30 June 2023

Accident Compensation: Simpson v. ACC

 

Having no declared income and having not filed any tax returns for the previous four years, Albert Simpson failed in a claim for earnings related accident compensation based on his tourism business.

In February 2020, Accident Compensation accepted his claim for personal injury by accident.  He was off work with infection to a wound after cardiac surgery.  He was subsequently refused earnings related compensation.

The High Court was told he is owner operator of Discovery River Cruises Ltd.  Its website advertises luxury houseboat cruises on the Waikato River.  It has not been a profitable business.  In the previous four years annual losses had exceeded between $50,000 and over $100,000.  Mr Simpson was not paid a salary.  His only income was a pension.

To determine earnings-related compensation for shareholder-employees, the Accident Compensation Act looks at earnings received immediately before an accident.  Mr Simpson had no earnings.  He said another part of the legislation was relevant to shareholder-employees; allowing Accident Compensation to pay weekly compensation based on what would be ‘reasonable remuneration’ for services.  Mr Simpson valued his work for Discovery River Cruises at $80,000 per annum.

Justice Campbell ruled the ‘reasonable remuneration’ formula applied only when income declared for tax did not properly represent services actually provided.  In this case, Mr Simpson never declared any income.  In the absence of a tax filing, the ‘reasonable remuneration’ rule could not apply.

Simpson v. Accident Compensation Corporation – High Court (30.06.23)

23.107