FARRELLY v ACCIDENT COMPENSATION CORPORATION [2016] NZHC 3153

FARRELLY v ACCIDENT COMPENSATION CORPORATION [2016] NZHC 3153 [20 December 2016]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2015-485-985[2016] NZHC 3153UNDER the Accident Compensation Act 2001IN THE MATTER OF an application for special leave to appealto the High Court pursuant to s 162 of theActBETWEEN DEREK LAWRENCE FARRELLYApplicantAND ACCIDENT COMPENSATIONCORPORATIONRespondentHearing: 2 December 2016Counsel: J P Temm for applicantF L Becroft for respondentJudgment: 20 December 2016RESERVED JUDGMENT OF DOBSON J[1] On 20 December 2013, Judge Ongley dismissed an appeal brought by Mr Farrelly (the applicant) in the Wellington District Court against the decision of the Accident Compensation Corporation (the Corporation) to decline his claim for backdated weekly compensation from 2003 to 2007.1 The applicant applied for leave to appeal against that decision, and his application was declined by Judge Henare in a decision dated 13 November 2015.2[2] The applicant then applied to the High Court for special leave to appeal against the District Court decision, pursuant to s 162(3) of the Accident Compensation Act 2001 (the Act). Counsel cited slightly different formulations of1 Farrelly v Accident Compensation Corporation [2013] NZACC 420.2 Farrelly v Accident Compensation Corporation [2015] NZACC 344.the principles that apply to the determination of an application for special leave. They are substantially the same:(a) The purpose of requiring leave is to ensure the sensible allocation of scarce judicial time. The issue must be of sufficient importance to outweigh the cost and delay of a further appeal. Leave ought not to be granted as a matter of course.(b) It is normally necessary to show either that there is an issue of principle at stake and that there is a reasonable prospect of success (or that the question is capable of bona fide argument). Given that leave has been refused by the District Court, there will normally need to be some extraordinary factor that has not been properly taken into account.(c) Granting leave must be in the interests of justice.3Background[3] In 2003 the applicant was a self-employed forensic accountant and insolvency practitioner. He suffered a back injury during October that year, when he was hit by a chairlift at Turoa ski field. The applicant was immobilised for a short time but thereafter returned to work.[4] The applicant had cover for the injury from 2003 but did not claim weekly compensation for incapacity. In July 2007, he suffered a further injury, was certified as being incapacitated and started to receive weekly compensation. The applicant then claimed he had in fact been incapacitated since 2003, with the effect that his weekly compensation entitlement should be calculated on the basis of his earnings prior to 2003 and that he should receive backdated weekly compensation for the years between October 2003 and July 2007.[5] After investigation, the applicant was denied the claim for backdated compensation on the basis that there was insufficient evidence that he was3 Kenyon v Accident Compensation Corporation [2002] NZAR 385 at [15].incapacitated during the period between 2003 and 2007. In March 2011 the applicant sought a review of the decision. The review hearing commenced on 17 October 2011. There, the applicant gave evidence that he did not continue his insolvency practice after his accident in 2003.[6] The review hearing was then reconvened on 30 November 2011 to allow the parties an opportunity to address further evidence that had been filed for the Corporation. The evidence comprised documents found by a Google search, which suggested that the applicant had continued to work in his insolvency business since 2003. At the reconvened hearing the applicant explained that any work post-2003 was in the nature of winding up the business.[7] On 10 December 2011, the review decision was released, dismissing the application for review. The reviewer was not satisfied that the applicant was continuously incapacitated for the relevant period.District Court decision[8] Judge Ongley considered the applicant's appeal, commenting that thequestion of whether he was incapacitated was made more difficult because he did not apply for weekly compensation after the accident, his general practitioner did not provide certificates, and because he continued to work to some extent.[9] The applicant presented his earnings over the years from 2003 to the Court, with explanations for the decrease in income. The Judge noted that the figures were consistent with the applicant having engaged contractual staff to help finish his remaining files in 2003 to 2005, and thereafter conducting a more limited practice.[10] However, the Judge also found that the figures themselves did not prove incapacity; they were consistent with a loss of business, possibly caused by otherreasons. The Judge quoted from the applicant's evidence at the review hearing,where he explained that he did not apply for assistance from the Corporation because he had heard bad reports from friends about the system. He also expressed disappointment at the low rate of weekly compensation that he was assessed as beingentitled to. The applicant also disclosed a "less than forthright habit of disclosure ofhis income, casting some doubt on his veracity". The Judge considered this highlighted the importance of objective evidence in assessing a retrospective claim.The Judge also noted it was possible that the applicant's belief may have beeninfluenced by pain levels and that his belief of incapacity might not have correlated with his medical situation at the time.[11] Judge Ongley found that, if the applicant's evidence was to be accepted asreliable on the medical question, his claim would succeed. However, the case lacked reasonably persuasive medical evidence. The Judge made the following findings:4(a) The onus of showing incapacity lies with a claimant, subject toACC's obligation to make proper enquiries. In this retrospective claim, the circumstances clearly require the claimant to provide the evidence of his past incapacity.(b) Incapacity is a precise concept. It requires evidence of the physical and mental demands of pre-injury employment and evidence of the nature and consequences of the injury, in sufficient detail to reach a conclusion whether the claimant could continue that employment. Determination of incapacity also requires reasonably precise dates in order to align a finding of incapacity with pre-injury employment tasks and earnings at the date of incapacity. Those fairly precise findings have to be identified in relation to a contemporaneous application for weekly compensation. A retrospective claim cannot be treated as requiring less evidence than a contemporaneous claim(c) Incapacity was far from self-evident from the nature of the appellant's injury. It was a spinal injury with no radicular features but with mechanical back pain. Apart from the acute period of incapacity immediately following the injury, it cannot be said that the injury was probably one that caused incapacity. It was the kind of injury that, more often than not, allows a return to the kind of sedentary work in which the appellant was engaged.(d) There is no evidence of the effect of pain and loss of concentration with regard to the specifics of the appellant's insolvency practice. He was able to delegate a certain amount of work and he continued to accept work. He appears to have been able to administer his practice at least to some degree, leaving a difficult question concerning the point at which he was not capable of carrying the burden of the practice as he had before.(e) The earnings figures are not self-explanatory. They show a decline in insolvency management income but at the same time it appears that the appellant maintained some level of insolvency practice while he spent more time administering rental and property development. His income was from mixed sources and the rental income generally4 Farrelly v Accident Compensation Corporation, above n 1, at [70].reflected a tax loss. It is not clear whether he diversified because of actual incapacity for insolvency administration, or because of mixed reasons. For example, the effects of his back injury may have made his insolvency practice more difficult thereby providing an incentive to focus more on property development.(f) While the appellant attended his GP, osteopaths and his psychologist over the relevant period, no record was made of his inability to continue his insolvency practice by reason of pain and inability to concentrate. Opinions of incapacity made after the event have less weight than contemporaneous records.(g) The appellant was a businessman who paid ACC levies and could be assumed to have been generally aware of income support from ACC. If he had been unable to continue working it is difficult to understand why he did not claim weekly compensation. A possible reason is that he was able to diversify satisfactorily. Although he may not have been aware of the legal test for incapacity, his failure to claim weekly compensation at a relevant time is [an] important factor when considering the evidence of incapacity.[12] The applicant also submitted in the District Court that there had been no jurisdiction to resume the review hearing for the purpose of considering evidence from the Corporation. The Corporation submitted the question was moot because the appeal was by way of rehearing. For the applicant, it was submitted that this approach would give no meaning to the requirement in s 144(1) of the Act that the reviewer make a decision within 28 days.[13] Judge Ongley did not accept that s 144(1) was relevant: the Act does not prescribe any consequence of a delay and the reviewer correctly interpreted his general powers under the Act. The Judge found that there is no formality in the Act defining the point at which a review hearing is closed and, although there is no express power to adjourn a hearing, it is done frequently under the general power to conduct a hearing as the reviewer thinks fit.[14] The Judge referred to the Court of Appeal's decision in O'Neill v ACC.5There, the Court considered that splitting a hearing to deal with a preliminary pointwas within the reviewer's jurisdiction. It was important that the reviewer be able toadapt the procedure to the particular circumstances, subject to natural justice considerations and the obligation to conduct a hearing in an informal, timely and practical manner.5 O'Neill v ACC [2012] NZCA 219.Grounds on which special leave were sought[15] Of the four grounds on which special leave was sought, the second, third and fourth are process related. Mr Temm's submissions expressed these in the following terms:Second ground –Was the District Court correct in concluding that there is no statutory consequence under the Act where a Reviewer does not issue a decision within 28 days of the date that the hearing of the review is closed.Third Ground –Was the District Court correct in holding that a resumed Review Hearing is a valid extension of the informal process under the Act and, as such, was consistent with the Court of Appeal decision in O'Neill v ACC [2012] NZCA 219.Fourth Ground –Was the District Court correct in concluding that once a reviewer had closed a hearing the reviewer was entitled to reopen that hearing and receive further evidence.[16] Whether or not there is a question of law capable of bona fide and serious argument, they do not raise issues of sufficient importance to outweigh the cost and delay of further appeal.[17] As to the second ground, the District Court is alleged to have erred in finding that there was no statutory consequence if a reviewer does not issue a decision within 28 days of the date that the hearing of the review is closed. This questionrequires a definition of when the hearing of the review is "closed" and is therebydependent on the later grounds. Irrespective of the answers to those grounds, the Judge was correct to observe on this narrow point that the statute provides no sanction for a delay in the delivery of a review decision.[18] As to the third ground, the applicant criticised the District Court for approving the conduct of the reviewer in re-opening the review hearing after the reviewer and the parties had implicitly treated it as closed.[19] There is no statutory provision formalising the point at which the review hearing is to be treated as closed. In the absence of a specific provision, the general informality and entitlement of reviewers to conduct themselves independently of the Corporation and abiding by rules of natural justice and fair process certainly do not require a reviewer to deny him or herself the entitlement to re-open a hearing where circumstances justify that.[20] It is to be hoped that such occasions will be relatively rare, but the present is an example of cases in which it might well lead to an unjust result if a party to the review is precluded from raising new relevant material. The applicant for review is not prejudiced by any delay because any success before the reviewer would include the entitlement to have compensation on a backdated basis.[21] This also deals with the fourth ground.[22] As to the materiality of these issues, an unsuccessful applicant for review has a right to pursue an appeal to the District Court which is by way of a re-hearing. It is open to the parties to call evidence in the District Court that was not before the reviewer. Accordingly, there is no prejudice from the reviewer re-opening the hearing so as to be as fully informed as is appropriate before reaching his or her decision. Such evidence may be relevant to the outcome, and would be before the District Court in any event. If the reviewer takes it into account, it may avoid the need for an appeal.[23] Accordingly, a grant of special leave on these three questions is not justified.[24] The issue of substance raised by the first ground goes to the test applied by the District Court in assessing whether Mr Farrelly was incapacitated in the period between the injury in 2003 and the further injury in 2007. As argued by Mr Temm at the hearing, the essence of this ground was whether the District Court Judge wascorrect to exclude the applicant's own evidence on the existence of incapacity, in deciding whether incapacity could be made out so as to qualify for weekly compensation.[25] This is an issue of more general application, and I heard argument on it from both counsel, having given a provisional indication that I was minded to grant leave for it to be argued. I consider it appropriate to grant leave.Can an applicant's own evidence be relevant in determining incapacity?[26] The question of law as posed in Mr Temm's argument is perhaps bestexpressed in the following terms:Did the Judge err by considering as a matter of law that he wasobliged to ignore the applicant's own evidence of incapacity?[27] The test to be applied is in s 103(2) of the Act, which provides:103 Corporation to determine incapacity of claimant who, at time of personal injury, was earner or on unpaid parental leave(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.[28] The applicant's own explanation for his predicament was that he wasincapacitated by the 2003 accident to an extent that prevented him conducting his insolvency practice as he had before the accident. Initially, there was a restriction on his bodily movement and thereafter he suffered chronic pain to an extent that prevented him applying himself to the mental tasks involved. The Judgeacknowledged that if the applicant's own evidence were to be determinative, then the claim would have been made out:6If the appellant's own evidence were to be accepted as being reliable on themedical question, his claim would succeed.[29] In the Judge's earlier factual review of the evidence of the applicant's incomethrough the relevant period, the Judge had made the statement:76 Farrelly v Accident Compensation Corporation, above n 1, at [70].7 At [29].In considering objective evidence of incapacity, the appellant's personalaffirmation of incapacity has to be put to one side.[30] Mr Temm argued that the Judge's reasoning constituted a positive rejection ofthe applicant's evidence, and that such an approach was wrong. On Mr Temm'sanalysis, if the absence of contemporaneous medical evidence confirming an incapacitating injury or condition was explicable, then the Corporation ought to consider an applicant's own evidence in support of his or her claim. If such evidencemade out the incapacity when thoroughly tested, then the Corporation ought to accept the claim. It was wrong to reject a claim solely for want of contemporaneous evidence from health professionals confirming the diagnosis that made out the requisite incapacity.[31] Mr Temm described in some detail the circumstances in which the applicant now feels extremely frustrated by the sequence of events that, on his view, unfairly prevent him establishing that he had a disqualifying incapacity between 2003 and2007. On the applicant's own view of his medical condition, he was sufferingchronic pain syndrome (CPS) from the time the physical loss of movement suffered by the 2003 accident wore off, or very shortly thereafter. Because he hoped to remain independent and able to cope, he took the view that it was a condition he had to live with, that medical professionals were unlikely to be able to help, and he was therefore reluctant to trouble his general practitioner or medical specialists. The consequence is that the applicant does not have any contemporaneous medical assessment confirming that he was suffering from CPS throughout the period for which he now seeks backdated earnings-related compensation.[32] The applicant questions why corroboration of a non-physical condition isrequired when, in any event, medical practitioners' assessments would inevitablydepend on his description of the symptoms he was suffering.[33] Further, Mr Temm argued that the various medical reports were sufficient tocorroborate the applicant's own claim to have suffered CPS throughout the relevantperiod. He cited the report of Judith White, a registered psychologist, prepared in December 2008. That confirmed that the applicant had first consulted her in November 2002 when he had been referred for anxiety and depression. She notedhis symptoms as being severe panic attacks, claustrophobia and agoraphobia, which it was suggested might be linked to his very stressful occupation as a liquidator and insolvency practitioner. Her December 2008 review included the observation that:Over recent years, [the applicant] has become increasingly disabled by severe back pain as a consequence of damage caused by an accident in October 2003. The consultant musculo-skeletal surgeon, at this time, recognised secondary chronic pain syndrome.[34] In a further report written for the Corporation in August 2011, Ms White opined that the October 2003 injury had led to a valid diagnosis of CPS which wasnot under the applicant's voluntary control, and that it had impacted negatively onhis physical condition and also the psychotherapeutic work that she had originally undertaken to do in 2002.[35] The Corporation directed the applicant to see Dr Ian Wallbridge, a musculo- skeletal pain physician, in September 2008. The medical history noted in Dr Wallbridge's report was that the applicant had progressively worked less over thelast five years as he had attempted to manage his increasing pain. As to non-accident related psycho-social problems, Dr Wallbridge commented:There have been a series of complex psycho-social stressors, These havea bearing on the development of chronic pain states, but I do not believe they explain all of his symptoms. He was coping well in a business situation for many years with these past issues, and it was only since the musculo-skeletal injury that his migraines, muscle aches, sleep changes, other bodily symptoms have become intolerable for him.[36] In a later letter addressed to the advocate then assisting the applicant with his claim to the Corporation in July 2011, Dr Wallbridge commented that the applicant: would have been partially incapacitated for work between 2003 and 2007. I am not able to be specific as to the tasks and hours that he would have worked between 2003 and 2007.[37] In August 2010, the applicant consulted his general practitioner, Dr G F Smith, because he was distressed at the Corporation's proposal that he shouldbe seen by an orthopaedic specialist in relation to his claim to be incapacitated. The applicant was concerned that this demonstrated a misunderstanding by the Corporation as to the basis of his claim. His point was that it was not a physicalincapacity caused directly by the injury, but CPS. Dr Smith confirmed that the primary disability was CPS. That report also acknowledged that the applicant had had problems with anxiety and depression, and opined that an assessment by an orthopaedic specialist was inappropriate at that time.[38] Mr Temm argued that where the applicant had a reasonable explanation for not consulting medical practitioners at the time, but their subsequent views corroborated his own statements, then the decision on incapacity ought to have been made by weighing the totality of that evidence, and not excluding the applicant'sown description.[39] Responding for the Corporation, Ms Becroft submitted that diagnoses of CPS are by no means unusual in such claims to the Corporation. The nature of the pain as described by a claimant cannot be determinative as it is not the existence of pain per se that constitutes an incapacity. Rather, it is the impact of the pain on the capacity of the sufferer to continue in his or her work. That impact is not a matter on which lay people are competent to opine. Ms Becroft emphasised that the statutory process for assessing incapacity obliges the Corporation to consider assessments by medical practitioners. Section 102(2) is in the following terms:102 Procedure in determining incapacity under section 103 or section 105(2) In determining any such question, the Corporation—(a) must consider an assessment undertaken by a medical practitioner or nurse practitioner; and(b) may obtain any professional, technical, specialised, or other advice from any person it considers appropriate.[40] Arguably, in the absence of any medical reports from 2003 confirming that the impact of pain the applicant was suffering amounted to CPS that incapacitated him from continuing with his previous work, the mandatory obligation under s 102(2) could not be completed.[41] Ms Becroft also argued that Judge Ongley was entitled to take into account other evidence of the nature and extent to which the applicant continued with hispre-2003 accident work, in the 2003 to 2007 period to which the claim related. Income figures produced by the applicant suggested there had been a drop in activity, and also that he appeared to have retained more staff or contractors to carry out work on his behalf, but the level of activity suggested by the income returned for income tax purposes was inconsistent with his being unable to continue with that type of work.[42] The Judge suggested a measure of scepticism about the accuracy of the reported income because of an acknowledgement by the applicant that self-employed people in that profession always under-declared their income for income tax purposes. The adverse inference that might be drawn from such an acknowledgement was by no means determinative.[43] A fair inference from all of the medical reports about the applicant is that his health difficulties were contributed to by mental health difficulties that pre-dated the 2003 accident. The reports do not include any proportionate responsibility for his reduced work capacity to those matters, but they could not be discounted as making a meaningful contribution to them.[44] Accordingly, I do not accept that there was any error in the approach of Judge Ongley to the analysis of whether the applicant could make out incapacity in the statutory sense on the basis of all the evidence available to him.[45] The answer to the question as posted at [26] is no. No error is made out. First, I am not satisfied that the Judge did consider that he was obliged in any absolute sense to ignore the applicant's own evidence as to the causes of his claimedincapacity in the 2003 to 2007 period. Secondly, no error arises if the Judge elects, in the circumstances of any particular case, that it is not appropriate to have regard toa claimant's own characterisation of his or her medical condition.Two further points[46] Mr Temm urged me to consider one further component of the applicant'sprocess criticisms as an aspect of the substantive criticism of the approach in law adopted by the Judge. That was Judge Ongley's rejection of criticism of thesequence adopted by the reviewer in re-opening the scope of evidence the reviewer would consider.[47] The applicant's stance in the original hearing before the reviewer was that hehad ceased his insolvency practice from the time of the October 2003 accident. The initial hearing concluded on the basis that the Corporation did not accept that, but did not specifically challenge it. Shortly thereafter, the Corporation discovered evidence that at least some aspects of the applicant's insolvency practice continued. That was then put to the reviewer in a way that Mr Temm argued unnecessarily andprejudicially dented the credibility of the applicant's claim. The re-opened hearing put him on the back foot, having to justify a qualification to the stance he had originally adopted.[48] Mr Temm's criticism was that the Corporation ought to have shown the newevidence first to the advocate assisting the applicant, so that a joint approach to the reviewer might have been made. He suggested that unnecessary harm to theapplicant's credibility might have been avoided if it could have been handleddifferently.[49] This does not raise a relevant criticism of the Corporation. The applicant'sstance before the reviewer about cessation of his insolvency practice unfolded at the hearing without the Corporation having received any brief of the evidence that he would give. It was foreseeable that the Corporation would research claims made by the applicant that his insolvency practice had terminated, and the product of that research was inarguably relevant. Given the publicly available records of continuingwork by the applicant's insolvency practice, some rejoinder was to be expected. I donot consider there was any procedural unfairness in the Corporation putting the matter to the reviewer, with a request that it be considered. Fairness was maintained by affording the applicant an opportunity to respond to it.[50] If it had not been put to the reviewer, or if the reviewer had been persuaded to ignore it, then it would inevitably have been relevant material on any appeal by way of rehearing.[51] I also acknowledge an isolated criticism of the Corporation that cannot have any relevant bearing on the outcome of this appeal. In November 2007, a case manager then dealing with the applicant wrote to him to advise that the Corporation had reconsidered its decision to accept his 2007 claim as a recurrence of the injury in October 2003. That letter advised:ACC has determined that this claim should not have been accepted as a recurrence of your injury dated 18/10/03, instead it has been accepted as a Delayed Incapacity of your injury dated 18/10/03. This does not affect any entitlements you may be receiving from ACC.[52] Ms Becroft was unable to provide any detailed explanation as to why the letter had been written in those terms in November 2007. It may well have been unsettling for the applicant to be advised of the Corporation having a change of heart. However, in the end it does not give rise to any relevant estoppel against the Corporation and it cannot advance any aspect of the question of law that Mr Temm focused on.Outcome[53] The application for special leave is declined in respect of questions 2, 3 and 4. The application for special leave is granted in respect of question 1, but that appeal, as encapsulated in the question and answer in [26] above, is dismissed.[54] There will be no order as to costs.Dobson JSolicitors:Malcolm Lake, Rotorua for applicantMedico Law Limited, Auckland for respondent