Waterford v Accident Compensation Corporation
[2022] NZHC 1883
•2 August 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2022-485-000139
[2022] NZHC 1883
UNDER the Accident Compensation Act 2001 IN THE MATTER
of an application for special leave to appeal under s 162 of the Act
BETWEEN
WATERFORD
Applicant
AND
ACCIDENT COMPENSATION CORPORATION
Respondent
Hearing: 20 June 2022 Appearances:
B H Woodhouse for the Applicant C Light for the Respondent
Judgment:
2 August 2022
JUDGMENT OF COOKE J
(Special leave to appeal)
[1] The applicant seeks special leave to appeal the decision of the District Court upholding the Corporation’s decision to decline her weekly compensation under the Accident Compensation Act 2001 (the Act).1 Leave to appeal was declined by the District Court,2 but under s 162(3) of the Act the High Court may grant special leave.
[2] Special leave can be granted by the Court if it is satisfied there is a serious question of law capable of argument in a case involving some interest, public or private
1 W v Accident Compensation Corporation [2021] NZACC 105.
2 W v Accident Compensation Corporation [2022] NZACC 37.
WATERFORD v ACCIDENT COMPENSATION CORPORATION [2022] NZHC 1883 [2 August 2022]
of sufficient importance to justify leave. The ultimate question is whether leave should be granted in the overall interests of justice.3
Relevant circumstances
[3] The applicant is a social worker.4 When she was a teenager she was seriously sexually abused. She was subsequently diagnosed with Post Traumatic Stress Disorder, Major Depressive Disorder and Alcohol Use Disorder arising from the abuse.
[4] Later in life she was employed as a team leader engaging in social work. At this stage she was certified as being unfit for work because of the mental injuries arising from the abuse and she ceased work in August 2019.
[5] She had first sought counselling for these matters in June 2012. At that stage she was completing a Bachelor of Applied Social Sciences (Social Work) degree which she was subsequently awarded in 2013. As part of the requirements for that degree she had secured a placement at Women’s Refuge, and she was working as a volunteer there when she sought the counselling.
[6] The applicant has cover for the mental injuries arising from the abuse. They are deemed to have arisen when she sought this counselling. Section 36 of the Act provides:
Relevant dates of injury
36 Date on which person is to be regarded as suffering mental injury
(1) The date on which a person suffers mental injury in the circumstances described in section 21 or 21B is the date on which the person first receives treatment for that mental injury as that mental injury.
…
[7] Sections 21 and 21B address those who suffer mental injury as a consequence of serious offences such as the offending against the applicant.
3 Cullen v Accident Compensation Corporation [2014] NZCA 94 at [5].
4 The name used in the intituling of this judgment is not the applicant’s true name.
[8] One category of potential compensation under the Act relates to lost earnings. Section 100(1)(a) provides for an entitlement to weekly compensation where the claimant is incapacitated within the meaning of s 103, which relevantly provides:
103 Corporation to determine incapacity of claimant who, at time of personal injury, was earner, on unpaid parental leave, or recuperating organ donor
(1)The Corporation must determine under this section the incapacity of—
(a)a claimant who was an earner at the time he or she suffered the personal injury:
…
(2)The question that the Corporation must determine is whether the claimant is unable, because of his or her personal injury, to engage in employment in which he or she was employed when he or she suffered the personal injury.
(3)If the answer under subsection (2) is that the claimant is unable to engage in such employment, the claimant is incapacitated for employment.
…
[9] The Corporation has accepted that the applicant has cover under the Act. But by letter dated 10 March 2020 it declined the applicant’s claim for weekly earnings related compensation because she was not in employment at the deemed date of her injury. It was nevertheless determined that the applicant could receive compensation as a “potential earner” under s 105 of the Act. This was because she was “engaged in full-time study or training” before aged 18 at the time she was deemed to have suffered her injury in accordance with the definition of “potential earner” in s 6 of the Act. But “potential earner” compensation under s 105 is less generous than normal earnings related compensation under s 103.
[10] The applicant sought a review of the decision declining earnings related compensation. By decision dated 11 August 2020 the review was declined. The Review Officer concluded that the applicant’s placement at Women’s Refuge did not involve her being employed as “… the purpose of participating in the placement was to learn, rather than to earn”.
[11] The applicant appealed that decision under the Act to the District Court, and by decision dated 16 July 2021 the appeal was dismissed.5 She then sought leave to appeal that decision to this Court which was declined in March 2022.6 By application dated 21 March 2022, which specifies proposed questions of law, she seeks special leave to appeal. This is opposed by the Corporation.
Issues on proposed appeal
[12] There are two relevant requirements for a person to receive earnings related compensation under ss 101 and 103. First, under s 103(1)(a) the person must be an “earner” at the time he or she suffered the personal injury, which in the present circumstances arises when she is deemed to have suffered that injury. Second the person must be unable, because of that injury, to engage in the “employment” in which he or she was employed at that time under ss 103(2). There is also a requirement that the claimant be an earner in that employment at the date of incapacity. This arises under s 103(2) and cl 32 of sch 1. Here the applicant was an earner at that time as a consequence of her employment as a social worker.
[13]There are relevant definitions contained in s 6 of the Act in the following terms:
6 Interpretation
…
earner—
(a)means a natural person who engages in employment, whether or not as an employee; and
…
employment—
(a)means work engaged in or carried out for the purposes of pecuniary gain or profit;
…
[14] The applicant was working at Women’s Refuge when she is deemed to have suffered her injury. But she did so as a volunteer as part of the requirements for her
5 W v Accident Compensation Corporation, above n 1.
6 W v Accident Compensation Corporation, above n 2.
degree. This has led the Corporation, Review Officer and the District Court to conclude that she was not an “earner” in “employment” at the deemed date of her injury. The District Court held:7
In this case the placement at the Women’s Refuge was part and parcel of the requirements [the applicant] had to meet to enable her to obtain her degree. Although she was treated as an honorary employee and had to attend at specified hours and undertook certain work when she was there, this is not employment for the purposes of the provisions of the Act. And neither does [the applicant] meet the requirements of the word ‘earner’.
[15] The applicant wishes to argue that this is wrong. The applicant accepts that she must demonstrate that she was in employment at the time. But she argues that this is defined as “work undertaken for the purposes of pecuniary gain or profit” and that this does not require that she receive “earnings”, or payment there and then, and that the definition is met by the fact that her volunteering was for the purpose of obtaining future remuneration as a fully qualified social worker.
[16] In support of these arguments the applicant refers to cases in analogous situations. In Bedford v Accident Compensation Corporation the claimant was a trainee doing workplace experience arranged as part of that training.8 The District Court there concluded that the claimant was in employment, saying:
… I rule as a matter of law that [the claimant] was in employment for the purposes of section 7 during the time that she was undertaking workplace experience … The fact that she received no monetary remuneration for this employment does not mean she was not in employment. The remuneration that she was obtaining was that of experience and the ability to improve her prospects of employment opportunities.
Analysis
[17] The provisions of the Act that regulate when those who have suffered from mental injuries as a result of sexual abuse are entitled to compensation under the Act are complex, and in many circumstances seem unjust. I recently reviewed some of those provisions in TN v Accident Compensation Corporation, a decision that is now subject to an appeal to the Court of Appeal.9 Part of the reason for this complexity
7 W v Accident Compensation Corporation, above 1, at [73].
8 Bedford v Accident Rehabilitation and Compensation Insurance Corporation [1999] NZACC 287 at 7. This case concerned compensation under the previous Act.
9 TN v Accident Compensation Corporation [2022] NZHC 1280.
arises from the fact that the relevant mental injury is deemed to arise when the person first seeks treatment for that injury rather than when the abuse occurs. Not only will that not commonly be when the abuse or mental injury occurs, but it will also not commonly be when the adverse effects of the abuse fully manifest themselves. It follows there is artificiality involved in the application of the provisions.
[18] There are other anomalous aspects. Here the applicant was in paid employment when the adverse effects of the abuse fully manifested themselves such that she could not continue work. But she was not in paid employment when the injury is deemed to have occurred. The Corporation has determined she cannot receive earnings related compensation as a consequence. At its heart the applicant’s argument involves an attempt to respond to this unfairness by the Court giving the relevant provisions a meaning that is different from that which they apparently have. There are circumstances where this could be appropriate, but only when it accords with a conventional approach to statutory interpretation. I applied such an approach in TN v Accident Compensation Corporation, and the Court of Appeal will now no doubt consider whether that approach was indeed conventional.
[19] But for the reasons outlined below in the present case I do not accept the arguments advanced by the applicant. They seem to me to involve distorting the statutory meaning rather than giving effect to it.
[20] Although they are complex, the relevant provisions create a carefully formulated regime for weekly compensation as an “earner”, and as a “potential earner”. Three categories of person who qualify to receive compensation as an “earner” are identified — employees, self-employed persons, and shareholder employees. Those three categories can be found in the definition of “earnings” in s 6, and in other provisions.
[21] These categories explain the slightly unusual wording in the definitions of “earner” and “employment”. An “earner” is defined as a person who engages in employment “whether or not as an employee” because there will be situations when that person is not an employee as they fall into one of the other two categories — self- employed persons or shareholder employees. The definition is making it clear that
they are still treated as an “earner”. Similarly the definition of “employment” refers to work engaged in “for the purposes of pecuniary gain or profit” rather than simply for the purpose of earning wages. That is because the other categories — self- employed people and shareholder employees — are intended to be covered even though they may not have been paid wages. The legislation is seeking to address all relevant categories of remunerated work.
[22] But what is clear is that the claimant must engage in work “for the purpose of” being so remunerated. This requirement is illustrated by previous decisions. In Beel v ACC the claimant qualified as he had been undertaking work on the basis that his rent would be paid for.10 But in Ryan v Accident Compensation Corporation the claimant on unpaid leave was not, even though her employment relationship continued, as she was not an “earner” at that time.11 During oral argument other situations were referred to. For example the position of trainee doctors or nurses was raised. But as the Review Officer noted the position of those persons is different from that of the applicant “… if those students are being paid while they gain their qualification”. It is the existence of remuneration that is the important pre-requisite.
[23] The legislation is not contemplating that earnings-related compensation will arise for those who undertake voluntary work. They must have been working for the purpose of remuneration before they are entitled to receive compensation for the loss of that remuneration.
[24] Against that background I cannot accept the applicant’s argument that she can be treated to have been an “earner” engaged in “employment” when she was doing voluntary work for the purpose of her degree. She did not work in order to receive wages, or the kind of pecuniary gain or profit that self-employed persons or shareholder employees can receive. The fact that she was doing this work because it formed part of her required training as a social worker, and that this was done so she could qualify as a social worker, and thereby open the door to her making a living from that employment is too remote to engage the concepts contemplated by the
10 Beel v ACC [2008] NZACC 252.
11 Ryan v Accident Compensation Corporation (2006) 7 NZELC 98, 253 at [20]–[22].
definition. Parliament clearly had a more direct category of pecuniary gain or profit in mind.
[25] The applicant’s best way of putting her argument is that the definition of “employment” focuses on the nature of the work. The nature of the work that she undertook when her incapacity arose was social work. The tasks required of a social worker are tasks engaged in for the purposes of pecuniary gain or profit. So when she engaged in those kind of tasks in a voluntary capacity at Women’s Refuge she was engaging in such work. It is similar kind of work to that for which she was subsequently remunerated as an employee.
[26] But whilst that way of viewing the provisions is available by looking at the text alone, it can be seen that it involves an artificial distortion of the intended meaning when the text is interpreted in light of its purpose, and context, as required by s 10 of the Legislation Act 2019. There is a required link between the remuneration and compensation for the loss of that remuneration. I accept that a narrow view of the required remuneration should not been taken. So in Beel the District Court accepted the claimant was engaged in qualifying work even though he never actually received the rental benefits in question.12 As the applicant submitted, there is no requirement to actually receive “earnings” as there is under cl 32. But there must still be some form of intended remuneration for that work meeting the concept of “pecuniary gain or profit” in the definition of “employment” before the compensation for the loss of it arises.
[27] The overall scheme of the legislation is reflected in the calculation of the entitlement for weekly compensation as an “earner”. Under cl 32 of sch 1 of the Act a person is entitled to compensation if they were “an earner immediately before his or her incapacity commenced”. The entitlement is then set out in cl 32(3) at 80 per cent of the claimants weekly earnings. So the compensation is calculated based on what the claimant was earning when their incapacity arose. This provides context on what is contemplated from the requirement that the claimant be an “earner” when the injury
12 Beel v ACC, above n 10.
arose under s 103. The word “earner” does not mean different things in s 103 and cl 32. It is someone who works for the purpose of being remunerated.
[28] The legislation has also expressly addressed the position of those who are engaged in training activities when they are injured. The definition of “potential earner” contemplates those “… engaged in full time study or training” that a person began before turning 18, and continued uninterrupted after they turned 18. That covers the position of the applicant. She was studying to obtain her degree in social work, and as a part of the requirements of that training she undertook a placement at Women’s Refuge doing unpaid work. As the Review Officer correctly captured it, these functions were undertaken to learn, not to earn. Given that the legislation has addressed these circumstances, and has determined that the applicant is to be treated as a “potential earner” as a consequence, I see no room to distort the meanings applicable to the more generous category of “earner” compensation in order to accommodate the applicant’s position more generously.
[29] Here the applicant was such an earner when her incapacity arose later in life. But she was not when the deemed injury arose. She is nevertheless entitled to compensation as a “potential earner” because she was in training at the time of her deemed injury.
[30] This lower form of compensation appears unfair, and anomalous given the applicant has lost the ability to continue her current work because of her covered injury. The unfairness arises because of the delay between the deemed injury, and the adverse effects fully manifesting themselves. The legislation requires the claimant to be an “earner” in the “employment” at the date of the deemed injury as well as the date of incapacitation. The unfairness of this requirement has been noted in previous decisions.13 But that is what the Act says. As Kós J said in Murray v Accident Compensation Corporation:14
The outcomes under the present Act are unquestionably anomalous. It was not suggested otherwise before me. No Judge could frame common law duties in so inconsistent and erratic a fashion. Nor could insurers achieve such
13 Accident Compensation Corporation v Vandy [2011] 2 NZLR 131 at [22]-[23]; Murray v Accident Compensation Corporation [2013] NZHC 2967.
14 Murray v Accident Compensation Corporation, above n 13, at [69].
outcomes in an informed market. But cover under the Act is the product of careful and crystalline drafting by legislators. The meaning and effect of the statutory words in issue is quite clear.
[31] I agree with this, although I note that the legislators’ drafting is not always “crystalline”. But here it is nevertheless apparent.
[32] This should not be taken to be understood as an endorsement of the outcome created by the legislation. The Act covers those who are victims of sexual abuse, including childhood sexual abuse, only in limited respects. When those suffering mental injuries from such events are unable to continue in their employment the cover arises only in somewhat anomalous situations. I have considerable sympathy for the applicant and those in her position. But it is the Court’s function to give effect to the will of Parliament rather than to avoid it.
[33] For these reasons I accept the Corporation’s argument that there are insufficient prospects of success to warrant the grant of special leave. For these reasons special leave to appeal is declined.
Cooke J
Solicitors:
Shine Lawyers NZ, Christchurch for the Respondent
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