Rinnai New Zealand Limited v Pickard CA13/06

[2006] NZCA 437

IN THE COURT OF APPEAL OF NEW ZEALAND

CA13/06

BETWEEN  RINNAI NEW ZEALAND LIMITED Appellant

AND  AMANDA JANE PICKARD AND TROY TAYLOR

First and Second Respondents

AND  CHAS AMBROSE Third Respondent

Hearing:         18 July 2006

Court:            Robertson, Arnold and Ellen France JJ Counsel:       P L Hunt for Appellant

K M Anderson for First and Second Respondents

No appearance for Third Respondent

Judgment:      10 August 2006 at 11.30am

JUDGMENT OF THE COURT

The appeal is dismissed with costs to the first and second respondents jointly of

$3,000 together with usual disbursements.

REASONS OF THE COURT

(Given by Robertson J)

RINNAI NEW ZEALAND LIMITED V PICKARD  CA CA13/06  10 August 2006

[1]      This  is  an  appeal  against  part  of  a  pre-trial  judgment   delivered  by Ronald Young J in the  High Court  at  Wellington on 16  December  2005.    It  is asserted that the Judge was in error when he found that:

(a)      the claim of Amanda Jane Pickard was quite different from the claim made for cover under the Accident Compensation legislation for her son Troy Taylor when both claims were for the effects of carbon monoxide poisoning at Ms Pickard’s Waikanae residence;

(b)      the  claims  by  both  respondents  were  for  personal  injury  caused wholly or substantially by gradual process and therefore outside the applicable Accident Compensation legislation;

(c)      the two respondents’ claims were independent of each other; and

(d)      Ms Pickard’s claim was for personal injury which was not covered by the Accident Compensation legislation.

[2]      The  appellant  sought  an  order  reversing  these  findings  and  striking  out Amanda Pickard and Troy Taylor (together the “respondents”) claims for damages for personal injuries.

[3]      The respondents, as well as supporting the judgment of Ronald Young J, sought to support the decision on two additional grounds:

(a)      that the personal injuries they suffered were not caused by an accident as defined in the Accident Compensation legislation; and

(b)      as  the  Accident  Compensation  Corporation  (ACC)  did  not  advise

Troy Taylor that it had accepted his claim for injuries suffered on

9 August 2001, then pursuant to s 66(1) of the Accident Rehabilitation

and Compensation and Insurance Act 1992 (ARCIA 1992) he was entitled to treat his claim as having been rejected.

Factual background

[4]      The respondents’ (who are mother and son) allege that  in 1998 the third respondent  (Mr  Ambrose)  fitted a gas heater  in their  house at  Waikanae.    The appellant (Rinnai New Zealand Limited) was the importer, distributor and agent of the manufacturer of the product.   The respondents allege that the heater was improperly installed without a correct flue and there was a failure to recognise and rectify a problem of gas leakage when this became apparent.

[5]      The  respondents  assert  that,  as  a  result  of  gas  leaks  from  the  heater intermittently  from 1998  through  to  June  2001,  they  suffered  carbon  monoxide poisoning   which   caused   severe   headaches,   drowsiness,   chest   pains,   heart palpitations, and other medical disabilities.  They further say that the heater and flue were not safely constructed by Rinnai.

[6]      In August 2001 Ms Pickard, concerned about her son’s health, took Troy to their family GP.   Dr Smith determined Troy was suffering from carbon monoxide poisoning and needed a consultation with a specialist.   The doctor lodged a claim with ACC.   This claim stated that the poisoning had occurred on 9 August 2001. This claim was accepted by ACC.

The crux of the case

[7]      The critical issue at this stage of the litigation was whether, in terms of the various pieces of Accident Compensation legislation which were applicable at relevant times, what occurred constituted a personal injury and whether as a result the respondents’ claims were statutorily excluded.

[8]      This was an application to strike out under r 186 of the High Court Rules. The applicable principles were not in dispute.  It is accepted that the Judge applied the decision of this Court in Attorney-General v Prince and Gardner [1998] 1 NZLR

262 and there is no challenge in that regard.  In summary:

(a)      A strike out application usually proceeds on the assumption that the facts pleaded in the statement of claim are true even if the pleading has not been admitted;

(b)      Before the Court may strike out a proceeding, the causes of action must be so clearly untenable that they cannot possibly succeed; and

(c)      The jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material.  The fact that applications to  strike out raise difficult  questions of law,  and require extensive argument, does not exclude jurisdiction.

Discussion

[9]      Accident  Compensation  litigation  can  be  complicated  because  of  the intersecting statutes that concurrently cover different time periods.   Three Acts are relevant in this case.   In order to simplify the matter and to capture the substance (although not the exact form of presentation) of the appeal, we consider the first and second respondents’ situations separately.  As Mr Hunt accepted that his challenge to the decision about Ms Pickard was dependent on our accepting his approach with regard to Troy, we consider the case in that way.

Troy – Second Respondent

[10]     Mr Hunt asserted that, as Troy lodged a claim for personal injury which was accepted by ACC, he was barred from bringing his civil claim by s 317 of the Injury

Prevention Rehabilitation and Compensation Act 2001 (IPRCA 2001) or by s 394 of the Accident Insurance Act 1998 (AIA 1998).  It was his submission that Troy’s civil claim related to the same condition as that caused by the ACC claim.

(a)      What is the relevant legislation for assessing Troy’s ACC claim?

[11]     We reject Mr Anderson’s argument that the ACRIA 1992 should apply in assessing the validity of the ACC claim made on behalf of Troy.  Section 7(5) of that Act  provides that  the  date on which personal  injury  caused  by gradual process arising  out  of employment  is to  be determined  is the date that the  person  first received medical treatment. Mr Anderson contends that this section should apply in Troy’s case and as Troy first received treatment on 11 May 1999 the 1992 Act should apply (the AIA 1998 did not come into force until 1 July 1999).  Section 7(5) cannot apply to Troy as his injury was not caused in the “course of employment.”

[12]     The legislation governing this incident was the AIA 1998.

(b)      What is the effect of Troy’s ACC claim?

[13]     As the  ACRIA  1992  does  not  apply,  the  fact  that  Troy did  not  receive notification regarding the status of his claim does not mean that the claim is deemed to be rejected.

[14]     The  injury  accepted  by  ACC  was  what  was  said  to  have  occurred  on

9 August 2001.  The claim was lodged by Dr Smith.  The legislation governing this incident was the AIA 1998.

[15]     Section 39 is the operative provision for determining cover under the AIA

1998 in this instance.  Section 39(2) provides that a person has cover if the injury was caused by an accident.  Accident is defined in s 28 as:

28       “Accident”

(1)      “Accident”, as defined in this section, is used in s39(2)(a):

(2)       “Accident” means any of the following kinds of occurrences: (a) A specific event, or a series of events that –

(i)  Involves the application of a force or resistance external to the human body; and

(ii)  is not a gradual process:

(b)     The inhalation or oral ingestion of any solid, liquid, gas or foreign object on a specific occasion.  This kind of occurrence does not include the inhalation or ingestion of a virus, bacterium,   protozoa,   or   fungi,   unless  that  inhalation  or ingestion is the result of a criminal act of a person other than the insured:

(emphasis added)

[16]     In accepting the claim, ACC must be assumed to have been satisfied that the claim complied with s 28(2)(b).   However, that  claim covers only the poisoning suffered by Troy caused by the inhalation of carbon monoxide on the morning of

9 August 2001.  The claim does not relate to the effects of inhaling gas prior to this, as cover is expressly limited to a “specific occasion”.  To find that the claim covered prior inhalation would have the effect of finding that Troy was made sick by a gradual process which is of course expressly excluded from the definition of “accident” in the 1998 Act.

[17]     The evidence disclosed that, for each claimant, ACC maintains an electronic file.  The file for Master Troy Alan Taylor has six entries including:

15.8.2001, 11.24        accepting injury as a specific event as stated in s 28 of the AI Act.  Closing claim.

That is at least consistent with the position now advanced by the respondents that the claim was for a specific event and that is all that was permitted under the definition of “accident” in s 28.   Mr Hunt  sought to argue that other references  might  be interpreted differently, but was obliged to accept that the respondents’ interpretation was arguable.

[18]     Whether there is a material difference between the discrete incident and the longer term effects is a question of fact for trial.  The Judge was correct in holding that the successful ACC claim lodged on Troy’s behalf did not automatically bar

Troy from bringing his civil claim.  Any assessment of Troy’s coverage under ACC legislation must be considered in accordance with the proven facts in the substantive hearing.  The Judge did not err in refusing to strike out Troy’s civil proceedings.

Ms Pickard – First Respondent

[19]     Mr Hunt, on behalf of the appellant, submitted that Ronald Young J erred in determining that Ms Pickard was not covered by the relevant accident compensation legislation  and,  therefore,  not  entitled  to  lodge  a  claim  with  ACC.     Counsel contended that she was covered and thereby barred from bringing a civil claim.

[20]     Counsel  further  submitted  that  the  Judge  was  wrong  in  finding  that Ms Pickard’s injury was distinct from Troy’s.   He argued that the circumstances causing Ms Pickard’s injury were identical to those causing Troy’s injury and that as Troy was covered by ACC so Ms Pickard must also be covered.

[21]     It  therefore  followed,  in  counsel’s  submission,  that  Ms  Pickard’s  claim should be struck out. Two issues require assessment:

(a)      Does Ms Pickard have a personal injury covered by ACC?

[22]     The alleged carbon monoxide poisoning occurred between September 1998 and June 2001.  This time period is prior to the IPRCA 2001 which came into force on 1 April 2002.  The legislative framework which is to apply is to be determined in accordance with Part 11 of the IPRCA 2001.  Section 360 provides:

360     Claim for cover under former Acts not lodged until on or after

1 April 2002

(1)      Subsection (2) applies to a claim for cover, if the claim -

(a)      is for personal injury suffered before 1 April 2002; and

(b)      is not lodged with the Corporation before 1 April 2002. (2)        A claimant has cover under this Act only if -

(a)       the claimant would have had cover under this Act, had the injury occurred on or after 1 April 2002; and

(b)      the claimant would have had cover under the Act that was in force at the time that the person suffered the injury.

[23]     The evidence in the High Court was that Ms Pickard has never lodged a claim with ACC.  Therefore the IPRCA 2001 applies.

[24]     Section 20 of the IPRCA 2001 provides:

20Cover  for  personal  injury  suffered  in  New  Zealand  (except mental injury caused by certain criminal acts)

(1)      A person has cover for a personal injury if—

(a)       he or she suffers the personal injury in New Zealand on or after 1 April 2002; and

(b)      the personal injury is any of the kinds of injuries described in section 26(1)(a) or (b) or (c) or (e); and

(c)       the personal injury is described in any of the paragraphs in subsection (2).

(2)      Subsection (1)(c) applies to—

(a)      personal injury caused by an accident to the person:

…

(e)       personal injury caused by a work-related gradual process, disease, or infection suffered by the person:

[25]     Section 26(2) of the IPRCA 2001 expressly provides that “personal injury does not include personal injury caused wholly or substantially by a gradual process, disease, or infection unless it is personal injury of a kind described in s 20(2)(e) to (h)”.  Those exceptions are not applicable here.

[26]     Given  that  the  Judge  was  dealing  with  a  strike  out  application,  it  was appropriate for him to accept, on the facts as asserted by Ms Pickard, that she had suffered from an injury caused by a gradual process of carbon monoxide poisoning. Ms Pickard was not entitled to cover by ACC according to s 360(2)(a) of the IPRCA

2001, and as such she was not barred from bringing this action.  We note that it is not necessary to consider s 360(2)(b).

(b)      Is Ms Pickard’s injury the same as Troy’s and for that reason covered by

ACC?

[27]     The fact that both Ms Pickard and Troy inhaled gas from the same faulty gas heater over the same period of time does not necessarily mean that their eligibility for ACC will be the same.

[28]     If, after full inquiry into the facts, it was established that on 9 August 2001

Troy was overcome by the effects of the gas and suffered a personal injury, for him to be covered by ACC Troy must have become ill because of the gas that he inhaled on that specific occasion.  It does not necessarily follow that, because Troy became ill from the gas he inhaled that morning, his mother was affected in the same way. Ms Pickard may not have inhaled the same amount of gas as Troy – she may have been moving about the house whereas Troy may have been sitting watching TV in front of the heater.  Even if the two had inhaled the same amount of gas, the effect may not have been the same as Ms Pickard is an adult and Troy was only a child.

[29]     The Judge was correct to reject, in the context of a strike out application, that any injury suffered by Ms Pickard was identical to the injury suffered by Troy.  Any assessment regarding the form of injury suffered by Ms Pickard required a factual evaluation and was not determined by her son’s position.  The analysis required was not amenable to determination in strike out proceedings.

Decision

[30]     This is not a situation where the causes of action are clearly untenable.  The more this matter is analysed, the more it is apparent that this case is not one which could properly be determined on a strike-out basis.  There are factual issues which require exploration, evaluation and determination.

[31]     The  precise  coverage  of  the  ACC  legislation  is  open  to  debate.     No conclusive decision can be made until there has been a proper assessment of the factual situation against which the statutory provisions will apply.

Result

[32]     The appeal is dismissed with costs to the first and second respondents jointly of $3,000 together with usual disbursements.

Solicitors:

Phillips Fox, Wellington, for Appellant
McElroys, Auckland, for Respondent