[1] These two appeals, which were heard together, concern the payment of interest under the accident compensation legislation. In particular, the appeal in CA15/05 is about whether s 458 of the Accident Insurance Act 1998 (the 1998 Act) affects the operation of s 72 of the Accident Rehabilitation and Compensation Insurance Act 1992 (the 1992 Act) in the present case. The appeal in CA56/06 raises the question whether interest under s 72 of the 1992 Act is to be calculated on a simple or a compounding basis.
[2] Mr John Robinson, who is not a lawyer with a current practising certificate, appeared in person to argue his appeal in CA56/06. He sought leave to appear as advocate for his brother, Mr Graham Robinson, in CA15/05 and in CA56/06. The Court granted leave, but with some reluctance. As Cooke J said in Re G J Mannix [1984] 1 NZLR 309 at 314 (CA), the right of audience will rarely be granted to a lay advocate. We must say that we did not receive the type of assistance from Mr Robinson that we would have received from experienced counsel.

Appeal CA15/05

[3] In December 1986, the appellant, Mr Graham Robinson, was medically retired from his employment, following various injuries. He was paid earnings related compensation by the Accident Compensation Corporation (the Corporation) for several years but that lapsed towards the end of 1988 when the appellant failed to provide further medical certificates. In 1992 and 1998 the appellant made further claims against the Corporation for earnings related compensation in respect of the injuries which led to his medical retirement. The Corporation declined these claims. The appellant challenged the declinature of the 1998 claim, but the Corporation’s decision was upheld on review and by the District Court.
[4] Despite that, however, on 23 February 2001 the Corporation accepted that the appellant was incapacitated due to his injuries from the time of his medical discharge in 1986 and was entitled to earnings related compensation from that time. As a result, the appellant was paid compensation, appropriately backdated.
[5] The appellant then applied for interest on the payment. The Corporation determined that it had not been in a position to resolve the appellant’s claim until 9 December 2000 when it received some additional information. Accordingly, it paid the appellant interest from 9 January 2001, one month after payment was due.
[6] The appellant challenged that decision in the District Court, arguing that the Corporation had the information necessary to resolve his claim on 15 December 1986. The District Court agreed and awarded interest from 15 January 1987. The Corporation paid the appellant interest from 1 July 1992, but appealed against the District Court’s decision in relation to the period 15 January 1987 to 30 June 1992. In the High Court, Heath J upheld the Corporation’s appeal: Accident Compensation Corporation v Robinson HC WHA AP12-03 1 August 2003. The appellant then sought and was granted leave to appeal to this Court: HC WHA CIV 2004-488-00260 17 June 2004.

The question for decision

[7] The appeal is by way of case stated on a question of law. Mr J C Robinson put forward two questions:

Whether, in a case where the Corporation had received all the information necessary to enable it to calculate the compensation payable to a person entitled by 15th December 1986 and having entitlement to interest via section 138(1) and section 72 of the 1992 Act arising from 1st January 1987 and where the Corporation continued to deny liability until 23rd February 2001, is interest payable under the 1992 Act.

Can section 458 of the 1998 Act be applied to Interest Debts that had crystallised prior to 1st July 1999.

[8] In granting leave to appeal, Cooper J suggested a question along the following lines:

Whether, in a case where the Corporation had received all the information necessary to enable it to calculate the compensation payable to a person entitled by 15 December 1986 and there was an entitlement to interest under s 72 of the 1992 Act, arising from 1 January 1987, s 458 of the 1998 Act has the consequence that interest may only be paid in respect of the period subsequent to 1 July 1992?

[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 is determined. Accordingly we consider that a simple question along the following lines is more helpful:

In the factual circumstances of this case, is there any statutory authority for interest to be paid in respect of the period before 1 July 1992?

Discussion

[10] Mr Robinson’s arguments were not easy to follow. He argued that either s 72 of the 1992 Act or s 62B of the District Courts Act 1947 provided statutory authority for the payment of interest for the pre-1 July 1992 period.
[11] As to s 72, Mr Robinson argued that:

(a) A claimant’s entitlement to interest is a right which arises automatically by operation of legislation. Interest becomes a debt owed to the claimant by the Corporation and is in the nature of a penalty.

(b) The appellant’s entitlement to interest arose under s 72 of the 1992 Act. Interest was payable to him prior to the implementation of the 1998 Act. This was because the District Court found that the Corporation had all the information necessary to determine his claim as at December 1986. As a consequence, the appellant’s entitlement to the payment of interest had crystallised before the 1998 Act, and s 458 in particular, had come into force.
(c) Section 7, 8 and 18 of the Interpretation Act 1999 operate to protect to the appellant’s crystallised right.
[12] As to s 62B, Mr Robinson argued that if s 72 did not apply in relation to the period prior to 1 July 1992, the District Court had the power to make an award of interest against the Corporation under s 62B(1) in relation to that period.
[13] We deal with the s 72 and s 62B arguments in turn.

Section 72 argument

[14] We do not accept Mr Robinson’s submissions.
[15] First, if the appellant’s rights had crystallised as at December 1986 they would have crystallised in terms of the 1982 Act. That Act did not make provision for the payment of interest in respect of late payments of this type.
[16] Mr Robinson argued that interest could be paid under s 118 of the 1982 Act. He described s 72 of the 1992 Act as a replacement for s 118. Contrary to Mr Robinson’s submission, however, s 118 does not provide a general authority for the Corporation to pay interest, nor was s 72 of the 1992 Act a replacement for it. Section 118 simply authorised the Corporation, with the consent of the Minister of Finance, to make available on an ex gratia basis compensation or rehabilitation assistance to certain persons. These included persons who had cover under the Act but in respect of whom the Corporation was satisfied there were special circumstances which made it reasonable to provide further compensation or rehabilitation assistance.
[17] Mr Robinson referred us to a letter from the Minister for Accident Rehabilitation and Compensation Insurance dated 21 June 1996, in which the Minister said that the Corporation could make interest payments under s 118 in relation to late compensation payments. However, it is the Court which must determine the meaning of s 118, not the Minister. Further, even if, contrary to our view, interest payments could have been made under s 118, that would not assist the appellant. Payments under s 118 were not an entitlement but a matter of discretion.
[18] This Court did hold in Accident Compensation Corporation v Broadbelt [1990] 1 NZLR 169 that the Corporation could make interest payments under s 80(1) of the 1982 Act. However, that provision relates to compensation for pecuniary loss not related to earnings. As a consequence, it has no application to the present case.
[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. Before turning to those provisions, however, there is a general point to be made.
[20] Mr Robinson said that the appellant had filed claims in relation to the injuries for which he ultimately received earnings related compensation in August 1987, September 1987, April 1988, July 1988, July 1992 and September 1998 and that the Corporation had finally accepted the claim as formulated in September 1998 on 23 February 2001. Given that the claimant filed claims in relation to this matter throughout the period that the 1982, 1992 and 1998 Acts were in force, and the Corporation accepted his entitlement to further compensation when the 1998 Act was in force, it is not obvious what principled justification there could be for Mr Robinson’s claim that the appellant’s eligibility to receive interest should be determined in terms of the 1992 Act. The question for the Court is whether that outcome is what the legislation requires.
[21] Turning then to the legislative provisions, s 72 of the 1992 Act provided:

72. Payment of interest where Corporation or exempt employer makes late payment of compensation based on weekly earnings – Where any payment of compensation based on weekly earnings to which a claimant is entitled is not paid by the Corporation or exempt employer within 1 month after the Corporation or exempt employer has received all information necessary to enable the calculation of the payment, interest shall be paid on the amount payable by the Corporation or exempt employer at the rate for the time being prescribed by or for the purposes of section 87 of the Judicature Act 1908 from the date on which payment should have been made to the date on which it is made.

[22] Mr Robinson relied on the decision of the Full Court of the High Court in Estate of SB v Accident Rehabilitation and Compensation Insurance Corporation HC WN AP 393/97 23 November 1998, which concerned a claim for interest under s 72. In 1984 the claimant filed a claim under the 1982 Act. The Corporation declined cover. The claimant sought a review of that declinature. That review was not determined until after the 1992 Act had come into force. The reviewer held that the claimant was entitled to cover under s 28 of the 1982 Act. The Corporation accordingly accepted the claim.
[23] A question then arose as to the payment of interest. The Court held that although the 1982 Act had no provision authorising the Corporation to pay interest, the claimant was entitled to the benefit of s 72 of the 1992 Act. This was the result of the wording of a transitional provision in the 1992 Act, s 138(1), which referred to compensation under the 1982 Act continuing to be payable or be paid “as if it had been calculated under this [1992] Act”.
[24] That decision does not assist the appellant. In the present case, the Corporation accepted the appellant’s entitlement to the compensation which he claimed while the 1998 Act was in force. The claim must be considered under the transitional provisions in Part 13 of that Act. In that connection there are two possibilities:

(a) Section 421, which provides that a person is deemed to have cover under Part 3 of the 1998 Act if his or her claim for cover for personal injury covered by an earlier Act has been accepted before 1 July 1999 (when the 1998 Act came into force).

(b) Section 422, which provides that claims for cover for personal injury lodged under either the 1982 Act or 1992 Act but not determined before 1 July 1999, are to be determined under either the 1982 Act or 1992 Act as appropriate.

[25] Given that the claim which the Corporation ultimately accepted in February 2001 was a claim filed on behalf of the appellant in September 1998 (albeit that it related to his medical disengagement from employment in December 1986), it might be thought that cover was to be determined under the 1992 Act by virtue of s 422(1). However, Mr Wilson QC said that the Corporation considered that the claim fell under s 421 because cover had been accepted while the 1982 Act was still in force and the subsequent dispute concerned simply whether a particular form of compensation was available.
[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. That section provides:

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

(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.

(The effect of s 417 is to repeal the 1992 Act.)

[27] Accordingly, whether deliberately or not, s 458(b) reverses the effect of the judgment in Estate of SB.
[28] Mr Robinson argued that s 458 did not apply in the appellant’s case because it was a provision which was intended to protect the Corporation where “new technology” meant that the Corporation had to provide cover for injuries which initially it thought were not covered under the legislation. The section was not, he said, intended to deal with claims where there was already cover. However, we see no basis for reading the language of s 458 in that way.
[29] In the High Court, Mr Robinson also argued that s 101 of the 1998 Act, rather than s 458, applied to the appellant’s case (s 101 is in similar terms to s 72 of the 1992 Act.) Heath J thought that the point was arguable (at [37]), although he ultimately rejected it (at [48]), and that assessment was a significant factor in Cooper J’s decision to grant leave to appeal (at [30]-[31]). However, Mr Robinson did not take the point before us. He was right not to do so. It has no merit. It is clear from the structure of the 1998 Act that s 101 is intended to apply to claims for cover for injuries arising after 1 July 1999. It is not intended to apply to claims falling within the scope of the transitional provisions in Part 13.

Section 62B argument

[30] Section 62B(1) authorises the District Court to award interest “in a proceeding for the recovery of any debt or damages”. The Court may include interest in the sum for which judgment is given at a rate not exceeding the prescribed rate. Section 62B(2)(b) says that subsection (1) does not apply “in relation to any debt upon which interest is payable as of right, whether by virtue of any agreement, enactment, or rule of law, or otherwise”.
[31] However, as the Corporation argued, the present proceedings were not concerned with the recovery of a debt. Once the Corporation accepted that the appellant was entitled to the further earnings related compensation which he sought, it paid the appropriate amount. The proceeding before the District Court was to determine when the Corporation had the information necessary to enable it to calculate the amount of the appellant’s claim. The answer to this affected the application of the statutory provisions in the accident compensation legislation which deal with entitlement to interest on late payments.
[32] Further, even if the proceedings could have been characterised as being for the recovery of a debt, we doubt that the District Court had the power to by-pass the statutory scheme in the accident compensation legislation by relying on s 62B(1).
[33] Accordingly, the answer to the question set out at [9] above is “no”. The appeal must fail.

Appeal CA56/06

[34] The issue for determination in this appeal is whether s 72 of the 1992 Act provides for the payment of compound interest as held by Heath J: HC AK CIV 2005-485-0127 19 September 2005. The Judge put the issue in this way - does s 72 require that interest accrued after the one month period for payment has expired be added into the “amount payable” under the section for the purpose of the next month’s calculation or not?
[35] The question is a significant one, for two reasons:

(a) Section 101 of the 1998 Act is in materially the same language as s 72 of the 1992 Act, and materially the same language has been carried over into the current provision, s 114 of the Prevention, Rehabilitation and Compensation Act 2001. A decision as to the meaning of s 72 will therefore have application beyond s 72.

(b) Prior to the decision of the High Court in this case, the Corporation has always paid simple interest on late payments.

[36] In the High Court Heath J said that the issue was one of statutory interpretation. The Judge applied the principles articulated by this Court in Alington Group Architects Ltd v Attorney-General [1998] 2 NZLR 183 at 189-190. The issue in that case was whether compound interest was payable under a particular contract. Heath J summarised the principles from Arlington as follows (at [29]):

(a) The question whether interest payable is to be simple or compounded interest must be approached without reference to any predisposition Courts may have demonstrated in favour of simple interest. The question is one of interpretation.

(b) The terms of s 87(1) of the Judicature Act 1908 do not necessarily support the conclusion that the whole tenor of the law is against compound interest. Section 87(1)(a) expressly prohibits the giving of interest upon interest. Such a restriction may well have been thought appropriate when conferring a discretion on the Court to award interest where the parties have not agreed upon the interest payable or there is no statute or other rule of law governing the situation.
(c) Perceptions of what Parliament may or may not have intended in enacting s 87 can have no bearing on what is essentially a question of interpretation of the relevant contract. Any question of interpretation must be approached without any predisposition in favour of simple interest.
[37] Heath J found that, on its wording, s 72 was ambiguous - it was capable of meaning (as the Corporation argued) that simple interest was payable or (as Mr Robinson argued) that compound interest was payable. Accordingly, the Judge said, it was necessary “to determine the interpretation that best fits the underlying policy of the statute” (at [32]).
[38] The Judge encapsulated his views on that aspect as follows:

[33] In my view, it would be contrary to the statutory regime to calculate interest only on the earnings related compensation payable one month after all relevant information is in the possession of the Corporation. Interest ought to be calculated on the amount actually payable (including interest accrued) up to the date of final payment and discharge of the debt.

[34] I analyse the legal position as follows:

(a) The statute implicitly requires the Corporation to pay the cumulative amount of weekly earnings payable within one month of the date on which the Corporation has received all information necessary to enable calculation of the payment.

(b) The Corporation is given the benefit of use of money from the time at which entitlement to compensation (in fact) arose and one month from the time at which the Corporation has sufficient information to confirm a right to compensation.
(c) On the other hand, the person to be compensated is entitled to receive interest for late payment from the expiry of the one month period.
(d) In my judgment Parliament intended to ensure that the person to whom compensation is payable was not disadvantaged by the failure of the Corporation to pay on due date. If the Corporation’s interpretation were to prevail the person to be compensated would be disadvantaged.

[35] Payment of interest on the actual amount due (principal plus accrued interest) acts as an incentive for the Corporation to make payment of the debt it owes within the one month period to which s 72 refers. Were interest accrued not to be taken into account for that purpose, there would be a disincentive for the Corporation to pay on time because the Corporation would have the benefit of the use of that money to the disadvantage of the intended recipient.

Discussion

[39] We agree with the Judge that the issue is one of statutory interpretation. However, we disagree with the conclusion that he has reached. In our view it is clear that Parliament did not intend that interest on late payments under s 72 of the 1992 Act was to be calculated on a compound rather than a simple basis.
[40] Section 72 says that “interest shall be paid on the amount payable by the Corporation or exempt employer at the rate for the time being prescribed by or for the purposes of section 87 of the Judicature Act 1908 from the date on which payment should have been made to the date on which it is made.”
[41] Section 87(1) and (3) of the Judicature Act provide:

(1) In any proceedings in the High Court, the Court of Appeal, or the Supreme Court for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate, not exceeding the prescribed rate, as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment.

Provided that nothing in this subsection shall-

(a) Authorise the giving of interest upon interest; or
(b) Apply in relation to any debt upon which interest is payable as of right, whether by virtue of any agreement, enactment, or rule of law, or otherwise; or
(c) Affect the damages recoverable for the dishonour of a bill of exchange.

...

(3) In this section the term the prescribed rate means the rate of 7½ percent per annum, or such other rate as may from time to time be prescribed for the purposes of this section by the Governor-General by Order in Council.

[42] In summary, then, s 87(1) authorises the court, at its discretion, to order the payment of interest in respect of debts or damages awards at a rate not exceeding the prescribed rate. The proviso makes it clear that nothing in s 87(1) authorises the giving of interest upon interest. However, s 87(1)(b) emphasises the “backstop” nature of the s 87(1) power by providing that s 87(1) does not apply to any debt upon which interest is payable as of right under, among other things, a statute. In such a case an award of interest will not be discretionary, and, depending on the statutory language, interest may be payable at a higher rate than the prescribed rate and the payment of compound interest may be authorised.
[43] As a statutory corporation the Corporation has only those powers which it is given by statute, whether expressly or by necessary implication. Accordingly, the question is whether s 72 authorises (or, more accurately, requires) the payment of compound interest. As we have said, we consider that it does not.
[44] While we accept, as this Court said in Alington, that the limitation on paying compound interest in s 87(1) is of no assistance in interpreting what the parties to a contract intended, we do not accept that it is of no relevance in the present statutory context. Of course, the fact that Parliament did not give the Courts the power to award compound interest under s 87(1) does not necessarily mean that Parliament did not grant the Corporation the power to pay compound interest on late payments under its statute. But one would expect to see clear statutory language requiring such payments.
[45] Here the language of s 72 refers to the rate “for the time being prescribed by or for the purposes of section 87.” Section 87(3) says that prescribed rate means 7.5% per annum (or such other rate as the Governor-General by Order in Council prescribes). The strong inference is that the rate prescribed “by or for the purposes of s 87” is a simple interest rate of (currently) 7.5% per annum. Support for this view is found in the fact that s 72 says nothing about the interval at which compounding is to occur, which is an important aspect of any compounding regime. It is not obvious what the appropriate interval would be. Arguments could be advanced for various intervals.
[46] In addition, in s 118 of the 1992 Act, Parliament did make provision for compounding. That section provides:

118. Penalties for late payment of premiums

Where-

(a) Any premium payable under section 101 or section 102; or
(b) Any premium payable by an earner in respect of earnings other than as an employee under section 114; or
(c) Any premium payable by an earner in respect of earnings as an employee under section 114 where the employer of that earner is not required to make deductions under section 115; or
(d) Any premium in respect of which a notice is issued under section 131 –

is not paid on or before the last date allowed for payment, a penalty of 10% of the amount unpaid is added to that amount, and the penalty compounds at the rate of 10% at 6-monthly intervals and is recoverable as if it were part of the premium.

[47] While that provision is not, as the Judge pointed out, a direct analogy, principally because it deals with what are described as “penalty” payments for late payment of premiums rather than compensatory interest payments for late payment of compensation, it is relevant for two reasons:

(a) It shows that Parliament turned its mind to compounding in a particular context in the 1992 Act, and used language that was plainly effective to achieve its goal of imposing an obligation to pay on a compounding basis.

(b) Parliament identified the interval for compounding, namely six months. By contrast, there is, as we have noted, no interval identified in s 72, and it is not self-evident what the interval should be.

[48] Finally we address the considerations that influenced Heath J in reaching his decision. The Judge held that it was necessary to interpret s 72 as requiring the payment of compound interest for two principal reasons:

(a) To fulfil Parliament’s purpose of ensuring that a person owed compensation was not disadvantaged by late payment; and

(b) To provide an incentive for the Corporation to meet its payment obligations on time.

[49] It is clear from s 72 that Parliament wished to compensate those who did not receive payment within a month of the time at which they should have received payment. It is also true that payments based on compound interest will be more generous or advantageous to recipients than payments based on simple interest. But that does not mean that Parliament intended that payments under s 72 should be based on compound interest. The accident compensation legislation does not have as its principal purpose being generous to claimants. Rather it reflects a range of competing interests, one of which is affordability. To the extent that the accident compensation legislation reflects a social contract, we note that compound interest was not a feature of the common law action for negligence causing personal injury, which the accident compensation legislation has replaced.
[50] As it happens, the appellants have been generously treated. The prescribed rate during the periods at issue (July 1992 to June 2001 for Mr G V C Robinson and March 1998 to May 2002 for Mr J C W Robinson) was 11%. The market interest rate for the period July 1992 to June 2001 was approximately 7.5%. It is also relevant to note in this context that the Court’s power under s 87(1) of the Judicature Act is a power to award interest at a rate not exceeding the prescribed rate. Under the accident compensation legislation, the Corporation must award interest at the prescribed rate.
[51] As to the incentive argument, the Corporation must administer the 1992 Act in good faith in accordance with its terms. Its administrative structures should be designed to ensure that it complies with its responsibilities under the Act, including as to time frames. We think it improbable that Parliament intended that compound interest would be payable under s 72 so as to provide an incentive to the Corporation to comply with its timing responsibilities under the Act. Had Parliament intended such an outcome, we would have expected it to say so, clearly.
[52] For these reasons we conclude that s 72 does not require or authorise the payment of compound interest.

Decision

[53] The appeal in CA15/05 is dismissed. The appeal in CA56/06 is allowed. As to costs, Mr Wilson advised that the Corporation did not seek costs if it succeeded in the appeals, and would meet the reasonable travelling expenses of the advocate in any event. On this basis we make no order as to costs.

Solicitors:
ACC Legal Services (Mr Mercier), Wellington for Accident Compensation Corporation

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