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Buis v Accident Compensation Corporation (Calculation of Interest payment) [2020] NZACC 46 (18 May 2020)

Last Updated: 11 June 2020

IN THE DISTRICT COURT
AT WELLINGTON

I TE KŌTI-Ā-ROHE
KI TE WHANGANUI-A-TARA


[2020] NZACC 46 ACR 213/18

UNDER THE ACCIDENT COMPENSATION ACT 2001

IN THE MATTER OF AN APPEAL UNDER SECTION 149 OF THE ACT

BETWEEN MICHAEL BUIS

Appellant

AND ACCIDENT COMPENSATION CORPORATION
Respondent

Hearing: 13 February 2020

Appearances: Appellant in Person

D Tuiqereqere for the respondent

Judgment: 18 May 2020


____________________________________________________________________


RESERVED JUDGMENT OF JUDGE AA SINCLAIR
[Calculation of Interest: s 114 and 371 of the Accident Compensation Act 2001 being s 72 of the Accident Rehabilitation & Compensation Insurance Act 1992]

____________________________________________________________________

[1] At issue in this appeal is the decision by the Accident Compensation Corporation (“the Corporation”) dated 14 November 2017 determining the entitlement of the appellant, Michael Buis, to interest on two payments of weekly compensation arrears made in December 2006.
[2] Having initially issued a decision fixing interest from 13 April 1994, the Corporation issued a further decision on 19 February 2007 determining that interest was payable on these arrears payments from 13 July 1992. In 2017, following an application by Mr Buis, the Corporation agreed to pay interest from 1 July 1992 stating that this was the earliest day from which interest could be calculated. Mr Buis disputes the Corporation’s position and claims that the original interest provision in s 72 of the Accident Rehabilitation & Compensation Insurance Act 1992 (“the original s 72”) applies and further interest is payable for a period prior to 1 July 1992.

Background

1976 -2003

[3] In July 1976, Mr Buis suffered an epidural infection which led to T9 paraplegia. At the time, Mr Buis was 20 years of age and was employed as a leading steward with the Royal New Zealand Navy (“RNZN”).
[4] Mr Buis’ initial claim for cover was declined on the basis that the condition was not caused by an accident. Mr Buis applied to review this decision and produced medical evidence to show that his condition was caused by medical misadventure. Cover was subsequently granted in a review decision dated 29 January 1980. The Corporation proceeded to determine Mr Buis’ entitlements including entitlement to earnings related compensation/weekly compensation.
[5] Various assessments followed. Mr Buis was employed for a period in 1978/79 and again at various times between 1981 and 1984. In June 1986 he commenced employment with the Department of Social Welfare (New Zealand Income and Support Services). He resigned from his (then) part time position on 1 May 1996 due to medical issues related to his 1976 injury and applied for weekly compensation.
[6] The Corporation obtained earnings information from NZISS and calculated Mr Buis’ weekly compensation on 24 May 1996 at $135.71 per week. In a letter dated 28 June 1996, Mr Buis disputed this calculation noting that make up pay was paid to him for the period 10 February 1983 to 2 June 1986 based on 80% of wages paid by his various employers during this period. He contended that he had been incapacitated since his primary injury in 1976 and make up pay should be calculated based on his RNZN wages. The Corporation maintained its position that his weekly compensation should be paid based on his earnings in the period immediately before 2 May 1996.
[7] Mr Buis lodged a review from the Corporation’s decision. The review was dismissed and an appeal to the District Court was filed. This appeal was settled in early 1999 on the basis that the Corporation accepted that Mr Buis had been incapacitated since his accident in 1976 and was entitled to make up pay on that basis.
[8] The Corporation proceeded to obtain the necessary information (which included post incapacity earnings information and benefits paid over the relevant period) to be able to calculate Mr Buis’ entitlement to make up pay. In November 1999, the Corporation made an arrears payment to Mr Buis covering the period from 1981 to 1999. A second arrears payment was made in early 2001 for the period from 1979 to 1981.
[9] In a letter dated 23 March 1999 discussing the make-up pay, Mr Buis observed:

Interest of course will need to be calculated at some point, after negotiation with the Corporation, although a recent High Court decision has fixed this level at either 11% or 11.25%

The Corporation considered Mr Buis’ entitlement to interest following the first arrears payment and issued a decision on 20 March 2000. A further interest decision was issued on 16 May 2001 following the second arrears payment. Interest payable on the arrears payments for the period from 1 July 1992 was calculated in the total amount of $106,112.39.

[10] Mr Buis lodged a review seeking interest for the period before 1 July 1992 under the original s 72 provision. This review was dismissed, and Mr Buis filed an appeal in the District Court.

[11] Judge Hole allowed the appeal in a decision dated 10 October 2003. His Honour found that Mr Buis had applied for interest prior to 1 July 1999 and held that interest should therefore be calculated under the original s 72.[1] In accordance with this decision, the Corporation subsequently recalculated Mr Buis’ interest entitlement for the period from 1 July 1992 resulting in a further payment to him of $73,871.91.

Recalculation of relevant earnings and interest

[12] In March 2004, Mr Buis requested the Corporation to reassess his original “relevant earnings” to include the value of allowances that he received from the RNZN. Following investigation, the Corporation agreed to include the value of certain allowances in its calculation of relevant earnings. Arrears based on the new earnings figure totalled $124,956.72.
[13] Arrears of interest were initially calculated in the sum of $109,042.15. The “all information necessary” date relied upon by the Corporation was the date of the High Court decision in Lewis[2] being 13 April 1994. Following further communication with Mr Buis, the Corporation revisited the matter and on 19 February 2007 issued a further letter accepting that the “all information necessary” date should be that of the Accident Compensation Appeal Authority’s decision in Lewis[3]. This date was 13 July 1992. The Corporation recalculated the total interest payable in the sum of $118,620.27.

Further request for reconsideration of entitlement to interest

[14] Mr Buis wrote to the Corporation on 28 April 2017 re questing that the Corporation reconsider his entitlement to interest on the weekly compensation arrears payments made in December 2006. He contended that the interest on the arrears should be calculated under the original s 72.
[15] The Corporation responded on 29 May 2017 stating that issues raised by him had been fully considered in previous communications over the years. The Corporation was satisfied that its decision of 19 February 2007 was correct. The letter went on to state that the Corporation would not be responding to any further correspondence in the matter “unless you are able to provide new information that has not previously been provided to us”.
[16] Mr Buis sought to provide that further information in a letter dated 7 November 2017. In summary, he considered that there had been failures by the Corporation in the calculation of ERC following the Lewis decision. In addition, the necessary information was always available from the RNZN if the Corporation had requested the same.
[17] The Corporation’s internal panel considered the matter and on 14 November 2017 issued a further decision letter advising that a further interest payment of $276.35 would be made on Mr Buis’ backdated weekly compensation. The letter went on:

The amount of interest we’re paying covers the period from 1 July 1992, the earliest date that ACC can calculate interest from, to 18 December 2006, the date we paid your backdated weekly compensation for 17 January 1977 to 20 June 2006. $276.35 is the difference between the recalculated interest total of $118,896.62 and the interest amounts already paid on 18 January 2007 of $109,042.15 and 26 February 2007 of $9,578.12.

[18] Mr Buis filed an application to review this decision which was heard before Ms Rachael Knight on 10 April 2018. This application was dismissed in a decision dated 10 April 2018 and Mr Buis subsequently lodged a notice of appeal to the District Court.

Relevant statutory provisions.

[19] A provision for the payment of interest on late payments of ERC was first introduced in the 1992 Act which came into force on 1 July 1992. Pursuant to s 72 of the 1992 Act, interest was payable for late payments of weekly compensation where the payment was not made within 1 month of the date the Corporation had all information necessary to make the payment. The High Court interpreted s 72 as permitting the payment of interest for periods prior to 1 July 1992.[4]
[20] On 1 July 1999, the 1992 Act was repealed with the enactment of the Accident Compensation Act 1998 (“the 1998 Act”). Section 101 of the 1998 Act provided for the payment of interest for periods after 1 July 1999. Section 458 of the 1998 Act operated for periods before 1 July 1999. Section 458(a) expressly preserved s 72 of the 1992 Act. However, s 458 (b) modified its operation as follows:

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.

[21] The 1998 Act and Accident Insurance (Transitional Provisions) Act 2000 were subsequently repealed under s 339 of the Accident Compensation Act 2001 (“the 2001 Act”) which came into force on 1 April 2002. Section 114 of the 2001 Act provides for the payment of interest for periods after 1 April 2001. 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 states:
  1. 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.

[22] Section 390 of the 2001 Act provides that the Corporation may revise decisions made under earlier Acts if it appears to the Corporation that the decision was made in error. Subsection (3) states that in revising a decision, the Corporation must apply the Act that applied at the time when the decision being revised was made.

Case for Mr Buis

[23] I summarise Mr Buis’ submissions as follows:
[h] In King v Accident Compensation Corporation[9] the High Court took a dim view of the Corporation’s attempts to deliberately delay a claim for permanent incapacity assessment under the 1982 Act until repealed by the new Act. In the present case, the Corporation has deliberately failed to carry out its statutory duty in Lewis and is now attempting to take advantage of the interest limiting provision that took effect from 1 July 1999.
[i] The limiting provisions (ss 458 and 371) only apply in cases where there is compensation due for periods prior to 1 July 1999 but the interest application was made on or after that date. In this case Judge Hole in Buis v Accident Compensation Corporation[10] has already found on the facts that the original s 72 applies.
[j] In Accident Compensation Corporation v Bartels[11] the Court upheld the Corporation’s argument that in a situation where later information shows that the original decision under an early Act was wrong then it is appropriate to apply s 390 to correct that error. In the present case, the Corporation breached its statutory duty in not obtaining the allowances information when it knew that affected claimants (including himself) would be underpaid. This is an error that must be corrected by way of s 390 as the legislation intended.

Analysis

Applicable Statutory Provision?

[24] The principal issue for determination is whether the Corporation was required to apply the original s 72 provision or the modified s 72 pursuant to s 371 of the 2001 Act when it considered Mr Buis’ entitlement to interest on the 2006 arrears payment of weekly compensation in early 2007.
[25] This issue was considered in McLean v Accident Compensation Corporation [12]. In that case, Ms McLean had received an arrears payment of weekly compensation for the period from May 1991 following a successful review decision in 1995. She applied for interest in 2002. The Corporation took the position that, while it had “all information necessary” in May 1991, interest was payable from 1 July 1992. The question for determination was whether the original s 72 operated in terms of Ms Mclean’s entitlement or the modified s 72. In the District Court, Judge Barber stated[13]

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 12 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.

[26] In the High Court Stevens J agreed with this approach and declined leave to appeal. He held:

[35] With respect to the argument for the appellant based on the applicability of s 72 of the 1992 Act, I am satisfied that the approach followed by the Judge in the District was correct. Such an approach finds support from a dictum in the Court of Appeal in Robinson and the other authorities cited at [31] above. I agree with the submission of counsel for the Corporation that the application of the relevant legislation at the time that the determination is made by the Corporation regarding payment of compensation (or interest) is consistent and would avoid haphazard results dependent upon accidents of timing.

[36] So far as the Corporation is concerned, being a creature of statute, it must apply the legislation in force at the time that its dealing with any particular claim. It would be entirely artificial to say that the Corporation, dealing with claims for interest for 2003 or 2006, could reach back and apply s 72 of the 1992 Act when, at the point of determination, that section had been repealed. It is true that the effect of s 72 continued in part at those times, but that was only due to the effect of s 371 of the Act. By its expressed terms the payment of interest prior to 1 July 1992 was not possible.

[27] As noted above, Stevens J considered that such a construction was consistent with the Court of Appeal decision in Robinson v Accident Compensation Corporation.[14] In that case, Mr Robinson had cover under the 1982 Act. In 2001, the Corporation determined that he was entitled to weekly compensation backdated to 1986. Arrears were paid the same year. Mr Robinson applied for interest and a decision was 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 and contended that under s 458 of the 1998 Act, interest was not payable under s 72 before 1 July 1992. The Corporation’s decision was upheld in the High Court and Mr Robinson appealed to the Court of Appeal asserting that the original is 72 applied. The Court observed:

[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 has such an entitlement will depend on the legislative provisions applying at the time his or her claim was determined. ......

[19] ... 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 ...

[28] The Court of Appeal rejected Mr Robinson’s arguments. Despite the fact that the Corporation had “all information necessary” in December 1986, the Court of Appeal determined that s 458 of the 1998 applied.
[29] In the present case, the Corporation made an arrears payment of weekly compensation to Mr Buis in December 2006. The decision on interest was initially made in January 2007 and revised in February 2007 before being revised again in November 2007. These events fall clearly within the operation of the 2001 Act.
[30] Mr Buis submits that his right to have the matter completed under the 1992 Act is preserved under s 18 of the Interpretation Act 1999. Sections 17 and 18 of the Interpretation Act 1999 provide for the saving of certain statutory rights following the repeal of governing legislation. The application of the sections was discussed by Judge Barber in McLean. He noted that if the 1998 and 2001 Acts had been silent in respect of s 72 an argument could have been made that the original s 72 should apply. However, he went on to say:

[28] ... 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 Limited v CIR [2001] NZCA 215; [2002] 1 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.

[31] Stevens J concurred with Judge Barber’s reasoning. It follows that ss 458 (of the 1998 Act) and 371 (of the 2001 Act) preserve the payment of interest for periods prior to the enactment of the particular legislation and confine the payment of interest to periods after 1 July 1992.
[32] Mr Buis submits that his letter in March 1999 seeking interest to be calculated at a later time preserved his entitlement to interest under the original s 72. However, this letter related to the makeup payment of weekly compensation being calculated at that time. It did not apply to the arrears payments made in 2006 which related to the reassessment of Mr Buis’ “relevant earnings”. Significantly, this issue was not raised by Mr Buis until 2004. Accordingly, it could not be said on the evidence before the Court, that this interest payment was in the contemplation of Mr Buis in March 1999.
[33] Mr Buis further submits that the decision of Judge Hole in Buis v Accident Compensation Corporation[15] in which his Honour held that the original s 72 applied, is binding in the present case. In the 2003 decision, Judge Hole made a factual finding that Mr Buis’ claim for interest had been made before 1 July 1999. In the present case, Mr Buis’ claim for interest was made in 2006 and in relation to a different arrears claim. The decision therefore has no application.
[34] Mr Buis also relies on the decision in Accident Compensation Corporation v Kearney[16]. In this case, Mr Kearney was injured in 1985 and received weekly compensation for various periods. The Corporation terminated his weekly compensation payments from 31 July 1991. This decision was quashed at review as being unlawful and Mr Kearney became entitled to backdated weekly compensation from 1 August 1991. He applied for interest in April 2005. The Court of Appeal referred to a number of previous cases including Robinson and McLean and held that s 458 of the 1998 Act applied.
[35] At paragraph 32 of its decision the Court of Appeal discussed the Corporation’s obligation to pay interest noting that if the Corporation did not have all the information needed to enable calculation of the compensation, the obligation to pay interest did not arise until such information was forthcoming. The Court went on to state:

[32] ... In our view, it was implicit in that qualification that the Corporation would ask information that it needed in a timely way. Accident victims could not be expected to mind-read or to search through the immensely complicated legislation themselves. Parliament would not have countenanced a regime whereby the Corporation sat by, requested nothing, and then later attempted to take advantage of the qualification to its obligation to pay interest on late payments. Still less could Parliament have intended the Corporation to be able to represent to an accident victim it (wrongly) did not need any further information, and then later be able to take advantage of that error. In short, Parliament would not have envisaged a situation where the Corporation sought to benefit from its own wrong.

[36] Mr Buis places considerable weight on these obiter comments. However, I do not consider that these comments assist Mr Buis’ claim (under s 390 or otherwise). Significantly, in Kearney the Corporation had made errors and in addition had “all information necessary” in December 1986. Nevertheless, despite these factors, the Court of Appeal still found that s 458 of the 1998 Act applied and the commencement date for the payment of interest was 1 July 1992.
[37] Mr Buis also relies upon the decision in King v Accident Compensation Corporation[17]. He contends that as in King, the Corporation has deliberately failed to carry out its statutory duty in Lewis and is now attempting to take advantage of the interest limiting provisions that took effect from 1 July 1999. King involved an application for judicial review. The High Court found that there had been a refusal by the Corporation to exercise its statutory power to make an assessment of the claimant’s entitlement for compensation for permanent incapacity under s 60 of the 1982 Act on the basis that s 60 assessments were to be repealed under the new 1992 Act. The Court was critical of the Corporation observing that its argument “was not cluttered with objective merit” and held that the Corporation was required to assess the appellant under s 60.
[38] I do not consider that this decision has any application. The facts and issues under consideration in the present appeal are quite different to those in King. Furthermore, and importantly, that case involved a consideration of the transitional provisions in the 1992 Act with the High Court finding that the relevant provisions were sufficiently broad to include an injured person’s entitlement to have a s 60 assessment considered.

Application of s 390 of the Accident Compensation Act 2001?

[39] Mr Buis contends that the Corporation breached its statutory duty in not obtaining information as to his allowances when it knew following Lewis that he (and other claimants) would be underpaid. He asserts that this is an error that must be corrected under s 390 of the 2001 Act. He relies on the Accident Compensation Corporation v Bartells[18] in which the Court upheld the Corporation’s argument that in a situation where later information shows that the original decision under an earlier Act was wrong then it is appropriate to apply s 390 to correct the error. In Accident Compensation Corporation v Bartells the Court stated:

....Section 390 is a back stop for both claimants and the Corporation when all else has failed (for example the formal claim-appeal system) and yet a decision has been made that is an error. The section’s purpose therefore, is to ensure that such a decision does not stand where it can be established that the decision has been made in error.[19]

[40] The decisions under consideration are the interest decisions in January and February 2007. These follow the Corporation’s decision in December 2006 fixing arrears payable to Mr Buis following the recalculation of his relevant earnings to include allowances. The Corporation submits that they are new decisions and did not involve the revision of the interest decisions made on the 1999 and 2001 arrears payments of weekly compensation.
[41] I agree with the Corporation’s submission. Following the recalculation of Mr Buis’ weekly compensation, the Corporation was required to consider the question of interest on these further arrears payments and to issue a decision. Accordingly, I find that the two interest decisions issued in January and February 2007 are new decisions and s 390 does not apply.
[42] Finally, with regard to Mr Buis’ submissions asserting that the Corporation breached its duties and obligations to collect all information necessary to be able to correctly calculate ERC and to implement the Lewis decision, I note that these would have been relevant if the Corporation had determined that it had received ‘‘all information necessary” after 1 July 1992. However, the Corporation accepts that it received “all information necessary” by or before 1 July 1992 which I have found to be the earliest date from which interest is payable.

Conclusion

[43] As noted above, the Corporation is a creature of statute and must apply the legislation in force at the time it determines a claimant’s entitlement to interest. The 2001 Act was in place at the time that the Corporation made its decisions to pay interest in January and February 2007. Section 371 of this Act expressly modifies s 72 of the 1992 Act with the effect that interest is not payable before 1 July 1992.
[44] Accordingly, the interest payments made to Mr Buis were correctly calculated by the Corporation.

Decision

[45] The appeal is dismissed. There is no claim for costs.

AA Sinclair
District Court Judge


Solicitors: Medico Law, Auckland for the respondent


[1] Buis v Accident Compensation Corporation [2003] NZACC 246.

[2] Mr Buis made this application in reliance upon the decision in Accident Rehabilitation and Compensation Insurance Corporation v Lewis HC 149/93 Auckland Registry, 13 April 1994, Barker J in which the Court held that earnings of an employee are not limited to earnings returned as assessible income and in that case, included the value to an employee of the provision of a company car.

[3] Lewis v Accident Rehabilitation and Compensation Insurance Corporation No 236/92.
[4] Estate of SB v Accident Rehabilitation and Compensation Insurance Corporation AP 393/97 HC Wellington 18 November 1998 Doogue and Wild JJ; and Howley v Accident Compensation Corporation AP 29/01 HC Invercargill 6 December 2001 Hansen J.

[5] This form is completed by an employer providing details of an employee’s gross earnings up to the date of the accident.

[6] Robinson v Accident Compensation Corporation [2006] NZCA 289; [2007] NZAR 193.

[7] McLean v Accident Compensation Corporation [2008] NZHC 615.

[8] Accident Compensation Corporation v Kearney [2010] NZCA 327.

[9] King v Accident Compensation Corporation [1994] NZAR 159.

[10] Above n2.

[11] Accident Compensation Corporation v Bartels [2006] NZHC 939; [2006] NZAR 680.

[12] Above n7.

[13] Supra at [49].

[14] Above n6.

[15] Above n2.

[16] Accident Compensation Corporation v Kearney [2010] NZCA 327.
[17] King v Accident Compensation Corporation [1994] NZAR 159.

[18] Above n11.

[19] At [33].


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