Thimbleby v Accident Compensation Corporation
[2004] NZCA 62
•12 May 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA42/03
BETWEENDAVID JOHN THIMBLEBY
Appellant
ANDACCIDENT COMPENSATION CORPORATION
Respondent
Hearing:5 February 2004
Coram:Anderson P
Glazebrook J
Chambers JAppearances: J M Miller for Appellant
B A Corkill and N Lawson for Respondent
Judgment:12 May 2004
JUDGMENT OF THE COURT DELIVERED BY CHAMBERS J
A transitional dilemma
[1] This case involves a short point of statutory interpretation. The question is whether s40(2) of the Accident Rehabilitation and Compensation Insurance Act 1992, as inserted by s8 of the Accident Rehabilitation and Compensation Insurance Amendment Act (No 2) 1996, has retrospective effect.
[2] On 5 December 1994, Douglas Thimbleby, a fitter/welder by occupation, injured his back in the course of his employment. He has not been able to work since that time. At the time of his accident, Mr Thimbleby had been employed for only the past 17 weeks in the year immediately preceding his accident. Mr Thimbleby’s entitlement to compensation at that time was governed by s40 of the Accident Rehabilitation and Compensation Insurance Act 1992 (“the 1992 Act”), as originally enacted. Because he had been in employment for only a short time, his entitlement to compensation under the then s40 led to compensation at only a very low level. Indeed, it was so low in fact that it was advantageous for him to transfer to a social welfare benefit, a step he took in April 1995.
[3] In 1996, Parliament passed the Accident Rehabilitation and Compensation Insurance Amendment Act (No 2) 1996 (“the 1996 Act”). That Act amended s40 and, in general terms, improved the lot of employees who had been in paid employment for only a short period before the event making them unable to work. Eventually the Accident Compensation Corporation (“ACC”) recalculated Mr Thimbleby’s entitlement under s40 as amended. There is no dispute now about Mr Thimbleby’s entitlement since the 1996 Act came into force, namely from 2 September 1996.
[4] The question is, however, whether the amended s40 has retrospective effect and whether ACC was bound to recalculate Mr Thimbleby’s entitlement to compensation in the period from his incapacity in 1994 to 2 September 1996.
Question for determination
[5] On 10 December 2001, Judge Willy held that s40 as inserted by the 1996 Act did in essence have retrospective effect and that as a consequence its formula should be applied from 5 December 1994, the date of Mr Thimbleby’s accident. ACC appealed to the High Court from that decision. On 5 August 2002 Goddard J allowed the appeal. She held that s40 as substituted by the 1996 Act did not have retrospective effect. She held that ACC was not bound to recalculate Mr Thimbleby’s entitlement from the date of his accident until the date on which the 1996 Act came into force.
[6] Mr Thimbleby sought leave to appeal against Goddard J’s decision. Goddard J granted leave on 30 September 2002. A case was stated to this court. The question for the determination of this court is in the following terms:
Does the amendment to s40(2) of the Accident Rehabilitation and Compensation Insurance Act 1992, which came into force on 2 September 1996, allow the Appellant’s weekly compensation to be recalculated from the date upon which he was incapacitated by injury in 1994, or does it only allow recalculation for the period from 2 September 1996 onwards?
The solution
[7] Section 40 of the 1992 Act read as follows:
Calculation of weekly earnings where earner had earnings solely as an employee during the 12 months before commencement of incapacity
(1) This section applies only to earners who are earners immediately before the commencement of the incapacity and who, during the 12 months immediately preceding the commencement of the period of incapacity, had earnings as an employee and who did not also have earnings other than as an employee.
(2) The weekly earnings of any person to whom this section applies shall be —
(a) In respect of each of the 4 weeks next following the first week of incapacity, the earnings as an employee during the 4 weeks immediately before the commencement of the incapacity divided by the number of full or part weeks of remunerated employment as an employee during that period:
(b) In respect of any period of incapacity after the period referred to in paragraph (a) of this subsection, the lesser of—
(i)1/52nd of the earnings of that person as an employee during the 52 weeks immediately before the commencement of the incapacity; or
(ii)The weekly earnings calculated under paragraph (a) of this subsection.
(3)Where, during the 12 months immediately preceding the commencement of the incapacity, an employee had more than 1 employer, the calculations made under subsection (2) of this section shall be made separately and then be combined.
[8] Section 1 of the 1996 Act read as follows:
Short title and commencement
(1) This Act may be cited as the Accident Rehabilitation and Compensation Insurance Act (No. 2) 1996, and shall be read together with and deemed part of the Accident Rehabilitation and Compensation Insurance Act 1992 (hereinafter referred to as the principal Act).
(2) Except as provided in subsection (3) of this section, this Act shall come into force on the day on which it receives the Royal assent.
(3) Sections 13 and 27 of this Act, and the amendments to sections 71 and 148 of the principal Act in the Schedule to this Act, shall come into force on the 1st day of July 1997.
[9] The 1996 Act received the Royal assent on 2 September 1996.
[10] Section 8 of the 1996 Act read as follows:
Calculation of weekly earnings where earner had earnings solely as an employee during the 12 months before commencement of incapacity
Section 40 of the principal Act is hereby amended by repealing subsection (2), and substituting the following subsections:
“(2) The weekly earnings of any person to whom this section applies shall be,—
“(a) In respect of each of the 4 weeks next following the sixth day after the day on which the incapacity first commenced, the person’s earnings as an employee during the 4 weeks immediately before the commencement of the incapacity divided by the number of full or part weeks during which the person earned those earnings as an employee during that 4-week period:
“(b) In respect of any weekly period of incapacity after the period referred to in paragraph (a) of this subsection, if the person was in permanent employment immediately before the commencement of the incapacity, the person’s earnings as an employee during the 52 weeks immediately before the commencement of the incapacity, divided by -
“(i) The number of full or part weeks during which the person earned those earnings as an employee during that 52-week period; or
“(ii) Thirteen, -
whichever is the greater:
“(c) In respect of any weekly period of incapacity after the period referred to in paragraph (a) of this subsection, if the person was not in permanent employment immediately before the commencement of the incapacity, 1/52nd of the person’s earnings as an employee during the 52 weeks immediately before the commencement of the incapacity.
“(2A) For the purposes of this section, a person shall be regarded as having been in permanent employment if, in the opinion of the Corporation, that person would have continued to receive earnings from that employment for a continuous period of more than 12 months after the commencement of incapacity if the personal injury had not occurred.”
[11] Goddard J held that s40(2) did not have retrospective effect. She referred to s7 of the Interpretation Act 1999. She also referred to a passage from Maxwellon the Interpretation of Statutes (12ed, 1969) 215, where the learned editors stated “a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in terms of the Act, or arises by necessary and distinct implication”.
[12] Mr Miller, for Mr Thimbleby, made four submissions as to why Goddard J was wrong. First, he submitted that the legislative history of the 1996 Act showed that “the purpose of the amendment was to remove an inequity and allow for a fairer method of calculation for claimants such as the appellant”.
[13] Mr Miller referred to Parliament’s Labour Committee report and also to the Parliamentary debates at various stages of the Bill. We have carefully studied that report and the passages from the Parliamentary debates cited to us. We do not consider that those references assist Mr Miller’s argument. In none of them is there an express reference to the proposed s40 amendment having retrospective effect. The only express reference to retrospectivity came in the course of a First Reading speech by an Opposition Member. That member referred to the case of an injured teacher who had, he said, an income of $40,000 but who wound up on the minimum payment because of the way the 1992 Act had been drafted. The member said (14 December 1995) 552 NZPD 10,706:
I want the Minister to say whether this problem has been fixed and, more important, what this Bill will do for those people who have been disadvantaged by an oversight. Will the legislation be retrospective; if not, why not? The rules were written badly, and people should not be badly done by it because of incompetent drafting.
[14] No answer to that question was ever provided by the Minister or anyone else on his behalf. We attach little importance to that unanswered question, save to note that it was obviously unclear to the inquiring member whether or not the Bill did have retrospective effect. What is perhaps significant, however, from the Parliamentary deliberations is that the Labour Committee did recommend amendment to the commencement clause of the Bill, which later became s1 of the 1996 Act. As will be apparent from s1 as finally enacted (and as set out in para [8] above), different sections of the Act came into force on different dates. It is clear therefore that the Labour Committee considered carefully what dates various parts of the 1996 Act should come into force and that no part of the 1996 Act was determined to warrant retrospective effect. In that regard, a comparison can be made with other Acts which amended the 1992 Act, some of which did contain amendments which Parliament determined should have retrospective effect: see, for instance, the Accident Rehabilitation and Compensation Insurance Amendment (No 2) Act 1993, s1 and the Accident Rehabilitation and Compensation Insurance Amendment Act 1995, s1.
[15] We agree that the purpose of the amendment, broadly speaking, was, to remove an inequity and allow for a fairer method of calculation for claimants such as the appellant. In that regard, this amendment was like many amendments, perhaps the majority of amendments: amending legislation is often intended to remove inequities that have been demonstrated to exist. This does not mean that there is an intention that the inequities be removed retrospectively.
[16] Mr Miller’s second submission was “that the natural and ordinary meaning of the words used in the amended s40(2) apply to the appellant’s incapacity from 1994 onwards”. In this regard, Mr Miller submitted that the reference in s40(2) was simply to incapacity whenever it occurred. He said that s40 did not provide that the new regime was to apply only to claims lodged from 1996 onwards or to incapacity which first occurred from 1996 onwards. He noted that ACC accepted that the amended subsection applied to Mr Thimbleby, notwithstanding that his incapacity commenced prior to the amendment coming into force. Mr Miller submitted that the section could not be accepted “as retrospective for one purpose but not for another”.
[17] Mr Corkill, for ACC, accepted that the amendment did apply to incapacity which began prior to 2 September 1996, if such incapacity continued at that date. But that did not mean, he submitted, that entitlements under the amending legislation must be retrospectively conferred. Mr Corkill submitted that the authorities distinguished between facts and events which may occur before the commencement of a provision and the legal consequences commencing thereafter. In particular, he referred to two authorities which, he submitted, were right on point. They are Dean v Accident Compensation Corporation [1982] 1 NZLR 750 (CA) and Accident Compensation Corporation v New Zealand Meat Industry Association [1988] 1 NZLR 1 (CA and PC).
[18] We agree with Mr Corkill’s analysis. The point has been clearly established in the first of the cases cited by Mr Corkill; the second is, with respect, less on point although in general terms is consistent with Mr Corkill’s thesis.
[19] In Dean, Mr Dean had suffered an injury in May 1974. He was potentially entitled to certain compensation under s114 of the Accident Compensation Act 1972, but such assessment had to wait until his condition stabilised. Section 114 was amended: the amendment came into effect as from 10 October 1975. After that date, Mr Dean’s condition stabilised, so that his s114 compensation could be quantified. The question was whether that compensation should be assessed under the old s114 or the new s114. The Accident Compensation Commission decided that Mr Dean’s application for compensation should be assessed in terms of s114 as it stood at the time of the accident. To do otherwise, the Commission argued, would be to give the new provision retrospective effect. This court disagreed. The court held that the amended s114 should apply, as Mr Dean’s condition stabilised only after it had come into force. The section did operate only prospectively. That did not mean, however, that the accident could not have occurred prior to the amended section coming into force.
[20] Mr Miller’s submission leads to extraordinary results. Suppose an employee had been injured in 1993 and had returned to work in early 1994. Suppose that worker’s entitlement to compensation had been calculated under s40 as originally enacted. Mr Miller’s interpretation would mean that that worker, some years later, could have his s40 compensation recalculated under the new s40, notwithstanding that he was no longer injured and indeed had not been for some years. Mr Miller accepted that that would be a consequence of his interpretation. It is surely unlikely that Parliament would have intended to reopen closed claims. One would expect clear wording before such an unusual result could be inferred. Many stale claims could be involved.
[21] Mr Miller’s third submission was “that the presumption against retrospectivity does not apply where the legislation is fair and beneficial”. He submitted that the amending legislation in this case was of that character. He submitted that “any new liability” created by the interpretation he was advocating would not fall on any particular individual. It could “be spread through the ACC scheme”.
[22] With respect, this approach is simplistic. The argument came perilously close to an assertion that legislation could be read retrospectively if that is fair and no particular individual will suffer as a consequence. That is not a proper approach to statutory interpretation. Certainly none of the authorities cited by Mr Miller comes close to such a proposition.
[23] In any event, giving the amended s40 retrospective force would have consequences on others. In the period up to 2 September 1996, employers were subject to “experience ratings” under the regime established by the Accident Rehabilitation and Compensation Insurance (Experience Rating) Regulations 1993 (SR 1993/310). Under this regime employers could be made subject to a “premium loading” in respect of injuries occurring to their employees in the course of employment. These regulations reflected the fact that the 1992 Act, unlike its predecessors, was an insurance-based scheme. If Parliament intended when enacting the amended s40 to reopen all s40 payments since the 1992 Act came into force, then it is inconceivable that Parliament would not have also addressed how employers’ premiums were to be reopened and recalculated. The fact that the 1996 Act did not provide for any such recalculation is a telling point against s40 having retrospective effect.
[24] Mr Miller’s fourth submission was that Goddard J had been wrong in applying s452(2) of the Accident Insurance Act 1998.
[25] We can deal with this point briefly. Section 452(2) provides that ACC, in revising a decision, “must apply the Act that applied at the time when the decision being revised was made”. This subsection was first referred to during argument in this case in the District Court. At that time Mr Thimbleby argued that the subsection applied and that its effect was to require ACC to apply s40 as amended. Judge Willy had relied on s452 when coming to his decision in Mr Thimbleby’s favour.
[26] Goddard J also considered s452. She too considered it applicable. But she considered it reinforced her primary conclusion that the amended s40 applied only retrospectively.
[27] In this court, Mr Miller adopted a different stance. He now submitted, contrary to his submissions in the courts below, that s452(2) had no application. He submitted that that subsection applies only when ACC is revising a decision it considers to have been made in error. The original ACC decision in this case was not made in error. The ACC at that time was, to use Mr Miller’s terms, “simply applying inequitable law as it then was in 1994”. He developed that argument in some detail. We do not need to go into that. Mr Corkill agreed with Mr Miller that s452(2) has no application for present purposes. We too agree.
[28] To this extent – and only to this extent – we differ from Goddard J’s reasoning, but it must be stressed that this was not Her Honour’s primary ground for the decision she reached. We agree with her primary reasoning and with the result she reached.
Result
[29] We answer the formal question as set out in para [6] above as follows:
The amendment to s40(2) effected by the 1996 Act does not allow the appellant’s weekly compensation to be recalculated from the date upon which he was incapacitated by injury in 1994. It allows recalculation only for the period from 2 September 1996 onwards.
[30] It follows therefore that we uphold Goddard J’s decision and we dismiss the appeal.
[31] If Mr Thimbleby is not legally aided, he must pay costs to ACC on this appeal in the sum of $4,000, together with reasonable disbursements as fixed, if necessary, by the registrar. If he is legally aided, costs are reserved. In that event, memorandums can be filed, if necessary.
Solicitors:
J M Miller, Wellington for Appellant
The Office Solicitor, Accident Compensation Corporation, for Respondent
2
0
0