Crothers v Accident Compensation Corporation
[2017] NZHC 259
•24 February 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2016-485-4 [2017] NZHC 259
BETWEEN PAUL STANLEY CROTHERS
Appellant
AND
ACCIDENT COMPENSATION CORPORATION
Respondent
Hearing: 29 June 2016 Counsel:
T McGurk for Appellant
F Becroft for RespondentJudgment:
24 February 2017
JUDGMENT OF WILLIAMS J
[1] Mr Crothers is a self-employed sheep and beef farmer from Mangamahu in the Whanganui district. In July 2010, he injured his left hand. He caught it in a pump belt drive severing the tip of his ring finger at the first (proximal interphalangeal) joint and damaging the extensor tendon in his middle finger. His grip strength has been reduced by this injury and this has affected his ability to do certain tasks around the farm although the extent of this is a matter of debate.
[2] In a decision in September 2011, the Accident Compensation Corporation (ACC) rejected Mr Crothers’ request for the Corporation to fund purchase of an all- terrain vehicle (ATV) with power steering pursuant to the Corporation’s vocational rehabilitation responsibilities in s 85 of the Accident Compensation Act 2001. Shortly thereafter Mr Crothers’ weekly compensation was terminated pursuant to
s 103(2).
CROTHERS v ACCIDENT COMPENSATION CORPORATION [2017] NZHC 259 [24 February 2017]
[3] Applications for review and then appeals to the District Court were all dismissed.1 On application for leave to appeal the District Court’s dismissal,2 Judge Harrison granted leave in relation to the following question in relation to weekly compensation only (no application for leave was brought with respect to the ATV decision under s 85):
Do the words “engage in employment” as they appear in section 103(2) of the Act mean that the claimant must be able to undertake all the tasks of his or her employment which he or she is able to carry out when he or she suffered the personal injury, or can a claimant be deemed not to be incapacitated even if he or she cannot undertake all such tasks.
[4] The parties have subsequently agreed on a cut down version of the foregoing as follows:
Did the District Court apply the correct test under s 103(2)?
[5] It is appropriate in the circumstances of that agreement for me to proceed to answer the amended question.
[6] There is also an application by Mr Crothers for special leave to appeal on the separate question of whether the District Court was wrong to hold that s 103(2) provides ACC with a discretion on the question of whether the claimant was incapacitated. On this question, Judge Harrison declined leave.
Relevant provisions
[7] From the date of his injury, Mr Crothers received weekly compensation under s 69 and vocational rehabilitation assistance under s 85. Weekly compensation is only payable if a claimant has been incapacitated for employment pursuant to s 103(2). Before making a s 103(2) decision, ACC must consider an assessment undertaken by any medical practitioner or nurse and may obtain such professional, technical, specialised, or other advice as is considered appropriate to the circumstances in accordance with s 102.
[8] By the terms of s 103(2), incapacity is articulated in this way:
1 Crothers v Accident Compensation Corporation [2015] NZACC 10.
2 Crothers v Accident Compensation Corporation [2015] NZACC 383.
The question that the Corporation must determine is whether the claimant is unable, because of his or her personal injury, to engage in employment in which he or she was employed when he or she suffered the personal injury.
[9] If the answer to that question is no, then the claimant is incapacitated for employment and entitled to weekly compensation.3
[10] If the determination is that the claimant is no longer incapacitated in terms of s 103(2), then weekly compensation entitlements are lost immediately.4
[11] Vocational rehabilitation – for our purposes entitlement to assistance for the purchase of the ATV – is by the terms of s 85 only available if the claimant is, first, entitled to weekly compensation;5 or, would be so entitled but for the vocational
rehabilitation assistance ACC is providing at the relevant time.6
Facts
[12] Mr Crothers farms with his wife on 550 ha, of which 60 per cent is steep hill country. The farm carries 4000 stock units. As far as I can tell, the farm did not employ any additional workers prior to Mr Crothers’ injury except for standard farming contractors to undertake shearing and the like. ACC immediately granted cover to Mr Crothers following the injury discussed. It is common ground that from around August or September 2010, Mr Crothers’ youngest son came to work on the farm in order to carry out tasks that, due to the injury, Mr Crothers could no longer undertake or could not undertake safely.
[13] When he returned to work part-time in October 2010, Mr Crothers continued to receive weekly compensation abated pro-rata from the full-time rate. He underwent surgery in February 2011 followed by a six to eight week rehabilitation period and then returned to work, again part-time.
[14] By mid-July 2011, Mr Crothers was working 24 hours a week.
3 Section 103(3).
4 Section 104(a)(i).
5 Section 85(1)(b)(i).
6 Section 85(1)(b)(ii).
[15] On 8 August, Mr Crothers applied to ACC to assist in funding the purchase of the ATV with power steering. He said this would enable him to access parts of the farm that he could no longer access with his existing ATV as he no longer had the grip strength to safely control the vehicle. He said he needed the power steering model in order to reach the hill country scrub. The cost of the new ATV was
$18,218, but as he expected to receive $8,000 trade-in value on his existing ATV, a net figure of $10,218 was sought.
[16] On 9 August 2011, physiotherapist Clare Montgomery (working on contract to ACC) prepared a return to work plan for Mr Crothers which was subsequently amended on 16 August. The plan involved a three week graduated return to some of the more challenging farm work that had, to that point, been beyond Mr Crothers’ capacity. This included scrub cutting in the steep country – a task usually undertaken during the winter months. The difficulty in this regard was safe access to that country because Mr Crothers found it difficult to control his non-power steering ATV due, he said, to loss of grip strength in his injured hand. The plan provided this work would begin at three hours a day and increase to eight hours by the end of the third week. The plan noted that Mr Crothers had issues with cold and wet hands, grip strength fatigue, general reduced fitness and being unable to use the ATV on steep tracks. These were considered to be barriers to a clearance for return to full- time work.
[17] On 17 August 2011, Mr Crothers visited his GP and there was agreement that a graduated return was appropriate.
[18] On 7 September, Mr Crothers visited his GP and asked him to provide a full work clearance as (Mr Crothers said) he had decided to purchase the new ATV whether or not ACC funded it. The medical certificate contains only brief notes and makes no reference to the new ATV purchase. I am not therefore able to say whether Mr Crothers would have sought or received a full clearance without the new ATV in prospect.
[19] ACC declined Mr Crothers’ application for assistance to purchase the ATV in a letter dated 8 September 2011. An internal memorandum recommending this
decision referred to the GP’s clearance the day before. ACC’s letter to Mr Crothers stated that the request was declined because Mr Crothers was able to perform the majority of the tasks relating to his pre-injury employment and that his ability to operate his current ATV would improve with time making any new purchase a non- cost effective option for ACC in terms of the s 85 criterion.
[20] Weekly compensation also ceased on 8 September because ACC determined that Mr Crothers was no longer incapacitated in terms of s 103(2). Both decisions were upheld by an independent reviewer.
District Court decision
[21] The appeal to the District Court covered both the cessation of weekly payments and the refusal to fund purchase of the new ATV.
[22] The Judge noted that the occupational physician, Dr Turner, who assessed the appellant for ACC, appeared to have applied a test of substantial ability to perform the job of a sheep and beef farmer in order to determine incapacity. The Judge suggested that if this phrasing in Dr Turner’s report was intended to suggest that partial capacity was sufficient, that was inconsistent with s 103.7
[23] The Judge also noted that Dr Turner appeared to have wrongly referenced the principle that capacity does not depend on the ability to perform the work tasks in a particular job if the claimant is otherwise able to perform the tasks of the generic class of employment in which he was engaged before his injury.8
[24] Judge Ongley said this principle may be applicable to the employment context but did not translate well in the context of self-employed claimants:9
That test is not readily applicable to an owner operated business that requires the operator to perform specific work tasks. The question should not be whether the appellant was substantially able to perform his pre-injury tasks, but whether he was able to continue his farming business with reasonable adaptation. That might involve exchanging some work tasks with
7 Crothers, above n 1, at [13].
8 At [29]. The case referenced though not cited in Dr Turner’s report is Irving v Accident
Compensation Corporation HC Whangarei AP53/01, 11 April 2003.
9 At [29] (emphasis added).
employees or in this case family members who are available for work, and reorganising work so that steep terrain could be managed in fair weather. It would involve riding with more caution for his left hand grip, provided that could be done with safety.
[25] Though the Judge noted Dr Turner had posed the wrong question, in his view, the report nonetheless demonstrated a proper consideration of all of Mr Crothers’ circumstances and the extent of his disability. He found that in Mr Crothers’ case, substantial capacity was for practical purposes “interchangeable” with reasonable adaptation.10
[26] The Judge concluded that “the balance of the evidence leads to the conclusion that the appellant regained pre-injury capacity”, defining capacity as “the realistic ability to engage in pre-injury employment despite inconvenience and in many cases a degree of tolerable pain.”11
[27] The Judge found that the evidence did not clearly show Mr Crothers was unable to carry out his pre-injury employment without facing unreasonable or inappropriate risk of further injury. Rather, Mr Crothers was able to “carry out almost all of his pre-injury tasks” and could ride his quad bike over rough or steep terrain while avoiding over-reliance on the left hand grip, and scheduling work to
avoid unsafe weather conditions.12 Accordingly, he was no longer incapacitated in
terms of s 103.
[28] The impact of this finding was that the vocational rehabilitation test in s 85 was not satisfied either. He was not entitled to weekly compensation (s 85(b)(i)), nor was he likely to be entitled to weekly compensation unless he had vocational rehabilitation (s 85(b)(ii)). In short, Mr Crothers would have lost his weekly compensation regardless of whether or not ACC assisted with the ATV purchase because he was already capable of continuing his farming business with reasonable
adaptation and without the new ATV.
10 At [31].
Special leave to appeal
[29] As noted, special leave to appeal is sought on the question of whether the District Court was wrong to hold that s 103(2) provides ACC with a discretion to decide whether a claimant is incapacitated. For Mr Crothers, Mr McGurk submitted this question arises from the following passage in the District Court decision:13
The real concern is one of safety rather than one of capacity. They are inter- related because unsafe or ineffective performance of work tasks could not meet the statutory test. A reduced margin of safety does not necessarily lead to a determination of incapacity for pre-injury employment, and may have to be tolerated where the manner of work before injury already carried a degree of risk. It may well be fair to give the claimant the benefit of the doubt in favour of compensation that ensures the safest outcome, but is an area that falls within the Corporation’s discretion and cannot be overruled unless it is demonstrably wrong.
[30] Judge Harrison declined to grant leave on this question finding that the passage related to vocational rehabilitation under s 85 not capacity under s 103. The Judge added that although ACC has a discretion as to the kind of vocational rehabilitation it provides, it must nonetheless correctly apply s 85.
[31] Section 103(2) is plainly not discretionary. Its terms are mandatory provided the prescribed factual circumstances exist. But Judge Ongley did not say the subsection was discretionary. In fact at an earlier point in the judgment, the Judge noted:14
… a claimant either has incapacity under section 103 or has not.
[32] Neither is s 85 discretionary. It is also worded in mandatory terms provided the factual circumstances set out in subs (1) are found to exist. Discretion only begins when the Corporation must determine what vocational rehabilitation is appropriate for a claimant who has met the s 85 threshold test. There is therefore no efficacy in providing an answer to the question because it proceeds from a wrong premise.
[33] Special leave is declined accordingly.
The substantive appeal
Submissions
[34] For the appellant, Mr McGurk’s essential argument was that the incapacity test under s 103(2) required the Judge to be satisfied that Mr Crothers could engage in all aspects of his pre-injury work as a sheep and beef farmer. He relied in that respect on the analysis of Brown J in Gibson v Accident Compensation Corporation.15 In that case, the Judge tracked the legislative history of s 103(2) to find substantial ability to undertake prior employment was not the correct test. Mr McGurk submitted that the section does not envisage that incapacity will cease if the claimant is required to change the nature of his or her employment to
accommodate the incapacity.
[35] For ACC, Ms Becroft argued that s 103(2) as it is currently worded does not set an inflexible test for incapacity in the way that its predecessor had in the 1998 legislation.16 Something less than the ability to fully engage in all work tasks of previous employment will be sufficient. By analogy Ms Becroft submitted, the employee cases that refer to the ability to return to the same general work category rather than exactly the same work, also applied in the self employed context.
[36] It followed, Ms Becroft submitted, that the Judge correctly applied the reasonable adaptation test. Mr Crothers returned to work following his purchase of the new ATV and therefore, by his own admission, he now had capacity. The fact that he has not appealed that decision of the District Court is significant, Ms Becroft submitted.
[37] At the hearing, both counsel agreed that Judge Ongley’s reasonable adaptation test was the correct one. But Mr McGurk argued that although the Judge had stated this test he had in fact applied a practical test of whether Mr Crothers could do a majority of the tasks he formerly performed. Mr McGurk submitted that the only reason Mr Crothers was back at work was that his son was now being paid
to perform tasks Mr Crothers had formerly undertaken. The correct test had therefore been incorrectly applied.
[38] In response Ms Becroft acknowledged that if that were actually the case, incapacity would remain, but on the facts, she said, it was the ATV not the son’s involvement that had removed the incapacity.
Gibson v ACC and legislative history
[39] Before moving to assess the test Judge Ongley applied, I would make two observations. The first is that s 103(2) is not to be construed as mandating some kind of broad test where if a claimant can still do most of the job, that will be enough. In that respect, I agree with Brown J’s decision in Gibson v Accident
Compensation Corporation.17 In Gibson, the claimant returned to his previous
employment but could no longer undertake all of the substantial overtime hours previously the norm in his work. Brown J found that the term “employment” in s 103(2) spoke to the total time working, including overtime customarily worked by the claimant, and the District Court was wrong to conclude that it was enough that the claimant was back at work on a full-time basis even if he could no longer do the customary overtime.
[40] The second point, related to the first, is that a change in the formulation of the test between the 1992, 1998 and the current iteration of the Act is not inconsistent with that conclusion. A brief explanation is required. The wording of s 103(2) is almost identical to the test in the Accident Rehabilitation and Compensation Act
1992. That Act was replaced in 1998 by the Accident Insurance Act of that year. The 1998 test required the Corporation to make a determination as to whether a claimant could engage in “every part of every employment”.18 The current s 103(2) returned to the prior formulation in the 1992 Act. Ms Becroft argued that the repeal of the “every part of every employment” formulation restored a degree of flexibility for the Corporation that had not existed between 1998 and 2001. Her point was the much tougher 1998 formulation required the Corporation to show that the claimant
had capacity in all aspects of their work before entitlements could be terminated. Since 2001, that was not required.
[41] I agree with Brown J that the return to the 1992 test was never intended to signal a lowering of the threshold for the Corporation to establish capacity for employment. A Department of Labour report to the Select Committee on the 1998
Bill makes it clear that the wording of 1998 test had nothing to do with enhancing its stringency. As introduced, the clause said “engage in any of the employment”. The Department said:19
The clause is intended to mean that an assessment is to be made, employer by employer, of the injured person’s ability to perform any of the work – that is, work for each employer he or she was able to undertake prior to incapacity. Officials recognise that the meaning is unclear and the wording needs to be adjusted. The intention is to cover multiple employment situations. When incapacity is in respect of one employment, weekly compensation only applies to that employment if the claimant can continue in their other employment.
[42] The 1998 Bill was then amended to read “every part of every employment”, to meet that multiple employer situation. The incapacity threshold has thus been consistent since 1992.
A brief survey of previous authority on incapacity and flexibility
[43] The approach to incapacity under s 103 for claimants in paid employment is that generally outlined by this Court in Irving v Accident Compensation Corporation in which Laurenson J approved an earlier District Court decision in Lamb v Accident Rehabilitation and Compensation Insurance Corporation.20 In Irving, the Judge outlined his approach as follows:21
The principles which I discern in [Lamb] is that when considering s 37A [the predecessor to s 103 in 1992 Act] and in particular the words “in employment in which the person was engaged when the personal injury occurred”, that consideration is not to be restricted to an assessment of the specific task being undertaken at the time of the injury. Rather, the question to be determined is whether the basic elements of, or skills required to
19 Department of Labour Accident Insurance Bill: Departmental Report (ACC/34, 17 November
2008) at 34.
20 Lamb v Accident Rehabilitation & Compensation Insurance Corporation, DC Christchurch
74/98, 20 April 1998.
21 Irving, above n 8, at [26].
perform the task, are peculiar to that specific task, or are they such that they can be applied in a wider sphere of work engaged in or carried out for pecuniary gain or profit.
[44] The principle then is that if the claimant’s basic employment skills have application to a wider field for which the claimant has capacity then incapacity is not established. In Lamb, the claimant could no longer work as a geriatric nurse (as had been the position at the time of injury) but was working as a psychiatric nurse. Incapacity was not established. In Irving, the claimant had been a truck driver but was now working as a courtesy coach driver. Once again substitutability meant that incapacity was not established.
[45] The self-employment cases (all at District Court level) have grappled in different ways with the challenges of self-employed claimants who do not always have the flexibility of employment substitutability. In O’Connor v Accident Compensation Corporation,22 the claimant was a self-employed welder who, following an injury in 1993, was certified incapacitated for six weeks. He returned to work but avoided heavy work that he had formerly undertaken. He employed
extra staff from time to time to assist with the heavier work and contracted out some work. He applied for weekly compensation four years later as his condition had deteriorated. The issue was the start date for incapacity. The Court found that the appellant had capacity between 1993 and 1997 because he had been able to adjust his work practices so that his employees undertook the heavy work he had formerly done. That Court found that adjustments of this type were to be expected and did not establish incapacity.
[46] In Delaney v Accident Compensation Corporation,23 the claimant was a self- employed builder. Once again the issue was the date of incapacity because that set the level of weekly compensation. Mr Delaney’s delay in making a claim and the gradual deterioration of his business due to injury meant that his earnings were much lower when the claim was made. The Court settled upon the later date on the facts,
but suggested the test was “whether [Delaney] could engage in that self-employment
22 O’Connor v Accident Compensation Corporation, DC Wellington 224/2000, 28 August 2000.
23 Delaney v Accident Compensation Corporation [2012] NZACC 331.
[as a builder], not just whether he had a functional capacity for some building
tasks.”24
[47] The Judge went on to say:25
The probable dividing line appears to lie between tasks that he could reasonably delegate to an employee and tasks that he would have to assign to a skilled contractor for accident related reasons. If he was so limited by his disability that he had to contract out substantial parts of his work, it could not reasonably be said that he could substantially engage in his previous employment as a full-time self-employed builder.
The answer depends on reaching a fair generic classification of the kind of work in which the appellant was engaged, the physical demands of the work and finally the medical reasons for being unable to engage in that work.
[48] By contrast in Trent v Accident Compensation Corporation,26 the claimant was a self-employed accountant with five staff. She had been working 60 hours a week prior to injury but after injury could only work 40, and was required to hire a contractor to do a significant portion of the work.
[49] The Court found that the claimant was engaged in the same work albeit to a reduced extent, so she was no longer “incapacitated”.
The test
[50] I am satisfied that the reasonable adaptation test applied by Ongley J to the self-employment context is the correct one. Both O’Connor and Delaney are essentially applications of that principle. Trent by contrast appears to have reverted to the employee test and even then is inconsistent with Brown J’s finding in Gibson. In my view Trent was wrongly decided.
[51] I consider that the reasonable adaptation test requires the assessor to:
(a) identify the core tasks of the self-employment category – here sheep and beef farming on mixed flat and steep hill country; and
24 At [39].
25 At [42].
26 Trent v Accident Compensation Corporation [2013] NZACC 244.
(b)assess whether these core tasks (all of them) can be done with reasonable adaptation.
[52] Just what amounts to reasonable adaptation will require a close factual inquiry. It will generally be reasonable to rearrange existing staff to cover work that the claimant is unable to do because of the injury. A multiple staff workplace creates that flexibility. But if a self-employed person is required, because of the injury to hire new staff or contractors to perform essential tasks of that employment, whether because the person has no staff or existing staff cannot reasonably be reassigned, then this additional cost will not be reasonable adaptation. Rather, it will be evidence of continuing incapacity. Similarly, although it is not a matter strictly at issue in this appeal, it must also follow that if a claimant is only able to perform a key task or tasks of his or her employment through the use of expensive equipment, then this too will not be considered reasonable adaptation. Rather, it is likely to qualify as the kind of “but for” vocational rehabilitation referred to in
s 85(1)(b)(ii).27
Application to these facts
[53] It seems to have been common ground that when he was first taken on, Mr Crothers’ son did perform some of the tasks formerly undertaken by Mr Crothers himself because Mr Crothers’ poor grip strength in his left hand meant he could not access the steep country on his old ATV to cut scrub. Ms Becroft argued however that this was no longer the case. She said the son was busy doing other work on the farm now. Ms Becroft argued that Mr Crothers was able to reasonably adapt to perform his key employment tasks not because of his son’s involvement but because of the new ATV – a little ironically it must be said, given the Corporation’s stance in the s 85 application.
[54] Ms Becroft relied in that regard on the report of occupational therapist Mr Morris dated 7 November 2011. Mr Morris noted for example, “[Mr Crothers] reports he obtained clearance to return to work on [8 September] only because he
purchased an ATV with power steering himself”, and that “use of an ATV is essential
27 See above at [11].
for Mr Crothers to access various locations on his farm required to complete his regular duties such as scrub cutting and gorse spraying”. Further Mr Morris noted that “the use of an ATV with power steering does allow Mr Crothers to independently and safely access all areas of his farm.”
[55] Mr McGurk argued that in fact Mr Crothers’ son was doing a substantial amount of the work that Mr Crothers himself was still unable to do. He pointed to various reports to that general effect. Mr McGurk pointed to the extensive report from Claire Montgomery (dated 16 August 2011 following an interview with Mr Crothers on 9 August 2011) in which Mr Crothers reported that his son was doing scrub cutting, gorse and thistle spraying because this was on country he could no longer access safely.
[56] A further email to the independent reviewer on 10 November 2011 confirmed that Mr Crothers had employed his son first on a casual basis, “but over the last six months, he has been full-time.” He noted that during the last two weeks of August and first week of September (the period of his three week graduated return to work plan), the son worked alongside him doing the scrub cutting “for safety reasons and because the work was behind schedule.”
[57] There is an inconsistency in this evidence. On the one hand, Mr Crothers indicated he had to continue employing his son, and on the other hand indicated that the ATV had solved his problems in September of that year.
[58] Judge Ongley viewed Mr Crothers’ story with scepticism and specifically rejected Mr Morris’ findings in his report as being based too much on Mr Crothers’ self report and lacking the objectivity that (for example) Dr Turner showed in his alternative interpretation. The Judge preferred Dr Turner’s view that Mr Crothers’ grip strength was not so impaired as to prevent him from working the steep country. Once a core task–based analysis was posed as the correct measure of reasonable adaptation in the appeal before me, Ms Becroft on behalf of ACC then shifted to suggest that the ATV purchase had solved Mr Crothers’ problems and his son’s contribution was no longer required.
[59] Given Mr Crothers’ inconsistent statements in relation to his son’s contribution to his core farming tasks, the conclusion the Judge reached was open to him on the reasonable adaptation test. I would answer yes to the question even though the Judge did not expressly articulate it in the core task terms I have in this judgment. It is clear, in my view, that the Judge applied the reasonable adaptation test in a way that, in substance, concluded that Mr Crothers could perform all of his core farming tasks albeit with a decreased (but still acceptable) margin of safety. I am bound to add however, that although there was no appeal with respect to the ATV question, The Corporation should consider revisiting its s 85 determination given Ms Becroft’s stance in that regard in argument in the appeal before me.
Disposition
[60] The answer to the question posed on appeal is yes. There will be no award of costs.
Williams J
Solicitors:
John Miller Law, Wellington for Appellant
Medico Law Limited, Auckland for Respondent
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