The Ministry of Education v Accident Compensation Corporation

IN THE DISTRICT COURT AT WELLINGTON Decision NO 21/2007 UNDER Injury Prevention, Rehabilitation and Compensation Act 2001 IN THE MATTER OF An appeal pursuant to s151 of the Act BETWEEN THE MINISTRY OF EDUCATION Appellant AI 239/06 AND ACCIDENT COMPENSATION CORPORATION Respondent Hearing: 1 September 2006 (Heard at Auckland) Appearances: A Sharp for Appellant D Tui for Respondent RESERVED JUDGMENT OF JUDGE J CADENHEAD On the Papers MINISTRY OF EDUCATION V ACC DC WN AI 239/06 [19 January 2007] [1] This appeal is an application for leave out of time to appeal a reviewer's decision that the review officer had no jurisdiction to add additional claims to the review application. After considerable discussion it was agreed that I would hear the merits of the appeal along with the application for leave on the papers. [2] I accordingly directed: i) The appellant was to file written submissions within 21 days on the issue of the power to enlarge a review hearing by adding another additional 150 claims that were out of time. ii) The respondent was to reply in writing within 21 days of service of the written submissions of the appellant. ifi) The appellant had seven days from the receipt of the respondent's submissions to reply. [3] I have now received those written submissions from both parties. THE ISSUES [4] The issues that arise for consideration on this appeal are whether I should grant leave to bring the appeal: the appeal being out of time and the merits of the review decision under appeal. THE DISTRICT COURT DECISION [5] On 14 April 2000 the appellant applied for an application for review. I set out hereunder the relevant parts of that application: 'Dear Mr Coe Ministry of Education - Application for Review 1. We act for the Ministry of Education ('the Ministry') 2. On behalf of the Ministry we seek review of the following matters: (a) the 1997 experience rating assessment for the Ministry dated 24 January 2000; b) the 1998 experience rating assessment for the Ministry dated 24 January 2000 3. The experience rating and premium assessments are based on claims that have been treated and paid as valid work-related injuries. In order to properly consider these reviews, it is necessary to re-visit the claims upon which Assessments were made. 4. The individual claims, which are sought to be reviewed, are set out in the table at paragraph 6 below. As set out in our letter of 31 March 2000, the claims may not meet the criteria for qualifying payments because: (a) the employer (the Ministry) has never been issued with the decision letter and hence the right of review has been denied; and (b) no work injury reports have been issued within 21 days within receipt of the claim, which is mandatory under the Accident Rehabilitation and Compensation Insurance Act 1992. 5. As also set out in our letter of 31 March 2000, there are doubts concerning the assessment of the premium for the claims listed in paragraph 6 below because of the following alternative grounds (a) ongoing costs do not related to the original injury; (b) there has been no diagnosis of injury; and/or c) there never has been an accident as defined by Section 3 of the Act e.g. no external force or resistance other than gravity. 6. The claims in respect of which an assessment has been based which are sought to be reviewed are set out in the table below: . . . 7 . Accordingly, we seek a review hearing at which both the Ministry's experience ratings for the relevant years and premium assessment can be reviewed together with the individual claims upon which they are based." [6] This application was declined at a review hearing. An appeal then took place and this is the starting point to understanding this appeal. This appeal is grounded in the decision of Judge Beattie dated 25 February 2002 from an ensuing review application. I am indebted to His Honour for the chronology of events that predicates this appeal and I set them out: "The issue in this appeal is whether, and if so to what extent, the Appellant can seek to review, and therefore subsequently appeal, the decisions of the Respondent issued on 24 January 2000 and 29 March 2000 respectively whereby it issued Experience Rating Credit Adjustment Notices for the 1998 and 1999 years respectively. The facts which are relevant to the issues in this appeal are not in dispute and may be stated as follows: The Appellant is a large employer in terms of the meaning of that expression as contained in the Accident Rehabilitation and Compensation Insurance (Experience Rating) Regulations 1993 By invoice dated 12 June 1998 the Respondent advised the Appellant of its Experience Rating Assessment (ERA) for the period 1 April 1997 to 31 March 1998 By invoice dated 11 October 1999 the Respondent advised the Appellant of its Experience Rating Assessment for the period 1 April 1998 to 31 March 1999 At the time those ERA were presented to the Appellant it took no issue with them. On 24 January 2000 the Respondent issued an Experience Rating Credit Adjustment Notice altering the 1997/1998 ERA. On 29 March 2000 the Respondent issued an Experience Rating Debit Adjustment Notice to the Appellant altering the 1998/1999 ERA. By letter dated 14 April 2000 Injury Management New Zealand (IMNZ), acting as agent for the Appellant, advised that it was seeking a review of those two ERA Adjustment Notices. In its letter it stated - "...the experience rating and premium assessments are based on claims that have been treated and paid as valid work related injuries. In order to properly consider these reviews it is necessary to revisit the claims upon which the assessments were made." The letter attached a list of 37 claims in respect of which it is contended there were doubts as to whether they ought to have been included in the ERA and in respect of which it sought each to be reviewed. " [7] These claims were the claims set out in the application letter dated 14 April 2000:- "The Respondent accepts that the 37claims of which the Appellant advised were included in the calculation of the original ERA for the two years in question. The Appellant's request for a review did proceed to a hearing and at that hearing evidence was given for the Respondent that none of the 37 claims to which the Appellant had referred were the subject of the reason for the credit adjustment for the 1998 year, or with a debit adjustment for the 1999 year. In his decision dated 19 December 2000 the Reviewer ruled that if the Appellant had sought to review the ERA issued on 12 June 1998 and 11 October 1999 within the statutory timeframes - there would be no argument that they were valid applications. However he ruled that in the present application for review the Appellant was in fact seeking only to review the adjustments to those ERA issued and he ruled that review rights related only to claims which had been adjusted. The Reviewer found that the applications to review the 37 claims in terms of the Adjustment Notices were not valid applications for review as none of those claims had been the subject of an adjustment. He therefore dismissed the claim. Ms Mechen, Counsel for the Appellant, submitted that the two Adjustment Notices were decisions of the Respondent which were subject to review and that as it is a decision that notifies the employer of a premium loading or discount, that brought into question the original ERA and that in questioning the adjustment, an employer could question the basis for the ERA that was being sought to be adjusted either by credit or debit Counsel submitted that in so doing all claims that had been classified as qualifying claims for the purposes of the ERA could then be brought under scrutiny in such a review and to determine whether or not those claims were correctly classified as qualifying claims for the purposes of the employer's ERA. Counsel submitted that he Appellant's Application for Review was filed within the statutory timeframe rom the issuing of the adjustment notices and it was that time frame only that needed to be considered rather than any timeframe from the date of the issuing of the ERA itself..." [8] Judge Beattie decided: DECISION By virtue of Section 457 of the Accident Insurance Act 1998 it is provided that the provisions of the Accident Rehabilitation and Compensation Insurance Act 1992 relating to an employer's Experience Rating continue after the enactment of the 1998 Act in respect of any obligation arising before the enactment of the 1998 Act Section 104 of the 1992 Act provides that the basic premium payable by employers may be adjusted by reference to the accident experience of, or attributed to, that employer. It provides that the adjustment shall be by way of premium loading or premium discount in accordance with the procedure and formula provided in Regulations. Regulation 5 of the 1993 Regulations sets out the formula for calculating the premium loading or premium discount from the basic premium. Factor (g) in that formula gives the Respondent a discretion as to how much of the qualifying payments made by the Corporation in the year on behalf of qualifying claims are to be attributable or deemed to be attributable to the employer in that premium liability year. Qualifying claim' is defined in the Regulation as being - "a work injury claim lodged in respect of employment with that employer and accepted by the Corporation (such a qualifying claim is referred to in these regulations as being a qualifying claim attributable to that employer)." In the context of questioning the Adjustment Notices, the Appellant is seeking to be able to reopen how the Respondent may have exercised its discretion when determining factor (g) in relation to the 37 qualifying claims that it has referred to in its letter of request. It is that very enquiry which would have been required to be made if the Appellant had sought to review the ERA that the Respondent had made in the 1998 and 1999 premium liability years by its notices dated 12 June 1998 and 11 October 1999 respectively. The Appellant had three months from receipt of those respective notices to question its ERA and any premium loading that it may have received. That it did not do so must mean that those Assessments must be taken as being binding on the Appellant in the context of those notices. It is axiomatic that if a person who has a right of review in relation to any decision thoses not to or omits to exercise that right of review then that person must be bound by and subject to the decision so made, particularly when it is a decision made pursuant to a statutory power as is the case here. There the matter would end were it not for the Adjustment Notices. The Adjustment Notices issued by the Respondent advised of a debit and credit respectively in relation to the premium liability for the particular premium year. Although the Reviewer found on the facts that the reasons for those adjustments were not for reasons to do with any of any of the 37 qualifying claims which the Appellant was seeking to encompass in the review, nevertheless those Adjustment Notices were affecting the two ERAs in question. Ms Mechen submitted that the decision of His Honour Judge Ongley in Lane Walker Rudkin v ARCIC (supra) is authority for the proposition that an employer is entitled to question the appropriateness of the classification of the stated qualifying claims and that once there is an adjustment to an ERA, it is open to the employer to raise questions on all claims that have been classified as qualifying claims for the purposes of that employer's ERA. In that decision His Honour rejected the Corporation's argument that the Appellant was bound by the Corporation's original decision to the extent that it prevented the employer from questioning it at any time subsequently. At page 476 His Honour stated as follows: ". ..in this case, the premium loading decision that is under review includes a number of questions, particularly the classification of the claim as a "qualifying claim", the attribution of the claim to the Appellant, the calculation of costs relating to the claim and also the attribution of costs to one or more employer. The Appellant submits that the only question that cannot be reviewed is the question whether the costs would have been properly applied if the claimant had cover in respect of the injury" It would follow that, on the making of a premium loading decision in any particular year, the employer has an opportunity for review of all questions raised in the premium loading decision except questions of entitlement of the claimant to actual payments or rehabilitation provision in the event that the claimant does have cover. It does not follow that the employer would be able to obtain repeated reviews of the accident classification question. The doctrine of issue estoppel will prevent classification questions being relitigated once they have been decided at review or appeal level. The meaning of $89(4A) The limiting words which require definition are: "review of any decision relating to the entitlement under this Act of any person to any payment or rehabilitation or the making of any payment directly or indirectly under this Act in respect of that person.' The words "directly or indirectly" must qualify "payment". It would be an ungrammatical construction of the subsection to apply the qualifying words to the word "review" at the beginning of the phrase. I consider that the subsection is capable of permitting a review which has a consequential indirect effect on entitlements. What is prohibited is a review of the entitlement decision. For example, if the Corporation decided to meet costs of vocational rehabilitation, $89(4A) would prevent the Appellant reviewing the Corporation's decision concerning the appropriateness of the grant of vocational rehabilitation to the claimant. For the reasons that I have set out in this decision, I reach the conclusion that the question of classification of the claim as a qualifying claim may be considered in the course of a review of the accident experience component of premium loading under $89(4) of the Act, and the Appellant is not estopped, from having that question determined, by virtue of its failure to exercise review rights in respect of two earlier occasions on which the Corporation issue decisions concerning substantially the same question. Once the classification has been determined by review or appeal, the same question will not be able to be reopened between the same parties in respect of any future premium loading decision by the Corporation." That decision has been followed and adopted in a number of subsequent decisions, a more recent one being that of His Honour Judge Barber in Alstom NZ Ltd v ARCIC (Decision 26/00). If the reasoning and principle enunciated in the Lane Walker Rudkin decision is applied to the present factual situation, I find that the particular decisions which the Appellant seeks to review do encompass a wider scope than simply the nature of the adjustment or how that is calculated The Court was provided with the actual document, which is the Experience Rating Debit Adjustment Note and the Experience Rating Credit Adjustment Note. In the former the document states "...this Debit Adjustment Note is for the Experience Rating loading you have incurred for the 1998/99 year. Please note that this Assessment may increase or decrease if updated data is received." There then follows some columns of calculations and in the right-hand column are inserted figures under the heading Experience Rating Total where a calculation is done to identify the debit, or in the case of the credit adjustment, a credit. One of the critical figures in the calculation formula is 'Claims Costs' and indeed it is that figure which is shown to be adjusted and which brings about the adjustment either by credit or debit. Thus it is that I find that the "Claims Costs' which must of course relate to 'Qualifying claims' and 'Qualifying payments' made in respect of a 'Qualifying claim' does throw into the frame, as it were, the basis for the fixing of those qualifying claims and qualifying payments Although it was the evidence of the Respondent, and it has not been contradicted, that the adjustments in those Claim Costs did not relate to any of the 37 qualifying claims that the Respondent was seeking to look into, nevertheless those 37 qualifying claims must have contributed the bulk of the claims costs figure which is shown in the adjustment note. If that Claims Cost figure is one of the necessary figures to calculate an adjustment, either by credit or debit, then I find that where hat adjustment does of itself give a right of review, and there can be no question about that, then in line with the reasoning given in the Lane Walker Rudkin Ltd decision the whole question of the classification of the qualifying claims and claims costs must be open to scrutiny by review. After all the Respondent is, in the case of a debit adjustment, seeking further premium payable by the Appellant by way of an Experience Rating loading that it has had imposed on it for the relevant year. I do not think there can be any distinction to be drawn between a debit adjustment note and a credit adjustment note as to the extent to which the Experience Rating THE REVIEW HEARING 10] On 23 and 24 January 2006 the review officer heard 15 applications for review concerning the attribution of claim costs to the experience rating of the Ministry of Education. This was the review conducted in accordance with the decision of Judge Beattie. The other claims had either been settled or withdrawn. [11] At the review the Ministry sought to amend the Application to include some further 150 claims it considered should not have been included in the Ministry's ERA. [12] After hearing argument from the parties, the Reviewer concluded that he did not have jurisdiction to consider any claims other than the 37 claims listed in the Application. The Decision was issued by the Reviewer on 28 February 2006. I set out the relevant passages from the review decision: 'Analysis It is certainly the case that in some instances an application for review may be amended by consent. However, I do not consider this is such a situation. The Ministry's application, dated 14 April 2000, listed the 37 claims which it wished to challenge as part of the review. More importantly, I convened the hearings in order to comply with a specific direction by the District Court. As I have noted above, Judge Beattie directed that the 37 claims identified in the Ministry's application were to be remitted to review. Both Ms Hodgson, counsel for ACC, and Mr Mccord, advocate for the Ministry, provided written submissions on the jurisdictional issue. It is important to note that both representatives confirmed that the Ministry's letter dated 14 October 2005 was the first indication that it wished to include in the review approximately 150 additional claims. I need not detail the submissions to which Ms Hodgson and Mr Mccord spoke. Given the recent decision of Keane J in the High Court in ANZ Banking Group (NZ) Limited (CIV 2005-485-00938), I do not believe the Ministry can succeed in its attempt to enlarge its application for review. At paragraph 49, Justice Kea Like the Judge, however, I consider that the intent of Reg 21A as to bring to a conclusion the assessment regime under the 1992 Act, on the passing of the 1998 Act, and to permit experience rating assessments and payment liabilities only to be revisited exceptionally under Reg 21A(4); and not in the wholesale sense ANZ contends for." Earlier, at paragraph 46, His Honour noted: Reg 21A(4) envisages that reviews or appeals arising might extend beyond 31 March 2000 and says this The Corporation may at any time after a review or appeal under the Act becomes final and conclusive, whether before or after 31 March 2000, make any alteration to an assessment that is necessary to make the assessment comply with the decision on the review or appeal. When it notified its intention to include approximately 150 further claims in the application for review, in its letter dated 14 October 2005, the Ministry was well beyond time for such a challenge. My ability to hear the 15 applications for review, being the remainder of the 37 claims identified in the Ministry's application, is by virtue of the exception contained in Regulation 21A. That exception aside, the intent of Regulation 21A was to bring to a conclusion the assessment regime under the 1992 Act' By 14 October 2005, the Ministry was time barred from challenging any additional claims not listed in its application for review Conclusion For the reasons given, I find I have no jurisdiction to consider any claims beyond the 15 claims which were the remainder of the 37 claims Judge Beattie directed be determined at review, and on which I have now issued decisions." LEGISLATION AND LEGAL PRINCIPLES [13] The issue was referred back to the reviewer by the powers conferred by section 164 2(c) of the Accident Insurance Act 1998. 164 Decisions on appeal (1) The court must determine an appeal by- a) Dismissing the appeal; or (b) Modifying the review decision; or (c) Quashing the review decision. (2) If the court quashes the review decision, it must indicate the effect clearly. The effect may be, for example, to- (a) Endorse the insurer's decision; or (b) Require the insurer to take the action the court specifies in relation to the insurer's decision; or (c) Require another review, to be conducted in accordance with directions the court gives [14] It seems clear that if the letter of 14 October 2005 was considered as an initiating application in respect to the 150 claims it was well out of time: 136 How to apply for review (Repealed) (1) A review application is made by giving an application that complies with subsection (2) to the insurer. (2) The application must- (a) Be written: (b) Be made on the form provided by the insurer for the purpose, if the insurer provides such a form: (c) Identify the decision or decisions in respect of which it is made: (d) State the grounds on which it is made: (e) Be made within 3 months of- (i) The date on which the insured has a decision under section 66; or (ii) The date on which the insurer gives notice under section 72. [15] The application had to be in writing and identify the decisions or decisions in respect of which it was made and be made within 3 months of the decision. The 1998 Act specifies a strict time code for an application for review and it is only respect of the 2001 legislation has there been a relaxation in respect of extenuating circumstances. [16] The appellant has sought to argue that the original application for review could be amended. I accept that is the case if the amendment was made within time. In Chilcott v Goss [1995] 1 NZLR 263 Richardson J delivering the judgment of the Court said at pp 272/3: "Rule 40 of the Court of Appeal Rules 1955 confers on this Court all the powers of the High Court as to amendment of pleadings. Rule 11(2) of the High Court Rules empowers the Court to make "such amendments to any pleading . . . as are necessary for determining the real controversy between the parties." The underlying test is the interests of justice and in that regard a powerful consideration is whether amendment would cause significant prejudice to the opposite party. On our assessment of the case the only special factor requiring discussion is the question of the limitation period. That arises because the application for amendment was made more than six years after, on the present hypothesis, the cause of action accrued on 6 August 1987. There is no reference in R 11 to the question of limitation. However, it is unlikely that when during a trial the High Court is exercising its jurisdiction under R 11 and when this Court is exercising its jurisdiction under R 40, it would allow the introduction of a cause of action which would not have been allowed before trial under R 187 (Elders Pastoral Ltd v Pemberton (1990) 2 PRNZ 188, 190). Rule 187(3) provides that an amended pleading may introduce "A fresh cause of action which is not statute barred". In essence, "cause of action" means the act on the part of the defendant which gives the plaintiff the cause of complaint (Smith v Wilkins and Davies Construction Co Ltd [1958] NZLR 958, 961). The test of whether an amended pleading raises a "fresh" cause of action for the purposes of the rules as to amendment is well settled. In Smith v Wilkins and Davies Construction Co Ltd at p 961 Mccarthy J put the matter in this way: 'The issue is, I think, put as clearly as anywhere in the words of Lord Wright MR in Marshall v London Passenger Transport Board [1936] 3 All ER 83, as being whether the new pleading involves 'a new departure, a new head of claim, or a new cause of action' (ibid, 87). In other words, is it something essentially different from that which was pleaded earlier? Such a change in character may be brought about, in my view, by alterations in matters in law or of fact, or both. Alterations of fact could possibly be so vital and important as by themselves to set up a new head of claim. On the other hand, more often alterations of fact do not affect the essence of the case brought against the defendant . . . In each case it must, I consider, be a question of degree." That test was adopted by this Court in Gabites v Australasian T & G Mutual Life Assurance Society Lid [1968] NZLR 1145, 1151 where North P also cited with approval the following passage from the judgment of Sholl J in Harris v Raggatt [1965] VR 779, 785: 'If we say that the law is that the plaintiff cannot be allowed, after the period of limitations has run, to set up a new cause of action, we use the term in a special sense as meaning a 'new case' varying so substantially from what has previously been set up that it would involve investigation of matters of fact or questions of law, or both, different from what have already been raised and of which no fair warning has been given, so that it would be unfair and unjust to the defendant to put him in peril of a judgment founded on the new matter. Certainly, if there is set up a 'new case' on the facts, upon which is based a new claim upon a new and different legal basis - a new cause of action in that sense - leave will ordinarily be refused." It is then a matter of comparing the allegations in the new pleadings with what has previously been alleged, recognising that questions of degree are involved." [17] Similarly Rules 11 and 210 of the District Court Rules are similarly couched and are amenable to the same principles. The principle is that an amendment may be entertained provided that is applied for in time. [18] It seems to me that each individual claim is in effect a fresh cause of action and requires individual consideration and that the application to review the additional 150 claims was made on 14 October 2005 well out of time. In addition Judge Beattie's decision to remit the 37 claims was made on 12 November 2004. Decision [19] In my opinion, the jurisdiction of the reviewer is found in the decision of Judge Beattie dated 12 November 2004. By that decision Judge Beattie said that the 37 claims were remitted to determine whether the Experience Rating Assessments are correct assessments under the Experience Rating Assessment Regulations 1993. I would have thought in respect to the additional 150 claims sought to be added by the appellant that the appellant would have applied to Judge Beattie to widen the terms of reference of the remission back. The application to the review officer in respect of the additional 150 claims was made on 14 October 2005 well after the decision of Judge Beattie. [20] The initial application to review 37 claims was made on 14 April 2000. An application to amend that application made on 14 October 2005 was clearly out of time. While it might be competent for a review officer to amend an application to review, in my view, this is not possible where the subject matter of the review sought on the amendment is out of time. [21] In my view, there is no merit in this appeal and it is dismissed on the merits. That being the case as the merits are an important factor in the granting of leave to appeal out of time I do not grant leave to appeal. I would have granted leave to appeal out of time on the basis that I do not think that the respondent had been prejudiced and that the period of delay was only a matter of some two months and four days. However, in my opinion, the appellant cannot succeed on the merits and leave to appeal out of time is declined. I reserve the question of costs and seek counsels' memoranda on this issue. (J Cadenhead) District Court Judge DATED at North Shore this 31 day of January 2007.