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Accident Compensation Cases

Re SSA36/11 (SSAA, 13/11/14)

Judgment Text

Ms M Wallace - Chairperson, Mr K Williams - Member, Lady Tureiti Moxon - Member
The Authority issued an interim decision in relation to xxxx appeal on 17 October 2011 and a final decision on 7 August 2012. The Authority found that xxxx had in effect received compensation for loss of earnings equivalent to at least $61,218 per annum for a period of 15 years. It concluded that this amount should be treated as income. The amount exceeded the income cut-out point for entitlement to Invalid's Benefit, Accommodation Supplement and Disability Allowance and that it was highly unlikely that xxxx had any ongoing eligibility for Temporary Additional Support. 
On a backdated review under s 81(2) the Chief Executive was entitled to review the appellants entitlement to benefit and conclude that xxxx had received income related compensation in respect of the period 9 June 2008 to 31 August 2010 which compensated him at a level which exceeded the cut-out point for the benefits he had received in that period. It was appropriate on a backdated review to cancel the benefits and establish debts. 
The appellants lodged an appeal in respect of this decision in the High Court. Prior to the hearing of the appeal the appellants and the Chief Executive reached agreement on all matters, with the exception of an issue relating to xxxx entitlement to any supplementary benefits in the period 9 June 2008 to 31 August 2010. This issue was remitted to the Authority for consideration. 
At the hearing of this matter in December 2013 xxxx also raised two service delivery issues. Xxxx said that the Ministry had failed to advise her that benefits paid prior to compensation being recovered would need to be repaid from the compensation paid. She said that had she been aware of this, the amount could have been factored into the settlement achieved. 
Her second concern related to the fact that her husband was able to request the Ministry that his share of the benefit be paid into his account contrary to a previous arrangement that it would all be paid to her. As a result the family experienced significant hardship due to xxxx failure to use his funds for family expenses and his inability to appreciate the consequences of his actions. 
The position of the Chief Executive is that the Chief Executive should be entitled to treat the compensation for loss of earnings as income or regard it as “notional income” in assessing xxxx eligibility for benefit. It is submitted that xxxx circumstances, including his “notional income” of approximately $61,218 per annum need to be taken into account in assessing xxxx entitlement to benefit. 
On behalf of xxxx it is submitted that the Chief Executive seems to be under the misapprehension that xxxx was entitled to compensation. Xxxx had no right to any compensation and xxxx compensation payment should not be taken into account in assessing her entitlement to supplementary benefits. 
Xxxx was originally paid a half share of the supplementary benefits granted to her husband on the basis of the provisions of s 83 of the Social Security Act 1964. This provides that where a benefit is granted at the married rate, 50% of that benefit and any other benefit payable is to be paid to the person entitled to the benefit and 50% is payable to the spouse. 
We understand the question that is put to us is whether xxxx was entitled to retain her half share of the supplementary benefit payments made. Alternatively had xxxx been granted supplementary benefits in her own right from the outset, would she have been entitled to retain those benefits once the compensation payable to her husband was received. 
In general benefits payable under the Social Security Act 1964, with the exception of the Child Disability Allowance, all require that the marital status of the applicant and financial means of the applicant's spouse, civil union or de facto partner be taken into account in assessing entitlement to benefit. 
While xxxx are married and living together any entitlement to benefit needs to be assessed and granted on the basis that they are a married couple. The income and assets of both, need to be considered in the assessment. 
Section 1A of the Social Security Act 1964 provides that the purpose of the Act include: 
to help people to support themselves and their dependents while not in paid employment. 
to enable in certain circumstances the provision of financial support to people to help alleviate hardship. 
to ensure that the financial support referred to in paragraphs (a) and (b) is provided to people taking into account- 
that where appropriate they should use the financial resources available to them before seeking financial support under this Act. 
any financial support that they are eligible for or already receive otherwise than under this Act from publicly funded services. ”
In the case of a married couple it is their joint resources that are taken into account in assessing benefit entitlement. To treat one partner as having all of the resources and the other as having no access to those resources would be contrary to the purposes of the Act. 
Section 71 of the Social Security Act 1964 provides as follows: 
Special provisions where compensation or damages recoverable by applicant 
Notwithstanding anything to the contrary in [this Act] … [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 or 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 [is a debt due to the Crown under section 85A(b) and (e), and subject to recovery under section 86(1) (chief executive's duty to recover debt referred to in section 85A),] from the beneficiary or from any person liable for the payment of the compensation or damages. ”
Despite the requirements throughout the Act that the marital status and income of a spouse or partner be taken into account in assessing entitlement to benefit, s 71 makes no express reference to the circumstance of a spouse or partner receiving compensation. This is in contrast to the provisions of s 71A which provide for the situation where a person receives weekly earnings related compensation under the Accident Compensation Act 2001. 
In summary s 71(1)(b) includes a specific provision that a person applying for a benefit may be granted a benefit subject to a requirement to repay that benefit or part thereof from the compensation received. It is perhaps unfortunate that this provision was apparently overlooked when xxxx was granted benefits. However had xxxx grant of benefit been made subject to this provision we would have expected that the grant would have been made subject to any instalment of benefit including supplementary benefits payable to either himself or his wife being repaid. This is because all income tested benefits without exception take into account the financial circumstances of the spouse, civil union partner or de facto partner of the applicant for benefit. It is inconceivable that the Chief Executive would grant a benefit subject only to the share of the applicant for benefit being repaid. 
Section 71(1)(a) provides that where compensation or damages have been recovered the Chief Executive may refuse to grant a benefit or grant it at a reduced rate in respect of the period for which the compensation or damages are deemed by the Chief Executive to have been paid. 
In a backdated review under s 81 of the Act the Chief Executive must consider whether on the basis of the information now to hand the Chief Executive should have declined to grant a benefit under s 71(1)(a) in respect of a period for which compensation has now been paid or or whether it should have been paid at a lower rate. It is difficult to believe that Parliament would have intended that xxxx receipt of earnings related compensation should be ignored in considering xxxx situation whether she received half of xxxx benefit entitlements or was granted supplementary assistance in her own right. 
Whilst the text of s 71 does not expressly refer to the spouse or de facto partner of the recipient of compensation we considered that the words “or the spouse or de facto partner of the person” must be read into s 71(1) after the words “where any person” to prevent what would be an absurd result in the context of the Act. 
Whether xxxx applied for and received supplementary assistance in her own right or was paid a share of supplementary assistance as xxxx partner under s 83, the Chief Executive was entitled to review the assistance granted to her under s 81 and take into account the level of compensation received by her husband for loss of earnings in assessing her entitlements. 
Both s 71(1)(a) and (b) envisage partial payments of benefit. This implies that the Chief Executive must make some assessment of the level of compensation received to determine whether or not the full amount of benefit paid should be recovered or some lesser amount. This will invariably require some calculation of “notional income”
There is no specific reference in the Act to “notional” income but by inference such an exercise must be carried out as it is in cases involving s 74(1)(d) of the Act. 
The calculation of “notional” income represented by the compensation for loss of earnings outlined in decision number [2012] SSAA 59 indicates that average “notional income” of $61,218 per annum was received by Mr Robb for the period in respect of which benefit was paid. 
There are three main types of supplementary assistance that xxxx received and which xxxx may have been eligible to apply for in her own right. The first is Disability Allowance. There is no suggestion that xxxx personally had any disability costs and therefore entitlement to Disability Allowance. On that basis alone she would not have been entitled to a grant of Disability Allowance in her own right. 
The other main types of supplementary assistance available were Accommodation Supplement, and Temporary Additional Support. Both of these types of assistance are income tested and require the Chief Executive to take into account the family circumstances including the marital status of the person receiving the benefit and the financial means of both partners. 
Accommodation Supplement is provided for in s 61 of the Act. A grant of Accommodation Supplement is discretionary. Section 61EC provides that it should be paid at the appropriate rate specified in Schedule 18 of the Act. Schedule 18 requires the income of the applicant and any spouse or partner of the applicant be taken into account in assessing entitlement. The Ministry say that as at 1 April 2008 the income limit for a married couple with children in the xxxx area was $51,948 per annum or $999 per week and as at 1 April 2009 $52,728 per year or $1,014 per week. The Authority's assessment of xxxx notional income indicates he received a notional sum for loss of wages which exceeds the cut out points. On that basis alone xxxx would not have had an entitlement to Accommodation Supplement had it been granted to her in her own right. 
We conclude that it would have been appropriate for the Chief Executive to exercise his discretion to retrospectively cancel xxxx entitlement to Accommodation Supplement whether it was granted to her in her own right or as the payee of a share of xxxx benefit, and establish an overpayment. 
Temporary Additional Support is payable pursuant to s 61G of the Act and the Social Security (Temporary Additional Support) Regulations 2005. 
The Ministry say that Regulation 10(1) of the Social Security (Temporary Additional Support) Regulations 2005 provides a discretion to grant or not grant Temporary Additional Support. Moreover grants must be consistent with the objects of the Act contained in s 1A and the purpose of Temporary Additional Support set out in s 61G(1). 
As with Accommodation Supplement we consider that in the first instance in the context of an Act which consistently makes entitlement to benefit dependent on the financial circumstances including the income and assets of the spouse or partner on a backdated review it would be open to the Chief Executive to cancel payment of Temporary Additional Support if compensation was received by xxxx for the period in respect of which Temporary Additional Support was paid. 
It was open to the Chief Executive to consider that xxxx had received “notional income” or approximately $61,218 per annum as compensation for loss of earnings and take this into account in a backdated assessment of entitlement to Temporary Additional Support. 
There are no standard income cut-out points for Temporary Additional Support but it would not be payable if the income received resulted in a deficiency of less than $1 or there was a surplus of income once the disposable income/standard costs assessment was carried out. On a backdated review we consider the level of compensation received for loss of earnings by xxxx would be relevant in exercising discretion to cancel xxxx entitlement to Temporary Additional Support. We think the Chief Executive would have been justified in reversing any decision to grant Temporary Additional Support to xxxx. 
The other supplementary assistance received was Temporary GST Assistance. We understand this assistance was only payable to persons entitled to receive a main benefit in the period 1 October 2010 to 31 March 2011. 
It is not altogether clear what main benefit under the Act xxxx might have been entitled to in her own right during this particular period. We are not satisfied that she would have been entitled to Domestic Purposes Benefit (Care for the Sick and Infirm) in this particular period. In any event the receipt by her husband of compensation for any period she was in receipt of a main benefit would impact on her entitlement to that main benefit. For the same reason that xxxx entitlement to a main benefit was cancelled xxxx entitlement to a main benefit granted in her own right would also need to be cancelled. 
In summary once xxxx received the compensation payment from xxxx any supplementary assistance paid to xxxx, whether paid pursuant to s 83 or granted to her in her own right, would need to be reviewed. For the reasons outlined in this decision and decision number [2012] NZSSAA 59 we consider it would have been appropriate for the Chief Executive on a retrospective review to cancel xxxx entitlement and establish a debt. 
Service delivery issues 
Xxxx says that she was not informed that the benefit would be recovered from the compensation payment, and had she been aware of this, this could have been taken into account in the settlement with her husband's xxxx employer. On behalf of the Chief Executive it is submitted that the first record the Ministry has of an impending compensation payment was when xxxx attended the xxxx office on 15 February 2010 with a letter from her Australian lawyers asking her to be prepared for an upcoming telephone conference on 24 February. On that day xxxx advised that her solicitors needed to know what benefits would have to be recovered and under what section of the Act this would occur. She was advised that the benefits paid out would have to be repaid and that this would be pursuant to s 71 of the Act. She gave authority for the Ministry's solicitor to correspond directly with the xxxx lawyers. On the same day the Ministry e-mailed the xxxx lawyers advising that they were preparing an exact statement of benefit monies and supplementary assistance which the Ministry would seek to recover if the xxxx were successful with their compensation claim in xxxx. In the meantime the writer noted that the amount required would be approximately $43,557. Subsequently all correspondence with the xxxx lawyers was copied to the appellants. 
We conclude that at all times from February 2010 xxxx and their legal advisers were aware that their benefits would be recovered from the proceeds of the xxxx. 
The settlement meeting was on 24 February and settlement did not occur until 30 October 2010. The appellants and their lawyer had time during the negotiation phase to factor in what would need to be repaid. 
It is possible that xxxx has forgotten about this sequence of events. There is of course a significant difference between the $43,595 referred to by the Ministry in the e-mail of 15 February and the $77,064 actually recovered. This has in part arisen because of the delay in the payment of the compensation and the fact that the appellants continued to received benefits during this period. 
We agree that it would have been preferable that the appellants were advised that any benefits would be recovered from any compensation received at the outset. Nevertheless it is not clear that the appellants would have acted differently had this happened. The fact that their solicitors in xxxx were informed that the Ministry would wish to recover benefits from any compensation payment before the settlement conference on 24 February suggests that this would have been factored into any compensation settlement. The appellants must have been aware that the delay in the settlement and their continued receipt of benefit during that time would result in an increase in the amount to be recovered. We are not satisfied that the appellants have suffered any loss as a result of any failure to advise of the possible recovery of benefits prior to 15 February 2010. 
Payment of xxxx share of benefit to xxxx 
The Ministry concede that it did not follow best practice when it allowed xxxx 
to change payment of his half share of benefit to his bank account without reference to xxxx who was his Power of Attorney. Unfortunately he was able to do this at the front desk without reference to a case manager. The Ministry say that this change occurred shortly prior to the appellants' benefits being cancelled for a period and then reinstated because the compensation payment was delayed. In the seven months during which the reinstated benefits were paid, xxxx did not approach the Ministry about attempting to rectify the situation. Had she advised the Ministry as soon as she noted less money in her account each week the Ministry could have reversed the situation and made all payments to her bank account. It is perhaps unfortunate that xxxx did not go back to the Ministry and ask them to rethink their decision to pay half the benefit to xxxx, however this was also a very difficult time for xxxx and she may not have been altogether aware of her rights in relation to this matter. It is unsatisfactory that there was no protection in the system to avoid xxxx being able to change the place to which payments were made in the first instance. In our view the Chief Executive should consider making an ex gratia payment to xxxx and offering a formal apology. 
In all other respects the appeal is dismissed. 
The Chief Executive may wish to refer s 71 of the Act to the Act rewrite Committee for consideration. 

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