EM v Accident Compensation Corporation
[2016] NZHC 2535
•21 October 2016
ORDER PROHIBITING PUBLICATION AS TO (A) IDENTIFICATION OF THE NAMED PLAINTIFF (B) NON-PARTY ACCESS TO THE COURT FILE UNDER PART 3 OF THE HIGH COURT RULES (C) THE CONDUCT OF ANY HEARINGS IN RELATION TO THIS PROCEEDING.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-002436 [2016] NZHC 2535
BETWEEN EM
Plaintiff
AND
ACCIDENT COMPENSATION CORPORATION
Defendant
Hearing: 25 February 2016 Appearances:
E P Henderson for Plaintiff
C J Hlavac for DefendantJudgment:
21 October 2016
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 21 October 2016 at 3.00 pm
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date……………………….
EM v ACCIDENT COMPENSATION CORPORATION [2016] NZHC 2535 [21 October 2016]
Table of Contents
Para No.
Introduction
Background [1]
Principles on striking out [7] The pleadings [11] Background
DM’s initial claim [15]
DM’s claim for attendant care expenses [18] Statutory bar in s 317 [25] Statutory provision for attendant care under previous legislation [39] Accident Compensation Act 1982 [40] Accident Rehabilitation Compensation and Insurance Act 1992 [42] Accident Insurance Act 1998 [44] Accident Compensation Act 2001 [52]
A tenable cause of action for breach of statutory duty?
General principles [54]
Previous cases involving claims relating to attendant care
payments [70]
The claim in negligence
The decision under review [73]
A novel duty? [75] Principles relating to novel duty of care [84] The duty argued for by EM [89]
Conclusion [94]
Introduction
Background
[1] The issue in this case is whether a woman whose son is entitled to attendant care payments under the Accident Compensation Act 2001 (ACA 2001) should be able to sue the Accident Compensation Corporation for her own financial losses resulting from the Corporation’s failure to properly assess the attendant care entitlement.
[2] The plaintiff, EM, is the mother of a young man, DM, who suffers from Downs syndrome and Post Traumatic Stress Disorder (PTSD). The latter is the result of sexual abuse as a child. Partly as a result of Downs syndrome and partly as a result of PTSD, DM requires constant supervision to ensure his own safety and the safety of others. DM lived in residential care for some years and returned to live with his mother in 2004, when he was 24 years old. EM provides virtually all the supervision and care that DM requires. This has taken a heavy toll on her; she claims that, as a result of having to devote nearly all her time to DM, her business has failed and, as a consequence, she has lost her home as well.
[3] DM’s PTSD was covered under the Accident Rehabilitation Compensation and Insurance Act 1992 (ARCI Act) and later under ACA 2001.1 Under ACA 2001
DM is entitled to attendant care costs to assist with the supervision and care he requires. The Corporation has made payments for DM’s attendant care entitlement since 2006. But for several of those years it underpaid them, a fact that the Corporation now accepts.
[4] The plaintiff asserts that as a result of the Corporation failing to meet its statutory obligations, she herself suffered significant financial losses. Prior to DM’s injury she had done well financially and was running successful businesses. However, as a result of having to provide most of the constant supervision and care she came under significant financial strain. Her business failed, resulting in the forced sales of both her home and investment property. She wishes to sue the
Corporation to recover her financial losses.
1 By virtue of s 360 ACA 2001 DM has cover under that Act.
[5] As initially framed, EM’s claim alleged only negligence. Associate Judge Christiansen struck out that pleading.2 EM now applies to review that decision and, in doing so, to reframe her pleading by adding a cause of action for breach of the Corporation’s statutory duty to take her position into account in assessing the proper level of DM’s attendant care entitlement.
[6] The Corporation resists EM’s application. It argues that the proposed claim is barred by s 317 of ACA 2001 and is, in any event, untenable because the scheme of the Act does not create a statutory duty enforceable by a person in EM’s position and nor does any duty of care exist.
Principles on striking out
[7] The application to review Christiansen AJ’s decision is brought pursuant to rule 2.3 of the High Court Rules (HCR). It proceeds as a rehearing subject to the principles set out in Austin, Nicholls & Co Inc v Stitching Lodestar.3 EM has the burden of persuading the Court that the original decision was wrong and, if she does so, is entitled to have this Court form its own view on the merits of the case.4
[8] The jurisdiction to strike out a pleading is contained in r 15.1 of the High Court Rules. The principles upon which it is to be exercise were summarised by the Court of Appeal in Attorney-General v Prince,5 and endorsed by the Supreme Court in Couch v Attorney-General:6
(a) The Court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action or case appropriate to the nature of the pleading.7
(b)Pleaded facts are assumed to be true unless speculative or without foundation.
2 EM v Accident Compensation Corporation [2015] NZHC 971.
3 High Court Rules, r 2.3(4)(a); Austin, Nicholls & Co Inc v Stitching Lodestar [2007] NZSC 103, [2008] 2 NZLR 141; Burmeister v O’Brian [2008] 3 NZLR 842 (HC) at [29].
4 Austin, Nicholls & Co Inc v Stichting Lodestar, above n 4, at [16].
5 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267.
6 Couch v Attorney General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
7 High Court Rules, r 15.1(1)(a).
(c) The jurisdiction is to be exercised sparingly and only in clear cases where the cause of action is clearly untenable.
(d)Jurisdiction to strike-out a pleading is not precluded by the need to decide difficult questions of law. However the Court will be cautious and particular care is required where the law is confusing or developing.8
(e) When determining whether a claim should be struck out the Court is able to consider not only the basis on which the claim is presently pleaded but also any other basis on which the claim might be pleaded.9
[9] In Couch the Supreme Court said:
[33] It is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed.10 The case must be “so certainly or clearly bad”11 that it should be precluded from going forward. Particular care is required in areas where the law is confused or developing. And in both X (Minors) v Bedfordshire County Council and Barrett v Enfield London Borough Council12 liability in negligence for the exercise or non-exercise of a statutory duty or power was identified as just such a confused or developing area of law. Lord Browne-Wilkinson in X thought it of great importance that such cases be considered on the basis of actual facts found at trial, not on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike-out. Lord Slynn in Barrett was of the same view:13
“… the question whether it is just and reasonable to impose a liability of negligence is not to be decided in the abstract for all acts or omissions of a statutory authority, but is to be decided on the basis of what is proved.”
[10] I note that, although the relevant events occurred more than six years ago the
Corporation did not raise any limitation issue in argument and I do not comment on
8 Couch v Attorney General, above n 6, at [33].
9 Couch v Attorney General, above n 6, at [123].
10 Citing X v (Minors) Bedfordshire County Council [1995] 2 AC 633 (HL) 740; Attorney-General v Prince & Gardner [1998] 1 NZLR 262 (CA); General Steel Industries at [35] per Barwick CJ; Takaru Properties Ltd (in receivership) v Rowling [1978] 2 NZLR 314 (CA) at 329.
11 Citing W v Essex County Council [2001] 2 AC 592 (HL) at 601.
12 Barrett v Enfield London Borough Council [2001] 2 AC 550 (HL).
13 At 574.
that aspect. It is possible that the Corporation has indicated an intention to waive any such issue.
The pleadings
[11] The statement of claim that Christiansen AJ struck out contained a single cause of action in negligence alleging that the Corporation owed EM, as a person who would foreseeably suffer harm if the Corporation failed to comply with its statutory obligations, a duty to pay entitlements in accordance with ACA 2001, ensure DM received all the entitlements to which he was entitled and to correctly and fully perform its obligations in relation to providing for and funding attendant care for DM.
[12] For the purpose of the review the plaintiff filed an amended statement of claim that repeated the cause of action in negligence and added a second cause of action, also in negligence, which relied on assurances given by the Corporation that DM would receive all the care, treatment and support necessary for his rehabilitation
(based on Naysmith v ACC).14 Additional evidence was filed in support of the
application but following the Corporation’s response EM abandoned that cause of
action.
[13] Instead, at the review hearing Ms Henderson, for EM, sought to advance the application on the basis that the plaintiff had a tenable cause of action for breach of statutory duty in respect of the requirement in Schedule 1, clause 14(f) ACA which provides that, in determining the amount payable towards attendant care, the Corporation must take into account the effect on the employment and activities of household family members.
[14] Mr Hlavac, for the Corporation, was unprepared for this development but reluctant to see the matter delayed further. I therefore heard both counsel and
granted the parties leave to file further submissions, which they did.
14 Naysmith v Accident Compensation Corporation [2006] 1 NZLR 40 (HC).
Background
DM’s initial claim
[15] The plaintiff’s son DM was born with Downs Syndrome and a mild intellectual impairment secondary to this condition. He was, however, relatively high functioning and for most of his primary school years attended mainstream classes. From the age of about eight, however, DM began to exhibit inappropriate sexualised behaviour that put both him and other children at risk. He was segregated from the mainstream students as a result.
[16] In 1993, aged 14, DM moved to supervised residential accommodation. In
1995, when DM was 16, he disclosed that he had been sexually abused when he was eight years old. The perpetrator was a member of DM’s extended family who was subsequently convicted. The Corporation accepted DM’s claim for PTSD resulting from the sexual abuse. DM received counselling in 1995, 2000 and 2005. His PTSD had reportedly resolved but EM does not accept this.
[17] Except for a period of one year during which he lived with his mother, DM remained in residential care until 2004. That year, then aged 24, he returned to live permanently with EM. But DM still requires constant supervision. This need is, in part, attributable to his Downs Syndrome. But it is also, in part, attributable to his PTSD, which the Corporation accepts. Apart from the relatively few hours each week that DM attends scheduled group activities, EM provides the necessary care and supervision.
DM’s claim for attendant care expenses
[18] EM says that, despite her making repeated requests, the Corporation refused to assist her in securing the compensation payments to which DM was entitled. In particular, EM only belatedly became aware of DM’s right to payments for attendant care, which he applied for in September 2006. In an initial decision dated 31 August
2007 the Corporation assessed DM’s entitlement to attendant care at 13 hours per week. It declined either to fund transport or assist with the purchase of a vehicle to transport DM to his scheduled group activities.
[19] The Corporation’s assessment was not undertaken properly. In November
2008, Reviewer M H Donovan reviewed the previous decisions. Over the period
2004 – 2007 the Corporation had assessed DM’s attendant care needs at between
four and 22 hours per week for Level 1 attendant care and for the period from 2 June
2008 onward at 13 hours of Level 1 care. The reviewer found that these decisions did not provide sufficient support for DM’s covered injury. In her review Ms Donovan considered reports provided by DM and additional reports that the Corporation had obtained in response. She began her decision with this observation:
[DM] has a pre-existing condition, Downs, which means that he will have had a level of decreased functioning regardless of whether he had suffered the covered injury. That fact must be acknowledged as representing the “landscape” upon which his needs as a result of his covered injury must be determined. Equally, it must be acknowledged that not all of DM’s needs are related to his covered injury. Some are a factor of his Downs condition.
The complexity of these reviews lies in establishing whether the attribution of a particular need has been made correctly – is it one arising from his covered injury or from his pre-existing condition, or do the two contribute in equal measure.
[20] Ms Donovan then summarised the conclusions reached by Dr Katherine Murrell in a neuropsychological assessment in 2007. Of all the reports the reviewer placed the greatest weight on this one. Dr Murrell had concluded, among other things, that although DM’s level of function was impaired as a result of his Downs condition he was nevertheless capable of a certain level of independence and capable of learning and developing self-direction skills. However, DM reacts adversely when confronted with or expected to function in an environment where boundaries are unclear or where he experiences stress from external causes such as work pressure, bullying or fear of abuse. DM’s need for a structured environment and clear boundaries was more than his disability would suggest should be required and could be a result of the sexual abuse. DM’s living arrangements with his mother provided a safe, consistent world with clear boundaries that supported his psychological reactions.
[21] Finally, the Reviewer commented that:
The known history indicated that [DM’s] inability to recognise for himself
appropriate boundaries places him, and others, at risk of further abuse.
The accepted “risk” to self and others is from [DM’s] sexualised behaviour. That risk arises not as a result of his Downs, but because of his experience of abuse.
The cause of his present inability to exercise any independent function … is related to the after effects of his covered Post Traumatic Stress Disorder and not the Downs condition.
[22] Ms Donovan referred to the assessment of an independence allowance that put DM’s level of impairment from the covered injury at 30 per cent and noted that the Corporation appeared to have accepted that assessment as a correct reflection of the level of personal impairment resulting from the covered PTSD. She went on to find that the Corporation had not properly exercised its discretion in relation to the level of attendant care needed because it had failed to ask itself the right questions, namely what Corporation support DM required, given his PTSD condition, and instead asked itself whether DM required any Corporation support given that he had a condition which would ordinarily require some level of supervision in any event.
[23] In relation to the issue of transport, the reviewer also found the Corporation’s decision to have been wrong in principle. In particular, the Corporation wrongly proceeded on the basis that it was not liable to purchase or contribute to the purchase of a vehicle for DM’s use because it would not be he who drove the car. More generally, the reviewer considered the issue of transport entitlement to have been unacceptably limited.
[24] The earlier decisions regarding both attendant care and transport were quashed and the Corporation directed to make fresh assessments. The Corporation has not challenged the reviewer’s decision.
Statutory Bar in s 317
[25] The Corporation says that both proposed causes of action are barred by s
317(1) of ACA 2001, which provides:
(1) No person may bring proceedings independently of this Act, whether under any rule of law or any enactment, in any court in New Zealand, for damages arising directly or indirectly out of —
(a) personal injury covered by this Act; or
(b) personal injury covered by the former Acts.
[26] This provision must, of course, be interpreted in light of the purpose of ACA
2001 generally. A similarly worded provision in the ARCI Act (s14) was considered in Queenstown Lakes District Council v Palmer.15 The plaintiff in Palmer suffered mental injury that was not covered by the Act after witnessing his wife being thrown from a boat while rafting, which resulted in her death. He brought an action in negligence against the Queenstown Lakes District Council and the rafting company. The proceedings were initially struck out as being barred by s 14(1), then reinstated on review, with that decision upheld on appeal.
[27] The statutory bar under the ARCI Act provided that:16
No proceedings for damages arising directly or indirectly out of personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is suffered by any person shall be brought in any Court in New Zealand independently of this Act, whether by that person or another person, and whether under any rule of law or any enactment.
[28] The Council contended that the statutory bar precluded a secondary victim from claiming. It argued that the words “arising directly or indirectly” encompassed claimants who had not, themselves, suffered a personal injury covered by the Act. They relied for support on the words “suffered by any person” and the words “whether by that person or any other person.”
[29] The Court of Appeal rejected this argument. It emphasised that s 14 (1) was to be interpreted having regard, not only to the language of that provision, but also to the context of the subsection, to the scheme and purpose of the Act with reference, if necessary, to the history and policy of the legislation and the consequences of the
interpretation contended for.17 On a correct interpretation, it was the words
“personal injury covered by this Act” that were critical. The proceedings that were
15 Queenstown Lakes District Council v Palmer [1999] 1 NZLR 549 (CA); considering s 317’s
predecessor, s 14(1) ARCI Act.
16 Accident Rehabilitation and Compensation Insurance Act 1992, s 14(1).
17 At 553.
barred were proceedings by the person who had sustained such injury. The words
“whether by that person or any other persons” added nothing.
[30] Thomas J, for the Court, said:18
… the purpose of the provision barring common law claims is to prevent persons who suffer personal injury being compensated twice over, once under the statute and then at common law. The bar is not designed to prevent them recovering any compensation at all.
Such a view is in accordance with the traditional principle, which enjoys fundamental constitutional status in our free and democratic society, that citizens are not to be denied access to the Courts, save in rare and appropriate circumstances, and then only pursuant to explicit statutory language. The right to seek damages at common law for personal injury suffered because of the fault or negligence of another was removed by the legislation, but the quid pro quo was the right to compensation under the statutory scheme … The design of restricting the right of access to the Courts by, as it were, a side wind, that is by simply withdrawing or curtailing the scope of the cover under the Act without at the same time addressing the fundamental principle of access to the Courts, should not be imputed to Parliament.
[31] The Court’s conclusion was:19
The critical phrase in [s 14(1)] is “personal injury covered by this Act”. Unless the personal injury for which damages are sought is covered by the Act, the right to bring proceedings at common law remains.
The particular phrases on which the appellants’ counsel have focused in order to arrive at the plain meaning they contend for must give way to a construction which is based on the reading of the section as a whole and in context and which has regard to the scheme and purpose of the Act and in this case, the history and policy of the legislation and the consequences of the alternative view. By a proper approach, Mr Palmer’s mental injury cannot be said to arise indirectly out of his wife’s death for the purpose of the subsection. Moreover, in this Court, Summers J has already held that the words “directly or indirectly” have been included ex abundant cautela so as to include, for example, the recovery of funeral expenses. See Donselaar v Donselaar (supra) at p115. In the same way, the words “any other person” have also been included out of an abundance of caution to remove any possible argument that a proceeding can be brought by persons, such as personal representatives, on behalf of the person who is injured by accident and covered by the Act.
[32] There are some differences in the wording between ss 14(1) ARCI Act and
317(1) ACA 2001 but I am satisfied that the words that have been removed were
18 At 555–556.
19 At 557.
those regarded by the Court in Palmer as not adding to the meaning of the critical words “personal injury covered by this Act”. In my view the current wording of the statutory bar under consideration has the same meaning as it did when Palmer was decided.
[33] The Corporation seeks to distinguish Palmer on the basis that Palmer involved two separate personal injuries, one of which was not covered by the Act: if a common law cause of action were barred then Mr Palmer would have been left without either statutory compensation or damages but in this case the only personal injury is DM’s PTSD so that there would be no lacuna in compensation if the statutory bar precluded EM from suing. I do not see this as a valid distinction. The principle stated in Palmer was concerned with the risk of a person entitled to compensation under the scheme being able to recover twice over. The fact that there was a second personal injury in that case meant that there was no such risk; Mr Palmer was seeking to recover for his own injury, which was not covered. Nor, in this case is there a risk of a person entitled to compensation under ACA 2001 being paid twice over. EM seeks to recover for a loss that she has suffered and for which she is not entitled to compensation under ACA 2001. The same principle applies even though EM’s claimed loss is financial rather than physical.
[34] The second basis on which the Corporation distinguishes Palmer is that EM would never have suffered the loss she claims but for the accident compensation legislation and the fact that her son came within its aegis i.e. that the claimed loss arises indirectly from DM’s covered personal injury. Even if the Corporation was correct that EM’s claimed loss arises indirectly from DM’s personal injury, that would not bring EM within the statutory bar for the reason already discussed; she is not the person who has sustained a covered personal injury by accident and is therefore not the object of the statutory bar.
[35] That point aside, I do not consider that EM’s claimed loss is one “arising directly or indirectly” out of DM’s personal injury. This phrase uses the language of causation. It requires some causal nexus between DM’s personal injury and the loss
that EM has sustained.20 The word “indirectly” means that the cause need not be the
immediate cause but there must, nevertheless, be some causal nexus.21
[36] I do not consider that EM’s claimed loss can truly be said to be causally linked to DM’s “personal injury covered by this Act”. The phrase “personal injury covered by this Act” means, in my view, an injury for which the statutory compensation and entitlements are met. Such an injury cannot be said to have caused the loss that EM claims; her argument is that, had those payments been made she could have managed financially. Instead she effectively did the job that the Corporation was supposed to do.
[37] I do not find the case relied on by the Corporation, Chalecki v Accident Rehabilitation and Compensation Insurance Corporation, to be helpful.22 The claim in Chalecki was that the Corporation officers had improperly pressured Mr Chalecki to resume work, causing further personal injuries and other financial losses. The High Court found that:
[24] … On any assessment of the pleadings, it is clear that the damages sought by Mr Chalecki arise directly, or indirectly, from his original personal injury. If he had not been personally injured, he would not have come within the aegis of ACC or the relevant statutory provisions. The alleged damages arise from efforts made by ACC to rehabilitate Mr Chaleki within the term of the Act. The loss alleged must, therefore, arise directly, or indirectly, from a personal injury covered by the Act.
[38] The decision in Chalecki does not describe the injuries that Mr Chalecki claimed were the result of the Corporation’s actions. In particular, it is not possible to tell whether they were an aggravation of the covered injury or new injuries of the same type as the covered injury or an entirely new kind of injury. Without that information I think it is difficult to compare it to the present case or to draw any
specific assistance from it.
20 Government Insurance Office of NSW v R J Green & Lloyd Pty Ltd [1996] HCA 6, (1966) 114
CLR 437.
21 Coxe v Employers’ Liability Assurance Corporation Ltd [1916] 2 KB 629.
22 Chalecki v Accident Rehabilitation and Compensation Insurance Corporation HC Greymouth
AP28/01, 10 October 2001.
Statutory provisions for attendant care under previous legislation
[39] Attendant care for the purpose of social rehabilitation has been available under all iterations of the accident compensation scheme. But prior to 1998 there was no specific reference to the position of family members in the context of assessing that entitlement. The development of those provisions is relevant to both the proposed causes of action.
Accident Compensation Act 1982
[40] The Accident Compensation Act 1982 (ACA 1982) provided, broadly, that the injured person was entitled to rehabilitation to the extent provided for by the Act,23 that rehabilitation was to be provided in accordance with an individual rehabilitation plan which included social rehabilitation and the Corporation:24
… having regard to any other compensation payable, may pay to that person, or if it thinks fit to the administrator of that person, such amounts as the Corporation from time to time thinks fit in respect of the necessary care of the person in any place of abode or institution.
[41] In implementing those provisions the Corporation followed a policy of limiting the hours it would pay for attendant care, even when the person was so badly injured that 24 hour care was necessary, on the basis that family assistance could reasonably be expected. That approach was later held to be wrong.25
Accident Rehabilitation Compensation and Insurance Act 1992
[42] Under the ARCI Act 1992 those covered for personal injury by accident continued to be entitled to rehabilitation, including attendant care, to the extent provided by the new Act. The Corporation could make any provision or payment in respect of social rehabilitation required or permitted by the Act.26 But the relevant
regulations did not identify specific considerations to be taken into account in
23 Accident Compensation Act 1982, s 18.
24 Accident Compensation Act 1982, ss 20 and 80(3).
25 Accident Rehabilitation Compensation Insurance Corporation v Campbell [1996] NZAR 278 (HC).
26 Accident Rehabilitation Compensation and Insurance Act 1992, s 26A.
determining the extent of the entitlement; the entitlement was determined simply by reference to the rating given to each specific task that was required to be done.
[43] The Corporation continued to follow its policy of assuming that family members could reasonably be expected to contribute to the care of the injured person. In exercising its discretion in terms of attendant care for social rehabilitation the Corporation therefore took into account the capacity for the injured person’s family to provide care. This policy was later the subject of successful challenge.27
Accident Insurance Act 1998
[44] Parliament next made changes to the accident compensation scheme in the Accident Insurance Act 1998 (AIA 1998), the main purpose of which was to enable the participation of private insurers in aspects of the scheme. However, there were also changes made to the method of determining the attendant care costs payable; Schedule 1 clause 44 identified, for the first time, specific considerations to be taken into account in deciding whether to provide attendant care and directly addressed the position of family members:
44 Attendant care
In deciding whether to provide attendant care, the insurer must have regard to —
(a) Any rehabilitation outcome that would be achieved by providing it;
and
(b) The nature and extent of the insured's personal injury and the degree to which that injury impairs his or her ability to provide for his or her personal care; and
(c) The extent to which attendant care is necessary to enable the insured to undertake or continue employment (including agreed vocational training) or to attend a place of education or a primary or intermediate school; and
27 Free v Accident Rehabilitation & Compensation Insurance Corporation DC Auckland Decision
No 144/98, 16 December 1997.
(d) The extent to which other household family members or other family members might reasonably be expected to provide attendant care for the insured after the insured's personal injury; and
(e) The need to avoid substantial disruption to the employment or other activities of other household family members.
[45] Because AIA 1998 was primarily concerned with the involvement of private sector insurers in the scheme, there was no apparent need to alter any other aspect of the scheme, in particular no apparent need to alter the provisions relating to the assessment of attendant care entitlement. The rationale for the change to schedule 1 was not the subject of any recorded parliamentary debate. However, its timing, suggests that the change was a legislative response to criticisms made by this Court
in Accident Rehabilitation and Compensation Insurance Corporation v Campbell28
and by the District Court in Free v Accident Rehabilitation and Compensation Insurance Corporation of the Corporation’s approach to assessing attendant care entitlement for those requiring full-time care based on the expectation that family members should assume significant responsibility for that care.
[46] In Campbell, which was decided in 1996, the families of five seriously injured people challenged the Corporation’s policy of limiting the number of attendant care hours funded for those requiring full-time care where family members were available to assume some of the burden of caring for the injured person. The Corporation had relied on the discretion conferred by s 80(3) which provided that where a person covered by the scheme required constant personal attention the Corporation “may pay … such amounts as the Corporation from time to time thinks fit … .”
[47] The Accident Compensation Appeal Authority found for the families and was critical of the Corporation for having disregarded its earlier decision, Tamati- Aubrey.29 In Tamati-Aubrey the Authority had considered the Corporation’s decision to provide a maximum of 35 hours of attendant care on the basis that in most
circumstances where there was a spouse there would be a moral obligation on the
28 Accident Rehabilitation and Compensation Insurance Corporation v Campbell, above n 25.
29 Tamati-Aubrey ACAA 260/90, 27 September 1990.
part of one partner to assist the other with the benefit of some additional help. The
Authority had said:
While the Corporation may wish to provide guidelines to assist its claim staff in considering applications for attendant care, the section does not contemplate the blanket approach such as that adopted by the Corporation and there may well be cases such as the case of this appellant, where it is necessary that “constant personal attention” must be provided. The Act clearly contemplates that possibility and any attempt to limit the discretion in the form adopted by the Corporation must be outside the scope of the Act and an improper exercise of the discretion.
[48] In Campbell the Corporation appealed to the High Court. Heron and Ellis JJ recorded the circumstances of the plaintiffs and the effect of the injury on the families. These included loss of employment, being forced to sell a business and to curtail business operations.
[49] Heron and Ellis JJ referred to the Authority’s decision under appeal:30
The Judge expressed concern that the Tamati-Aubrey decision had not been widely applied and he inferred, kept secret from persons in the position of these individuals and their families. His concern that the statutory requirement to implement his decision might not have been followed was found to be unjustified but he expressed concern that the wider implications of the decision were not implemented and in fact kept secret from possible claimants. That was done by pursuing appeals in Tamati-Aubrey but later abandoning them, a situation which also applied to a decision given by the Authority in McIsaac, which expressed the same views as to the scope of the s 80(3) discretion.
[50] They went on to reject the Corporation’s interpretation with the following
observations:
We think that the discretion is restricted to other compensation paid and to the amount to be paid for care. It is to be remembered that these cases are very special in terms of accident compensation. We think the legislature would not have left the discretion which has possible life threatening implications, so that the Corporation could dictate the number of hours for which it would pay for the necessary care … Further the discretion contained is circumscribed by the words of the section itself. “Constant personal attention” and “necessary care” speak volumes as to the extent of the approach the Corporation may take. To suggest a broad approach as argued allows the Corporation to effectively require individuals to make ad hoc arrangements for care when the section intends that “necessary care” will be provided at the Corporation’s expense …
30 Accident Rehabilitation and Compensation Insurance Corporation v Campbell, above n 25, at
284.
It must be realised that persons injured in the way these five individuals were occupy a small space at the top of the pyramid which represents all those suffering personal injury by accident. It is implicit in the scheme of the Act that considerable resources should be directed to them. It seems the legislation has again left a wide discretion to be interpreted by the courts. If it wished to it could easily have made payment under this section subject to any resources such as family and friends that the individual might have. To an extent the interpretation to be given to the section marks out a philosophical boundary. Should the scheme be responsible for payment for care which would in many cases probably be provided free of charge by persons through natural love and affection …
Subsequently legislative activity in this area seems to recognise the need for unequivocal opportunity for full-time paid care. The latest regulations made under the 1992 Act whilst different in approach do not undermine the Authority’s view as to the way the section should be interpreted. If anything they give weight to the view that more resources rather than less should be directed towards people so shockingly injured.
[51] In Free, decided in 1997 Judge Beattie identified as a question of principle whether, when assessing a claimant’s entitlement to home help, regard should be had to familial responsibility.31 The claimant had argued that there was no mention of familial responsibility in either the Act or Regulations and a claimant’s entitlement was determined on need based system; expecting the injured person’s family to provide the necessary care was in effect requiring family members to assume the Corporation’s responsibility. The Judge said:32
In the particular circumstances of the home help methodology the new question asked which is not present in the regulations is “Is there another person who can help with the task?”
I have not been referred to any principle of law which would enable a statutory entitlement to be removed by the implementing of a discretionary regime created by a policy directive which was at odds with that statutory entitlement. I find that such a concept would be contrary to what was intended to be available to claimants when s 26A was enacted. That section was meant to enable an amelioration of rigidity and to give the Corporation a discretion where, under the regulations, no discretion may have been permitted. It does not permit the Corporation to lay down criteria which have the effect of diminishing entitlement.
Accordingly then I find that the assessment made, and the assessment made consequent upon it by the Corporation of the 18th February 1997 to diminish the amount of home help to which the appellant was entitled because of the
31 Free v Accident Rehabilitation & Compensation Insurance Corporation, above n 27, at 289 –
290.
32 Free v Accident Rehabilitation and Compensation Insurance Corporation, above n 27, at 12.
calculation in the assessment that the appellant’s husband was able to do a substantial number of tasks, was not a proper exercise of the Corporation’s discretion. The Corporation was not entitled to take account of the fact of the appellant’s husband being available to carry out those tasks, when those tasks had before the accident been carried out by the appellant herself. She was entitled to have them put into the calculation for the assessment of her home care entitlement, not to have them omitted because it was perceived that her husband could do them.
Accident Compensation Act 2001
[52] Social rehabilitation continues to be provided for under ACA 2001 and attendant care is identified as one of the key aspects of it.33 Attendant care is specified as personal care, assistance with cognitive tasks, orientation, planning and task completion and the protection of the claimant from further injury in his or her ordinary environment.34
[53] The determination of the level of entitlement to attendant care is now made in accordance with the factors identified in clause 14 of Schedule 1 which provides that:
In deciding whether to provide or contribute to the cost of attendant care, the corporation must have regard to –
(a) Any rehabilitation outcome that would be achieved by providing it;
and
(b) The nature and extent of the claimant’s personal injury and the degree to which that injury impairs his or her ability to provide for his or her personal care; and
(c) The extent to which attendant care is necessary to enable the claimant to undertake or continue employment (including agreed vocational training) or to attend a place of education, having regard to any entitlement the claimant has to education support; and
(d) The extent to which household family members or other family members might reasonably be expected to provide attendant care for the claimant after the claimant’s personal injury; and
(e) The extent to which attendant care is required to give household family members a break, from time to time, from providing attendant care for the claimant; and
33 Accident Compensation Act 2001, ss 3(c), 79 and 81(1).
34 Accident Compensation Act 2001, sch 1 cl 12.
(f) The need to avoid substantial disruption to the employment or other activities of household family members.
A tenable cause of action for breach of statutory duty?
General principles
[54] A plaintiff pursuing damages for breach of statutory duty must show (1) that the statutory duty was imposed for the protection of a limited class and (2) that Parliament intended to confer on members of that class a private right of action for breach of that duty. The question whether a cause of action exists will ultimately be a matter of statutory construction in light of all the circumstances.
[55] In Gorringe v Calderdale Metropolitan Borough Council Lord Steyn said:35
… In a case founded on breach of statutory duty the central question is whether from the provisions and structure of the statute an intention can be gathered to create a private law remedy?
[56] In the decision of the UK Court of Appeal in X & Ors (Minors) v Bedfordshire County Council, to which Lord Steyn referred in Gorringe, Lord Bingham had this to say about private law claims for breaches of statutory duty:36
There is a great mass of authority on the question whether a statute, when it imposes a duty, also creates a right to damages in private law for breach of that duty … The fact that no other remedy is provided is an indication that there may be a right to damages for a breach but it is not conclusive.
It must always be a matter for consideration whether the legislature intended that private law rights of action should be conferred upon individuals in respect of breaches of the relevant statutory provision. The fact that a particular provision was intended to protect certain individuals is not of itself sufficient to confer private law rights of action upon them; something more is required to show that the legislature intended such conferment.
When we speak of the intention of Parliament we may often mean, in effect, the intention of a government department which sponsored a Bill, or of the Parliamentary draughtsman who wrote it, or of the members who prepared amendments. But in any case it is an objective assessment, founded on the language of the statute and the terms of its other provisions, and on an assessment of the reasons which would have motivated the legislature to confer, or not to confer, the right to damages for breach.
35 Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15, [2004] 2 All ER 326 at
[2].
36 X & Ors (Minors) v Bedfordshire County Council (1995) 2 AC 633, (1994) 2 WLR 554.
[57] In determining appeals from the X & Ors (Minors) v Bedfordshire County Council case in the House of Lords, Lord Browne-Wilkinson said this of claims for breach of statutory duty based solely on the existence of a statutory duty, breach of that duty and resultant damage:37
The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult. The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However, a private law cause of action will arise if it can be shown, as a matter of construction in the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of that duty. There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: see Cutler v Wandsworth Stadium Ltd [1949] 1 All ER 544, [1949] AC 398 and Lonrhu Ltd v Shell Petroleum Co Ltd [1981] 2 All ER 456, [1982] AC
173. However, the mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy.
[58] Clause 14(d) of Schedule 1 of ACA 200138 reflects what has previously been described, in relation to other aspects of the accident compensation scheme, as the “cushioning principle” drawn from the statement made by Cooke J (as he then was) in Accident Compensation Commission v Nelson:39
The general aim has been described as being, not to grant complete restitution, but to cushion the results of accident by providing substantial but not total restitution.
[59] However, clauses 14(e) and (f) appear to represent legislative recognition that the distressing effect on families who shoulder unrealistic burdens in terms of care (such as those described in Campbell) are to be avoided. The availability of family
members to care for injured persons is not to come at the cost of the family’s own
37 X & Ors (Minors) v Bedfordshire County Council [1995] 3 All ER 353 (HL) at 364.
38 And its predecessor Accident Insurance Act 1998, sch 1, cl 44.
39 Accident Compensation Commission v Nelson [1979] 2 NZLR 464 at 466.
wellbeing and employment. They are, at least arguably, for the benefit of family members affected by the attendant care entitlement assessment. The question before me is whether this specific recognition was intended to be enforceable through a private cause of action.
[60] The observation made in Campbell is an apt starting point; persons who suffer injury so as to require constant care and attention as a result of a personal injury by accident are relatively few in the context of the scheme’s overall operation. It follows that family members affected by the burden and responsibility of an injured person who requires constant care is a small group.
[61] The question of what constitutes a reasonable contribution by family members to attendant care and the extent to which the burden of caring for an injured person will disrupt the employment or other activities of family members is very much a fact specific inquiry and one that cannot be undertaken without information about the employment and activities of family members and, very likely, direct confirmation from the family members affected as to their apprehension of what they can reasonably manage. It is also one that will inevitably throw up differences of opinion as to what is reasonable. There is, however, no provision in the dispute resolution process provided in the ACA that would enable affected family members to have their position, as opposed to that of the injured person, specifically considered.
[62] Part 5 of ACA provides the framework for dispute resolution. There is provision for review of any Corporation decision on a claim, delay in processing a claim or a decision on any complaint made. However, that process is not available to everyone affected by the Corporation’s decision. Under s 134 only a claimant may apply to the Corporation for a review of its decisions or any delay in making its decisions. The only exception is that under s 134(2) an employer may apply for a review in relation to a work-related personal injury suffered during employment with that employer.
[63] In terms of attendance at a review hearing s 142 provides for the applicant, the Corporation and an employer (where relevant) to be present with a representative
“if they wish”. An applicant can be heard either personally or through that representative.
[64] There is then an appeals procedure under s 149 to t he District Court. The right to appeal a review decision is limited to claimants, the Corporation or employers in qualifying circumstances. Finally, there is provision for further appeals, to the High Court and to the Court of Appeal on questions of law. That procedure is available only to parties to the preceding appeal.40
[65] Mr Hlavac argued that a failure by the Corporation to observe clause 14(f) could be enforced by the claimant’s right to challenge the decision through the review and appeal processes. In cases where attendant care is in issue it is very likely that family members who are affected by the decision will be closely involved in the claimant’s care. It is probable, therefore, that they will be able to participate in decisions on whether to seek review or appeal, as EM’s capable and diligent involvement with her son’s claim demonstrates in this case. He pointed out that in this case the review process did respond to the very problem that lies at the heart of EM’s proposed claim. Therefore there is no need for any additional common law remedy to address shortcomings in the Corporation’s assessment of attendant care entitlements.
[66] Ms Henderson submitted that any such remedy “by proxy” is irrelevant, it being inappropriate to impose on claimants a duty of fighting battles for their family members. In my view this must be right, for two reasons. First, it is not appropriate to confer a benefit on a party without a remedy by which to enforce it. The fact that an effective remedy could be obtained through the exercise of a right by another person (should they choose to do so) is unprincipled; the burden of advancing the carer’s cause ought not lie with the injured person.
[67] Secondly, I agree that the exercise of review and appeal rights by the injured person are not a proper substitute for a direct remedy because there may well be situations where a claimant’s and their family’s interests diverge to such an extent as
to make a joint decision to review or appeal an ACC assessment inappropriate. Not
40 Accident Compensation Act 2001, ss 162 and 163.
all cases will involve an relationship between the injured person and the carer such as exists between EM and DM. Cases such as Taylor v Taite show how the carers within a family can change and that subsequent carers will not necessarily take the same view on matters as earlier ones.41 The injured person himself or herself may be unwilling to advance the position of the party who claims to have sustained a loss as a result of the Corporation failing to meet its liabilities for attendant care.
[68] Some of the factors that the Corporation must consider in determining attendant care entitlements benefit only the injured person’s family members. The injured person will be cared for regardless of how the attendant care entitlements are determined but for his or her family members that determination could result in severe hardship of the kind recorded in Campbell. On one hand, there is a comprehensive scheme for review and appeal of decisions regarding attendant care entitlement and it might be expected that that if Parliament intended family members to have a right of action it would have made the necessary provision in the Acts. As against that, however the limitations on the rights of review and appeal mean that affected family members have no direct means of challenging a determination.
[69] The question whether Parliament intended the apparent benefit conferred by clause 14(e) and (f) to be enforceable by private action was raised at a late stage and answering it will require more consideration than has been possible in the context of this review application. The rights of family members in EM’s position appear not to have been considered since Campbell and Free and the effect of the legislative changes apparently prompted by those cases justifies the question being fully explored. I have concluded that the existence of an enforceable statutory duty is not so untenable as to justify stopping the proposed claim at this stage.
Previous cases involving claims relating to attendant care payments
[70] I found the previous cases involving unsuccessful attempts to identify a cause of action for breach of statutory duty in relation to ACC entitlements to be of little assistance because they were decided under predecessor Acts. Nevertheless, I
canvass them for the sake of completeness.
41 Taylor v Taite HC Rotorua M13100, 23 May 2002.
[71] In Naysmith v Accident Compensation Corporation, decided under the ACA
1982, a man who had been badly injured in a car accident alleged a breach of statutory duty by the Corporation based on the Corporation’s failure to provide adequate rehabilitation.42 Mr Naysmith’s wife had been given an assurance by the Corporation that it would look after him but it failed to act on specialist medical advice regarding further steps that were needed to ensure that Mr Naysmith recovered completely from a serious head injury. The basis for the claim in that case
was the then s 36, which provided a duty on ACC to “place great stress upon rehabilitation” and to “take all practicable steps to promote … medical and vocational rehabilitation”. Baragwanath J struck out the cause of action, concluding that it was simply not possible to infer the statutory intention for which the
appellants contended.43 Baragwanath J did not accept that a simple breach of s 36
could give rise to a claim for breach of statutory duty. After canvassing the statutory framework then in place and the general principles applying to such claims he said that:44
I consider that the confusion arises from failure to distinguish between legislation that on its proper construction has the purpose of itself providing a cause of action to a plaintiff and legislation that does not have that purpose
… Absent such purpose, there is no actionable statutory duty, even if the
legislation may be relevant to a claim at common law …
Section 36 must be read not only with sections 14, 19, 20, 63, 89, 91 and 97, which establish statutory code dealing with rehabilitation, but with section 7
… which concerns funding and to which it is necessary to return.
…
There was no evidence of legislative purpose in this matter to establish a right of action for damages in respect of breach of s 18.45 Its raison d’etre was to set up an elaborate alternative to the damages regime which it has very largely superseded. The legislative scheme is of an exclusion of recourse to the common law proceedings for damages. It was replaced by a legislative no fault scheme providing for weekly and lump sum compensation together with, inter alia, the costs of rehabilitation provided for in ss 18 – 20. The elements of that scheme included its funding (s 7, especially subsections (1)(c) and (4), which refer to funding payment of
42 Naysmith v Accident Compensation Corporation, above n 14, at [43]–[60]. A separate cause of action in negligence was permitted to continue.
43 At [60].
44 Naysmith v Accident Compensation Corporation, above n 14, at [48]–[55].
45 Which provided that every person who suffered a personal injury for which he or she was entitled to cover was responsible for his or her own rehabilitation to the extent possible and was entitled to the extent provided by the Act to rehabilitation necessary to enable the person to lead as normal a life as possible.
claims made under s 63 and s 9(2)(b), which empowers the Corporation to pay for “rehabilitation assistance in accordance with this Act”), and the expression of the right to rehabilitation (s 18, which limits rehabilitation “to the extent provided by this Act”), and (s 19, which after the first 13 weeks imposes limitation on payment to “rehabilitation provided under an
‘approved individual programme’ specified in s 20) … Such claims are
inconsistent with the statutory scheme and plainly barred by s 14. And the method of challenging decisions (or failures to make decisions) under the
scheme is confined to the statutory procedures … The court’s role on judicial
review is limited to ensuring due performance of those procedures.
[72] In the course of his discussion Baragwanath J expressed his agreement with the previous decisions, Pearce v Accident Compensation Corporation46 and Chalecki v Accident Rehabilitation & Compensation Corporation.47 Neither is of assistance in the present case. In Pearce v ACC the claim for breach of statutory duty that was struck out was based on a statutory duty imposed by the Private Investigators and
Security Guards Act; the Corporation was alleged to be vicariously liable for the actions of a private investigator it had employed.48 Penlington J held that the relevant section of that Act was designed for the benefit of the public in general and could not support a private law duty. Given the different context it is not of assistance in this case. Chalecki concerned a cause of action in negligence (an earlier cause of action for breach of statutory duty had been abandoned).
The claim in negligence
The decision under review
[73] The negligence cause of action that Associate Judge Christiansen struck out asserted a duty of care to EM on the basis that she was a person or a member of a group who it was foreseeable would suffer harm if the Corporation failed to comply with his obligations under the ACA 2001. Specifically it was alleged that the Corporation owed a duty to provide DM with entitlements in accordance with the
provisions of ACA 2001, ensure that DM received the entitlements he was entitled to
46 Pearce v Accident Compensation Corporation (1991) 5 PRNZ 297 (HC).
47 Chalecki v Accident Rehabilitation & Compensation Corporation, above n 22.
48 There were also a pleaded cause of action in negligence against the Corporation for its own conduct, including failing to take reasonable steps towards rehabilitation of the plaintiff but the plaintiff expressly disavowed allegations of breach of statutory duty under the Accident Compensation Act 1982 (p302).
and correctly and fully perform its obligations in relation to the provision for and funding of attendant care for DM.
[74] In striking out the claim the Associate Judge appeared to accept that the duty being asserted was novel but regarded it as untenable:49
[67] The Court considers in this case that the only remedy is available to the son and that was to have the extent of the attendant care he needed reassessed – and that is what it did.
[68] What the plaintiff is endeavouring to do is to extend the category of statutory duties available to persons other than claimants and in a way not provided for in the Act and in doing so to give to the plaintiff access to remedies not available to her son.
[69] Parliament clearly defined those who have entitlements under the Act. The plaintiff’s claim seeks to extend the range of remedies available and much wider than parliament could have intended.
[70] There are always in cases involving decisions regarding the extent of entitlements to be provided other persons who will be affected by those decisions.
[71] To widen the scope would mean that anyone in a situation with a relationship with a claimant is therefore able to bring a claim and to seek damages beyond those a claimant would receive.
[72] It seems to the Court that that outcome threatens to undermine the whole purpose of the ACC scheme.
A novel duty?
[75] Supporting the decision on review, Mr Hlavac submitted that this case was not the kind contemplated by Couch (No. 1) which concerned matters of genuine public importance and in an area where the law was confused or developing.50
Rather, he contended that there is clear authority in sufficiently analogous circumstances that the Corporation does not owe a duty of care in respect of its
statutory obligations.
49 EM v Accident Compensation Corporation, above n 2, at [67]–[72].
50 Couch v Attorney-General, above n 6, referred to above at [9].
[76] Mr Hlavac relied on Jones v Department of Employment, Pearce v ACC and Chalecki and Traynor v ACC.51 He argued that attendant care entitlement was due only to the claimant (in this case DM) and any failure by ACC in its assessment of that entitlement could not give rise to a claim of negligence; rather the review and appeal process set out in the Act was the only available course directed by any error. Ms Henderson sought to distinguish these cases. She emphasised that EM was not a
claimant under ACA 2001 and therefore had no personal rights of appeal or review. Therefore the circumstances could not be determined by reference to existing authority.
[77] I have already referred to Pearce in relation to relation to the breach of statutory duty cause of action. The negligence cause of action was based, in part, on the Corporation’s cessation of compensation payments in breach of its statutory duty relating to rehabilitation.52 Penlington J considered that the hierarchy of rights of review and appeal available under the Act effectively excluded any right of action at common law.53 Finding a duty of care would effectively and undesirably circumvent the review and appeal procedures set out in the Act. In reaching this conclusion Penlington J placed considerable reliance on the decision of the English Court of Appeal in Jones v Department of Employment.54 The alleged duty of care in that case was against an adjudication officer who disallowed a benefit claim. The English Court of Appeal concluded that the imposition of a duty of care was not fair, just and reasonable and further held:55
It is a general principle that if a Government department or officer charged with the making of decisions whether certain payments should be made is subject to a statutory right of appeal against his decisions he owes no duty of care in private law. Misfeasance apart, he is only susceptible in public law to judicial review or to the right of appeal provided by the statute under which he makes his decision.
51 Jones v Department of Employment [1998] All ER 725 (EWCA); Pearce v Accident Compensation Corporation, above n 46; and Chalecki v Accident Rehabilitation and Compensation Insurance Corporation, above n 22; Traynor v Accident Compensation Corporation HC Wellington CIV-2012-485-001806, 4 October 2012.
52 The other allegations of negligence related to the engagement and actions of a private investigator and are not relevant for present purposes.
53 Pearce v Accident Compensation Corporation, above n 46, at 318.
54 Jones v Department of Employment, above n 51.
55 At 736.
[78] Penlington J accepted this reasoning as applicable in Pearce and considered it fatal to the appeal. There are, however, distinguishing features in this case; EM had no entitlement to the benefit in respect of which the statutory obligation was being exercised and, although directly affected by the Corporation’s decision, had no review or appeal rights.
[79] Chalecki, as discussed, involved a claimant who alleged further injury and financial loss as a result of ACC improperly forcing him back into work. In striking out the cause of action the first instance Judge relied on Pearce and Jones. On appeal Mr Chalecki argued that because ACC had not made any decision which could be subject to review or appeal the common law remedies were available. However, John Hansen J declined to distinguish Pearce holding that it would be anomalous if a claimant could sue for allegedly negligent management or administration of a claim but could not sue for a negligent decision which is the
culmination of such a process.56 He further considered that there were sound policy
reasons enunciated in Jones for no duty to be owed by ACC in the circumstances.57 I have already noted, however, that I find the circumstances of Chalecki too different from the present case to be helpful. I do not consider that Chalecki addresses the issues raised in the present case so as to preclude EM’s asserted duty.
[80] In Traynor v ACC the claimant alleged that ACC owed and breached a duty of care to him by failing to provide vocational rehabilitation and also by failing to inform him of his entitlement to it. He claimed damages amounting to the difference between the sum he received by way of compensation and the sum he considered he would have earned had he been rehabilitated. Associate Judge Matthews considered that the reasoning in Peace v ACC was of direct application to the facts and fatal to
the plaintiff’s claim in negligence.58 Again, because EM has no statutory entitlement
under ACA 2001 this decision does not assist.
56 Chalecki v Accident Rehabilitation and Compensation Insurance Corporation, above n 22, at
[38].
57 At [43].
58 Traynor v Accident Compensation Corporation, above n 51, at [24].
[81] Mr Hlavac also relied on the decision in Taylor v Taite, which concerned the distribution of back pay for historical attendant care entitlement.59 Over the relevant period the attendant care had been provided by both the disabled child’s mother and his grandmother, whose estate had claimed a share of the back payment. The decision in that case rested on the premise that payment of attendant care entitlements were due to the injured person, not the carer:60
It is obvious that the payment is being made to the injured person so that he or she can buy the services of someone or some institution who can provide the “constant personal attention” that the injured person requires. It may be that the injured person may choose to live in an institution, in which event he or she would direct ACC that that institution charge for providing his or her “necessary care”. If, on the other hand, the injured person is looked after at home by a family member, then the direction will be for the money to be paid to that caregiver. That caregiver is not able to hold over employment. He or she is therefore entitled to be compensated at a reasonable rate for the nursing services he or she provides. In circumstances where the injured person is not able, by reason of his or her infirmity or mental incapacity, to make a decision as to who should care for him, that decision will need to be made by the injured person’s legal guardian.
[82] This decision does not assist in the present case because the entitlements in question fell to be determined under the legislation that preceded AIA 1998 and the case was not concerned with how the entitlement was assessed but rather to whom the back payments should be made and on what terms.
[83] I accept that the duty EM asserts is novel.
Principles relating to novel duty of care
[84] A claim for a duty of care in novel circumstances raises two general questions; the degree of proximity or relationship between the alleged tort-feasor and the claimant and whether there are policy considerations that tend to negative or restrict a duty.61 Where the loss claimed is purely economic that fact may tell against
a duty, though it is not fatal.62
59 Taylor v Taite, above n 41.
60 At [37].
61 First City Corporation Ltd v Downsview Nominees Ltd [1990] 3 NZLR 265 (CA) at 275; South
Pacific Manufacturing Co Ltd v NZ Security Consultants and Investigations Ltd [1992] 2 NZLR
282 (CA) at 293–294.
62 Brown v Heathcote County Council [1986] 1 NZLR 76 (CA) at 79–80.
[85] In Couch v Attorney General the Supreme Court held, in the context of a strike out, that it was possible that the Probation Service could owe a duty of care to the plaintiff after she was violently assaulted by a parolee with whom she had been working.63 Tipping J summarised the general principles to be applied in determining whether a duty of care is owed in a situation not covered by previous authority:64
[78] … Whether a duty of care is owed has been determined on the basis of whether it is fair, just and reasonable to impose it. Proximity and policy are the two headings under which the courts have determined that ultimate question. The leading case is South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd. That case was followed in Attorney-General v Carter, where the Court of Appeal said:
Whether it is fair, just and reasonable to hold that a duty of care is owed by defendant to plaintiff in a situation not covered by authority is conventionally addressed in terms of proximity and policy: see for example Price Waterhouse v Kwan (supra) at p 41 para [6], and of course South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282. Generally speaking, proximity is concerned with the nature of the relationship between the parties whereas policy is concerned with the wider legal and other issues involved in deciding for or against a duty of care.
[79] The most recent decision of the Court of Appeal on this subject is Royce New Zealand Ltd v Carter Holt Harvey Ltd in which the Court adopted the same approach and listed a number of factors which it considered may be found helpful in considering the proximity and policy issues. If proximity is found to exist it is necessary to examine what influence wider policy considerations may have on whether it is appropriate to impose a duty of care. As the point was not argued we do not propose to discuss whether establishing proximity gives rise to any presumption of a duty of care.
[86] The factors identified as relevant to the overall proximity and policy assessment in Royce New Zealand Ltd v Carter Holt Harvey Ltd included:65
(a) Not only the foreseeabiltiy of the harm but also the degree of analogy with cases in which a duty has already been established;
(b) The nexus between the alleged negligence and the loss suffered;
63 Couch v Attorney General, above n 6.
64 At [78].
65 Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA) at [59]-[65].
(c) The need to avoid an undue legal burden and to ensure that the consequences are in proportion to the defendant’s fault;
(d) The need to avoid indeterminate liability;
(e) The extent to which those in the plaintiff’s position are vulnerable;
(f) Related to the plaintiff’s vulnerability, the extent to which other
remedies were realistically available;
(g)The nature of loss – the courts have been less willing to impose a duty in cases of pure economic loss than where there is physical damage to property; and
(h) The statutory or contractual background.
[87] Of relevance to this case, which depends on the statutory context and concerns pure economic loss, are Cooke P’s observations in South Pacific Manufacturing:66
Where a statute has a bearing on whether a duty of care should be recognised, the position is relatively straightforward if the true interpretation of the statute is either that it covers the field to the exclusion of the common law or that it gives rise to a statutory cause of action on the principles considered in Cutler v Wandsworth Stadium Ltd [1949] AC 398. The position is more complex if, … the statute expressly leaves the common law to operate as well. Clearly enough, however, such provisions show that the statute is not intended to inhibit the Courts in developing the common law; and I think that they can be a real help in deciding whether there is a common law duty. For example they may encourage the Court to hold that certain interests warrant protection.
[88] In Cutler v Wandsworth Stadium Ltd, to which Cooke P referred, Lord
Simonds said:67
It is often a difficult question whether, where a statutory obligation is placed on A, B, who conceives himself to be damnified by A's breach of it, has a
66 South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd, above n 61, at 297.
67 Cutler v Wandsworth Stadium Ltd [1949] AC 398 (HL) at 407, [1949] 1 All ER 544.
right of action against him. … The only rule which in all circumstances is valid is that the answer must depend on a consideration of the whole Act and the circumstances, including the pre-existing law, in which it was enacted. But that there are indications which point with more or less force to the one answer or the other is clear from authorities which, even where they do not bind, will have great weight with the House. For instance, if a statutory duty is prescribed, but no remedy by way of penalty or otherwise for its breach is imposed, it can be assumed that a right of civil action accrues to the person who is damnified by the breach. For, if it were not so, the statute would be but a pious aspiration.
The duty argued for by EM
[89] In this case the existence of the statutory obligation imposed by cl 14(f) is a significant factor in the inquiry regarding proximity. In Couch the Supreme Court said:68
… We accept that proximity between a statutory body and a plaintiff who has suffered harm is not readily to be assumed whenever statutory duties and powers could reasonably have been used to avoid foreseeable loss. But the statutory obligation is we think highly relevant to the judgment of sufficient proximity between plaintiff and statutory authority to give rise to an actionable duty of care. And in some cases, particularly those where individuals cannot reasonably protect themselves from risk which a statutory body has a duty to abate or manage, we consider that sufficient proximity may well follow from the statutory obligations.
[90] On the facts pleaded EM was both the primary caregiver and primary breadwinner for herself and DM. If the Corporation failed to properly assess DM’s attendant care entitlement EM, in reality, had no alternative but to bridge the gap by whatever means she could. This would mean either providing the necessary care herself (at the expense of her business) or incurring the additional cost of paid care. The circumstances of DM’s claim meant that the Corporation would have dealt either solely or primarily with EM and could, for present purposes, be assumed to understand her predicament. It would have been apparent that failure to provide DM with entitlements could have a serious knock-on effect on the family’s overall financial wellbeing. In the context of a strike out application it must surely be said that EM was sufficiently proximate to the Corporation for the purposes of a duty of
care at this stage.
68 Couch v Attorney General, above n 6, at [65].
[91] On the issue of proximity I also consider the apparent purpose behind clause
14(f) to be relevant. The circumstances preceding the introduction of clause 44 in AIA 1998 and cl 14 in ACA 2001 suggests recognition by Parliament that it was unacceptable for the Corporation to determine attendant care entitlements in a way that resulted in extreme hardship for the injured person’s family. In addition, it might have been expected that families affected by these decisions would have recourse through review or appeal rights within the statutory scheme. The lack of any such provision might (on the basis of South Pacific Manufacturing and Cutler) point towards a duty.
[92] In terms of policy the Corporation expresses concern over the potential “floodgate” effect and the prospect of conflict between its duty to those covered under the Act and to third parties. Floodgate concerns may be overstated, given the relatively small number likely to be in need of full time care. This was a point considered in Campbell. I do accept that a private law duty of care to family members could possibly create conflicts of interest for decision makers. These are, however, matters that are properly explored at trial.
[93] Given the uncertainty as to whether a right of action for breach of the statutory obligation exists, and the factors that I have discussed, some of which may point towards the existence of a duty, I have reached the conclusion that it would be premature to strike out this claim.
Conclusion
[94] I have concluded that:
(a) EM’s claim is not barred by s 317 ACA 2001;
(b)The assertion of a claim for breach of statutory duty is not so untenable as to justify not permitting it to proceed;
(c) The asserted duty of care is novel and is not so untenable as to warrant striking the claim out.
[95] The application for review is allowed.
[96] The parties may address the question of costs in memoranda.
P Courtney J
5
1