Miller v ACC (Backdated Interest)

In the High Court of New Zealand, Wellington Registry

Facts

In 1974, Mr Miller suffered an injury to his back at work, and was granted  weekly compensatory payments. Following the reports of two surgeons, which both stated that the claimant’s condition was due to disease rather than his accident, the payments were suspended in 1978.

Mr Miller obtained a new report in 1993, which said that there was not a disease process  affecting his back, and then made an application to review the suspension of entitlements. The Accident Compensation Appeal Authority made a ruling in 2003 that Mr Miller’s condition was due to a combination of disease and his workplace accident. Under the laws which applied at the time of Mr Miller’s injury, he was entitled to continuous, ongoing weekly compensation. As such, Mr Miller’s compensation was backdated to the date of the wrongful suspension of his entitlements.

Issue

The issue before his Honour Justice Simon France in the appeal to the High Court in Miller v ACC was whether Mr Miller was entitled to interest on his backdated compensation. Section 114 of the Accident Compensation Act 2001 (the Act) states that:

The Corporation is liable to pay interest on any payment of weekly compensation to which the claimant is entitled, if the Corporation has not made the payment within 1 month after the Corporation has received all information necessary to enable the Corporation to calculate and make the payment. [Emphasis added]

What is meant by “information” in s114 is critical to the issue of whether Mr Miller is entitled to interest. On one hand, “information” could refer to only the information required to calculate the gross weekly entitlement, primarily medical evidence. However, “information” could also mean everything required for ACC to pay the claimant the correct final amount, such as Work and Income New Zealand payments or IRD special tax codes.

History

When Miller v ACC was heard in the District Court, the Court identified two areas where it felt there was insufficient information under s114 until 2003. Firstly, ACC did not have details of Mr Miller’s WINZ payments, which must be deducted and repaid by ACC; secondly, the Corporation did not have the necessary medical information, as there were insufficient reports supporting the view that Mr Miller’s condition was injury related until 2003. Precedent for this approach is set in cases such as Donovan v ACC (210/2011), where Judge Beattie states:

In the circumstances of this case, I find that necessary information within the meaning of Section 114 was advice from the appellant as to whether or not he had received any income during the period or had received a WINZ benefit.

Arguments

In the appeal at hand, France J had to determine whether the recent Court of Appeal decision ACC v Kearney had changed the law as set out in Donovan. Kearney concerned an individual whose compensation was stopped in 1991, and then reinstated in 2004. As with Miller, the Corporation needed further information to determine the level of backdated compensation, such as any earnings or benefits given, as such income is required to be deducted from backdated compensation payments. In spite of this, the Court in Kearney ruled that Mr Kearney was entitled to interest for the whole period.

Council for Mr Miller contended that Kearney has set a precedent, which applies to all cases regarding wrongful suspension. It was argued that at some point, the claimant will have been receiving compensation, and therefore ACC had the required information for weekly payments. As such, interest should be payable on backdated compensation.

ACC contended that the decision in Kearney applies only to situations where the Corporation is at fault in suspending the compensation, whereby fault refers to situations where blame for the wrongful cession of entitlements is solely due to ACC, not medical evidence received at a later date. The Corporation argued that as there is no fault on their behalf in Miller, interest should not be payable to Mr Miller.

Decision

France J says of the decision in Kearney, that “the focus indeed seems to be on whether the Corporation at some point had the information.” As such, France J favours the appellant’s interpretation of what is meant by “information”. This decision is supported by further case law, mainly at District Court level, one such example being Lethbridge. After the reinstatement of Mr Lethbridge’s compensation, the Corporation did not pay interest to the claimant. However, it was later held by Judge Middleton that ACC were obligated to pay interests, as interest payments were not designed as a penalty on the Corporation, but rather were compensatory in nature.

After discussion of the relevant law, in particular the Kearney case, France J writes:

I consider it is clear that where the Corporation has been paying compensation, stops it and then later it is held that the compensation should have continued, the claimant will be entitled to interest. It seems that this is because at the time of suspension or cancellation the Corporation had all the information it needed. The fact that it later needs further information at the time of reinstatement does not matter.

France J rejects the arguments of the Corporation that backdated interest should only be granted in situations where the Corporation was at fault, and says that in the event of an incorrect suspension “… s114 is to be applied at the time that decision was taken and not at the time the backdating is being calculated.” The District Court decision is found to be erroneous, and hence it is overruled. Mr Miller is therefore entitled to backdated interest payments. [1]



[1] At the time of writing, ACC has lodged an appeal of this decision with the Court of Appeal.