On the Go (New Zealand) Ltd v Accident Compensation Corporation HC Wellington CIV 2011-485-736
[2011] NZHC 1136
•16 September 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2011-485-736
UNDER the Accident Compensation Act 2001
IN THE MATTER OF an appeal pursuant to s162 of the Act
BETWEEN ON THE GO (NEW ZEALAND) LTD, ON ROAD (NEW ZEALAND) LTD,
VEHICLE TESTING (NEW ZEALAND) LTD
Appellants
ANDACCIDENT COMPENSATION CORPORATION
Respondent
Hearing: 12 September 2011
Counsel: T P Cleary for Appellants
P A McBride and S Arnold for Respondent
Judgment: 16 September 2011
JUDGMENT OF SIMON FRANCE J
Introduction
[1] This appeal concerns whether ACC have correctly categorised the appellants’
business activity for the purposes of determining the amount of its Work Account levy.
ON THE GO (NEW ZEALAND) LTD, ON ROAD (NEW ZEALAND) LTD, VEHICLE TESTING (NEW ZEALAND) LTD V ACCIDENT COMPENSATION CORPORATION HC WN CIV 2011-485-736 16
September 2011
[2] The appellants’ business activity has been found by the District Court to be:[1]
[1] Accident Compensation Corporation v On the Go (New Zealand) Ltd & Ors [2010] NZACC 78 (DC) Judge Beattie at [6].
(a) Warrant/Certificate of Fitness Vehicle Inspections (not mechanical repair services);
(b) used imported vehicle inspections and pre-sale vehicle inspections;
(c) administrative agent for driver licensing (not road testing) road user charges and vehicle registrations;
(d) services ancillary to the above.
[3] The Court carried on to observe:[2]
[2] At [20].
... I find there can be no argument but that their core activity is motor vehicle testing for the purposes of issuing Warrants of Fitness or Certificates of Fitness, and that their other functions are ancillary to that undertaking.
Background
[4] Employers are required to pay ACC levies. The rate differs depending upon the risk factor of the business activity. Regulations have been passed that identify over 650 types of business activity, called classification units. I illustrate the scheme by setting out the first five classification units from Schedule 1 of the Injury Prevention, Rehabilitation and Compensation (Work Account Levies)
Regulations 2007:
Number Classification Unit $100 of earnings ($) 57100
Accommodation
0.64
78420 Accounting services 0.06 78510 Advertising services 0.16 02130 Aerial agricultural, horticultural, silvicultural ... services 3.09 86130 Aged care 1.19
[5] This case is about which classification the appellants come into.
[6] The classifications that appear in the Regulations are taken from a source known as the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006. This is a joint development of Statistics New Zealand and its Australian counterpart. The idea was to create uniformity in statistical information so as to allow better comparisons to be made. The list was developed in 1993 and amended in 2006.
[7] As noted the Regulations use those lists, and then attach to each classification unit the levy appropriate for the risk the particular classification activity involves.
Up until 2007, the appellants were placed in:
78290 Technical services
(not elsewhere classified)
0.39
[8] The Regulations are re-enacted each year as the rate of the levy changes. In
2008 there were also some substantive changes made to the classification units.[3]
[3] Injury Prevention Rehabilitation and Compensation (Work Account Levies) Regulations 2008
(“the 2008 Regulations”).
These changes were made as a result of the changes made in the 2006 review of
ANZSIC. Relevant to this case, the appellants’ classification unit, 78290, was changed altogether to now read:
78290Scientific testing and analysis services
0.30
[9] Next, a new residual classification unit was recognised that had some
similarities to the old 78290:
78291 Professional, scientific
and technical services (not elsewhere classified)
0.30
[10] And finally a new category altogether appeared:
96400Regulatory services (licensing and inspection) (not elsewhere classified)
0.48
[11] ACC determined that the new category of 96400 best applied to the appellants’ business activity and allocated it. The significance is that the size of the levy is 0.48. Previously their classification had a rate of 0.39, and the new 78291, if applicable, would have a rating of 0.30. So the difference is significant.
Procedural history
[12] The appellants objected. The statutory scheme calls for a review of the classification to be conducted in front of an independent reviewer, and that is what happened. The appellants said their classification should be the new 78291. Their position was that their core business activity had not changed so nor should the classification. ACC said that the new classification unit of 96400 was the “most accurate description”[4] of the activity, and therefore correct.
[4] The test specified by s 170(1) of the Injury Prevention, Rehabilitation and Compensation
Act 2001 is the unit that “most accurately describes” the business activity.
[13] The reviewer took an unexpected view, and said neither was correct. He directed ACC to use its power to define a specific category that would capture the appellants’ business activity.
[14] ACC appealed. The District Court notes of the reviewer’s decision:[5]
[5] Above at [4].
Neither the appellant nor the respondents support that [the Reviewer’s] decision and there has been agreement between counsel that in making that decision the Reviewer exceeded his jurisdiction and each party has come to this appeal asserting the appropriateness of their respective classification units.
[15] The District Court agreed with ACC’s assessment. The Judge queried whether the former category of unclassified technical services remained apt at all when now paired with “professional and scientific services”. However, it did not matter because, given the primary activity of the appellants, the new Regulatory Services classification unit was now the most accurate classification available. The Court noted that motor vehicle testing was recognised in ANZSIC as a primary activity under the Regulatory Services classification unit. In the Court’s view the fact that the new classification had a higher levy rating was irrelevant to the issue before it.
[16] The appellants sought leave to appeal, which was granted, on two questions:[6]
[6] On the Go (New Zealand) Ltd & Ors v Accident Compensation Corporation [2011] NZACC 110 DC) Judge Ongley.
(i) whether the Court should have taken the terms of the ANZSIC into account when deciding the correctness of classification; and
(ii) whether the activity of vehicle testing was conducted “without enforcement of regulations” where the applicants regulatory conduct was limited to the giving or withholding of a warrant or certificate of fitness.
Question one – should the Court have had regard to ANZSIC?
[17] The ANZSIC document contains an expanded commentary on the Regulatory Services category. This expanded commentary identifies a series of activities as the primary activities falling within the category. One of these is “motor vehicle testing”. In deciding that ACC was correct, the District Court noted this ANZSIC description of motor vehicle testing as a primary activity. The appellants say it was
an error to look at this.
[18] Their argument is that the assessment must be made only by reference to the wording contained in the Regulations – namely the classification description. In support of this proposition it is first noted that s 170(1) of the Injury Prevention, Rehabilitation and Compensation Act 2001 (“the Act”)[7] says ACC shall allocate a business activity to the most accurate risk category identified in the Regulations. Second, in former times the relevant enactments specifically authorised reference to ANZSIC.[8] This is no longer the case.
[7] The title of this Act was repealed in March 2010, it is now known as the Accident Compensation Act 2001.
[8] Clause 8(5) of the Accident Insurance (Employer Premiums) Regulations 2001. The regulation was the equivalent of s 239 of the present Act. It addresses the situation where there is no classification unit applicable to the particular business activity. In such circumstances, it is ACC’s job to define a new one. The old Regulation said this could be done by reference to ANZSIC. The present Act is silent on the point.
[19] In my view the question as framed is not suitable for a general response. It is an unlikely proposition, when interpreting legislation, to prohibit absolutely reference to particular material. The key issue usually turns on the nature of the source, and what use is sought to be made of it.
[20] In the present case, it is beyond dispute that the Regulations uplift the classifications from the ANZSIC document. It is, therefore, a somewhat surprising proposition to suggest it is not permitted to have regard to ANZSIC when assessing the nature of a particular classification. Why that would be so is not apparent to me. Indeed, the explanatory note to the 2008 Regulations that introduced the new Regulatory Services classification unit observes that:
There are changes to the wording in certain classifications, based on the
Australian and New Zealand Standard Industrial Classification 2006.
[21] The fact that at one point in time the Regulations specifically authorised reference to ANZSIC, and now they do not, does not advance matters. They certainly do not prohibit it, and ANZSIC seems an obvious interpretation aid. Of course, at the end of the day it is the wording of the Regulations that prevails, and
ANZSIC cannot make the words of the Regulation mean what they do not.
[22] Relevant to this last observation, in my view the primary hurdle the appellants face is the wording of the Regulations. Recalling that the task is to identify the classification that must accurately describes the business activity, classification unit 96400 is:
Regulatory services (licensing and inspection) (not elsewhere classified).
[23] In the absence of a specific category expressly for motor vehicle testing, it is hard to imagine a generic description that would be more apt. That is exactly what the appellants do. They inspect the vehicle and issue a license (in this context, the warrant). Indeed, although not referred to me in argument, I note that the relevant Land Transport Rule is the Vehicle Standards Compliance Rule 2002. Rule 5.2 authorises the appointment of vehicle inspectors and inspecting organisations to carry out warrant of fitness inspection and certification. This is the very language of classification unit 96400.
[24] In short one did not need to go to ANZSIC and its reference to motor vehicle testing to reach the conclusion that this new category is the most accurate description of the business activity. However, nor was it an error to do so.
[25] The answer to the first question is no.
Question two – did an “exemption” within the ANZSIC commentary apply?
[26] The ANZSIC commentary provides:[9]
[9] Australian and New Zealand Standard Industrial Classification (ANSIC) 2006, Australian
Bureau of Statistics/Statistics New Zealand, at pg 336.
REGULATORY SERVICES Regulatory Services
This class consists of units both public and private mainly engaged in enforcing regulations, licensing and inspection activities (except regulation of financial and insurance markets, electricity markets and regulatory units with a dual role of regulation and public administration with a significant amount of public administration). The regulations enforced in this class are established by Acts of Parliament and cover technical details that may be subject to frequent change. They are signed into law through the Cabinet Committee, Executive Council or some other body less than Parliament.
Primary activitiesConsumer protection service Licensing and permit issuance Motor vehicle testing
Regulating casino and other gambling Regulating food and agricultural standards Regulating qualification standards
Weights and measures regulations
Exclusions/References
Units mainly engaged in
operating tolls and weighbridge are included in Class 5299 Other Transport
Support Services n.e.c.;
regulatory activities with a dual role of regulation and public administration are included in the appropriate classes of Subdivision 75 Public Administration;
regulating and undertaking the activity at the same time are included in the appropriate classes of the division in which the activity is undertaken;
building inspection service are included in Class 6923 Engineering Design and
Engineering Consulting Services;
regulating their own rules or codes of conduct (i.e. interest groups) are included in the appropriate classes of Group 955 Civic, Professional and Other Interest Group Services; and
providing quality assessment services without enforcement of regulations are included in the appropriate classes of other divisions.
[27] The appellants say that their situation comes within the last bullet point under “Exclusions/References” and therefore 96400 is not applicable. However, in my view, this misunderstands these “Exclusions/References”. They are not “exclusions” in the sense of making this classification unavailable. All they do is provide notes to a reader that some activities which might be thought to come within the classification are in fact covered in other areas. For there to be any relevance in this, it would be necessary to identify the other classification referred to in the “Exclusions”, and show that other classification to more accurately describe the activity in question. Here there is none. The plaintiffs contend for 78291, but a catch-all of “Professional, scientific and technical services” cannot stand in the face of the plainly more apt 96400. I agree fully with the judgment under appeal on this point.
[28] Further, looking at the wording of the “Exclusion”, the appellants’ primary activity is not quality assessment services without enforcement of regulations. They inspect and certificate vehicles. They apply the regulations by withholding certification until a vehicle is compliant.
[29] The answer to this question is also no.
Conclusion
[30] The answer to the two questions is “no”. The appeal is dismissed. The
respondent is entitled to costs. Memoranda may be filed if agreement cannot be reached.
Simon France J
Solicitors:
T P Cleary, Wellington, email: [email protected]
P A McBride, McBride Davenport James, Wellington, email: [email protected]
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