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McLean v Accident Compensation Corporation [2007] NZACC 142 (2 July 2007)

IN THE DISTRICT COURT HELD AT WHANGAREI WELLINGTON REGISTRY

AND

IN THE MATTER of an appeal pursuant to section

151 of the Act

BETWEEN JACQUELINE McLEAN

Appellant

AND ACCIDENT COMPENSATION

CORPORATION

Respondent

HEARD at WHANGAREI on 23 March 2007

DATE OF THIS DECISION 2nd 2007

APPEARANCES/COUNSEL

Mr J C W Robinson, advocate for appellant Mr D Tuiqereqere counsel for ACC

DECISION OF JUDGE P F BARBER

The Issue

[1] At issue is a 4 April 2006 ACC decision determining that the appellant is not entitled to interest before 1 July 1992 on a payment of compensation arrears.
[2] The appellant contends that s.72 of the Accident Rehabilitation and Compensation Insurance Act 1992 applies to the appellant's entitlement to interest so that interest is payable from before 1 July 1992 (i.e. from 1 June 1991).

[3] The nub of ACC's case is that the transitional provisions in the Injury Prevention, Rehabilitation, and Compensation Act 2001 apply so that interest is not payable prior to 1 July 1992.
Background

[4] The appellant has cover for a left knee injury sustained on 12 February 1990. She received weekly compensation on the claim until 31 May 1991. Then ACC issued a decision ceasing the weekly compensation on the basis that the appellant's rehabilitation was complete.
[5] The appellant successfully reviewed ACC decision. In a 12 June 1995 review decision, a Review Officer quashed ACC's decision and directed it to reinstate the appellant's weekly compensation from the date of cessation (31 May 1991).
[6] On 3 August 1995 ACC recommenced weekly compensation and also paid arrears of weekly compensation from 1 June 1991.
[7] On 16 June 2002 the appellant telephoned ACC to enquire about her entitlement to interest on the payment of arrears of weekly compensation in 1995 i.e. from 31 May 1991 to 3 August 1995. ACC accepted that the appellant was entitled to interest and considered that interest was payable at 7.5% per annum from 1 July 1992 to 2 August 1995. Accordingly, $6,697.82 was paid to the appellant in July 2003, but, no formal decision was issued to the appellant in respect to this payment.
[8] On 21 September 2005 the appellant again contacted ACC regarding the payment of interest as she had become aware of Robinson v ACC; where, the High Court held that compound interest was payable under the ACC legislation. On 22 September 2005 ACC wrote to the appellant in respect to her enquiry and advised, inter alia:

"Further to your enquiry on paying additional interest payments as per the High Court decision in Robinson v ACC (CIV 2005-485-0127), at this stage ACC is not accepting any applications for additional interest payments as per the High Court judgment. If the position changes, steps will be taken to advise those limited numbers of claimants who are affected."

[9] On 4 April 2006 ACC issued a decision accepting that interest was payable at 11%. This resulted in $9,934.99 being overall payable to the appellant and, less the earlier payment of $6,697.82, left an outstanding balance of $3,237.17 payable to her at that stage. ACC also advised that it did not accept that interest was payable prior to 1 July 1992.
[10] A review hearing was conducted on 14 June 2006. The Reviewer issued a decision on 23 June 2006 dismissing the review and noting the argument for the appellant (at page 3 of her decision) as follows:

"Mr Robinson has argued that interest should commence on 1 June 1991, the same date as weekly compensation recommenced. He relies on the unmodified application of s.72 of the ARCI Act 1992. He further argues that there is no requirement for an application to be made in order to trigger the right to interest ..."

[11] The Reviewer did not accept that argument for the appellant and instead, determined that the transitional provisions in the 2001 Act applied in respect of the payment of interest. The Reviewer stated, inter alia, at pages 4 and 5:

"The applicable statute, the IPRC Act 2001, makes clear that s.72 of the ARC! Act 1992 is subject to clear statutory limitations. I note that this was a condition which was absent in the circumstances considered by Their Honours in the case of Estate of SB (Supra). Parliament has now remedied that gap in the law, and its intention is clearly to limit payment of interest made under s.72 of the ARC! Act 1992 to payments post 1 July 1992.

it is clear from the case law in this area, summarised in the case of Granich (Supra), that the Courts take the position that the date when interest is sought is critical in relation to payment of interest. I find it must follow from this that the Courts also take the position that entitlement to interest does not arise automatically, in the way argued for by Mr Robinson. If that were the case, there would be no need to consider the question of the applicable statute except in regards to the issue of when ACC had all information necessary to make the backdated payments. it is clear from the case law that the Courts are not looking at that issue alone."

Analysis

[12] I agree with the comprehensive submissions of Mr Tui for ACC so that they form the basis of this decision.
[13] There was no provision for the payment of interest on late payments of weekly compensation under the Accident Compensation Act 1972 and the Accident Compensation Act 1982. Interest first became payable under s.72 of the 1992 Act which came into force on 1 July 1992.
[14] Pursuant to s.72 of the 1992 Act, interest was payable where ACC had not made payment of weekly compensation within one month of receiving "all information necessary" to calculate the payment. The High Court, in Howley v ACC (AP 29/01), interpreted s.72 as permitting the payment of interest for periods prior to 1 July 1992.
[15] The 1992 Act was repealed on 1 July 1999 with the enactment of the Accident Insurance Act 1998. The equivalent interest provision (to that s.72 of the 1992 Act) under the 1998 Act was s.101; this provision applied to interest payable for periods during the currency of the 1998 Act. The criteria for the payment of interest largely remained the same as that contained under s.72 (as it has under the present 2001 Act).
[16] However, s.458(a) of the 1998 Act (found in the "Transitional Provisions" under Part 13) expressly saved s.72. Section 458(b) proceeded to modify s.72 as follows:

"(b) Section 72 has effect to require the payment of interest only in respect of calculations made under that Act for the period 1 July 1992 to 1 July 1999."

[17] The effect of s.458(b) was to preclude the payment of interest under s.72 for periods prior to 1 July 1992. Section 458(a) of the 1998 Act reads:

"458 Interest on late payments — Despite section 417, -

(a) Section 72 of the Accident Rehabilitation and Compensation Insurance Act 1992 continues in effect as if that section had not been repealed; but"

[18] The 1998 Act was repealed with the enactment of the 2001 Act. Section 114 (of the 2001 Act) provides for the payment of interest under the 2001 Act. Section 371, the equivalent of s.458 under the 1998 Act, saves ss.72 and 101 of the 1992 and 1998 Acts respectively. Section 371 preserves the same modification to s.72 as was prescribed by s.458 of the 1998 Act and reads:

"371 Interest on late payments of weekly compensation

(1) Despite section 339, section 72 of the Accident Rehabilitation and Compensation Insurance Act 1992 (as continued by section 458 of the Accident Insurance Act 1998) continues in effect to the extent that it requires payment of interest only in respect of calculations made under that Act for any period commencing on or after 1 July 1992 for which weekly compensation is payable.
(2) Despite section 339, -

• (a) section 101 of the Accident Insurance Act 1998 continues in effect as if that section had not been repealed; but
• (b) section 101 has effect to require the payment of interest only in respect of calculations made under that Act for the period 1 July 1999 to 1 April 2002."

[19] The appellant seeks the payment of interest for a period prior to 1 July 1992.

[20] As determined in Howley (supra), s.72 of the 1992 Act (prior to its repeal and modification by the transitional provisions under the 1998 and 2001 Acts, i.e. "the original s.72") permitted the payment of interest prior to 1 July 1992.
[21] With the repeal of the 1992 Act, i.e. from 1 July 1999, s.458 of the 1998 Act (and now s.371 of the 2001 Act) modified s.72 with the effect that interest is not payable under s.72 for periods prior to 1 July 1992.
[22] The question raised by the appellant, in this appeal, is whether the original s.72 operates in terms of the appellant's entitlement to interest or the modified s.72.
[23] The starting point, is the legislation in force at the time ACC considers any payment under the ACC legislation. The Corporation is a creature of statute and its powers and obligations are, in the first instance, prescribed by the current operating legislation.
[24] At the times ACC considered the appellant's entitlement to interest (i.e. in September 2002 and April 2006) the 2001 Act was in force (since 19 September 2001). By this time, both the 1992 and 1998 Acts had been repealed.
[25] Section 114 of the 2001 Act provides for the payment of interest for periods after 1 April 2002. With respect to interest payable prior to 1 April 2002, s.371 applies and it preserves ss.72 (of the 1992 Act) and 101 (of the 1998 Act) in respect of the periods from 1 July 1992 to 30 July 1999 and 1 July 1999 to 31 March 2002 respectively.

[26] ACC accepts that it had "all information necessary" to make the payment of weekly compensation in May/June 1991.; i.e. when the appellant's weekly

compensation ceased. At that time there was no provision under the 1982 Act for the payment of interest; but interest subsequently became payable under s.72 of the 1992 Act. However, as s.72 had been repealed by the time ACC considered the appellant's payment of interest, it was necessary to apply s.371 of the 2001 Act to make the payment under s.72. Pursuant to s.371, interest is payable under the modified s.72 from 1 July 1992 only.

[27] In short, the said transitional provisions applied because the 2001 Act was in force at the material time and its s.371 currently, and expressly deals with the payment of interest for periods prior to 1 April 2002. The said transitional provisions, ss.458 and 371, were clearly enacted by Parliament for the purpose of both saving s.72 but also confining interest thereunder to periods after 1 July 1992.
[28] Conceivably, if the 1998 and 2001 Acts had been silent in respect of s.72, an argument could be made that the Corporation is required to apply the original s.72. Sections 17 and 18 of the Interpretation Act 1999 provide for the saving of certain statutory rights following the repeal of governing legislation. However, the two Acts are not silent and as such ss.17 and 18 have no application. Section 4 of the Interpretation Act 1999 provides that Act applies "unless ... the enactment provides otherwise". In other words, the Interpretation Act 1999 does not supersede the wording of the enactment in question.
[29] In Vela Fishing Ltd v CIR [2002] I NZLR 49, the Court of Appeal held at page 54:

"[26] The dismal experience of those who work with legislation is that special ,transitional and savings provisions crafted to reflect perceived special features of the particular legislation often tend to become complex, which adds to difficulties in interpretation. And the simple general provisions of the Interpretation Act 1999, as in the case of its predecessor, the Acts Interpretation Act 1924 yield to the special provisions of the particular legislation."

[30] It seems to me that the purpose of the said ss.458 (of the 1998 Act) and 371 are (of the 2001 Act) are clearly two-fold:

[a] To preserve the payment of interest for periods prior to the enactment of the new legislation; and

[ID] To confine the payment of interest to periods after 1 July 1992.

[31] That interpretation is consistent with the present case law on this issue.
[32] The approach taken by the District Court to the issue of interest is largely set out in Granich 214/05. In that appeal, the claimant had cover under the 1982 Act for a hearing loss. The claimant received weekly compensation for a short period up until 1987 at which time his weekly compensation was ceased. On 6 October 2003 ACC made a payment of arrears to the claimant for the period from July 1987 in the amount of $986,441 gross. On 2 June 2004 ACC determined that it had "all information necessary" on 24 November 1998 and a payment of interest of $278,272.68 was made to the claimant. The claimant contended that the Corporation received "all information necessary" on, inter alia, 23 July 1987 (being the date from which weekly compensation was ultimately accepted as being payable from) or 1 July 1992 (being the date on which the 1992 Act came into force and a right to interest under s.72 arose). The District Court dismissed the appeal and held, inter alia:

719] The starting point for the determination of the issue in this appeal must be the relevant statutory provision, or provisions. The application for interest was made in December 2003 during the currency of the Injury Prevention, Rehabilitation, and Compensation Act 2001. Whilst it may be found that the appellant has an eligibility for interest for a period which pre-dates the coming into force of that Act (1 April 2002) the claim for interest was made during the currency of that statute and therefore it follows that it is the law that was in being at the time the claim was made that is prima facie applicable.

[20] That ruling I find is totally in accordance with the rulings made respectively by Justice Gendall in the Wardle decision (supra) and Justice Heath in the Robinson decision (supra). Those decisions have in turn been followed by decisions of this Court, notably Burston (277/04) and Eagles (380/04).
[21] It follows from that finding that the source of an entitlement for interest must be the provisions of the 2001 Act and in that regard two provisions are relevant, namely ss.114 and 371. The former relating to the entitlement for interest from the commencement of the 2001 Act, and the latter provision being the transitional provision providing for the continuance of the interest provisions of the 1992 and 1998 Acts for claims for interest during the currency of those Acts respectively.

[24] It is the case that those former provisions have the same wording as s.114 in the particular phrase with which the Court is concerned in this case. All provisions state that the date from which interest is payable is one month from the date on which the Corporation "has received all information necessary" for it to calculate and make payment.

[26] I further find that having regard to the nature and meaning of s.114 and its predecessors, namely s.72 of the 1992 Act and s.101 of the 1998 Act, it is the case that interest does not run as a matter of consequence from a date which coincides with the date from which eligibility for weekly compensation may be found to have arisen.

[27] In the present case it is accepted, by reason of the respondent's own decisions and that of the Reviewer and His Honour Judge Cadenhead, that the appellant's entitlement to weekly compensation was to be backdated to the date when it was ceased in July 1987. It was accepted as being so back-dated by reason of the respondent accepting that the appellant was incapacitated within the meaning of the Act, and continued to be so from on and after that date.

[28] However, it is the case that an entitlement to weekly compensation does not give rise to a concurrent entitlement to interest from the date of the commencement of that weekly compensation. The entitlement to interest

only arises from the date when it can be established on the particular facts of the case that the Corporation was in possession of all information necessary for it to calculate and make payment.

[29] As was noted by His Honour Justice Gendall, in Wardle (supra) when considering the statutory provision giving the right to receive interest, His Honour stated as follows:

"Its emphasis is that the person entitled to weekly earnings based compensation shall receive interest on such compensation if it is not paid within one month after ACC receives all the information necessary to enable calculation of the payment. The section does not relate or refer to a date of 'entitlement' to compensation."

Further on in the decision when considering the meaning of s.72 of the 1992 Act as to when the date for eligibility for interest arises, His Honour stated:

"In the present case that date is not when the actual eligibility as later determined arose. There is a distinction between eligibility for compensation in the sense of commencement of entitlement and the eventual payment of the entitlement."

[30] In line with that principle, I note from the facts in the present case that the appellant had substantial periods of post-incapacity employment, details of which were provided by the appellant to the respondent, firstly on 3 August 2000 in respect of employment up to that date, and secondly on 22 August 2003 when the respondent received confirmation from Freedom Air of the appellant's further income earned down to February 2003, when he ceased such employment.
[31] I find that the requirement to provide post-incapacity earnings was information necessary within the meaning of the section, as the respondent was required to calculate and deduce the amount of abatement from weekly compensation that such earnings require in accordance with the Act ...
[32] The requirement of clause 51 of Schedule 1 to the Act states that the Corporation must reduce the amount of weekly compensation to be paid by reference to certain formulae relating to all such earnings, and this is what the respondent was required to do upon receipt of details of the appellant's post-incapacity earnings from Freedom Air and all other former employment.
[33] I therefore find that in terms of s.114 the respondent did not have "all the information necessary" until 22 August 2003 ..."

[33] The Court applied the legislation in force at the time of ACC's consideration of the payment of interest, being the 2001 Act. As the Court found that ACC had "all information necessary" in 2003 it applied s.114 to determine the claimant's entitlement to interest.

[34] A similar approach was taken by the Court of Appeal in Robinson (CA 15105). In that case the appellant had cover under the 1982 Act. In 2001 ACC determined that the appellant was entitled to weekly compensation backdated to 1986. Arrears were paid the same year. The appellant applied for interest and a decision issued by the Corporation in 2001. In a subsequent District Court decision it was determined that the Corporation had "all information necessary" on 15 December 1986. The Corporation paid interest from 1 July 1992 but contended that under s.458 of the 1998 Act interest was not payable under s.72 before 1 July 1992. The High Court agreed with the Corporation's position. The appellant appealed to the Court of Appeal contending, inter alia, that the original s.72 applied. The Court of Appeal dismissed the appeal and held, inter alia:

"[9] There is a difficulty with these formulations in that they assume an entitlement to interest under s. 72 of the 1992 Act. But whether a claimant had such an entitlement will depend on the legislative provisions applying at the time his or her claim is determined ...

[19] Second, the accident compensation regime has gone through a number of changes over the years. The various enactments have, in some respects, been quite different. Accordingly, in resolving this question we must pay close attention to the legislative provisions, and the transitional provisions in particular ..."

[35] The Court of Appeal then considered whether the payment of weekly compensation was accepted under s.421 or 422 of the 1998 Act and held at paragraph 26:

"[26] Whether it is s.421 or s.422 that applies, however, the position in relation to interest is the same. It is governed by s.458 of the 1998 Act ..."

[36] Accordingly, (in Robinson) despite the fact that ACC had "all information necessary" in December 1986, the Court of Appeal determined that s.458 of the 1998 Act operated.
[37] That Court of Appeal decision in Robinson has been considered by the District Court in several recent decisions. In Kearney (30/1/06) the claimant suffered injuries in 19135 and received weekly compensation for various periods thereafter. The compensation was ceased in 1991. A review decision in 2004 quashed ACC's decision and directed it to further investigate the matter. ACC subsequently paid arrears of weekly compensation. The appellant applied for interest in April 2005. The claimant contended that the payment ought to be considered under s.72 of the 1992 Act and not under the 2001 Act. Cadenhead DCJ considered the effect of Robinson as well as the other High Court authorities, and confirmed the District Court's previous approach summarising the relevant principles as follows:

[34] ... To recap the principles:

[i] The first step is to ascertain the date on which payment of weekly compensation entitlement accrues.

[ii] The date for payment of interest for late payment of weekly compensation entitlement crystallises when the Corporation has not made that payment within one month after the Corporation has received all information necessary to enable the Corporation to calculate and make the payment of such weekly entitlement. This issue is a distinct and separate issue from AI above.

[di] The date that interest runs from is the date of crystallisation determined by the factual issue predicated by [ii] above, and it would be that date of crystallisation that would dictate the relevant statutory provisions applicable pursuant to the transition s.371 of the 2001 legislation.

[iv] Issues of unfairness or dilatoriness on the part of the Corporation cannot blur the simple factual exercise predicated to ignite the crystallisation of the interest provisions of the statute.
[v] The legislation does not allow for a retrospective deeming of receipt of "all information necessary".'
[38] Significantly, irrespective of the date payment of interest "crystallises", the Court confirmed that the current transitional provision applied in respect of the payment of interest prior to 1 April 2002.
[39] I n the present case, the appellant contends that the original s.72 applies regarding calculation of interest on her said arrears of compensation recommenced as at 1 August 1991. Her reasoning for this proposition appears to be:

• Interest is automatically triggered where payment of weekly compensation has not been made within one month of the Corporation receiving all necessary information; and
• The Act in force at the time a claimant's weekly compensation is determined and paid applies in respect of the payment of interest.

[40] The appellant appears to rely on the Court of Appeal decision in Robinson (supra) as well as a "concession" by the Corporation in that proceeding. The appellant also relies on King v ACC [1994] NZAR 159 to support the proposition that the Corporation has a duty to act expeditiously and not delay the provision of a payment/entitlement.
[41] However, as clarified in Keamey (supra) payment of interest crystallises when weekly compensation is not paid within one month of the Corporation receiving "all information necessary". The date interest crystallises impacts on whether s.72, 101 or 114 (as referred to above) applies. Where ACC is considering payment of interest during the currency of the 2001 Act, any application of s.72 or 101 will be pursuant to s.371 of the 2001 Act.

[42] The date ACC determines and pays a later payment of weekly compensation is irrelevant to a claimant's right to interest. Interest crystallises at the expiry of the one month period following receipt by the Corporation of "all information necessary". Interest is payable irrespective whether the arrears payment of weekly compensation has been made. There is no basis to support the proposition that the date of payment of arrears dictates the legislation applicable to interest.

[42] Neither the Robinson decision nor an alleged concession by the Corporation assist the appellant. The Court of Appeal in Robinson did not determine that the Act in force at the time the payment of weekly compensation was made applies to the payment of interest. In that case, it just so happened the payment of arrears occurred during the 1998 Act as did the decision issued by the Corporation on interest.
[43] As for the alleged "concession", the Corporation does not concede application of the Act in force either at the time interest crystallises or at the time payment of weekly compensation is made.

• [44] The King (supra) decision has no application to the present appeal. In that case, the claimant had sought on a number of occasions to be assessed. ACC advised the claimant in May and June 1992, before the 1992 Act came into operation, that the assessment would no longer be available under the new Act. ACC therefore did not assess the claimant. On 24 June 1992 the claimant applied for a review from the Corporation's decision not to assess him. The High Court determined that ACC was required to assess the appellant under s.60. The Court arrived at this determination by a number of alternative routes, including:
  

Its interpretation of the transitional provisions in the 1992 Act;

The claimant's application for review under the 1982 Act (which permitted orders from such proceedings to be given full effect pursuant to s.152 of the 1992 Act);

[45] The issue under consideration in this appeal is distinct from s.60 of the 1982 Act. The facts are also dissimilar. Further, and significantly, the High Court relied on an interpretation of the transitional provisions in the 1992 Act to support its decision.
[46] The transitional provisions are determinative here of the payment of interest. As consideration and determination about the appellant's entitlement to interest were made during the currency of the 2001 Act, interest was required to be determined under the 2001 Act. Interest could only be paid under s.114 or 371 depending on the date the interest crystallised.
[47] Also, to apply the original s.72 in 2005/2006, as the appellant proposes, ignores, firstly, the repeal of s.72 and, secondly, the fact and effect of the transitional provisions currently in force.
[48] If the original s.72 were to be applied where interest crystallises during the operation of the 1992 Act (which is contrary to the current case law), such interpretation would make ss.458 and 371 redundant as the modified s.72 would never apply under that interpretation.

Conclusion

[49] The Corporation is a creature of statute and must apply the legislation in force at the time it considers and determines a claimant's payment of interest. The relevant legislation in force here was the 2001 Act. Such legislation had expressly modified s.72 of the 1992 Act with the effect that interest is not payable before 1 July 1992. Parliament decided on 1 April 2002 that interest on unpaid compensation would only run from 1 July 1992 and not for any period prior to that.
[50] For the above reasons this appeal is dismissed.

Judge P F Barber

District Court Judge

Wellington