IHC NEW ZEALAND INC V ACCIDENT COMPENSATION CORPORATION HC WN CIV-2007-485-2786

IHC NEW ZEALAND INC V ACCIDENT COMPENSATION CORPORATION HC WN CIV-2007-485-2786 7 March 2008ORDER PROHIBITING PUBLICATION OF NAME OR IDENTIFYING PARTICULARS OF MS A, AND COURT FILE NOT TO BE SEARCHED WITHOUT PRIOR LEAVE OF A JUDGE IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2007-485-2786UNDER the Declaratory Judgments Act 1908 BETWEEN IHC NEW ZEALAND INC Applicant AND ACCIDENT COMPENSATION CORPORATION Respondent Hearing: 29 February 2008 Counsel: A C Beck for applicant I G Hunt for respondent Judgment: 7 March 2008JUDGMENT OF DOBSON J[1] These proceedings have been commenced by way of an originating application, seeking declaratory orders under the Declaratory Judgments Act 1908. [2] The applicant for relief is IHC New Zealand Inc ("IHC"). There is no pleading as to its status, but judicial notice can be taken of its existence as an organisation operating throughout the country in assisting with the care and housing of intellectually handicapped children. [3] The respondent corporation ("ACC") is a statutory body most recently re- established pursuant to the Injury Prevention Rehabilitation and Insurance Act 2001 ("the Act").[4] IHC and ACC are parties to a Partnership Programme Agreement ("PPA") pursuant to which IHC has contracted to manage all aspects of claims arising out of work-related personal injury suffered by any of IHC's employees. The PPA is of a type provided for under the Act. [5] The particular circumstances provoking the present dispute arise out of a series of work-related incidents suffered by an IHC employee, "Ms A". In January 2007, Ms A suffered lacerations to her foot in the course of providing support for a patient known to suffer from Hepatitis B. When she consulted a general practitioner, tests were taken for HIV, Hepatitis B and Hepatitis C. All of those tests returned negative results. However, IHC now raises the point that competent treatment by the general practitioner would have included inoculation against Hepatitis B. [6] On 19 May 2007, Ms A suffered a second laceration, this time to her hand caused by the teeth of the same Hepatitis B sufferer she was helping to care for. [7] Ms A lodged a claim for cover with ACC for the work-related personal injury sustained on 19 May 2007. The claim was referred by ACC to IHC pursuant to the PPA. [8] On 7 June 2007, IHC, acting by a claims manager, accepted Ms A's claim for cover for the work-related personal injury being the laceration suffered on 19 May. [9] Ms A subsequently developed Hepatitis B and applied to IHC to extend the scope of cover to include the effects of her contracting Hepatitis B. She sought weekly compensation consequent on her accepted claim for cover. [10] IHC has declined to make a formal decision in respect of the scope of cover and the entitlement claim, but has made ex gratia payments to Ms A in respect of her claim. [11] IHC contends that the contracting of Hepatitis B by Ms A is not a work- related personal injury: rather it argues that the disease has been caused by the negligence of the general practitioner when he or she failed to inoculate Ms Aagainst Hepatitis B, in circumstances where the prospect of contact with existing sufferers of Hepatitis B was drawn to the general practitioner's attention. On IHC's view of the matter, it follows that it does not have any liability to deal with the claim. Attempts to resolve with ACC how Ms A's claim was going to be dealt with having proved unsuccessful, IHC commenced the present proceedings seeking a declaration that it has no liability pursuant to the PPA in respect of the injuries suffered by Ms A in May 2007. [12] ACC takes two jurisdictional points. First, that claims to coverage under the Act are to be dealt with exclusively pursuant to procedures under the Act, so that this Court has no jurisdiction to entertain arguments, the substance of which address whether a claim properly lies under the Act. This raises the scope of privative provisions in s 133 of the Act. [13] Secondly, that even if the privative provisions do not exclude the Court's jurisdiction, then the real issues lying behind the question posed for declaratory answer raise mixed questions of fact and law, and may impact on the rights of others, namely Ms A. This makes the case inappropriate for declarations, and the Court's discretion under s 10 of the Declaratory Judgments Act 1908 should be exercised against making any declaration. [14] I propose to deal with the second of these jurisdictional points first.Factual issues[15] The following arise:What was the operative cause of the employee contracting Hepatitis?[16] Mr Beck put it in absolute terms that being bitten by a Hepatitis sufferer was not the effective cause. He was inclined to draw on common law analogies to submit that the failure to inoculate Ms A was the effective or operative cause. He advanced the case on the basis that causation was not in dispute.[17] However, for ACC, Mr Hunt would go no further than accepting that the absence of inoculation was arguably a contributing cause. Factual uncertainties over the cause of her Hepatitis B are compounded by Ms A having been "bitten" twice by the Hepatitis sufferer. The omission to be inoculated therefore spanned the period from the first consultation with the doctor, to a consultation after being bitten for a second time. Apparently, inoculation at any point is likely to have been effective to prevent her contracting Hepatitis B. As soon as that proposition has to be expressed with anything less than certainty that inoculation would have prevented Ms A catching the disease, it introduces another potential factual issue requiring determination. [18] If cover was determined in the conventional way under the Act, it seems inevitable that a more detailed factual inquiry would occur on the cause of the employee contracting Hepatitis. There is every prospect for this to be an issue of some complexity, and one analogy can be drawn with the comments on causation inACC v Ambros [2007] NZCA 304.Whether any entitlement arising is "work-related" or otherwise, would have a bearing on the extent of the employee's entitlement to compensation[19] IHC's case was that Ms A was always going to get cover, and indeed has received payments from IHC on an ex gratia basis. It would follow that she did not have an interest in the argument. However, ACC argued that the compensation calculation would be different, depending on the basis for cover, and that it would be less if it was not for work-related injury because a "stand down period" would then be involved. [20] Mr Beck's rejoinder was that he thought the extent of payments made were at the maximum, and that if IHC succeeded in denying liability, then it would only have a claim for reimbursement from ACC of the lesser, non-work-related compensation payments. In those circumstances, IHC would simply absorb the additional expense. That may well be how matters would pan out, but it still raises a factual uncertainty, that brings in to play the prospect of Ms A having an interest. IHC has declined to determine her application, which she has an interest in havingresolved to her maximum advantage, and not with payments left at her employer's discretion."The real issue"[21] IHC argues for the relevance of its question on the scope of contractual obligations under the PPA on the basis that the employee's entitlement is assured. One or other of the providers (ie IHC as employer or ACC as the party liable for any non-work-related "treatment injury" under the Act) will ultimately be liable for compensation, but apparently for differing amounts. [22] ACC contends that the decisions on the type of cover are always directly linked to assessments of whether there is cover at all. The statutory processes for dealing with claims, and employee and employer rights to seek review of ACC's decisions on such matters, are well established, and are dealt with by personnel with appropriate expertise. Conventional pursuit of the claim by the claimant enables all factual matters to be available to the original decision-maker. ACC says that this is, in part, the reason for the privative provisions in s 133(5). [23] The exchanges of position prior to these proceedings would have made it clear to IHC that ACC rejected the notion that Ms A's Hepatitis constituted a treatment injury. It is predictable that ACC would determine this a work-related injury, where the Act extends that concept to mishaps in the treatment for a work- related injury. IHC wanted to short-circuit the normal steps under the Act, by formulating a question of law that the relevant circumstances here do not come within work-related injury. In doing so, they have declined to make a determination on the application for cover referred to them. In itself, that might be a breach of their obligations under the PPA, but that is not directly in issue.The discretion to grant declarations[24] The jurisdiction to make orders under the Declaratory Judgments Act is wholly discretionary – see s 10 of the Act. One obvious exclusion is where answerswould require mixed questions of fact and law to be dealt with: New Zealand Insurance Co Ltd v Prudential Assurance Co Ltd [1976] 1 NZLR 84. [25] Nor should declarations be given, when the dispute could be resolved by ordinary action. Here, ACC argues that the alternative statutory procedure for addressing the real issue should be treated as the same as an ability in other situations to determine the dispute by the alternative means of an ordinary action. [26] I consider that it would not be just to embark on an evaluation of the abstracted question as posed on its own, rather superficial, terms. It is intimately related to the real issue. That is one involving questions of fact, and mixed fact and law. They may be quite complex. It would also be embarking on a purported determination outside an established framework under the Act. It would not be a proper function for declaratory judgment proceedings. [27] Accordingly, I decline to address the question posed for a declaratory judgment. In these circumstances it is also inappropriate to decide whether the privative provisions in s 133(5) would otherwise have excluded the Court's jurisdiction. The terms of that section deal with limitation on persons who have claims under the Act – ie here, Ms A. However, steps reflecting her position that would more clearly bring this case within the section have been avoided by IHC declining to rule on her claim. The untidiness of the resulting situation, in terms of the procedures under the Act, merely goes to underscore the inappropriateness of responding to the question posed for declaratory answer.Costs[28] The Court was requested to defer dealing with the issue of costs, until it could be dealt with by way of Memoranda following this judgment, and I do so. _________________Dobson JSolicitors: Duncan Cotterill, Wellington for applicant Young Hunter, Christchurch for respondent