Smith v Accident Compensation Corporation
[2024] NZHC 1801
•4 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2023-404-1957
[2024] NZHC 1801
UNDER The Accident Compensation Act 2001
IN THE MATTER OF An application for special leave to appeal
pursuant to section 162(3) of the Accident Compensation Act 2001
BETWEEN SANDRA SMITH
Applicant
ANDACCIDENT COMPENSATION CORPORATION
Respondent
Hearing: 12 June 2024 Appearances: P Schmidt for the applicant
I Hunt for the respondent
Judgment: 4 July 2024
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 4 July 2024 at 10.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
SMITH v ACCIDENT COMPENSATION CORPORATION [2024] NZHC 1801 [4 July 2024]
[1] The applicant, Mrs Smith, suffered a personal injury in July 2019. She was entitled to an independence allowance for that injury from the Accident Compensation Corporation (ACC). The amount of that allowance depended on the extent of her “whole-person impairment” from the injury. ACC referred Mrs Smith to a doctor for an assessment. The doctor assessed Mrs Smith’s whole-person impairment as 19 per cent. ACC issued a decision on Mrs Smith’s entitlement to an independence allowance based on that assessment.
[2] Mrs Smith applied for a review of that decision. The reviewer dismissed her application. Mrs Smith appealed to the District Court against the review decision.
On 24 March 2023, Judge C J McGuire dismissed Mrs Smith’s appeal.1
[3] Mrs Smith wishes to appeal against the decision of Judge McGuire. By s 162 of the Accident Compensation Act 2001 (the Act), she requires leave to appeal. On 26 July 2023, Judge P R Spiller declined leave to appeal.2 Mrs Smith now applies for special leave from this Court.
Background
[4] In October 1999, Mrs Smith had surgery to remove a brain tumour. Not all of the tumour could be removed. The part that remained was treated with radiotherapy.
[5] The tumour caused right homonymous hemianopia (loss of vision on the right side of the visual field of each eye). This was not covered by the Act or its predecessor legislation.
[6] In 2019, Mrs Smith developed progressive expressive dysphasia3 resulting in focal intractable fits4 and right hemiplegia.5 The cause of these problems was a rare outcome of her radiotherapy treatment in October 1999. Because this outcome was
1 Smith v Accident Compensation Corporation [2023] NZACC 47.
2 Smith v Accident Compensation Corporation [2023] NZACC 123.
3 Dysphasia is difficulty in expressing what a person wants to say.
4 Focal fits are fits during which the person is conscious/aware/alert; they are intractable in that they cannot easily be treated/controlled by medicines.
5 Paralysis of the right side of the body.
not a necessary part, or ordinary consequence, of her treatment, it was a “treatment injury” for which Mrs Smith was covered under the Act.6
[7] In March 2020, ACC accepted that Mrs Smith had suffered a treatment injury. In November 2020, ACC referred Mrs Smith to Dr Keith Murray for an assessment of her percentage of “whole-person impairment” from that injury. The purpose of the assessment was to determine whether Mrs Smith was entitled to an independence allowance and, if so, the amount of the allowance.
[8] Dr Murray conducted an assessment and provided a report to ACC in January 2021. He identified Mrs Smith’s impairments from both her pre-existing vision loss (not covered) and the treatment injury (covered). He ascribed a raw percentage whole-person impairment for each impairment. Each percentage was raw in the sense that it treated each impairment in isolation from other impairments. The raw percentages were derived from the American Medical Association Guides to the Evaluation of Permanent Impairment (Fourth Edition) (the AMA4 Guides). As I explain below, use of the AMA4 Guides is prescribed by regulations made under the Act.
[9] Dr Murray then calculated a total percentage. The total was not arrived at simply by adding the raw percentages. Rather, Dr Murray combined the raw percentages by applying a formula found in the ACC User Handbook to AMA4 (the ACC Handbook). Use of the ACC Handbook is prescribed by regulations. Dr Murray ascribed raw percentages of whole-person impairment of 30 per cent for aphasia and communication impairment, 62 per cent for the pre-existing vision loss,
17 per cent for movement disorders, five per cent for episodic neurological impairment, and six per cent for sleep arousal fatigue. Using the formula, Dr Murray assessed Mrs Smith’s total percentage of whole-person impairment to be 80 per cent.
[10] Dr Murray then said that apportionment was required for Mrs Smith’s preexisting (and not covered) vision loss. As I explain below, the ACC Handbook includes a requirement for apportionment where an impairment is the result of multiple conditions, not all of which are covered by the Act. Dr Murray apportioned the impairment by deducting 62 per cent (his raw percentage assessment of Mrs Smith’s
6 See s 32 of the Act.
impairment from vision loss) from his total percentage of 80 per cent. The difference was 18 per cent. Dr Murray noted in his report:
This 18% is rather a low figure considering the extent of her difficulties, and is due to the prescribed method used for apportionment which results in a high weighting for the pre-existing visual loss.
[11] Dr Murray then added an extra one per cent for scarring to give a final assessment of the degree of impairment from the injury of 19 per cent.
[12] On 11 February 2021, ACC wrote to Mrs Smith advising that her whole-person impairment rating had been assessed at 19 per cent and that as a consequence she was eligible for an independence allowance of $338.26 every three months.
Mrs Smith’s challenges to ACC’s decision
[13] Mrs Smith applied to review ACC’s assessment. Mr Schmidt (who has been Mrs Smith’s counsel throughout) said, in reliance on cl 59(3)(b)(i) of sch 1 of the Act, that the assessment should have excluded the impairment from Mrs Smith’s preexisting vision loss. Mr Schmidt also said the ACC Handbook was unfair and that the authors of the ACC Handbook did not have the power to override provisions in the Act. Mr Schmidt contended that Mrs Smith’s percentage of whole-person impairment was 81 per cent.
[14] The Reviewer dismissed Mrs Smith’s application. The Reviewer said it was clear from cl 59(3)(a) of sch 1 that an assessment of a person’s whole-person impairment must be done in accordance with regulations made under the Act. The relevant regulations provided that the assessment had to be carried out by an assessor using the AMA4 Guides and the ACC Handbook. The Reviewer said that was what Dr Murray had done.
[15] Mrs Smith then appealed ACC’s impairment assessment to the District Court. Mr Schmidt argued that the assessment of non-covered conditions (and, logically, the deduction of non-covered conditions) was prohibited by cl 59(3)(b)(i) of sch 1 of the Act. He said that the apportionment method in the ACC Handbook did not fairly assess injury-related impairment. He said that the concept of apportionment between
covered impairment and non-covered impairment was not in sch 1 of the Act and not in the AMA4 Guides, and had been “invented” by ACC.
[16] Judge C J McGuire dismissed Mrs Smith’s appeal.7 The Judge said he did not interpret cl 59 of sch 1 of the Act as requiring an assessor to go about their task differently to how Dr Murray had done.
[17] Mrs Smith then sought the leave of the District Court to appeal against the Judge’s decision on two questions of law. The proposed questions were:
(a)Does the apportionment method prescribed in the ACC Handbook undervalue impairment caused by injury contrary to s 3 of the Act?
(b)Does the term “exclude” as used in cl 59(3)(b)(i) of sch 1 of the Act require that ACC not assess impairment caused by non-covered conditions?
[18] Judge P R Spiller declined to grant leave to appeal.8 In respect of the first proposed question of law, the Judge agreed with Judge McGuire that Dr Murray’s assessment could not be faulted. Judge Spiller said:
[29] … In the face of medical evidence which was not challenged by competing medical evidence, the Court’s correct focus in this appeal was to address any flaw in the whole person impairment assessment conducted under applicable regulations sanctioned by the Act. In this case, the Act had mandated regulations which require that the assessment tool includes the ACC Handbook. It is not the function of the District Court to change a whole person impairment assessment properly conducted in terms of the governing legislation.
[19] In respect of the second proposed question, Judge Spiller said that cl 59(3)(b)(i) needed to be read along with cl 59(3)(a), which required the assessor to assess the claimant in accordance with regulations made under the Act. Judge Spiller then said:
[33] … [T]he applicable regulations require that the assessment tool includes the ACC User Handbook. This Handbook provides that the method of apportionment is to deduct the pre-existing impairment from the combination of covered and non-covered conditions. The appropriateness of
7 Smith v Accident Compensation Corporation [2023] NZACC 47.
8 Smith v Accident Compensation Corporation [2023] NZACC 123.
assessors assessing overall impairment and then deducting impairment for non-covered injury has been recognised by this Court in relation to preceding and current legislation.9
[20] Judge Spiller concluded that Mrs Smith had not established that Judge McGuire made an error of law capable of bona fide and serious argument.
Mrs Smith’s application for special leave to appeal
[21] Mrs Smith now seeks special leave from this Court to appeal against Judge McGuire’s decision. Mrs Smith’s application sought leave to appeal on the same two questions of law that were raised in the District Court application for leave, namely:
Question 1: Does the apportionment method prescribed in the ACC Handbook undervalue impairment caused by injury contrary to s 3 of the Act?
Question 2: Does the term “exclude” as used in cl 59(3)(b)(i) of sch 1 of the Act require that ACC not assess impairment caused by non-covered conditions?
[22]Mr Schmidt posed the questions in a different way in his written submissions:10
Question 1A: Does the apportionment method prescribed in the ACC Handbook result in underreporting of impairment caused by personal injury contrary to s 3 of the Act?
Question 2A: Is the apportionment of impairment for non-covered conditions contrary to cl 59 of sch 1 of the Act?
[23] At the hearing, Mr Schmidt said these were just grammatically better expressions of the two questions raised in the application. He noted that a Court, if granting leave to appeal on a question of law, will often rephrase the question proposed by the applicant.
9 Judge Spiller cited T v Accident Compensation Corporation [2009] NZACC 213.
10 Mr Schmidt also reversed the order of the questions. I have (for now) kept them in their original order.
Principles governing applications for special leave to appeal
[24] The purpose of requiring leave for certain appeals is to ensure that scarce judicial time is allocated sensibly.11 Special leave will be granted only where the question of law is “capable of bona fide and serious argument”.12 The question must arise “squarely” from the challenged decision.13 It will normally be necessary that there is an issue of principle at stake or that a considerable amount hinges on the decision.14 That the leave required is “special” is significant. As leave has already been refused in the District Court, “there will normally have to be some extraordinary factor which has not been properly taken into account”. 15
The legal framework
[25] Mrs Smith’s entitlement to an independence allowance for permanent impairment is governed by pt 3 of sch 1 of the Act (that is, cls 54–62). Those clauses deal primarily with entitlements to lump sum compensation, but it was common ground that they apply also to Mrs Smith’s entitlement to an independence allowance.
[26] Clause 54 provides that ACC is liable to pay a claimant lump sum compensation if the claimant has suffered personal injury for which they have cover and “an assessment carried out under clause 59 establishes that the claimant’s personal injury has resulted in a degree of whole-person impairment of 10% or more”. The amount of lump sum compensation is governed by cl 56 and regulations made under that clause. The amount depends on the claimant’s whole-person impairment.
[27] Clause 59 is a key provision, as it sets out how a claimant’s whole-person impairment is assessed. Relevantly, it provides:
11 Kenyon v Accident Compensation Corporation [2002] NZAR 385 (HC) at [15] citing Sandle v Stewart [1982] 1 NZLR 708 (CA).
12 Chalmers v Accident Compensation Corporation [2023] NZHC 925 at [39] citing Impact Manufacturing Ltd v Accident Rehabilitation and Compensation Insurance Corporation HC Wellington AP266/00, 6 July 2001 at [4].
13 YZ v Accident Compensation Corporation [2020] NZACC 160 at [19] citing O’Neill v Accident Compensation Corporation DC Wellington 250/2008, 8 October 2008 at [24]–[26].
14 Kenyon v Accident Compensation Corporation [2002] NZAR 385 (HC) at [15].
15 Kenyon v Accident Compensation Corporation [2002] NZAR 385 (HC) at [15] citing Brown v Chow Mein Fashions Ltd (1993) 7 PRNZ 43.
59 Assessment of entitlement to lump sum compensation
…
(2)An assessor assesses the claimant’s percentage of whole-person impairment.
(3)In doing an assessment under this clause, an assessor must—
(a)assess the claimant in accordance with regulations made under this Act; and
(b)exclude from the assessment any permanent impairment—
(i)that does not result from personal injury for which the claimant has cover under this Act:
(ii)arising from personal injuries suffered before the commencement of this Part; and
(c)include in the assessment any permanent impairment for which the claimant has received lump sum compensation under this Part.
(4)Subclause (3) applies subject to any regulations made under this Act.
(5)A claimant who has suffered more than 1 personal injury must be assessed by establishing, in accordance with regulations made under this Act, the combined effect of those injuries.
(6)However, no claimant is to be assessed as having more than 100% whole-person impairment.
…
[28] Clause 59(3)(a) and (4) refer to regulations made under the Act. The relevant regulations are the Injury Prevention, Rehabilitation, and Compensation (Lump Sum and Independence Allowance) Regulations 2002 (the Lump Sum Regulations). Regulation 4 provides:
4Assessment tool for assessing eligibility for lump sum payments and independence allowance
(1)Assessment of a person’s whole-person impairment, for the purposes of determining the person’s eligibility to receive lump sum compensation or an independence allowance, must be carried out by an assessor using the assessment tool prescribed by subclause (2).
(2)The assessment tool comprises—
(a)the American Medical Association Guides to the Evaluation of Permanent Impairment (Fourth Edition); and
(b)the ACC User Handbook to AMA4.
(3)The ACC User Handbook to AMA4 prevails if there is a conflict between it and the American Medical Association Guides to the Evaluation of Permanent Impairment (Fourth Edition).
[29] It is through reg 4 that, as noted earlier, use of the AMA4 Guides and the ACC Handbook is prescribed. The AMA4 Guides contain impairment ratings for a wide range of conditions. The ACC Handbook is, as its full name suggests, a handbook for the use of the AMA4 Guides.
[30]The ACC Handbook explains the “whole-person concept”:
The concept of whole-person impairment makes it impossible for an individual to be more than 100% impaired.
Whole-person impairment is expressed as a percentage, ranging from 0–100%. …
[31] The ACC Handbook says that in some instances a person will have multiple impairments that will have to be “combined”. It explains how this works:
Combining: How it works
This is how “combining” works:
·If we take an individual with no impairment, and they lose their leg (the impairment value for which is 40%), they now only have 60% of their whole person remaining.
·If they then suffer a further loss of (say) the other leg, that second impairment is deemed to be on the 60% whole person remaining. That is, the whole-person impairment for the second leg is 24% (40% of 60%).
·The total impairment for the loss of both legs is 64% (40% for the first leg, plus 24% for the second).
·The remaining whole person is now 36%. (Any further impairments should be applied to 36% of the whole person.)
The method guarantees that the total impairment rating for an individual can’t exceed 100%, and can be expressed mathematically as:
Percentage impairment = A + B(1 – A)
where A and B are the two impairment values being combined
[32] The mathematical formula there set out is the formula that Dr Murray used when combining the raw percentages that he had assessed for Mrs Smith’s impairments.
[33]The ACC Handbook also contains instructions on apportionment:
Apportionment
An impairment may be the result of multiple conditions, not all of which are covered by ACC. In this situation, apportion the percentage into covered and non-covered impairments.
Examples:
Method
Deduct pre-existing impairment
Use clinical judgement
Description
If possible, analyse the impairment that existed prior to the covered condition occurring, using the following method:
o Calculate the pre-existing percentage (base on medical records).
o Calculate the percentage that currently exists (from the combination of covered and non-covered conditions).
o Deem the difference between the two to be the impairment apportioned to the covered condition.
Note that one figure is deducted from the other. Don’t attempt a “reverse combine”.
If it’s not possible to calculate the pre-existing impairment, base the apportionment on your clinical judgement, using historical records and your own clinical evaluation.
Very occasionally, you won’t feel you can confidently do this. If so, note this in your report.
[34] Dr Murray applied the “Deduct pre-existing impairment” method in that table when apportioning Mrs Smith’s pre-existing (non-covered) vision loss.
Should leave be granted on the proposed questions?
[35] Mr Schmidt said no issue was taken (in this Court or below) with the raw percentages ascribed by Dr Murray to Mrs Smith’s various impairments. But he said
there were legal errors with two aspects of the assessment methodology employed by Dr Murray (and adopted by ACC). These contended errors were reflected in the two questions of law on which special leave to appeal was sought.
[36] In his submissions, Mr Schmidt addressed the proposed questions of law (and the contended errors) in reverse order. I agree that is the logical order in which to deal with them.
Question 2A: Is the apportionment of impairment for non-covered conditions contrary to cl 59 of sch 1 of the Act?
[37] Mr Schmidt pointed to cl 59(3)(b)(i), which requires the assessor to “exclude from the assessment any permanent impairment … that does not result from personal injury for which the claimant has cover under this Act”. He said this meant Dr Murray (and ACC) erred by including within the assessment Mrs Smith’s non-covered vision impairment. Mr Schmidt said this should have been excluded from the assessment altogether, and Mrs Smith’s whole-person impairment based solely on her other impairments: 30 per cent for aphasia and communication impairment, 17 per cent for movement disorders, five per cent for episodic neurological impairment, and six per cent for sleep arousal fatigue. Had Dr Murray assessed Mrs Smith based solely on those impairments, there would have been no apportionment for her non-covered vision impairment. Her percentage of whole-person impairment would have been greater than the 18 per cent assessed by Dr Murray.16
[38] Mr Schmidt accepted that apportionment had a role to play in assessing whole-person impairment. But he submitted that apportionment could occur only where a particular impairment was a result of both a non-covered condition or event and a covered personal injury. For example, if a claimant lost 20 per cent of the use of her right arm from disease (non-covered) and subsequently suffered a personal injury (covered) to the same arm, with a combined loss of use of 50 per cent, Mr Schmidt accepted that the 50 per cent impairment had to be apportioned into covered and non-covered impairments. By contrast, if a claimant lost 20 per cent of the use of her right arm from disease (non-covered) and subsequently suffered a personal injury (covered)
16 Mr Schmidt said it would have been 49 per cent. It is not necessary on this application to determine what it would have been; clearly it would have been higher than 18 per cent.
in which she lost an eye, Mr Schmidt said cl 59 required that the impairment to the right arm be excluded from the assessment. The claimant would be assessed only for the impairment to her vision and there would be no apportionment.
[39] Mr Schmidt said that were it otherwise, claimants would be treated differently on the basis of pre-existing impairments or disabilities. If two claimants, one blind and the other with full vision, each lost an arm in a car accident, on ACC’s approach the blind claimant would be assessed with a much lower whole-person impairment from the injury than the claimant with full vision. Mr Schmidt said this would be unfair and discriminatory.
[40] Mr Schmidt said his reading of cl 59(3)(b)(i) was consistent with how the original accident compensation legislation dealt with pre-existing impairments. When assessing lump sum compensation, he said pre-existing impairments were taken into account only where they affected the same bodily function impaired by the covered personal injury.17 If the pre-existing impairment was to a different bodily function, it was disregarded in assessing entitlement to lump sum compensation. Mr Schmidt said that s 3 of the current Act, which says that the Act’s purpose is to “reinforce the social contract represented by the first accident compensation scheme” and to ensure that claimants receive “fair … lump sums for permanent impairment”, showed that the same approach was intended under the 2001 Act.
[41] The tenor of Mr Schmidt’s written submissions was that the ACC Handbook was contrary to (his reading of) cl 59(3)(b)(i), that the Handbook could not override a provision of the Act, and that the Handbook was to that extent invalid. That is also clearly the way in which he advanced the argument in the District Court, and it is reflected in the wording of Question 2A.
[42] I consider this is not a tenable argument and that Question 2A, as framed, is not capable of serious argument. This is because, even if Mr Schmidt’s interpretation of cl 59(3)(b)(i) is correct, cl 59(3)(a) says the assessor must assess the claimant “in accordance with regulations made under this Act” and cl 59(4) says that cl 59(3) applies “subject to any regulations made under this Act”. Regulation 4(1) of the Lump
17 Mr Schmidt referred me to s 119(1) of the Accident Compensation Act 1972.
Sum Regulations provides that assessment of a person’s whole-person impairment must be carried out using the prescribed assessment tool. The prescribed assessment tool includes the ACC Handbook. In this way, cl 59(3)(b)(i) is subject to the Handbook, not (as Mr Schmidt might have it) the other way around.
[43] Further, and to be clear, the ACC Handbook is not a mere inhouse guide that is amended from time-to-time. The Lump Sum Regulations are made under s 326 of the Act. Section 326(2)(b) provides that regulations made under s 326 may “refer to, or incorporate by reference, guides, frameworks, or other standards”. Section 326(4) says any material referred to or incorporated by reference in regulations “forms part of the regulations for all purposes” and that any amendment made to such material after commencement of the regulations does not have effect “until regulations have been made incorporating the amendment into the regulations”. The ACC Handbook predates the Lump Sum Regulations.
[44]For these reasons, I decline special leave to appeal on Question 2A, as framed.
[45] In oral submissions, however, Mr Schmidt advanced a slightly different alternative argument. This was that the apportionment instructions in the ACC Handbook, properly interpreted (including in light of cl 59(3)(b)(i)), only allowed apportionment where a particular impairment was a result of multiple conditions, only some of which were covered by the Act, but did not allow apportionment between different impairments. Expressed as a question, this would be:
Do the apportionment instructions in the ACC Handbook, properly interpreted, allow apportionment between different impairments, or do they only allow apportionment of a particular impairment that is a result of multiple conditions, only some of which are covered by the Act?
[46]I consider this is capable of bona fide and serious argument. This is because:
(a)One part of the ACC Handbook is headed “Assessing impairment”. As noted in the next points, this part emphasises the need to assess each impairment separately and treats the assessment of “whole-person
impairment” as a distinct step. The next part of the Handbook deals with the “whole-person concept”.
(b)The “Assessing impairment” part, under “Assessment process”, says the first step is for the assessor to gather and evaluate relevant information “for each condition you’ve been asked to assess”. On the next page, the Handbook says the assessment should only rate impairment “resulting from conditions covered by ACC” and that the referral from ACC “will indicate which conditions are covered”.
(c)The penultimate step under “Assessment process” is to rate “the impairment for each condition” – that is, the conditions which the assessor has been asked to assess, which will be conditions covered by ACC. It is only once that is done that an assessor determines the “whole-person rating”.
(d)The apportionment instructions are in the “Assessing impairment” part of the handbook. The instructions begin:
An impairment may be the result of multiple conditions, not all of which are covered by ACC. In this situation, apportion the percentage into covered and non-covered impairments.
(e)Those opening words suggest that it is an impairment that can be apportioned, but only when that impairment is the result of multiple conditions and when some (but not all) of those conditions are covered by ACC. This does not sit easily with apportioning two (or more) distinct impairments, particularly where one of the impairments is not a result of a condition covered by ACC.
(f)The second apportionment method says that if it is not possible to calculate the pre-existing impairment, “base the apportionment on your clinical judgement”. It might be thought difficult to imagine when this method might ever be needed to deal with the apportionment of two distinct impairments.
(g)The “Assessing impairment” part prescribes a report format. For each condition, this requires an impairment rating to be identified, then apportioning (if used), and then a whole-person rating “for THIS condition”. This again suggests that apportionment is carried out in relation to a particular impairment. It is only once a (post-apportionment) rating has been identified for each condition that the report asks for a “Final whole-person rating (for ALL conditions)”. It is at least arguable that the conditions in the report can only be those that are covered by ACC.
[47] Beyond finding that the question is capable of bona fide and serious argument, it is not appropriate for me to comment on the merits. I record, however, that Mr Hunt, for ACC, referred me to several District Court cases which he said supported the apportionment approach of Dr Murray and ACC in this case. Most of those, however, were simply concerned with apportionment of a particular impairment that was the result of covered and uncovered conditions. Some dealt with apportionment of multiple impairments, but they did not examine whether the ACC Handbook, properly interpreted, allowed for apportionment in such cases. It was merely assumed that it did.
[48] The question is one of principle and would have implications for a wide range of claimants beyond Mrs Smith. Mr Hunt responsibly accepted this.
[49] The question is not one that was put before the District Court. As noted, it emerged only in oral submissions. Mr Hunt referred me to Knight v Accident Compensation Corporation, a case dealing with an application for leave to appeal to the Court of Appeal, in which Randerson J said:18
[19] … This matter has had a very lengthy history and it is desirable, in the interests of finality, that it be brought to a close. I am not persuaded that there is any question of law capable of bona fide and serious argument. This matter has been litigated in a specific way throughout its history. At no time has the point of law which Mr Miller seeks to raise on behalf of the intending appellant been mentioned. …
18 Knight v Accident Compensation Corporation [2006] NZHC 344.
[20] It is not in the public interest to permit a case to be argued on a completely different factual and legal basis from that which has gone before.
…
[50] I accept that the fact that the question of law emerged only in oral submissions, and was not raised below, is relevant to whether special leave should be granted. But it is not determinative. This case is different from Knight. The question is capable of bona fide and serious argument. The interpretation argument that Mr Schmidt wishes to run would not be argued on a “completely different factual and legal basis” from that below. It is the same underlying argument but focused on the interpretation of the ACC Handbook (in light of, among other things, the argument about cl 59 and the purpose of the Act that have always been advanced). The argument raises a pure question of law. Unlike Knight, it does not raise any factual matters.
[51] Finally, special leave should normally only be granted if some extraordinary factor has not been properly taken into account in the District Court. The proper interpretation of the ACC Handbook was not taken into account at all in the District Court. That is not a criticism of the Court; it merely reflects the arguments that were made in that Court. But it means “special” leave is warranted.
[52] For these reasons, I will grant Mrs Smith special leave to appeal on the question stated in [45] above.
Question 1A: Does the apportionment method prescribed in the ACC Handbook result in underreporting of impairment caused by personal injury contrary to s 3 of the Act?
[53] The second error for which Mr Schmidt contended assumes that the ACC Handbook allows for apportionment between distinct impairments. Mr Schmidt said that if such apportionment is allowed, the first method of apportionment in the apportionment instructions (set out in the table in [33] above) is contrary to s 3 of the Act. This was, he said, because that method “does not fairly assess whole person impairment caused by injury”.
[54] Mr Schmidt gave the following example (which, again, assumes that apportionment is allowed between distinct impairments). Assume that a claimant has a non-injury related vision impairment that is assessed at 50 per cent and then suffers
an injury to their leg that is assessed at 50 per cent. The apportionment method first requires a calculation of the pre-existing percentage impairment, which here is 50 per cent. Next, a calculation is required of the percentage impairment that currently exists. This calculation is done by “combining” the two impairments. The ACC Handbook prescribes a formula to use for combining impairments (set out at [31] above). Applying the formula to this example produces a combined impairment of 75 per cent. The apportionment method requires the pre-existing impairment percentage to be deducted from the combined percentage. The difference (here, 25 per cent) is “the impairment apportioned to the covered condition”.
[55] Mr Schmidt said that this is unfair because, prior to apportionment, the two impairments were equal, but after apportionment the injury-related impairment is only one-third of the total impairment. He said this was reflected in Dr Murray’s observation that Mrs Smith’s whole-person impairment of 18 per cent due to the covered injury “is rather a low figure considering the extent of her difficulties, and is due to the prescribed method used for apportionment which results in a high weighting for the pre-existing visual loss” (emphasis added).
[56] Mr Schmidt submitted that, because the method is unfair, it is contrary to s 3, which says a purpose of the Act is to ensure that claimants receive “fair compensation for loss from injury, including fair … lump sums for permanent impairment”. He said that if special leave to appeal were granted on this question, the remedy sought would be a direction from the Court that ACC amend the method of apportionment in the Handbook so that the relative contribution of impairment caused by personal injury is preserved.
[57] I consider that this proposed question is not capable of bona fide and serious argument. Clause 59 requires an assessment to be carried out in accordance with regulations made under the Act. The ACC Handbook is part of the Lump Sum Regulations. The apportionment method clearly operates in the manner set out in Mr Schmidt’s example. The method is not open to any other interpretation. While s 3 says that the Act’s purposes include that compensation be “fair”, fairness lies in the eye of the beholder. It is not obvious that the method is unfair. Mr Schmidt’s submission assumes that prior to apportionment the two impairments were “equal”.
But they are only “equal” because the impairment resulting from the injury is initially assessed on the assumption that the claimant does not have some other pre-existing impairment, contrary to the reality. The point of combining the impairments and then apportioning them by deducting the pre-existing impairment is to account for that reality.
[58] Further, there is no prospect of this Court directing ACC to amend the method of apportionment in its Handbook. Such an amendment would be pointless, as s 326(4) provides that any amendment to the Handbook would not have effect until regulations were made incorporating the amendment into the regulations. The Court has no power to direct the Governor-General to make such regulations, nor to direct the responsible Minister to recommend regulations.
[59] For those reasons, I decline to grant Mrs Smith special leave to appeal on Question 1A.
Costs
[60] Mrs Smith has succeeded, but only in part, and only in relation to an argument advanced for the first time in oral submissions. In these circumstances, ACC should pay Mrs Smith her costs on the application on a 2B basis, subject to a 50 per cent reduction, plus her reasonable disbursements.
Result
[61]Mrs Smith is granted special leave to appeal on the following question:
Do the apportionment instructions in the ACC Handbook, properly interpreted, allow apportionment between different impairments, or do they only allow apportionment of a particular impairment that is a result of multiple conditions, only some of which are covered by the Act?
[62]Mrs Smith’s application for special leave is otherwise declined.
[63] ACC is to pay Mrs Smith her costs on the application on a 2B basis, subject to a 50 per cent reduction, plus her reasonable disbursements.
Campbell J
1
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