Thomas v Accident Compensation Corporation
[2012] NZHC 3206
•30 November 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2011-404-002458 [2012] NZHC 3206
UNDER The Accident Rehabilitation and
Compensation Insurance Act 1992
IN THE MATTER OF an appeal on questions of law from a decision of the District Court
BETWEEN ALAN THOMAS Appellant
ANDACCIDENT COMPENSATION CORPORATION
Respondent
Hearing: 12 September 2012
Appearances: D G Hayes for the Appellant
D K L Tuiqereqere and E Bergin for the Respondent
Judgment: 30 November 2012
JUDGMENT OF GILBERT J
This judgment was delivered by me on 30 November 2012 at 4.00 pm
Pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:………………
Counsel: D K L Tuiqereqere, Auckland: [email protected]
D G Hayes, Auckland: [email protected]
THOMAS V ACCIDENT COMPENSATION CORPORATION HC AK CIV 2011-404-002458 [30 November
2012]
Introduction
[1] Mr Thomas claimed to have suffered a wrist injury in December 1989 while sailing in the Marlborough Sounds. At that time he was employed as a project manager for the design and construction of a sealing machine. This employment was not physically demanding but required him to use a computer. Mr Thomas claimed that as a result of his injury he was unable to work and he received weekly compensation for loss of income from 1990 to 1997. However, throughout this time Mr Thomas worked full-time managing 15 or more companies that he established during this period. Mr Thomas did not disclose this to the Accident Compensation Corporation or to his medical practitioners.
[2] The Corporation commenced a fraud investigation into Mr Thomas’ work activities in 1996. Following this investigation, the Corporation concluded that Mr Thomas’ work activities showed that he was not incapacitated.[1] It accordingly wrote to Mr Thomas on 18 August 1997 advising him that it had cancelled all future payments. It relied on s 73(1) of the legislation then in force, the Accident Rehabilitation and Compensation Insurance Act 1992 (the ARCI Act). Criminal
charges were laid against Mr Thomas for defrauding the Corporation. He was convicted and sentenced in 2000 to three years’ imprisonment.
[1] Thomas v Accident Rehabilitation Compensation Insurance Corporation DC Auckland DCA 129/98,
21 April 2010 at [16] and [63].
[3] Mr Thomas applied for a review of the Corporation’s decision. The review was heard on 5 January 1998. Mr Thomas claimed that he established his companies for the purpose of “self-rehabilitation”, that he did not make any money, and that the Corporation was wrong to have concluded that he was working. The reviewer considered the evidence available to the Corporation from the fraud investigation. In a decision released on 25 February 1998, the reviewer rejected Mr Thomas’ claim about self-rehabilitation. The reviewer found that Mr Thomas established the companies to generate income and that some of them did so. In upholding the Corporation’s decision, the reviewer found that Mr Thomas had been working extensively in these various businesses throughout the time he claimed to have been
incapacitated.
[4] After Mr Thomas was released from prison he was given leave to appeal the reviewer’s decision to the District Court. Appeals to the District Court from a decision of a review officer are to be conducted by way of rehearing with respect to both facts and law.[2] In Wildbore v ACC the Court of Appeal confirmed the correct approach to be adopted in such appeals:[3]
First, the District Court is required to come to its own conclusion on its assessment and evaluation of the evidence and the merits generally. Where the District Court has a different opinion from that of the reviewer, it would be an error of law for it to defer to the reviewer’s assessment of the acceptability of, and weight to be accorded to, the evidence rather than forming its own opinion, although the District Court is entitled to have regard to what the reviewer said and give it such weight as he or she thinks appropriate.
[2] Sections 91 and 92 of the ARCI Act 1992.
[3] Wildbore v ACC [2009] NZCA 34 at [29]. See also Austin, Nichols and Co Inc v Stichting Lodestar
[5] The appeal was heard before Judge Barber over a period of four years from
2006 to 2009. The Judge dismissed the appeal in a reserved judgment issued on
21 April 2010. The Judge found that the evidence gathered by the Corporation during its fraud investigation showed that Mr Thomas’ injury did not prevent him from performing the type of work he undertook prior to his accident. The Judge also found that despite his injury, and despite receiving earnings-related compensation, Mr Thomas continued to work full-time as a controlling executive in his companies. The Judge concluded that Mr Thomas did not suffer from incapacity in terms of ss 37 and 37A of the ARCI Act and that the Corporation was therefore entitled to cease payments to him.
[6] Mr Thomas applied unsuccessfully to the District Court for leave to appeal to the High Court. However, Mr Thomas obtained special leave from this Court to appeal on the following questions of law:[4]
[4] Thomas v Accident Compensation Corporation [2012] NZHC 1073.
(a) Was it an error of law for the District Court to determine the correctness of a decision on a statutory basis other than that used by
the Corporation?
(b) Does s 73 of the ARCI Act allow cancellation of entitlements for
“working”?
(c) Do ss 37 and 37A of the ARCI Act invoke s 73?
(d)Does the application of ss 37 and 37A of the ARCI Act require an occupational medical assessment by a qualified person?
[7] I propose to deal with the first question last because the other questions are relevant to the jurisdictional basis for the Corporation’s decision to cancel payments of weekly compensation to Mr Thomas whereas the first question relates to the District Court’s subsequent determination.
Does s 73 of the ARCI Act allow cancellation of entitlements for “working”?
[8] Section 73(1) of the ARCI Act requires the Corporation to suspend or cancel payment of compensation or any other benefit if it is not satisfied, on the information in its possession, that a person remains entitled to receive this payment. In meeting its obligations under s 73(1), the Corporation must consider whether a person remains entitled to the compensation or benefit under the relevant provisions establishing that entitlement. Section 73(1) provides:
73Suspension, cancellation or refusal of compensation and rehabilitation
(1) The Corporation shall, … if not satisfied on the basis of the information in its possession that a person is entitled to continue to receive any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act, suspend or cancel that payment for treatment, service, or related transport, or the payment of compensation, grant, allowance, or provision of rehabilitation.
[9] Mr Thomas was receiving weekly compensation. The Corporation was not entitled to continue making such payments if it was not satisfied that he remained entitled to them. Entitlement to weekly compensation is dealt with in s 37 and depends on whether a person is incapacitated within the meaning of ss 37A or 37B:
37 Application of incapacity and work capacity provisions
(1) Where the Corporation is required to consider the claim of any person for weekly compensation under this Act –
(a) The Corporation shall determine the person’s incapacity under section 37A or section 37B of this Act, as the case may require; and
(b) If the Corporation determines that the person is not incapacitated within the meaning of section 37A or section 37B of this Act, as the case may be, the person shall not be eligible to receive
weekly compensation under this Act; and
(c) If the Corporation determines that the person is incapacitated within the meaning of section 37A or section 37B of this Act, as the case may be, the person shall be eligible to receive weekly compensation under this Act and the provisions of this Act (including sections 22 and 23) apply accordingly.
[10] Section 37A is the applicable provision in Mr Thomas’ case. Incapacity for the purposes of s 37A depends on whether or not the person is, by reason of his or her personal injury, presently unable to engage in employment in which that person was engaged when the personal injury occurred. Section 37A(1) and (2) provide:
37A Determination of incapacity in relation to earners generally -
(1) For the purposes of this Part of this Act, the Corporation shall determine the incapacity of a person (other than a person to whom section 37B of this Act applies) in accordance with this section.
(2) The object of a determination of incapacity under this section is to determine whether or not the person is, by reason of his or her personal injury, for the time being unable to engage in employment in which the person was engaged when the personal injury occurred.
[11] If the Corporation determines that a person is not incapacitated within the meaning of s 37A (or, where applicable, s 37B) that person is not eligible to receive weekly compensation. This is clear from s 37(1)(b) quoted above and s 37A(4)(a) which provides:
(4)(a) If the person is not at the time receiving weekly compensation under this Act for loss of earnings, that person shall not then be eligible to commence receiving weekly compensation for such loss.
Section 37B(4)(a) is to similar effect.
[12] Sections 37(1) and 37A(4)(a) deal with the eligibility of new claimants for weekly compensation. Sections 37(2) and 37A(4)(b) deal with the continuing eligibility of those receiving weekly compensation. Section 37(2)(a) provides that ss 37A and 37B continue to apply while a person is receiving weekly compensation and the Corporation may from time to time make further determinations of the person’s incapacity in accordance with those sections:
(2) While a person is receiving weekly compensation under this Act, -
(a) Section 37A or section 37B of this Act, as the case may be, shall continue to apply to the person and the Corporation may further determine from time to time, in accordance with section 37A or section 37B of this Act, as the case may require, the person’s incapacity.
[13] The Corporation may also assess the person’s “capacity for work” in accordance with s 51. Section 37(2)(b) provides:
(2) While a person is receiving weekly compensation under this Act, - (b) Section 51 of this Act shall also apply to the person and the
Corporation may from time to time assess, in accordance with
that section, the person’s capacity for work.
[14] “Capacity for work” refers to a person’s capacity to engage in work for which he or she is suited by reason of experience, education, or training, or any combination of those things, having regard to the consequences of the person’s personal injury.[5]
[5] Section 51(2).
[15] Assessments of capacity for work under s 51 must be carried out in accordance with the procedure developed by the Corporation and gazetted in accordance with s 50 and in accordance with natural justice.[6]
[6] Section 51(3).
[16] Section 51(7)(a) provides that if a person is assessed under s 51 as having a capacity for work, that assessment shall be regarded, for the purposes of s 37A, as a determination that the person is able to engage in the employment in which that person was engaged when the personal injury occurred. This is provided for in
s 51(7)(a):
(7) If a person is assessed under this section as having a capacity for work, then, -
(a) For the purposes of section 37A of this Act, that assessment shall be regarded as a determination that the person is able to engage in employment in which that person was engaged when the personal injury occurred.
However, the person’s entitlement to receive compensation for loss of earnings does not cease immediately upon such an assessment being made. Rather, the entitlement ceases three months after the person is assessed under s 51 as having a capacity for work.[7]
[7] Section 49.
[17] The Corporation did not assess Mr Thomas under s 51 and it has no application in this case. The Corporation could have initiated an assessment under s 51 but it was not required to do so before cancelling payments to Mr Thomas. This follows from s 37(2) which makes it clear that further determinations of incapacity may be made from time to time under s 37A. The Corporation’s power to require an assessment of a person’s capacity for work under s 51 is discretionary and continues until it determines that the person is not incapacitated. Thereafter, by virtue of s
37A(4)(b), the Corporation has no power to assess the person’s capacity for work
under s 51. Section 37A(4)(b) provides:
(4) If the Corporation determines under this section that a person is able to engage in employment in which the person was engaged when the personal injury occurred, then, -
(b) If the person is at that time receiving weekly compensation under this Act for loss of earnings, that entitlement shall cease immediately and the power to assess the person under section 51 of this Act shall no longer be exercisable.
[18] Section 37(3) provides that a person’s entitlement to weekly compensation may cease as a consequence of the operation of ss 37A, 37B or 51 of the ARCI Act. However, s 37 does not limit any other provision of the ARCI Act, including s 73. This is clear from s 37(4) which provides:
(4) Nothing in this section limits any other provision of this Act.
[19] As can be seen from the above analysis, there is no inconsistency between ss 37, 37A, 37B, 51 and 73; these sections work together. Section 37 addresses eligibility to receive weekly compensation. Such eligibility depends on incapacity in terms of ss 37A or 37B. Once a person is in receipt of weekly compensation, the Corporation may make ongoing determinations of incapacity from time to time under ss 37A or 37B. It may also assess the person’s capacity for work under s 51. If a person is assessed as having a capacity for work under s 51, this is to be regarded as a determination that the person is able to engage in pre-injury employment for the purposes of s 37A and therefore not incapacitated. If the person is found not to be incapacitated as a consequence of a determination under s 37A or s 37B or s 51, that person’s entitlement to weekly compensation ceases. The Corporation is then obliged to cancel further weekly compensation payments under s 73.
[20] If the Corporation becomes aware that a person in receipt of weekly compensation is working, it may need to reconsider the question of incapacity and that person’s ongoing entitlement to receive weekly compensation payments. If the Corporation finds that the person is working in their pre-injury employment, it may determine that the person is no longer incapacitated in the relevant sense and therefore no longer eligible to receive weekly compensation. The Corporation might reasonably reach the same conclusion if it finds that the person is working in a manner that demonstrates that he or she is not incapacitated and is able to resume working in their pre-injury employment. In either of these cases, the Corporation would be obliged under s 73 to suspend or cancel further payments of weekly compensation to that person.
[21] On the other hand, the mere fact that a person is working may not be sufficient to justify the Corporation cancelling ongoing payments of weekly compensation or other entitlements. It would depend on the nature of the work being undertaken and whether it shows that the person is no longer incapacitated for the purposes of s 37A (or, where applicable, s 37B). If the information in the Corporation’s possession regarding the work being undertaken is such that it is no longer satisfied on the balance of probabilities that the person is incapacitated, the Corporation must cancel or suspend further payments of weekly compensation.
[22] It follows that the answer to the question of law raised in this part of the appeal is “yes”. The fact that a person is working may allow, indeed require, the Corporation to cancel entitlements under s 73. This will depend on whether the information in the Corporation’s possession relating to the work being undertaken leaves it in the position where it is no longer satisfied that the person is incapacitated.
Do ss 37 and 37A of the ARCI Act invoke s 73?
[23] As noted, s 73 applies not only to payments of weekly compensation but to other benefits available under the ARCI Act. The Corporation’s obligation under s 73 to suspend or cancel benefits depends on whether or not it is satisfied on the basis of the information in its possession that the person remains entitled to those benefits. This requires the Corporation to consider whether the person is eligible under the applicable provisions creating the relevant entitlement. There is therefore a linkage between s 73 and those sections of the ARCI Act creating the entitlement to the benefits referred to in s 73.
[24] As discussed, where a person is receiving weekly compensation, the ongoing entitlement to such compensation may require ongoing assessment in terms of s 37(2) in accordance with ss 37A, 37B or 51, depending on the circumstances. If the Corporation determines that the person is not incapacitated in the relevant sense, that person is not eligible to receive weekly compensation in terms of s 37(1)(b) and their entitlement shall cease immediately in terms of s 37A(4)(b). In those circumstances, s 73 requires the Corporation to suspend or cancel payments of such compensation. In that sense, ss 37 and 37A invoke s 73; a determination under ss 37 and 37A that a person is no longer incapacitated gives rise to an obligation on the Corporation under s 73 to cancel or suspend payments. It follows that the answer to this question is also “yes”.
Does the application of ss 37 and 37A of the ARCI Act require an occupational medical assessment by a qualified person?
[25] The answer to this question is “no”. The Corporation may take such advice
but is not required to do so in all cases. Section 37A(3) provides:
(3) The Corporation may make a determination under this section at any time and from time to time, and, in so doing, the Corporation may obtain such professional, technical, specialised, or other advice from such persons as it considers appropriate.
[26] Whether such advice or medical assessment is needed will depend on the particular circumstances of the case. For example, if it is established that a person is working full-time in the same position as they were pre-injury and it is clear that the injury is no longer impeding the person’s ability to carry out such work, specialist advice may not be required before making a proper determination under s 37A. However, I anticipate that in most cases the Corporation would need specialist advice before being able to make a proper and reasonable determination of incapacity.
Was it an error of law for the District Court to determine the correctness of a decision on a statutory basis other than that used by the Corporation?
[27] Mr Hayes, for Mr Thomas, submits that the Judge made an error of law by making a decision about incapacity under ss 37 and 37A whereas the Corporation relied solely on s 73. Mr Hayes submits that the Judge had no power to make a determination under ss 37 and 37A. He relied on s 91(8) which provides that the District Court’s powers on an appeal are limited to confirming, revoking or modifying the decision, which in this case was made under s 73, not ss 37 and 37A.
[28] The correctness of the Corporation’s decision under s 73(1) in this case turns on the issue of incapacity under s 37A. As noted, the Corporation would have been required to suspend or cancel payments if it determined that Mr Thomas was not incapacitated in terms of ss 37 and 37A. However, the Corporation’s obligation to suspend or cancel payments under s 73 could arise even before any such determination was made. In particular, the Corporation would be required to stop
payment under s 73 if it was not satisfied that a determination of incapacity under s 37A would be justified based on the information in its possession. It follows that the Corporation could not make a decision under s 73 without having regard to the issue of incapacity under ss 37 and 37A.
[29] It is not clear from the Corporation’s decision under s 73 whether it was based on a determination that Mr Thomas was not incapacitated in terms of s 37A or on the fact that the Corporation was no longer satisfied that he was incapacitated. It appears from the Judge’s decision that the former is the case.[8] However, this does not matter because, either way, it is not possible to scrutinise the legitimacy of the Corporation’s decision without addressing the question of incapacity under ss 37 and
37A.
[8] At [16].
[30] In my view, the Judge made no error of law in addressing the question of incapacity under s 37A. On the contrary, he was obliged to do so because it provided the foundation for the Corporation’s decision under s 73. The answer to this question is “no”.
Result
[31] The answers to the questions of law are as follows:
(a) Question 1: Was it an error law for the District Court to determine the correctness of a decision on a statutory basis other than that used by the Corporation?
The answer is “no”. The District Court was obliged to consider the question of incapacity under s 37A in order to determine whether the Corporation was correct in cancelling weekly compensation payments to Mr Thomas under s 73.
(b) Question 2: Does s 73 of the ARCI Act allow cancellation of
entitlements for “working”?
The answer is “yes”, depending on whether the information in the Corporation’s possession relating to the work being undertaken is such that it is no longer satisfied that the person is incapacitated.
(c) Question 3: Do ss 37 and 37A of the ARCI Act invoke section 73
The answer is “yes”. A determination under ss 37 and 37A that a person is no longer incapacitated triggers an obligation on the Corporation under s 73 to cancel or suspend payments.
(d)Question 4: Does the application of ss 37 and 37A of the ARCI Act require an occupational medical assessment by a qualified person?
The answer is “no”. It depends on the circumstances.
[32] The District Court Judge did not err in respect of any of the questions of law posed on this appeal. The appeal is accordingly dismissed.
[33] I was not addressed on the question of costs. Any application for costs should be made by memorandum to be filed and served by 4.00 pm on
14 December 2012. Any memorandum in response should be filed and served by
4.00 pm on 25 January 2013.
M A Gilbert J
[2008] 2 NZLR 141, (2007) 18 PRNZ 768 (SC).
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