Mahaki v Accident Compensation Corporation

[2008] NZCA 240

IN THE COURT OF APPEAL OF NEW ZEALAND

CA104/07
[2008] NZCA 240

BETWEENMARTIN BRUCE MAHAKI

Appellant

ANDACCIDENT COMPENSATION CORPORATION

Respondent

Hearing:29 April 2008

Court:Hammond, Chambers and Baragwanath JJ

Counsel:J M Miller for Appellant

I R Millard QC and L M Rice for Respondent

Judgment:17 July 2008 at 10 am

JUDGMENT OF THE COURT

A        We answer the question stated for our determination as follows:

A person in Mr Mahaki’s position has the independence allowance payable from the date of application for an independence allowance, not the date when a claim for the relevant personal injury was lodged.

B        The appeal is dismissed.

C        There will be no order for costs on the appeal.

REASONS OF THE COURT

(Given by Hammond J)

Introduction

[1]       This is an appeal by way of case stated from a decision of a Full Court of the High Court: HC WN CIV-2005-485-177 24 November 2006 (Wild and Mallon JJ).

[2]       Mr Mahaki suffered an injury to his right thumb in 1991, for which he received a lump sum payment under the Accident Compensation Act 1982 (“the 1982 Act”), based on the First Schedule therein pertaining to compensation for permanent loss or impairment of bodily function.

[3]       In 1993, Mr Mahaki suffered a severe laceration to his right arm, rendering both his arm and hand useless.  By then, the Accident Rehabilitation and Compensation Insurance Act 1992 (“the 1992 Act”) was in force.  This statute had replaced lump sum compensation with an independence allowance entitlement.  However, Mr Mahaki did not seek an independence allowance at that time.  It seems this was because he was not made aware of his possible entitlement to an independence allowance.

[4]       The 1992 Act was replaced by the Accident Insurance Act 1998 (“the 1998 Act”), which was in force from 1 July 1999 until 31 March 2002.  That Act continued to provide for independence allowances, although a separate independence allowance was now payable for each injury as opposed to one independence allowance paid for all injuries under the 1992 Act.  Competition for workplace insurance meant that different parties could have liability for the separate independence allowances for separate injuries.  Mr Mahaki took no steps under the 1998 Act with respect to his 1993 injury.

[5]       When Mr Mahaki finally applied for an independence allowance in October 2002, the Injury Prevention, Rehabilitation, and Compensation Act 2001 (“the 2001 Act”) was in force.  That Act had brought back lump sum compensation for impairment to bodily function in place of the independence allowances provided under the 1992 and 1998 Acts. 

[6]       The question stated for determination by this Court in relation to Mr Mahaki is whether his independence allowance is payable from the date he lodged a claim for the relevant personal injury (Mr Mahaki’s contention) or the date of his application for an independence allowance (the High Court’s finding).  If the view taken by the High Court is correct, then as a matter of law Mr Mahaki is not entitled to an independence allowance for the nine years between the claim for cover for his injury and his application for the independence allowance.

The legislation

[7]       As we have noted, Mr Mahaki applied for an independence allowance assessment in 2002, for personal injuries suffered before 1 July 1999.  The accident compensation legislation in force at the time of his application was the 2001 Act.

[8]       However, by virtue of s 377 of the 2001 Act, a transitional provision dealing with independence allowances for personal injuries suffered before 1 July 1999, ss 441 and 442 of the 1998 Act are part of the transitional regime of the 2001 Act. 

[9]       Prior to amendment by s 59 of the Injury Prevention, Rehabilitation, and Compensation Amendment Act (No 2) 2005, s 377 read:

(1)Sections 441 and 442 of the Accident Insurance Act 1998 continue to apply to personal injury covered by this Part that was suffered before 1 July 1999, irrespective of when the claim for cover in respect of that personal injury was or is lodged. 

(2)A claimant who suffered personal injury before 1 July 1999 and who applied, before that date, for an independence allowance but who was not or would not have been entitled to receive the allowance before the close of 30 June 1999 is to have his or her independence allowance assessed under Part 4 of Schedule 1 of the Accident Insurance Act 1998.

[10]     As a side note, as a result of the 2005 amendment, s 377(1) now provides that “sections 441 and 442 of the Accident Insurance Act 1998 cease to have effect”.  What is substituted is an assessment regime with certain modifications that go some way to ameliorating the interpretative difficulties which have arisen in this proceeding.

[11]     For the purpose of this appeal, it is necessary to set out ss 441 and 442 of the 1998 Act in full:

441.     Independence allowance -      

(1)       Subsection (2) applies to -

(a)A person to whom section 27(1) of the Accident Rehabilitation and Compensation Insurance Amendment Act (No. 2) 1996 applies and who was not reassessed under section 54A of the Accident Rehabilitation and Compensation Insurance Act 1992 before 1 July 1999:

(b) A person who, immediately before 1 July 1999, was receiving or was entitled to receive an independence allowance under section 54 of the Accident Rehabilitation and Compensation Insurance Act 1992:

(c)A person who suffered a personal injury before 1 July 1999 and did not apply for an independence allowance before 1 July 1999.

(2)Such a person is entitled to receive an independence allowance on and after 1 July 1999 under Part 4 of Schedule 1, as modified by -

(a)       Subsection (3); and

(b)Section 442(2)(a) and (b), if the person is a person to whom section 442(2) applies.

(3)       The modifications made by this subsection are as follows:

(a)Such a person may not lodge a claim for an independence allowance under Part 4 of Schedule 1 for any injuries suffered before 1 July 1999:

(b)A person described in subsection (1)(a) receives the rate of independence allowance payable on 30 June 1997 as adjusted by section 71 of the Accident Rehabilitation and Compensation Insurance Act 1992 or section 460:

(c)Any assessment under clause 60 of Schedule 1, or reassessment under clause 61 of Schedule 1, must be done on the basis of whole-person impairment for the combined effect of all his or her personal injuries covered by the former Acts, and only 1 independence allowance is payable for all those injuries:

(d)As soon as practicable after 1 July 1999, the manager must require a person described in subsection (1)(a) to be reassessed in accordance with paragraph (c).

442.Entitlement to independence allowance of persons who received lump sums under former Acts and suffer further impairment –

(1)Subsection (2) applies to a person who received a payment for personal injury by accident under section 119 of the Accident Compensation Act 1972 or section 78 of the Accident Compensation Act 1982.

(2)Such a person may apply under section 441 for an independence allowance under Part 4 of Schedule 1. That Part applies subject to the following modifications:

(a)The independence allowance must be calculated by deducting, from any whole-person impairment assessed under clause 60 of Schedule 1, or reassessed under clause 61 of Schedule 1, any percentage permanent loss or impairment of bodily function for which any payment was made under section 119 of the Accident Compensation Act 1972 or section 78 of the Accident Compensation Act 1982:

(b)An independence allowance payable as the result of an assessment under clause 60 of Schedule 1 is payable from the date of the application for it.

The issue for determination

[12]     The precise question stated for determination by this Court in relation to Mr Mahaki is:

Whether a person in Mr Mahaki’s position has their independence allowance payable from the date of application for independence allowance or the date he lodged the claim for the relevant person injury.

[13]     At first blush, s 442(2)(b) would seem to resolve this issue in favour of the date of application for an independence allowance.  Indeed, that is what the High Court held (at [53]–[55]):

[53]     … We consider that s 441(3)(a) does not exclude pre-1 July 1999 injuries from the independence allowance entitlement under the 1998 Act. The very point of s 441 is to provide such an entitlement.  The application of s 442 to Mr Fenemor and Mr Mahaki is not therefore excluded on this basis.

[54]     As a consequence, Mr  Mahaki’s independence allowance entitlement is modified by s 442(2).  This means that his independence allowance was payable from the date of application for it (see s 442(2)(b)).  It is not back-dated to the date of acceptance of cover nor to the commencement of the 1998 Act.

[55]     This contrasts with the 1992 Act position where entitlements were payable from the date that cover is accepted.  This is also the position for injuries suffered after 1 July 1999.  Despite the unfairness in the different position that applies under s 442(2)(b) where the entitlement is not back-dated, and whatever the rationale, this does seem to have been Parliament’s intention in light of the plain words of s 442(2)(b).

[14]     The consequence of this finding for Mr Mahaki is that he is not entitled to an independence allowance for the nine years between the claim for cover for his injury, and his actual application for the independence allowance.  The unfairness is quite apparent, but the argument for the Accident Compensation Corporation (“the Corporation”)  is that Parliament deliberately – and quite expressly – legislated in the way that it did.

The submissions for Mr Mahaki

[15]     Mr Miller’s central proposition on appeal was that Mr Mahaki’s independence allowance remains to be dealt with under the 1992 Act because of deficiencies in the drafting of ss 441 and 442; s 54 of the 1992 Act would commence payment from 1993.  As authority, he cited the judgment of Ronald Young J in Buxton v ARCIC HC WN AP63/02 12 July 2002 at [26]: that “those who are entitled to an independence allowance for pre-July 1999 injuries but have not applied need to apply under the statutory regime existing when the entitlement arose”.

[16]     In the High Court proceedings, Wild and Mallon JJ “respectfully disagreed” with this obiter passage, noting that “it was not necessary to decide the issue [in that case] because the claimant’s claim was found to be under the 1998 Act” (at [49]).

[17]     In the alternative, Mr Miller argued that Mr Mahaki’s independence allowance falls to be dealt with under Part 4 of Schedule 1 of the 1998 Act, and clause 63(b) therein which would permit commencement of payment from 1993.  This proposition is based on s 426(3) of the 1998 Act, which provides that entitlements were to be given under Schedule 1, bringing in clause 63(b).  However Mr Miller does concede that s 426(3) includes the words “unless the effect of s 427 to s 450 is the contrary”, which necessarily brings the issue of statutory interpretation back to ss 441 and 442.

[18]     Mr Miller submitted that the combined effect of ss 441 and 442 is so unclear that those provisions should not be allowed to deprive Mr Mahaki from having his independence allowance paid from 1993.

[19]     He then advanced three arguments to support the proposition that s 442(2) does not apply to Mr Mahaki:

(a)Section 442 only applies to a further impairment of the same injury that the earlier lump sum was paid for and not a new injury, as in Mr Mahaki’s case.

(b)Section 442 only applies to a further impairment that arises after 1 July 1999.

(c)Section 442 does not apply to Mr Mahaki as s 442(2) refers to a person being able to apply for an independence allowance under s 441 and s 441 does not apply to him.

[20]     Mr Miller suggested that the following is the outcome:

[A] person such as Mr Mahaki either loses his entitlement to claim an independence allowance for his pre 1 July 1999 injury or he is able to revert to his entitlement under the 1992 Act as the transitional provision in the 1998 Act does not cover his situation and the Interpretation Act 1999 (ss 7, 17 and 19) preserves his entitlement under the 1992 Act despite its repeal.

…

Accordingly to obtain an independence allowance for his 1993 injury he has to either rely on Part 4 of the First Schedule to the 1998 Act – through ss 421 and 426 unmodified by ss 441 and 442 or rely on his residual entitlement under s 54 of the 1992 Act.

The submissions for the Corporation

[21]     Mr Millard QC argued that Parliament clearly intended s 442(2)(b) to apply to persons in the position of Mr Mahaki.  He supported this proposition under three heads: firstly, the “application” of ss 441 and 442; secondly, the “meaning” of ss 441 and 442; and thirdly, the “history” of ss 441 and 442.

[22]     As to the application point, Mr Millard argued that Mr Mahaki had correctly applied for an independence allowance under Part 11 of the 2001 Act, dealing with transitional issues. Section 377(1) expressly states that, in the case of personal injuries suffered before 1 July 1999, ss 441 and 442 continue to apply.  Thus, Mr Millard contended that Mr Mahaki is clearly within s 441(1)(c) and s 442(1):

[A]s the [2001 Act] repealed the 1998 Act, the 1998 Act only has “life” to the extent that it is expressly saved by the [2001 Act].

Both Part 11 of the [2001 Act] and Part 13 of the 1998 Act expressly deal with the transitional situation, and thereby, persons who suffered injuries under former Acts. Accordingly, there is no scope for the provisions of ss 7 or 17 of the Interpretation Act 1999 to apply to preserve prior “rights” that are inconsistent with those transitional provisions.

[23]     In relation to the meaning of those provisions, having concluded that ss 441 and 442 apply to Mr Mahaki, Mr Millard argued that s 441(2) entitles Mr Mahaki to receive an independence allowance after 1 July 1999 under Part 4 of Schedule 1 of the 1998 Act, but, crucially, as modified by ss 441(3) and 442(2)(a) and (b).  Given s 442(1) is applicable to Mr Mahaki, s 442(2) also pertains to him and others in his position. 

[24]     Therefore, contrary to the argument of counsel for Mr Mahaki, Mr Millard contended that:

[T]he deficiencies in drafting ss 441 and 442 (if any) are not so bad that these sections can be simply dismissed. Nor does their drafting mean that the person applies under the statutory regime existing when the entitlement arose.

[25]     Mr Millard said that the appellant’s “further impairment of the same injury” gloss on s 442 entails reading into s 442(1) something which is simply not there.  Because s 442(2)(b) clearly applies to all who have received a lump sum under the 1982 Act, Mr Millard argued that issues of perceived unfairness cannot override the Act’s express meaning.  Moreover, s 441(3)(c) makes it clear that any assessment for an independence allowance is to be made on a “whole person impairment basis”.  The perceived ability of Mr Mahaki to rely on clause 63(b) of Schedule 1 of the 1998 Act, in a vacuum as it were, was criticised by Mr Millard on the basis that Mr Mahaki’s only access to Part 4 of Schedule 1 is via ss 441 and 442.

[26]     Mr Millard then turned to the history of ss 441 and 442.  Section 442, when in Bill form as cl 388, applied to a further impairment to the original injury and did not have a commencement date for the independence allowance.  Section 3 of the Accident Insurance Amendment Act 1999 removed the reference in s 442 to impairment linked solely to the prior injury that had been compensated by a lump sum, with the presumed intention that s 442 was to apply to all subsequent impairments suffered by those who had previously received a lump sum, whether or not that impairment related to the same injury.  Mr Millard also drew attention to the inclusion of a cross-reference to ss 442 in 441(2) in arguing that s 442(2)(b) applies to Mr Mahaki.

Discussion

[27]     However unfair the outcome may appear to be in Mr Mahaki’s case, we are of the view that the High Court’s analysis was correct.

[28]     Section 377 of the 2001 Act makes it clear that ss 441 and 442 of the 1998 Act apply to persons in Mr Mahaki’s position.  That also follows from ss 423 and 426 of the 1998 Act.

[29]     Mr Mahaki is within ss 441(c) and  442(1); it follows that his application for an independence allowance has to be made under s 441.

[30]     Section 441(2) then makes the application of Part 4 of Schedule 1 of the 1998 Act subject to ss 441(3) and 442(2)(a) and (b).

[31]     There is no escape in Mr Mahaki’s case from the plain meaning of s 442(2)(b), a meaning which is confirmed by the legislative history.

Conclusion

[32]     We answer the question stated for determination by the High Court as follows:

A person in Mr Mahaki’s position has their independence allowance payable from the date of application for an independence allowance, not the date when a claim for the relevant personal injury was lodged.

[33]     We have therefore reached the same conclusion as the High Court.  We dismiss Mr Mahaki’s appeal.

[34]     We make no order for costs on the appeal.

Solicitors:
John Miller Law, Wellington for Appellant
ACC Legal Services, Wellington for Respondent