Accident Compensation Corporation v J

IN THE DISTRICT COURT HELD AT WELLINGTON Decision No. 041/2004 UNDER The Injury Prevention, Rehabilitation, and Compensation Act 2001 AND IN THE MATTER of an appeal pursuant to Section 149 of the Act BETWEEN ACCIDENT COMPENSATION CORPORATION a body corporate duly constituted under the provisions of the said Act Appellant (Appeal No. AI 385/03) AND J of Waikanae Respondent HEARING at WELLINGTON on 13 February 2004 APPEARANCES/COUNSEL Miss Rice for Appellant Respondent in person RESERVED JUDGMENT OF JUDGE J. CADENHEAD Issue [1] The issue concerns the commencement date of the respondent’s independence allowance entitlement. The appellant’s decision dated 15 March 2003 advised the respondent that her independence allowance payments would commence from the date of application for the independence allowance in 2002. The reviewer 041-2004 - 2 - found that the entitlement should be backdated to the date the respondent lodged her claim for cover for a sensitive claim in November 1992. [2] It is the appellant’s position that the independence allowance should be paid from the date of application for the independence allowance in July 2002. Background [3] I set out hereunder the background of fact that has been provided by the appellant, as this narrative, in my opinion neutrally sets out the factual background confronting this issue. “1.1 The Respondent injured her back in April 1992 (the ‘back injury’). She received a 5% lump sum under the Accident Compensation Act 1982 (the 1982 Act) for this injury. 1.2 The Respondent lodged a separate claim for mental injury as a result of sexual abuse on or about 18 November 1992 (the ‘sensitive claim’). 1.3 On 8 July 2002 the Respondent applied for an independence allowance in respect of her sensitive claim. 1.4 On 13 February 2003 Dr Christian assessed the Respondent’s impairment in respect of both her back injury and her sensitive claim. 1.5 Dr Christian concluded that the Respondent had a 0% impairment in respect of her back injury. Dr Christian noted that the Respondent is usually pain free, and although she had intermittent symptoms of low back pain, there was no rateable physical impairment. 1.6 In respect of the sensitive claim, Dr Christian concluded that the Respondent had a 30% whole person impairment. 1.7 Dr Percival (who peer reviewed the assessments) sought further clarification of the sensitive claim assessment from Dr Christian. Dr Christian confirmed he had made a typographical error in one of the impairment categories, but otherwise reaffirmed the assessment he had made. The typographical error did not change the final whole person impairment of 30% for the sensitive claim. 1.8 ACC’s decision dated 15 March 2003 advised the Respondent that she had a combined whole person impairment of 30% for her back injury and sensitive claim. The 5% previous lump sum was deducted, and ACC advised that she was entitled to an independence allowance for a 25% impairment. ACC advised that her entitlement would be paid from 8 July 2002 – the date of application for independence allowance. 1.9 The Respondent applied for a review of this decision. The Respondent did not challenge the impairment assessments, but rather questioned the date that her entitlement should commence. - 3 - 1.10 The Reviewer quashed ACC’s decision in reliance on Buxton v ARCIC (Wellington HC, Young J, AP 63/02, 12 July 2002) and Davies (Decision no. 130/03). The Reviewer stated: “ … I find that Justice Young has clearly ruled in Buxton above that the 1998 regime cannot apply to Ms Jones by virtue of section 441(3)(a). Ms Jones meets the requirements of section 441(1)(c) in that her injury occurred prior to 1 July 1999 and she did not apply for an independence allowance before 1 July 1999. Section 441(3)(a) then excludes her from entitlements under the 1998 Act. Justice Young has interpreted this to mean that such claimants are entitled under the pre 1999 regime, being the 1992 Accident Rehabilitation and Compensation Insurance Act. In the District Court case of Davies (130/2002), Judge Cadenhead follows Buxton in a case which is on all fours with that of Ms Jones. Judge Cadenhead rules that the 1996 amendment to the 1992 Act provides for the correct date from which to pay the independence allowance. … Judge Cadenhead states: “It is clear from this amendment that the date that the independence allowance is payable is the date on which the person lodged a claim for cover in respect of the personal injury from which the impairment results.”” The Reviewer directed that the Respondent’s independence allowance be paid from 18 November 2002 – the date that she lodged her sensitive claim. 1.11 ACC has filed a Notice of Appeal in respect of the Reviewer’s decision. 1.12 The effect of the Reviewer’s decision is that the Respondent is entitled to a backpayment of independence allowance in the amount of $10,596.83. The Relevant Legislation [4] Section 377 of the Injury Prevention, Rehabilitation and Compensation Act 2001 (the IPRC Act) provides: “377. Personal injury suffered before 1 July 1999 (1) Sections 441 and 442 of the Accident Insurance Act 1998 continue to apply to personal injury covered by this Part that was suffered before 1 July 1999, irrespective of when the claim for cover in respect of that personal injury was or is lodged. A claimant who suffered personal injury before 1 July 1999 and who applied, before that date, for an independence allowance but who was not or would not have been entitled to receive the allowance before the close of 30 June 1999 is to have his or her independence allowance assessed under Part 4 of Schedule 1 of the Accident Insurance Act 1998.” - 4 - [5] It should be noted that sections 441 and 442 of the 1998 legislation continue to apply to personal injury covered by those Parts that was suffered before 1 July 1999, irrespective of when the claim for cover was lodged. “441. Independence allowance— (1) Subsection (2) applies to— (a) A person to whom section 27 (1) of the Accident Rehabilitation and Compensation Insurance Amendment Act (No. 2) 1996 applies and who was not reassessed under section 54A of the Accident Rehabilitation and Compensation Insurance Act 1992 before 1 July 1999: (b) A person who, immediately before 1 July 1999, was receiving or was entitled to receive an independence allowance under section 54 of the Accident Rehabilitation and Compensation Insurance Act 1992: (c) A person who suffered a personal injury before 1 July 1999 and did not apply for an independence allowance before 1 July 1999. (2) Such a person is entitled to receive an independence allowance on and after 1 July 1999 under Part 4 of Schedule 1, as modified by - (a) Subsection (3); and (b) Section 442 (2) (a) and (b), if the person is a person to whom section 442 (2) applies. (3) The modifications made by this subsection are as follows: (a) Such a person may not lodge a claim for an independence allowance under Part 4 of Schedule 1 for any injuries suffered before 1 July 1999: (b) A person described in subsection (1) (a) receives the rate of independence allowance payable on 30 June 1997 as adjusted by section 71 of the Accident Rehabilitation and Compensation Insurance Act 1992 or section 460: (c) Any assessment under clause 60 of Schedule 1, or reassessment under clause 61 of Schedule 1, must be done on the basis of whole-person impairment for the combined effect of all his or her personal injuries covered by the former Acts, and only 1 independence allowance is payable for all those injuries: (d) As soon as practicable after 1 July 1999 the manager must require a person described in subsection (1) (a) to be reassessed in accordance with paragraph (c).” [6] Section 442 of the AI Act provides: “442. Entitlement to independence allowance of persons who received lump sums under former Acts and suffer further impairment— - 5 - (1) Subsection (2) applies to a person who received a payment for personal injury by accident under section 119 of the Accident Compensation Act 1972 or section 78 of the Accident Compensation Act 1982. (2) Such a person may apply under section 441 for an independence allowance under Part 4 of Schedule 1. That Part applies subject to the following modifications: (a) The independence allowance must be calculated by deducting, from any whole-person impairment assessed under clause 60 of Schedule 1, or reassessed under clause 61 of Schedule 1, any percentage permanent loss or impairment of bodily function for which any payment was made under section 119 of the Accident Compensation Act 1972 or section 78 of the Accident Compensation Act 1982: (b) An independence allowance payable as the result of an assessment under clause 60 of Schedule 1 is payable from the date of the application for it.” [7] Clause 60(2) and (4)(b) of Schedule 1 of the AI Act provides: “60. Assessment of entitlement to independence allowance— (2) An assessor assesses the insured's percentage of whole-person impairment arising from each claim that is referred to the assessor for assessment. (4) In doing an assessment under this clause, an assessor must— (b) Exclude from the assessment any impairment that does not result from the personal injury for which the insured lodged the claim for cover.” [8] Clause 63 of Schedule 1 of the AI Act provides: “63. Payment of independence allowance— The following provisions apply to the payment of an independence allowance: (a) The insurer is not liable to pay an independence allowance for any period before 1 July 1992: (b) The insurer is liable to pay the independence allowance on and from the date on which the insured lodged the claim for cover for the personal injury from which the impairment results: (c) The insurer is liable to pay the independence allowance quarterly in advance for any period after the completion of the assessment of the degree of impairment: (d) The insurer must not take any action to recover the whole or any part of a quarterly payment of an independence allowance in respect of a quarter in which— (i). The insured's impairment decreases; or (ii). The insured's entitlement to an independence allowance ceases: - 6 - (e) An adjustment to the level of entitlement of the independence allowance necessitated by a reassessment under clause 61 takes effect on and from the date of the next quarterly payment: (f) The insured's entitlement to an independence allowance he or she was receiving at the date of his or her death ceases on that date.” [9] The Accident Insurance (Independence Allowance - Transitional Application Form) Regulations 1999 (the “Transitional Forms Regulations”) came into force on 1 July 1999 and regulation 2 provides: “2 Application form (1) This regulation applies to a person who— (a) Suffered a personal injury before 1 July 1999; and (b) Did not apply before that date for an independence allowance for the injury; and (c) Wants an independence allowance for the injury. (2) Such a person applies for an independence allowance in the form in the Schedule, if the manager specifies that the form is to be used. (3) References in the Accident Insurance Act 1998 (except section 441) to lodging a claim include making an application under these regulations, and references to a claim include such an application.” Application Form For Independence Allowance For Personal Injury Suffered Before 1 July 1999 Accident Compensation Corporation (Insert address) My full name is (Insert name). (a) I apply for an independence allowance under the Accident Insurance Act 1998 for a personal injury I suffered before 1 July 1999. The date on which I suffered the injury was ........ (Insert date). The nature of the injury was ....... (Give brief details). (b) I have lodged a claim for cover for the personal injury. The claim number is (Insert number). or (b) This application is attached to a claim for cover for the personal injury. (Delete one) ................. - 7 - (Signature) ............................. (Date) ..................... [10] The Schedule to the Transitional Forms Regulations specified the form referred to in regulation 2. The explanatory note to the Transitional Forms Regulations states: “These regulations prescribe a form for applying for an independence allowance under the Accident Insurance Act 1998. The form is used, if the Accident Compensation Corporation so requires, by people who suffered a personal injury before 1 July 1999 but did not apply before that date for an independence allowance. Such people receive an independence allowance under Schedule 1, as modified by section 441(3). As provided in section 441(3)(a), they may not lodge a claim for an independence allowance under Schedule 1; they may, however, apply for the modified independence allowance using the form in these regulations.” ARCI Act 1992 [11] Section 54(2) and (5) of the Accident Rehabilitation and Compensation Insurance Act 1992 (the ARCI Act) as originally enacted stated: “54. Independence allowance … (2) Any entitlement to the independence allowance shall commence not earlier than 13 weeks after the date on which the personal injury causing that disability was suffered. … (5) The Corporation shall not pay any independence allowance unless the assessment of the degree of disability of the person in respect of whom it is to be paid has been made in accordance with--- (a) Scales prescribed under this Act which may be based on impairment or disability or a combination of impairment and disability; or (b) In the absence of the scales referred to in paragraph (a) of this subsection, the American Medical Association Guides to the Evaluation of Permanent Impairment (Second Edition)--- and any such allowance shall be payable from the date of the assessment or the date determined under subsection (2) of this section, whichever is the later.” - 8 - [12] Section 54 was amended on 2 September 1996 and the amendment came into force on 1 July 1997. The commencement date of entitlement was provided for at section 54(7): “(7) The following provisions apply in relation to payment of an independence allowance: (a) Except where section 54A(5) of this Act applies on the reassessment of a person’s whole-person impairment, the date on and from which the independence allowance is payable is the date on which the person to whom it is payable lodged a claim for cover in respect of the personal injury from which the impairment results:” Legal Principles [13] In Buxton v ARCIC (Wellington HC, Young J, AP 63/02, 12 July 2002) the High Court considered the application of sections 441 and 442 of the AI Act to a claimant who had received a lump sum in 1976, and first applied for an independence allowance in March 1999. Although the respondent applied for an independence allowance during the currency of the ARCI Act, ACC did not issue a decision regarding her entitlement until after the commencement of the 1998 AI Act. Young J went on to note that the appellant was also subject to section 442 as she had previously received lump sum compensation. Young J concluded: “However, s442(2) while allowing an application under Part IV Schedule 1, modifies Part 4 in two aspects. Firstly (subs (a)) provides that allowances must be calculated using the whole person impairment basis and deducting any percentage of permanent loss or impairment previously paid by lump sum. And secondly (subs (b)) (and in contrast to clause 63(b)) it provides that independence allowances are payable from the date of application for them. Mrs Buxton is clearly caught by this provision. Her independence allowance may only be backdated therefore to the date of her application in March 1999.” [14] It was the finding that there had been a previous lump sum payment and the application of section 442 that was the ratio of the decision of Young J. [15] In addition, Young J stated that the appellant was a person who came within section 441(1)(b) of the AI Act. He then noted that section 441(2) provided that she was entitled to receive an independence allowance under Part 4 of Schedule 1 of the AI Act, as modified by section 441(3) and 442. Young J found sections 441 and 442 “remarkably confusing” and their meaning “not simply ascertainable from the - 9 - words Parliament has used”. In particular Young J noted that there was difficulty reconciling the fact that a person may come within section 441(1) so that they are entitled to receive an independence allowance under Part 4 of Schedule 1 of the AI Act (section 441(2)), and yet one of the modifications provided for in section 441(3)(a) appeared to prevent them from receiving an independence allowance under Part 4 of Schedule 1. Young J noted: “[25] Subsection (3) provides that those who suffer injury before 1 July 1999 may not lodge a claim under Part 4 Schedule 1 of the new Act. This cannot mean that such persons are prohibited from obtaining some form of continuing independence allowance if otherwise eligible. Thus subsection (3)(a) is intended to give notice that those who were entitled to receive an allowance pre July 1999 but had not lodged a claim by 1 July 1999 cannot lodge a claim under Part 1 Schedule 4 [sic] of the new statute. Those who are already receiving an independence allowance at 1 July 1999 pursuant to s441(2) are entitled to have their allowance continue pursuant to Part 4 Schedule 1. Those who have applied but have not been granted an allowance (the case here) are not expressly provided for.” [16] In Davies v ACC (Decision no. 130/03) I considered whether the ACC had been correct to pay the independence allowance from the date of application for it. The appellant had had a back injury in 1991, and received a 15% lump sum for that injury. In 1994 the Appellant suffered a knee injury, and lodged a claim for cover in respect of that injury on 25 November 1994. The appellant applied for an independence allowance on 19 April 2001, and was assessed as having a 26% impairment. Independence allowance entitlement was therefore payable in respect of an 11% impairment. ACC backdated the entitlement to the date of application – 19 April 2001. [17] I referred to the High Court decision in Buxton (supra) and found that the commencement date of the appellant’s entitlement was to be determined by reference to the ARCI Act provisions. I, therefore concluded that the entitlement was to be paid from the date on which the appellant lodged his claim for cover in 1994 in accordance with the amended section 54 of the ARCI Act. I did not refer to section 442 of the AI Act, or the High Court’s comments in Buxton regarding that statutory provision. In defence of myself I did not do this because at the hearing there was no great concentration in argument upon that section, although counsel for the respondent refers to the issue in the written submissions. - 10 - The Submissions of the Appellant [18] It is the appellant’s position that its decision to pay the respondent’s independence allowance from the date that she applied for it in July 2002 is correct. [19] It is submitted that the reviewer’s decision is wrong in finding that the respondent’s independence allowance entitlement cannot be assessed under the AI Act. [20] The appellant disagrees that the respondent’s entitlement falls to be assessed under the ARCI Act provisions. The reviewer did not have regard to the Transitional Forms Regulations, and did not recognise that section 442 applied to the respondent so that her entitlement was to be paid from the date of application (Buxton). [21] It is submitted that it was not necessary for Young J to determine the scope of section 441(3)(a) as that provision did not apply to Mrs Buxton. His Honour specifically noted at paragraph 30 of the judgment that section 441(3)(a) did not apply to Mrs Buxton as her claim for an independence allowance had been made in March 1999 prior to the date when the AI Act came into force. In addition Young J went on to note that as Mrs Buxton had previously received a lump sum section 442 of the AI Act applied, and her entitlement was to be paid from the date of application (section 442(2)(b)). [22] The appellant respectfully disagrees with the High Court’s comments in Buxton that section 441(3)(a) intended to effectively preserve the ARCI Act provisions regarding independence allowance entitlement for claimants who had not applied for an independence allowance before 1 July 1999. [23] It is submitted that the Transitional Forms Regulations support the contention that independence allowance entitlement is to be considered by reference to the modified Part 4, Schedule 1 of the AI Act, rather than by reference to the ARCI Act provisions. The Transitional Forms Regulations came into force on 1 July 1999, and applied to claimants who suffered a personal injury before 1 July 1999, and who did not apply for an independence allowance before that date (regulation 2). As noted at paragraph [10] above, the explanatory note to the Regulations provided that these people received an independence allowance under Schedule 1 of the AI Act as - 11 - modified by section 441(3). Further, it indicates that section 441(3)(a) prevented such claims being made directly under Schedule 1. [24] The submission is that the explanatory note to the Transitional Forms Regulations clarifies the intention that the effect of section 441(3)(a) was to qualify what would otherwise be an application for a Part 4 assessment. Therefore, it is submitted that the Regulations, including the explanatory note, show that independence allowance was to be determined under the AI Act, rather than the ARCI Act. [25] It is acknowledged that these Regulations were revoked from 1 April 2002 when the IPRC Act came into force. However, it is submitted that as sections 441 and 442 of the AI Act have been preserved unamended by section 377 of the IPRC Act, these Regulations are still of some assistance when considering the meaning of section 441(3)(a). [26] It seems from the decision in Buxton that the existence of the Transitional Forms Regulations and the relevance of the explanatory note to the interpretation of sections 441 and 442 was not put before the Court. Davies followed the decision in Buxton, however, it is respectfully submitted that the Davies decision was wrongly decided by myself. By adopting the High Court’s reasoning in Buxton, and finding that as the claimant had not applied for an independence allowance before 1 July 1999, section 441(3)(a) meant that his claim for independence allowance had to be considered under the ARCI Act. [27] However, in any event, the decision in Davies does not address the implications of Mr Davies having previously received lump sum compensation. It is submitted that as Mr Davies had received lump sum compensation, like Mrs Buxton, he came within section 442(2)(b) of the AI Act which provides that the independence allowance is payable from the date of application. [28] Section 442(1) specifically states that subsection (2) of that section applies to a person who has received lump sum compensation under the previous Acts. Section 442(2) then provides that “such a person” (ie. a person who has previously received a lump sum) may apply under section 441 for an independence allowance under Part 4 of Schedule 1. However, section 442(2) modifies Part 4 in paragraphs (a) and (b) - 12 - by providing for the deduction of lump sum, and modifying the commencement date for payment of the independence allowance. [29] It is therefore submitted that, in line with Buxton, section 442 applies to Mr Davies, and his entitlement was payable from the date of application. [30] It is submitted that the respondent is a person who comes within section 441(1)(c) as she suffered a personal injury before 1 July 1999 (the date of injury for the sensitive claim is 18 November 1992), but she did not claim for an independence allowance before 1 July 1999. Therefore, she is entitled to receive an independence allowance under Part 4 of Schedule 1 as modified by subsection (3) and section 442(2) (section 441(2)). It is submitted that section 441(3)(a) does not prevent the respondent from receiving an independence allowance under Part 4 of Schedule 1. Rather the respondent is unable to claim an independence allowance entitlement directly under Schedule 1, and Part 4 of the Schedule is modified so that the combined whole person assessment is preserved (see also section 441(3)(c)). Accordingly, it is submitted that the appellant was correct to assess both of the respondent’s injuries when considering her independence allowance entitlement. [31] Furthermore, it is submitted that section 442(1) of the AI Act applies to the respondent, as she has previously received a lump sum for her back injury. Section 442(2) then applies which reaffirms the respondent’s entitlement under Part 4, Schedule 1 of the AI Act, and requires the deduction of previous lump sum compensation, and provides that the independence allowance is payable from the date of application for it. It is submitted that the modification in section 442(2)(b) regarding the commencement of payment of the independence allowance overrides the general provision in clause 63(b) regarding payment. [32] As the respondent is a person to whom section 442(2) applies, it is submitted that the appellant was correct to pay the respondent's independence allowance from the date of application rather than the date on which the respondent lodged her sensitive claim. - 13 - Decision [33] I appreciate that the respondent was unrepresented and that she was unable to deal with the technical issues that are involved here. I have endeavoured to examine the submissions of the appellant as critically as I can. However, I have come to the conclusion that I incorrectly decided Davies as I did not apply the provisions of section 442 of the Accident Insurance Act 1998. I accept the submissions of the appellant on this issue. In addition, I follow the reasoning of Young J as to the applicability of the provisions of section 442, where a previous lump sum payment had been made. Young J went on to note that the appellant was also subject to section 442 as she had previously received lump sum compensation. Young J concluded: “[39] However, s442(2) while allowing an application under Part IV Schedule 1, modifies Part 4 in two aspects. Firstly (subs (a)) provides that allowances must be calculated using the whole person impairment basis and deducting any percentage of permanent loss or impairment previously paid by lump sum. [40] And secondly (subs (b)) (and in contrast to clause 63(b)) it provides that independence allowances are payable from the date of application for them. Mrs Buxton is clearly caught by this provision. Her independence allowance may only be backdated therefore to the date of her application in March 1999.” [34] In respect to the detailed submissions concerning the interpretation of section 441 I wish to record that the submissions as put were different than I encountered in Davies. In particular I did not have the benefit of considering the provisions of the Transitional Forms Regulations. Nor was I referred to the general rule that regulations may in certain circumstances be considered as an aid to the interpretation of a statute. However, those circumstances are limited. The general rule is that the regulations must be contemporaneous with the statute concerned, and the provisions of the statute must be ambiguous, (Interfreight Ltd v Police [1997] 3 NZLR 688, 692 (CA)). [35] Before leaving this case I would like to acknowledge the review officer in following my decision in Davies and following the obiter dictum of Young J in Buxton, it certainly was the correct course then to take. I, also, sympathise with the respondent, whose expectations may have been fuelled as a result of my earlier decision. However, I am of the view that my earlier decision was incorrect. For the - 14 - reasons that I have given I would allow the appeal and quash the review decision. There will be no order as to cost. [36] The appellant’s primary decision is confirmed. DATED at WELLINGTON this ….9th …. day of ………March…..…. 2004 (J. Cadenhead) District Court Judge