Wood v Accident Rehabilitation and Compensation Insurance Corporation

Dec NO 5/93 IN THE DISTRICT COURT DCA 2/93 HELD AT WELLINGTON BETWEEN B.J. WOOD APPELLANT 45 /93 / 0094 AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION RESPONDENT Date of Hearing: 21 September 1993 Place of Hearing: District Court, Auckland Date of Decision: 19 November 1993 Counsel: The appellant in person Mr A. Blair for the respondent RESERVED DECISION OF JUDGE J. W. IMRIE I consider that Mr Wood is entitled to reimbursement of the costs of electrolysis up to 31 December 1992. Introduction: This is an appeal by Mr Wood against the decision of a review officer given on 22 December 1992. Mr Wood suffered extensive injuries in a motor vehicle accident on 30 April 1988. One of his injuries left major scarring about his left eye. Private 2. hospital plastic surgery was undertaken on 12 January 1989. That included extensive scar excision and skin grafting and the costs were met by the respondent. Further plastic surgery took place on 8 August 1989 and that too was paid for by the respondent. The operating surgeon indicated in May 1990 that further surgery would be required. A further request for approval of private hospital treatment was received by the respondent on 17 August 1992. The request for private surgery costs was declined by the respondent in terms of the governing regulations. On 22 September 1992 Mr Wood sought reimbursement for the cost of hair transplanting to have his left eye brow reconstructed, and also the costs for electrolysis to remove unwanted hair from his facial skin grafts. In a letter dated 9 October 1992 the Corporation declined to contribute towards those costs stating:- "Under the new ... Act, there is no provision to consider the above treatment. ..." At the hearing on 21 September 1993 Mr Wood advised me that the Corporation has approved payment for the hair transplant and I do not have to deal with that. I have to deal with only the request relating to the electrolysis. Since the Corporation's letter dated 9 October 1992 Mr Wood has' continued to receive electrolysis treatment and has claimed for a number of further visits over and above the initial $78. At the hearing on 21 September 1993 he advised me that the visits cost $24 for every fifteen minutes. The treatment is on-going. He has made about 30 visits. It will reach a point 3. where the hair will die and no further treatment will be required. He anticipates that will be in about six months, that is after about six more visits. Original Decision: The decision of the Corporation which was reviewed is contained in the letter dated 9 October 1992 from the Corporation to Mr Wood. It reads:- "Re: (i) Electrolysis - $78. (ii) Hair transplanting - $787. Under the new Accident Rehabilitation and Compensation Insurance Corporation Act, there is no provision to consider the above treatment. If you wish to discuss this decision please contact me. As outlined in the attached pamphlet you are entitled to apply for this decision to be reviewed." Review decision: Much of the decision under review relates to the claim for reimbursement for the hair transplant operation, which I do not have to consider. In respect of the electrolysis the decision reads:- "As to the reimbursement of electrolysis, I said at the hearing that under the new 1992 Act, the Corporation did not have the discretion that it had under for example Section 80 of the 1982 4. Act to meet actual and reasonable expenses resulting from the injury. I pointed out that strictly speaking these were non- medical expenses and so that this sort of provision was required to enable the Corporation to consider payment. As to the electrolysis (for which Mr Wood left with me further receipts) I note that Section 135(4) of the 1992 Act provides that, for persons in Mr Wood's position, the continued entitlement of the person to rehabilitation, compensation, grants, and allowances shall be determined under the 1982 Act, but subject to the transitional provisions generally of the 1992 Act. S.149 of the 1992 Act (one of the transitional provisions) states that where any person was receiving or entitled to receive any compensation under Section 80 of the 1982 Act immediately before 1 July 1992, that Section shall continue to apply to 31 December 1992. It may be open for me to consider reimbursement of the electrolysis costs under this provision; but in any event I do not think that they would have been or are covered by Section 80(1) of the 1982 Act, which is for actual and reasonable expenses necessarily and directly resulting from the injury. It is not a catchall Section in the 1982 Act, and these expenses flow indirectly rather than directly from the injury itself. The 1992 Act itself contains no provision that would allow reimbursement that I am aware of. Accordingly the application for review is successful to the extent that Dr Wislang's (GP) costs be contributed to, but that the electrolysis be not contributed to." 5 . Hearing 21 September 1993: In support of his appeal Mr Wood said that s.80 of the 1982 Act provides for payment and his accident occurred before the new Act came into force. He was not sure about the provisions of the new Act. On behalf of the Corporation Mr Blair made submissions to the following effect:- 1. Part VIII of the 1992 contains the transitional provisions. 2. Section 135 of the 1992 Act deals with the relationship of the 1992 Act and the 1972 and 1982 Acts. The following subsections of s. 135 are relevant to this claim:- "135. Relationship of this Act and former Acts - (1) Any person who has had a claim accepted for personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982 suffered before the Ist day of July 1992 shall be deemed to have suffered personal injury that is covered by this Act. (2) Nothing in subsection (1) of this section shall apply if it is subsequently determined that the person had not suffered personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982. (3) Any person who has suffered personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982 before the Ist day of July 1992 and who has lodged a claim with the Corporation in respect of that personal injury by accident before the Ist day of 6. October 1992, shall have the acceptability of the claim determined under the Accident Compensation Act 1982 as if it had not been repealed. (4) Where subsection (3) of this section applies, the continued entitlement of the person to rehabilitation, compensation, grants, and allowances shall be determined under those Acts, as appropriate, but subject to this Part of this Act." 3. Section 149 of the 1992 Act deals with compensation for pecuniary loss not related to earnings and s. 149 is the provision in the 1992 Act that covers Mr Wood's claim for the costs of the electrolysis. Subsection (1) reads:- "149. Compensation for pecuniary loss not related to earnings - (1) Where any person was receiving or entitled to receive any compensation under section 121 of the Accident Compensation Act 1972 or section 77 or section 80 of the Accident Compensation Act 1982 immediately before the Ist day of July 1992, that section shall continue to apply to payments in respect of that person until the 31st day of December 1992 as if those sections had not been repealed." 4. Section 80(1) of the 1982 Act provides that the Corporation may pay to a claimant "compensation of such amount (if any) as it thinks fit for actual and reasonable expenses and proved losses necessarily and directly resulting from the injury ...". It is established by the cases that the words "necessarily and directly resulting from the injury" are to be interpreted strictly - see ACC v Nelson [1979] 2 NZLR 464. Mr Blair referred to Dixon (ACAA decision No. 343/91), Maddock (ACAA decision No. 233/91) and Jones (ACAA decision No. 66/92) as 7 . examples of decisions in which the interpretation in Nelson's case of the 1972 equivalent of s.80(1) was applied. 5. In terms of s.149 of the new Act the appellant's claim can be considered pursuant to s.80 of the 1982 Act only if he was receiving or entitled to receive compensation for those costs before 1 July 1992. He submitted that the appellant was not entitled to receive compensation for those costs at that date as his application for those costs was not made and the electrolysis did not take place until after that date. Accordingly he submitted that the appellant's application must be viewed in terms of the 1992 Act. 6. There is no provision in the 1992 Act similar to s.80 in the 1982 Act. Costs of social rehabilitation and treatment and physical rehabilitation are payable only pursuant to ss.26 and 27 to the extent required or permitted by regulations made under the Act. Costs of electrolysis are not required or permitted to be paid under any of the existing regulations. In reply to these submissions Mr Wood submitted:- 1. The costs do fall within s.80 because they follow "necessarily and directly resulting from the injury ...". 2. He is entitled to compensation because the need for the treatment was there before 1 July 1992 even if he had not had the treatment done or claimed for it. 8. Nature of electrolysis treatment: It is appropriate at this point to set out the identity of and the nature of the electrolysis treatment as far as possible. From the Corporation's file and the record of the hearing on 11 December 1992 of the application for review it appears that:- 1. The first plastic surgery was carried out in a private hospital in Hamilton. A skin graft was carried out by Mr Beehan, a registered medical practitioner, and that left unwanted hair on Mr Wood's face. 2. When Mr Wood moved to Auckland he contacted Mr Flint, a registered medical practitioner, in Auckland. 3. Mr Flint referred him to Dr Wislang, a registered medical practitioner, to have the hair transplant operations done. 4. Mr Flint told Mr Wood that the unwanted hair could be removed at the time of the hair transplant surgery or Mr Wood could have the unwanted hair treated by electrolysis. 5. Mr Wood decided to have the unwanted hair treated by electrolysis because it was not then decided when the operation would be carried. out and Mr Wood was keen to get it all tidied up. 6. The electrolysis has been carried out at the About Face Beauty Shoppe in Henderson. It is not carried out by a registered medical practitioner but by a person whom I understand is a member of the New Zealand Electrolysis Association. 9 It follows from this consideration that although the costs of the electrolysis treatment would come within the word "expenses" in s.80(1) of the 1982 Act, they would not come within regulations under the 1992 Act dealing with costs such as general medical practitioner costs or the costs of registered specialist medical practitioners. Consideration of s.80 of the 1982 Act: Section 80(1) of the 1982 Act reads:- "Where a person suffers personal injury by accident in respect of which he has cover or where a person dies as a result of personal injury so suffered, the Corporation having regard to any other compensation payable and any rehabilitation assistance provided or to be provided, may, under this subsection, pay to him, or in the event of his death to his administrator, compensation of such amount (if any) as it thinks fit for actual and reasonable expenses and proved losses necessarily and directly resulting from the injury or death, ..." The meaning of the phrase "necessarily and directly resulting from the injury" in s.80 was considered by the Court of Appeal in the Nelson case in relation to the same phrase in s.121(1) of the 1972 Act. The majority judgment makes the following statement (at p. 467):- "... proved losses fall within s 121(1), as a head of claim distinct from actual and reasonable expenses, provided of course that they meet the strict criteria. Read as a whole the subsection is plainly concerned to impose what counsel for the respondent called a stern test. It is a more stringent test than has ever prevailed as to remoteness of damage at common law in either 10. tort or contract. Directness of causation is not enough. As well the loss must necessarily result from the injury." The same judgment (on the same page) states this about the word "directly":- "While there are dangers in purporting to interpret statutory words by substituting others which Parliament did not select, one of the leading indications of the meaning of 'direct' in the context of causation is Scrutton LJ's statement in Re Polemis [1921] 3 KB 560, 577, '... damage ... in fact directly traceable to the ... act, and not due to the operation of independent causes having no connection with the ... act, except that they could not avoid its results'. Davison CJ cited and applied those words in the judgment under appeal. Another passage which we think helpful is in the judgment of Megaw LK in R v Criminal Injuries Compensation Board [1973] 3 All ER 808, 815-816; [1973] 1 WLR 1334, 1344-1345, where a police officer had been killed in a collision when driving through red lights on his way to a place where he believed a crime to be imminent. The question was whether his injury was 'directly attributable to ... the attempted prevention of an offence'. The Lord Justice said: 'In this case the police officer drove carelessly. He drove in a way, the board found, which disregarded his own safety and the safety of other road users. But that does not necessarily conclude the question of causation. The carelessness may certainly be properly regarded as a cause of his death. But it by no means follows that it was the only relevant cause. The carelessness itself may have been caused by the attempted prevention of an offence. If so, it certainly does not follow that the attempted prevention of an offence has necessarily to be excluded as a relevant cause of the death. Thus, the cause of death may in one sense quite properly be described as, for example, a fractured skull. But in seeking to ascertain direct attributability for the purpose of this scheme it 11. would be nonsense to stop there. Why was his skull fractured? The cause was that he was thrown from a car. Again, it would be nonsense to stop there. Why was he thrown from the car? Because of a collision. What caused the collision? The driver's carelessness. But it is not necessarily right to stop there. Why was he driving carelessly? It is a question on the facts of each case, governed always by common sense, how far back one goes in following the chain or how wide one goes in tracing outwards along the net, in seeking to ascertain whether any particular act or event or state of affairs - here the attempted prevention of an offence - was a cause of the injury and death. I think it is for the board to consider and decide the question of direct attributability on the facts of this case on the basis which this court has set out. '" I am satisfied that the electrolysis costs are losses "directly resulting from the injury" within the meaning of those words in s.80(1). The costs are directly attributable to the injury following the chain of causation back to the injury. That is a question to be decided on the facts of each case, governed always by common sense. It is not necessary to set out for the purposes of this decision the chain of causation in any more detail than I have set out in the introduction to this decision. I am also satisfied that the costs are "losses necessarily ... resulting from the injury ...". In the majority decision in Nelson's case the Court said. at p.467:- "As for 'necessarily', in the context of causation the nearest equivalents are 'inevitably' or 'unavoidabl 12. If it is appropriate to insert an equivalent for "necessarily", I am satisfied that the electrolysis costs inevitably or unavoidable follow from the injury. Once again it is not necessary to set out in detail the chain of inevitability. It is not necessary for me to distinguish other cases referred to by Mr Blair because, of course, each case turns on its own facts. However, when considering the Nelson decision it is important to keep in mind two aspects. The first is the nature of the loss claimed in that case. As a result of the claimant's permanent partial incapacity the company in which the claimant and his wife were the sole shareholders had to cease its landscape gardening operations and lost all its goodwill. This aspect clearly caused Woodhouse J concern. In his minority judgment he said (at p.471):- "Yet being denied in express terms compensation for any part of lost dividends from his investment in the company he has claimed in effect a total indemnity for the loss in capital value of the investment itself. If that claim is justified it is not difficult to see that similar successful claims by a shareholder- employee may produce immediate capital payments of compensation which could far exceed the value of periodic earnings related compensation and any non pecuniary compensation available under ss 119 and 120 as well. In the context of a statutory scheme with primary emphasis upon lost income it would be strange indeed if s 121(1) were intended to produce that kind of result." On the facts of that case it is not surprising that he later said:- 'There can be no doubt in my opinion that the subsection is deliberately framed in this way to prevent the reimbursement to persons of capital sums (large or small) as compensation for some essentially collateral misfortune in terms of causation and 13. yet one which may appear to have been associated with an injury or death." That is a long way from saying that in this case the costs of electrolysis to remove unwanted hair following plastic surgery for facial injuries suffered in an accident do not arise necessarily and directly from the injury resulting from the motor accident. The second aspect of the Nelson case to keep in mind is that it concerned a claim for "proved losses" rather than "actual and reasonable expenses". The claim I am concerned with relates to actual and reasonable expenses. Clearly the minority judgment would not have contained the statement last quoted above if the Court had been dealing with a claim for actual and reasonable expenses. Although my conclusion on s.80 differs from the original decision and the decision under review it will be seen the original decision in the letter dated 9 October 1992 does not refer to the 1982 Act, and the review decision gives no basis for the conclusion that "these expenses flow indirectly rather than directly from the injury itself. " Consideration of s.149 of the 1992 Act: Subsection (1) of s. 149 of the 1992 Act reads (as far as relevant):- "(1) Where any person was receiving or entitled to receive any compensation under . .. section 80 of the Accident Compensation Act 1982 immediately before the Ist day of July 1992, that section shall continue to apply to payments in respect 14. of that person until the 31st day of December 1992 as if those sections had not been repealed." There are three phrases to be considered. The first phrase is whether Mr Wood "was ... entitled to receive compensation under ..." s.80 of the 1982 Act. In respect of this phrase there are two points:- 1. I consider that he was "entitled" although the use of the word "may" in s.80 appears to give a discretion to the Corporation as to payment. 2. I consider that "actual and reasonable expenses" under s.80 came within "compensation" in s. 149. The second phrase to consider is "immediately before 1 July 1992". This phrase relates to the entitlement so that the fact that the expenses were not incurred before that date does not mean they are not payable. The third phrase to consider in s. 149(1) is that s.80 "shall continue to apply to payments in respect of that person until the 31st day of December 1992" as if s.80 had not been repealed. I do not consider that those words mean that s.80(1) applies only to payments actually made prior to 31 . December 1992. Rather the phrase means that s.80(1) remains in force for payments by the Corporation for expenses incurred before 31 December 1992. 15. The result is that Mr Wood is entitled under s. 149 to be reimbursed for the costs of any electrolysis treatments carried out before 31 December 1992. Claim for payments since 31 December 1992: Section 26 of the 1992 Act deals with social rehabilitation. Section 27 of the 1992 Act deals with treatment and physical rehabilitation. I consider that Mr Wood's claim for the costs of the electrolysis falls within s.27. Subsection (1) of s.27 reads:- "27. Treatment and physical rehabilitation - (1) Where a person requires any treatment, service, physical rehabilitation, related transport, or certificate in respect of that person's personal injury that is covered by this Act, the Corporation shall contribute to the cost of that treatment, service, physical rehabilitation, transport, or certificate, to the extent required or permitted by regulations made under this Act." For the Corporation Mr Blair has submitted that the costs of electrolysis do not come within any of the existing regulations. Mr Wood was not able to refer me to any regulation covering the costs of electrolysis. There would have to be either a regulation specifically allowing reimbursement of the costs of electrolysis or a general regulation allowing reimbursement of expenses such as s.80(1) of the 1982 Act. I am not aware. of any such regulation. Clearly this is a matter of policy for the legislature. Accordingly there is no provision for reimbursing Mr Wood for the costs of electrolysis after 31 December 1992. 16. Conclusion: Mr Wood is entitled to reimbursement for the costs of electrolysis up to 31 December 1992 but not for the costs of treatment since then. (J.W. Imrie DCJ)