Smith v Accident Compensation Corporation

[2023] NZHC 3841

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1957

[2023] NZHC 3841

BETWEEN

SANDRA SMITH

Appellant

AND

ACCIDENT COMPENSATION CORPORATION

Respondent

Hearing:	31 October 2023
Appearances:	P Schmidt for the Appellant I Hunt for the Respondent
Judgment:	20 December 2023

JUDGMENT OF BECROFT J

[Application to adduce further evidence]

This judgment was delivered by me on 20 December 2023 at 4pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors/Counsel:

Schmidt & Pearl Law, Auckland Young Hunter, Christchurch

S Hack, Accident Compensation Corporation

SMITH v ACCIDENT COMPENSATION CORPORATION [2023] NZHC 3841 [20 December 2023]

What is this application about?

[1]This is an application for leave to adduce further evidence.

[2]        The appellant seeks to adduce the evidence for a proposed appeal, on two questions of law, against a District Court decision about Ms Smith’s lump sum accident compensation entitlement.1 It is a complicated application. Both the factual and the procedural background require explanation.

[3]        It is important to note that the application for special leave to appeal on the two questions of law to the High Court remains to be argued. Such application is required because the District Court refused leave to appeal.2 It was agreed between the parties, and directed by this Court, that this application should be heard first.3

[4]        However, the two applications are intertwined. More so than might be expected. I was initially concerned that the result of this application might determine the special leave application. I now accept, as counsel agree, that is not the case.4 However, it has been virtually impossible to resolve this application without trespassing on the argument for leave to appeal. I have endeavoured to keep such encroachment to a minimum. This decision will at least provide useful background for the special leave application. I add that with the benefit of hindsight, the two applications could have been more efficiently heard together given the overlap of issues.

Facts

[5]        Mrs Smith recently developed progressive expressive dysphasia5 resulting in focal intractable fits6 and right hemiplegia.7

1      Smith v Accident Compensation Corporation [2023] NZACC 47.

2      Pursuant to s 162(3) of the Accident Compensation Act 2001 [Act].

3      Smith v Accident Compensation Corporation HC Auckland CIV-2023-404-1957, 11 September 2023 (Minute of Muir J).

4      Although, according to Mr Schmidt for the appellant, if this application were successful, it would probably increase the likelihood of a success of the leave to appeal application.

5      Dysphasia is difficulty in expressing what a person wants to say.

6      Focal fits/seizures are fits/seizures during which the person is conscious/aware/alert; they are intractable in that they cannot easily be treated/controlled by medicines.

7      Paralysis of the right side of the body.

[6]        This was a rare outcome of radiotherapy she underwent in October 1999 to treat a part of a brain tumour that could not be removed during surgery.

[7]        These outcomes for Mrs Smith were accepted as not a necessary part, or ordinary consequence, of her treatment. Therefore, they constituted a “treatment injury” for which Mrs Smith was covered under the Accident Compensation Act 2001.8

[8]        The tumour itself caused right homonymous hemianopia,9 which predated any treatment or radiation therapy, so is not covered under the Act as a treatment injury.

[9]        In January 2021, the Accident Compensation Corporation (ACC) referred Mrs Smith under cl 59 of sch 1 to the Act, for an assessment to determine whether she was entitled to lump sum compensation.

[10]      Under that procedure, the assessor determines a claimant’s “whole person impairment” (WPI), expressed as a percentage. If the assessor decides the person’s injury has resulted in a degree of WPI of 10 per cent or more, that person may be entitled to lump sum compensation.10

[11]      The whole person impairment is assessed in the following way. First, the impairment percentage for conditions covered under the Act is established. The impairment percentages for any conditions, where they exist, not covered under the Act are also established. In each case such percentages are fixed in the ACC User Handbook to the fourth edition of the American Medical Association’s “Guides to the Evaluation of Permanent Impairment” (“the Handbook” and “AMAG”). Second, the percentages are then used in a formula contained in the AMAG to produce the WPI percentage in respect of which compensation is payable. The fairness of this formula and method is very much in issue in the appeal for which leave is sought.

8      See s 32 of the Act.

9      Loss of vision on the right side of the visual field of each eye.

10     See cl 54(1)(c) of sch 1 to the Act.

[12]      Mrs Smith’s assessor, Dr Keith Murray, produced a detailed report based on an assessment undertaken on 20 January 2021. The assessment concluded that Mrs Smith’s WPI was 19 per cent.

[13]      As best as I can understand the process, the assessor established that the percentage impairment for injuries covered by the Act was 49 per cent. The District Court decision records that the assessor correctly (and separately) assessed Mrs Smith’s due to hemianopia (not covered by the Act), as being 62 per cent.

[14]      The assessor applied the formula (correctly it is accepted) to determine that the degree of permanent “whole-person impairment” (WPI) was 80 per cent.

[15]      The assessor records that that apportionment was then required to take into account the hemianopia (which had nothing to do with the treatment and was not covered by ACC). Again, correctly using the formula in the AMAG, the assessor then deducted the percentage impairment for the hemianopia (caused by the tumour itself and a total of 62 per cent) from the WPI assessment of 80 per cent, resulting in a final WPI impairment, for ACC purposes, of 18 per cent. An extra one per cent for scarring was added to give a WPI of 19 per cent.

[16]The assessor specifically noted in his report that11

[t]his 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 weighing for the pre-existing visual loss [the hemianopia].

[17]      As a result of the assessment, on 11 February 2021, the ACC issued a decision stating that Mrs Smith’s WPI rating was 19 per cent. She was eligible for an independence allowance of $338.26 every three months because of her level of impairment.

What is the procedural background leading to this appeal?

[18]Mrs Smith filed a review application against the ACC’s decision.

11     Report of Dr Keith Murray at 7.

[19]      On 30 July 2021, a Reviewer dismissed Mrs Smith’s review. The Reviewer found the Corporation’s decision, based on Dr Murray’s assessment, was correct.

[20]      On 2 November 2021, Mrs Smith appealed the impairment assessment to the Wellington District Court. After a hearing on 15 February 2023, Judge C J McGuire dismissed her appeal on 24 March 2023.12

[21]      Mrs Smith subsequently sought the leave of the District Court to appeal against the Judge’s decision on two questions of law. Judge P R Spiller declined leave to appeal on 26 July 2023.13

[22]      On 31 August 2023, Mrs Smith filed an application in this Court for special leave to appeal against the Judge’s decision. Again, Mrs Smith appeal focused on two questions of law:

(a)First, does the apportionment method described in the Handbook undervalue impairment caused by injury, contrary to s 3 of the Act?

In particular, Mr Schmidt notes, the question relates to the methodology which requires application of a mandatory formula in the AMAG. This is said to be inappropriate and unfair, in that it diminishes the allowance for impairment caused by injury, and inflates impairment caused by the non-covered conditions.

(b)Second, does the term “exclude” as used in cl 59(3)(b)(i) of sch 1 of the Act require that the ACC not assess impairment caused by non- covered conditions?

In brief, Mrs Smith’s argument is that consideration of non-covered conditions is contrary to cl 59(3)(b)(i), which clearly states that they are to be excluded from any assessment. The argument is that the WPI assessment should completely ignore any impairments not covered by

12     Smith v Accident Compensation Corporation, above n 1.

13     Smith v Accident Compensation Corporation [2022] NZACC 123.

the Act—rather than take them into account and then exclude them from final compensation.

[23]      The appellant submits that both questions of law are of wide public importance and deserve appellate consideration.

The proposed further evidence

[24]      Against this background, Mrs Smith has now applied for leave to adduce further evidence in the form of a two-and-a-half-page affidavit by Professor Meylan, a Professor of Mathematics from the University of Newcastle in Australia.

[25]      In the affidavit, Professor Meylan explains the apportionment method set out in the Handbook. He sets out how, in his view, it results in the under valuing of impairment caused by personal injury and, in effect, inflates the weight given to pre- existing injuries or conditions that are not covered by ACC.

[26]      On the basis of this affidavit, Mr Schmidt wishes to argue that the formula and method used by the ACC are inappropriate or flawed in that they fail to preserve the proportionality between the conditions covered by the ACC and those that are not.

[27]      Professor Meylan also proposes a different formula and method which he says better preserves the proportionality—which Mr Schmidt wishes to argue would be more appropriately used by the ACC.

Law

[28]      The application is made pursuant to r 20.16 of the High Court Rules 2016. Mrs Smith requires leave because it is agreed that the evidence does not relate to a question of fact.14 Rule 20.16 provides as follows:15

20.16   Further evidence

(1)Without leave, a party to an appeal may adduce further evidence on a question of fact if the evidence is necessary to determine an interlocutory application that relates to the appeal.

14     Rule 20.16(1) and (2).

15     Emphasis added.

(2)In all other cases, a party to an appeal may adduce further evidence only with the leave of the court.

(3)The court may grant leave only if there are special reasons for hearing the evidence. An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal.

(4)Further evidence under this rule must be given by affidavit, unless the court otherwise directs.

[29]      It is accepted the application falls for determination under r 20.16(2) and (3). The principles as to “special reasons” are reasonably settled and are outlined in McGechan on Procedure.16 Counsel highlighted and referred to several relevant cases.17 Not all need to be discussed in detail here. For this decision it is sufficient to highlight the following principles, many of which are summarised in B v A:18

(a)The overriding concern is the interests of justice.

(b)It is wrong to allow an appellant to introduce evidence available at the lower court but not adduced because of a particular view of the case at the time.

(c)Admitting further evidence is exceptional rather than routine. The prospect of further evidence triggering substantial re-litigation (or additional litigation) and argument before the appellate court will count against the application.

(d)Generally, the further evidence must be “fresh, credible and cogent”.

(e)The absence of “freshness” is not decisive but for the evidence to qualify for admission, the circumstances must be exceptional and the grounds compelling.19

16 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR20.16].

17  Subramani v Professional Conduct Committee [2023] NZHC 2759; Renault SAS v Allways Hire  Ltd [2023] NZHC 304; Accident Compensation Corporation v Ng [2020] NZCA 274, [2020] 2 NZLR 683; Terrace Tower (New Zealand) Pty Ltd v Queenstown Lakes District Council [2001] 2 NZLR 388 (HC); CH and DL Properties Ltd v Christchurch District Licensing Agency (2010) 20 PRNZ 680 (HC); Chamberlain v Scott [2012] NZHC 2596, (2021) 21 PRNZ 176; and PBS Distributors Ltd v Tomov [2013] NZHC 228.

18 B v A [2020] NZHC 580, (2020) 25 PRNZ 58 at [25].

19 Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA), as cited in PBS Distributors Ltd v Tomov, above n 17, at [3].

(f)The standard to be met is “rightly high”, and the use of the power “sparing”.20

(g)When the foreshadowed appeal, as here, is limited to a question of law, it is generally appropriate the appeal “is heard based on the evidence before the…Court from which the appeal originates.” Care should be taken to avoid the risk that the proposed evidence could inevitably lead to delays and requests for further reports, which may lead to substantial re-litigation of the substantive matter.21

(h)To substantially the same effect, are the comments of Dunningham J in Subramani regarding the necessity to consider whether admitting the evidence would require further evidence which might become the subject of cross-examination.22

Should Professor Meylan’s affidavit be admitted?

[30]      When those principles are carefully applied to this application, in my view the answer becomes obvious. In short, the application should not be granted. I say this based on a conventional application of the established legal principles. But even viewing the proposed evidence in the wider context of the question of law, if it were admitted, I do not think it would be nearly as helpful as the appellant contends. I now elaborate on my reasoning as follows.

Applying the legal principles

[31]      Professor Meylan’s affidavit is plainly not fresh evidence. This was immediately accepted by Mr Schmidt at the hearing. He agrees that the evidence could have been readily obtained even before the review of the ACC decision, but certainly before the subsequent appeal to the District Court.

20     Chamberlain v Scott, above n 17, at [14].

21     Reilly v Accident Compensation Corporation [2022] NZHC 542 at [16].

22     Subramani v Professional Conduct Committee, above n 17, at [68(d)].

[32]      However, Mr Schmidt emphasises the evidence does not seek to introduce new factual matters. He concedes the facts are not in dispute. He accepts the assessments as to “personal injury” covered by ACC, and the pre-existing condition not covered, are correct. He accepts the assessor fixed the correct percentages and indeed that he correctly applied the formula set out in the AMAG.

[33]      Mr Schmidt’s argument is not that the existing formula or method were incorrectly used or applied in a way that was mathematically in error. His point is simply that the formula and method used are wrong in principle and inappropriate, and when correctly used it leads (as here) to patently unfair results for claimants.

[34]      Understood in this way, the need for Professor Meylan’s evidence is much reduced. His affidavit explains the existing formula and method. But Mr Schmidt himself was able to provide those explanations in Court, even though I was a little slow to catch on. Mr Schmidt was able to explain how the formula and method unfavourably skew the initial percentage for WPI for an injury covered by the Act, and how when properly applied, the formula will always reduce this percentage if there is any other pre-existing injury or condition. In other words, the proposed evidence is understandable without the need for an expert, albeit with some explanation. And Mr Schmidt accepts that the mathematics speaks for itself. That is why, he explained, he never thought of obtaining an expert mathematician’s input in the earlier course of this claim.

[35]      As I understand the proposed evidence, the alleged unfairness of the formula and method can be demonstrated in this way. Say a claimant suffers from two impairments. A is the impairment percentage due to injury that is covered by the ACC. B is the non-covered impairment percentage. The formula looks like this:

A + B(1 – A) – B = the covered WPI

[36]      This is how the formula was applied in Mrs Smith’s case, where the covered impairment (A) was 49 per cent and the non-covered impairment (B) was 62 per cent:

49 + 62(1 – 0.49) – 62

= 49 + 62(0.51) – 62

= 49 + 31.62 – 62

= 80.62 – 62

= 18.62 per cent

= 18 per cent

(With 1 per cent added on for scarring to reach 19 per cent. I also note I am not sure why the 80.62/18.62 were rounded down, not up.)

[37]      The unfairness is said to be clearer in this “easy” example, where both the covered and non-covered claims (A and B) are assessed at say 50 per cent. Applying the formula produces the following result:

50 + 50(1 – 0.50) – 50

= 50 + 50(0.50) – 50

= 50 + 25 – 50

= 75 – 50

= 25 per cent

[38]      Mr Schmidt explained that in this example, the covered impairment—which begins by being assessed as a 50 per cent impairment (which is presumed fair)—then shrinks, and its weight is reduced by half (by taking into account the non-covered impairment), which is said to be unfair. As I understand it, this is the gravamen of the argument about the unfairness of the formula and method.

[39]      Mr Schmidt wants the evidence to be available in case the High Court Judge hearing the special leave application—or, more importantly, the full appeal if there is one —challenges Mr Schmidt’s explanation. He wants the affidavit as a backstop, an expert’s imprimatur to his explanation from the bar.

[40]      However, I accept Mr Hunt’s fair submission that a mathematics professor is not required to do this. And, in any case, it is only one mathematician’s view, which ordinarily will not be subject to cross-examination or additional explanation.23

[41]      This is quite a different situation than that in Accident Compensation Corporation v Ng, on which Mr Schmidt placed considerable reliance.24 There, four additional affidavits from medical practitioners, which set out how medical professionals generally approach a procedure which carries a risk of significant adverse effects, were accepted as further evidence on appeal. That evidence was of a pattern, and it provided a general overview of medical procedures and their range of risks. The factual accuracy of the contents was not disputed.

[42]      In my view this is quite a different situation. Here, there is one expert providing answers to three very narrow questions posed by Mr Schmidt. Professor Meylan is not seeking to speak on behalf of mathematicians generally, nor is his evidence sought to be introduced in conjunction with that of others. Mr Schmidt was honest enough to explain that Professor Meylan’s services were sought because he is Mr Schmidt’s friend. In Mr Schmidt’s view, the evidence is uncontroversial and unarguable.

[43]      Upon consideration, the evidence does not significantly advance the appellant’s case. As Mr Hunt emphasises, Mr Schmidt can still argue his point effectively without the mathematical evidence. Mr Hunt further emphasised that the appeal for which leave is sought is confined to specific matters of law, which ought to be observable on the face of the decisions appealed against. To that extent any appeal must be focused and confined. Professor Meylan’s evidence will not substantially assist in that task. His readily understandable explanations can still be made by Mr Schmidt as they were in the courts below, and to some extent before me.

[44]      I conclude that this is not fresh evidence, nor is there anything compelling or exceptional in the circumstances that would justify its admission.

23     See r 20.16(4), which requires further evidence under this rule be given by affidavit, unless the court otherwise directs.

24     Accident Compensation Corporation v Ng, above n 17.

A wider perspective

[45]      It is worth stepping back and understanding that Mr Schmidt also wants this evidence admitted because Professor Meylan suggests an alternative formula, one he says better preserves the proportionality between injury (which is covered) and pre- existing conditions (which are not). The use of Professor Meylan’s proposed formula in this case increases the WPI percentage from 19 per cent to nearly 36 per cent— although this is less than the figure of 49 per cent that Mr Schmidt argued for in the District Court. So, the proposed formula still does not preserve proportionality. But, according to Mr Schmidt, it is the more appropriate formula. That, of course, is not what Professor Meylan says. And although he was also tasked with answering the question of whether the formula currently used is “fair”, the Professor properly does not do so. Indeed, he cannot comment on that question.

[46]      To be frank, the question of law for which is leave is sought—regarding whether the method prescribed in the Handbook “undervalues” impairment caused by injury and is contrary to s 3 of the Act, which promotes fairness—is not a question that the Professor can or should answer. The answer would require much more than one mathematician’s view and more than his one suggested alternative formula would be needed to demonstrate the purported “unfairness”. In this respect, Professor Meylan’s proposed evidence is too little and too late.

[47]      If the prime purpose for the evidence is to argue about the fairness of the formula and method, then allowing the evidence to be adduced may open Pandora’s box. There is a real likelihood that allowing it would prompt cross-applications from ACC to call further evidence in response, either by way of other mathematicians or medical experts or both. As I assume that the current formula and method are based on significant policy considerations, then no doubt ACC would also wish to call policy experts to explain the reasons for the current approach. In all those cases there may well be applications for cross examination, all of which would turn this appeal into a much longer, more complex hearing.

[48]      If Mr Schmidt wished to argue about the fairness of the formula and method and to produce evidence to support it, this should have been done at least by the stage of the District Court hearing. If I opened the door to Professor Meylan’s evidence, I could not easily close it for other evidence. There would be a real risk of “spawning” a whole new case.

[49]      In any case, Judge McGuire has already addressed this issue of alleged unfairness. At [60] of his decision, he said:25

[60]   It may well be that, as has frequently occurred in the past, a re-think  or adjustment may need to be made to matters that impact ultimately on a person’s entitlement, so that the underlying ethos of s 3 remains authentic.

[50]He also noted:26

[66]    Nevertheless it may well be that a review of the process is warranted if there is some consensus of collegial medical opinion that the present process on occasion yields an unfair result.

[51]      It is also worth noting that in the District Court, Mr Schmidt’s primary submission was that the assessment for injury-related impairment by itself should be the sole assessment in this case. He argued that the deduction for non-covered conditions should not be included in the WPI percentage. Thus, the result should have been 49 per cent—not the 19 per cent obtained by the use of the formula.

[52]      However, Mr Schmidt is now asking the Court to conclude that Professor Meylan’s newly suggested formula would be “fairer”. In my view, and with great respect, he is recasting his case. He now wishes to place much more reliance on the “unfairness” of the current formula and method and on Professor Meylan’s new formula. In my view, it would be unfair to the ACC to now have Mrs Smith’ case presented in a different way with new evidence and calculations.

[53]      As he now explains his desired result from this case, Mr Schmidt would be content for the High Court to direct that it be returned to the ACC to consider whether the formula is “fair” in the sense that that object is enshrined in s 3 of the Act. This is

25     Smith v Accident Compensation Corporation, above n 1 at [60]..

26 At [66].

not something that he specifically asked the Judge to direct—and he could have done—as it was an option available to the District Court and presumably the High Court in terms of s 161(2)(b) of the Act. The reality that a new desired outcome is sought is also consistent with my view that Mr Schmidt is now recasting his case.

Conclusion

[54]      I conclude, as Mr Hunt submitted, that on a conventional application of legal principles, the proposed evidence should not be adduced.

[55]      I also agree with Mr Hunt, that even if the evidence was to be adduced, realistically it could serve no useful purpose, of and by itself, in establishing that the current formula and method are unfair or inappropriate. It would require vastly more evidence than this one affidavit to enable the High Court to make any meaningful and firm conclusion or recommendation to ACC.

[56]      I emphasise that I make no comment as to the “fairness” argument that Mr Schmidt wishes to advance. He asserts that there is a public interest in doing so, and thus far it has never been squarely addressed. Nothing in my judgment will prevent him pursuing this argument, if leave is granted. All I have decided is that Professor Meylan’s evidence should not be admitted to further that argument.

[57]      I also emphasise that the Professor’s evidence has nothing to do with the second question for which leave will be sought: as to the proper interpretation of the word “exclude” used in cl 59(3)(b)(i) of sch 1 to the Act. I note that question, too, would involve a consideration of whether 21 years of practice and approach should be overturned. But both questions seem to raise interesting points and I agree that they cannot be answered simply by asserting that is not how things have been done over the last two decades.

[58]      Finally, I hasten to add that even though some of the discussion in this case has impinged on arguments that will doubtlessly be raised in the application for special leave to appeal, the conclusion I have reached in this case is far from determinative of that application.

[59]      The application for special leave to appeal can now be set down, as envisaged by Muir J in his Minute.27

[60]      Finally, I wish to thank counsel for the courteous, thoughtful, and candid way in which they advanced their arguments and for their patience in endeavouring to explain to me the intricacies of the ACC system and the applicable law.

Becroft J

27     Smith v Accident Compensation Corporation, above n 3.