that a beneficiary who subsequently receives a backdated compensation entitlement was not entitled to have received a benefit for that backdated period: it simply means that the entitlement to a benefit has been retrospectively supplanted by an entitlement to compensation. ”
Section 71A of the Social Security Act 1964 provides that where a person receives an income tested benefit and is entitled to receive weekly compensation then the rate of benefit payable must be reduced by the amount of weekly compensation paid. 
In summary on receipt of advice that the appellant was entitled to a backdated payment of weekly compensation in respect of a period that she was receiving an income tested benefit it was appropriate for the Chief Executive to review the appellant's entitlement to benefit and establish an overpayment. 
In M v the Chief Executive of the Department of Work and Income the Court found with reference to s 71 and s 71A of the Social Security Act 1964:- 
Both sections reflect the principle that applicants should have access to only one stream of state assistance and that a beneficiary cannot expect to receive both benefit and periodic earnings-related compensation for the same period of time. Neither section prohibits the recovery of benefit money paid for a period retrospectively covered by 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 yet been established. 
Nor is either section concerned with the timing of any benefit or compensation payment: the only concern is with the time period that payment of both has covered … . ”
In summary backdated compensation has been paid to the appellant for the same period in respect of which benefit has been granted. Whether the payment from both sources was received at the same time is not relevant. The key issue is that payments from two sources have been made in respect of the same period. 
On receipt of information that the appellant was to receive backdated compensation payments from ACC it was also appropriate for the Chief Executive to conduct a review under s 81 of the appellant's entitlement to supplementary assistance, namely accommodation benefit. 
Accommodation Benefit (as it was called at the time) is an income tested benefit. When the Chief Executive reviews entitlement to a supplementary benefit such as Accommodation Benefit any income from ACC is taken into account in accordance with the appropriate income test in assessing entitlement. 
We are satisfied that the overpayments of Domestic Purposes Benefit and Accommodation Benefit have been correctly established in this instance. 
Section 86(9A) of the Social Security Act 1964 
The issue then is whether we can direct that the overpayments not be recovered. There is a discretion in s 86(9A) of the Social Security Act 1964 not to recover a debt in certain circumstances. We have considered whether we can direct that the overpayments not be recovered pursuant to the provisions of s 86(9A) of the Act. We can only direct that overpayments not be recovered if all of the criteria of s 86(9A) have been made out. If one of the criteria is not satisfied it is not necessary for us to proceed to consider subsequent criteria. 
We are first required to consider whether or not the overpayments have arisen as the result of an error by an officer of the Ministry. 
In this case the appellant argues that an officer of the then department ought to have advised her to apply for ACC. Had this occurred at an earlier stage the overpayment which has now arisen would not have occurred. 
Mr Signal on behalf of the Ministry argues that the Ministry had no obligation to inform the appellant of her eligibility to apply for ACC. 
We have considered this issue very carefully. We agree with the appellant that it is highly unsatisfactory that she was not made aware of the fact that she might be eligible for ACC payments until 2010. 
When she applied for a benefit in 1993 the appellant advised the Ministry that she had separated from xxx. The records available show that while the appellant subsequently advised that xxx had died, it is not apparent that the appellant advised the cause of death. 
In any event we are not satisfied that in 1993 a Work and Income case manager should have been aware that the appellant and her children may be eligible for ACC in circumstances where her former partner had committed suicide and should have advised the appellant accordingly. A work and Income case manager is trained in giving advice about benefits under the Social Security Act 1964. While it would be desirable that a case manager bring to the attention of an applicant for benefit of possible entitlement to ACC in the event that an accident has occurred, the situation in this particular case would not have been an obvious case for a case manager to identify as an accident. Nor would it have necessarily been obvious to a Work and Income case manager that the suicide of a former partner would give rise to an ACC entitlement for the appellant and her children. 
The appellant was involved in consulting lawyers following her partner's death. They apparently did not advise the appellant of her eligibility for ACC. If the lawyers advising the appellant at the time did not advise the appellant of her eligibility for ACC it is difficult to see how a case manager with Income Support should be aware of her eligibility for this type of assistance. 
Neither do we think that a Ministry investigator investigating the nature of the appellant's relationship in 1995 had an obligation to advise the appellant of her possible entitlement to ACC. We do not know what information the appellant gave the investigator but in any event his or her inquiries would have been focussed on the relationship that gave rise to the investigation. 
As we are not satisfied that there was any error on the part of an officer of the department which resulted in the overpayment we are unable to direct that the debt not be recovered pursuant to s 86(9A) of the Social Security Act 1964. 
Section 86(1) 
We must then consider whether the Chief Executive should be directed to take no steps to recover the debt pursuant to the discretions in s 86(1) and s 86A of the Social Security Act 1964. Parliament has specified the circumstances in which a debt should not be recovered in s 86(9A). The occasions therefore that the Chief Executive should exercise his discretion not to take steps to recover a debt or debts which do not meet the criteria of s 86(9A) must therefore be limited (see the Director General of Social Welfare v Attrill and others2
| X |Footnote: 2
[1998] NZAR368 
Section 86(1) applies to debtors who are still in receipt of benefit. Section 86A applies to debtors who have sources of income other than benefit. In our view the principles will be the same whether the recovery action is under section 86(1) or s 86A. 
The considerations to be taken into account in exercising the discretion include the Chief Executive's obligations under the Public Finance Act 1989 to make only payments authorised by law and under the State Sector Act 1988 for the economic and efficient running of the Ministry. The context of the Social Security Act 1964 is also relevant. 
The circumstances in which the discretion should be exercised have been considered by the High Court on a number of occasions in the context of s 86(1). In McConkey v The Director General of Work and Income New Zealand3
| X |Footnote: 3
HC WN AP 277/00 20 August 2002 
Goddard J described the circumstances as “extraordinary”. In Cowley v The Ministry of Social Development4
| X |Footnote: 4
HC WN CIV-2008485-381 1 September 2008 
they were described by Clifford J as “unusual” and in Osborne v the Ministry of Social Development5
| X |Footnote: 5
HC AK CIV-2007-485-002579 31 August 2009 
they were described as “rare and unusual”
We have considerable sympathy for the appellant. We accept that not receiving ACC payments in the years following her partner's death and while her children were growing up would have compounded the difficulties she experienced. That however is not a result of any action or inaction on the part of the then New Zealand Income Support Service. 
Had the appellant received the ACC payments from 1993 to 1995 she would not have received Domestic Purposes Benefit or Accommodation Supplement. 
In a sense by requesting that the overpayments not be recovered the appellant is asking to be compensated for the failure of those who ought to have advised her of her entitlement. We are not satisfied that any responsibility falls on the Ministry of Social Development and its predecessors in this regard. Regrettably it is not uncommon for backdated payments of ACC to be paid requiring reimbursement of Social Welfare benefits. We are not satisfied that in this case any distinction should be made between this appellant and others who receive backdated compensation payments. 
It is open to the appellant to seek interest on the arrears received from ACC. We are unaware of whether she has done so. 
Taking into account all of the circumstances we are not prepared to direct the Chief Executive not to recover the amounts concerned pursuant to s 86(1) of the Social Security Act 1964. 
The appeal is dismissed. 

AP 335/01, 27 August 2002, Goddard J 
[1998] NZAR368 
HC WN AP 277/00 20 August 2002 
HC WN CIV-2008485-381 1 September 2008 
HC AK CIV-2007-485-002579 31 August 2009 

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