Erwood v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT HELD AT AUCKLAND Decision No. 135 /99 IN THE MATTER of The Accident Rehabilitation and Compensation Insurance Act 1992 AND IN THE MATTER of an Appeal pursuant to Section 91 of the Act BETWEEN ROBERT ERWOOD DCA 346/98 Appellant AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 14th day of April 1999 APPEARANCES: Mr R B Hucker counsel for appellant Mr D Tui counsel for respondent RESERVED JUDGMENT OF JUDGE M J BEATTIE The issue in this appeal is whether the respondent was correct, when calculating the independence allowance to which the appellant was entitled in respect of personal injury by accident suffered in January 1995, to deduct from the percentage assessed in respect thereof the sum of the percentages of permanent loss or impairment of bodily function upon which lump sum payments had previously been made to the appellant. 2 RELEVANT FACTS On 22 January 1995 the appellant suffered injuries to his jaw and head as a consequence of being assaulted. He was granted cover and one of the entitlements he sought was an independence allowance. His application noted that he had had other ACC claims and had received lump sum compensation. The appellant was assessed for an independence allowance under the then assessment system of functional limitation profile and his disability was assessed as being 100%. The Corporation then determined that as the appellant had received the maximum lump sum award under section 119 of the Accident Compensation Act 1972 in respect of personal injury suffered in 1977, that 100% was required to be deducted from the percentage assessed in respect of the 1995 injury and therefore the appellant did not qualify for an independence allowance. That decision was confirmed on review and again in an appeal to this Court by the decision of Her Honour Judge Lovell-Smith delivered on 13 August 1996. The appellant obtained leave to appeal that decision to the High Court, the nub of the appeal being that whilst the appellant had indeed received the maximum sum permitted under the previous Act, nevertheless the percentage disability which had been assessed in respect of that 1977 injury had been in the range of "between 55% and 75%". That assessment had been made by a Psychiatrist, Dr Williams, as the appellant's impairment was wholly psychological from the effects of a false imprisonment and an assault whilst falsely imprisoned although there was no evidence of any lasting physical effects of the assault. In a reserved decision given on 11 June 1997 His Honour Justice Smellie ruled that the payment of the maximum lump sum to the appellant pursuant to section 119 of the 1972 Act was not authorised and only a lessor figure based on a disability impairment of between 55% and 75% would have been legitimate. He regarded the remainder of that $7,000 as being an unauthorised payment and that it should not be taken into account when assessing entitlement to an independence allowance. His Honour then stated: "Consequent upon the circumstances set out above it follows that the appeal succeeds. The matter is to be referred back to the Corporation in order that the appellant's entitlement to an independence allowance can be assessed on the correct basis i.e. that the payment to him under section 119 of the old Act was based upon a percentage of permanent loss of impairment between 35%- 75%". The matter was then reconsidered by the Corporation as the Judge had directed and it sought the advice of Dr Williams as to what precise figure he would place on the percentage of disability of the appellant. Dr Williams did not re-examine the appellant but simply advised that in the circumstances he would fix the permanent disability under section 1 19 at 55%. It was at this point that the Corporation then made reference to two further lump sum payments which had been made to the appellant in respect of two further personal injuries, being one for an injury suffered in March 1983 where the appellant had received an award pursuant to section 119 to the equivalent of 8% permanent disability, and another in respect of an injury sustained in 1984 when the appellant had received a lump sum award to the equivalent of 7.6% permanent disability. In its decision therefore, the respondent advised the appellant that he was entitled to an independence allowance based on a percentage of 29.4% being the assessed percentage less the sum of the previous payments under section 119 of the 1972 Act and section 78 of the 1982 Act. That is 100% - (55 + 7.6 + 8 = 70.6 %) = 29.4%. The appellant sought a review of the Corporation's decision and in his decision given on 19" August 1998, the Review Officer held that section 54(14) of the Act directs that where any payment or payments have been received by a person based on an 4 assessment under section 119 of the 1972 Act or Section 78 of the 1982 Act, the percentages of those permanent losses shall be deducted from the amount of disability assessed under subsection (5). The Review Officer found that Dr Williams had not taken account of any other pre-existing disability when he gave his figure of 55% and he found that the decision of Justice Smellie did not limit the amount that the respondent could deduct to the 55% for the 1977 injury. The relevant statutory provision in this appeal is section 54(14) of the 1992 Act which reads: '(14) Where any person who has received a payment under section 119 of the Accident Compensation Act 1972 or section 78 of the Accident Compensation Act 1982 is assessed for the purposes of establishing an entitlement to an independence allowance, the person's disability assessed under subsection (5) of this section shall be reduced by the percentage or percentages of permanent loss or impairment of bodily function upon which any payment or payments under section 1 19 of the Accident Compensation Act 1972 or section 78 of the Accident Compensation Act 1982 were based." SUBMISSIONS Mr Hucker's principal submission on behalf of the appellant was that the respondent was estopped from adding the 8% and 7.6% to the 55% as it was only that latter percentage which Justice Smellie had directed to be deducted in his judgment and that therefore this issue was now res judicata. Counsel submitted that the issue had been conclusively determined by Justice Smellie and that it was not open to the respondent to depart from that ruling. Counsel's second submission was that in any event the assessment made by Dr Williams took into account all the appellant's injuries, or if it did not then it ought to have and that the question of these other disabilities could have been raised. Finally, counsel for the appellant submitted that the respondent's interpretation of section 54(14) was in error and that any assessment of a right to an independence allowance should only relate to the personal injury that has been suffered and not related to any other personal injury for which separate claims have been allowed. In support of this submission counsel cited the decision of this Court in Hart (Decision 100/95). Mr Tui, counsel for the respondent, submitted that the issue determined by the High Court was different than that which is the issue before this Court, and earlier before the Corporation. He submitted that the High Court did not consider either of the other two claims when considering the issue that it did. He submitted that the fact of these other two claims only became relevant when it was determined by the High Court that the amount that could be deducted under section 54(14) was not 100% but a figure between 55% and 75%. Counsel submitted that section 54(14) requires a purely mathematical calculation and he referred to the previous decisions of this Court in Nichol 238/97 and Bourke39/97. Counsel further submitted that the evidence does not support the contention that Dr Willliams took into account any earlier injuries. He had no knowledge of these claims and his expertise was in the field of psychiatry and his assessment was solely to do with the mental injuries suffered by the appellant, not the physical injuries, in respect of which the two other settlements had been made. DECISION Counsel for the appellant has raised the plea of issue estoppel and res judicata as being reasons why the respondent cannot deduct the percentages from the two other lump sum settlements. Both counsel have referred to the decision of the Court of Appeal in Joseph Lynch Land Co Lid v Lynch 1995 1 NZLR 37 where Justice Tipping at page 40 stated: 6 "The expression "res judicata" means the matter has been adjudicated. The concept of res judicata is often applied to both cause of action estoppel and issue estoppel. Traditionally its use was confined to the former. Cause of action estoppel is different from issue estoppel which can arise where a plea of res judicata and the strict is not open because the causes of action are not the same: see 16 Halsbury Laws of England 4th ed. at para 977. Cause of action estoppel is more precise than issue estoppel. For there to be cause of action estoppel the cause of action sought to be estopped must be precisely the same as that upon which there has been an earlier adjudication. Issue estoppel is concerned with the prior resolution of issues rather than causes of actions. In the same paragraph of Halisbury as that referred to above, it is said that issue estoppel precludes a party from contending the contrary of any precise point which, having once been distinctly put in issue has been solemnly and with certainty determined against him." Counsel for the appellant contended that the issue before Justice Smellie was the amount which could be deducted from the percentage assessment which had been made for the 1995 injury and that the Judge's direction finally determined the matter and that the Corporation could not now revisit the issue by adding the two further percentage deductions. I have considered the judgment of Justice Smellie and have no difficulty in finding that the sole issue before him was whether the Corporation could deduct, pursuant to section 54(14), the full 100% which it had determined had been paid to the appellant in respect of his 1977 mental injury for false imprisonment. The Learned Judge noted that whilst the Corporation had paid out the maximum sum i.e. a sum which could be said to have been based on 100% disability, nevertheless the medical evidence disclosed that the lawful sum to which the appellant was entitled was only a lump sum based on a percentage of between 55% and 75%. He ruled that the sum paid to the appellant over and above a sum calculated in the range of between 55% and 75% was not authorised and that when applying the provisions of section 7 54(14) it could not include any deduction of any unauthorised payments. He found that the only deduction that the Corporation could now make was the percentage which had been assessed and which was therefore an authorised payment. The sole issue was whether the respondent could deduct 100% as it had purported to do or whether it could only be limited to the percentage which had been assessed. The facts of the other two lump sum settlements which had been made to the appellant were not known to His Honour, and were indeed not necessary to be so for the purposes of the question of law which His Honour was called upon to determine. Indeed those other two percentages did not come into the calculation by the Corporation itself because its position was that it could deduct the full 100% from the earlier settlement and therefore there was no need to include any other figures. Accordingly, I rule that the issue of whether or not the respondent can now add those two further lump sum settlement percentages is not an issue which has been earlier determined. It is not a matter that has already been adjudicated and it is not a matter where that issue has been solemnly and with certainty determined. I turn to consider the appellant's second submission that Dr Williams' assessment of 55% took into account all the appellant's disabilities resulting from other injuries including the awards of 7.6% percent and 8% respectively. The evidence discloses that Dr Williams made his initial assessment in his report of 24th of August 1993. That report makes it clear that Dr Williams, who is a psychiatrist, was giving an assessment in percentage terms of losses relating to a mental disorder and the major effects on personality functioning. He stated that the percentage effect was in the moderate to severe range (55% - 75%). Following Justice Smellie's decision, Mr Williams was asked if he could be more precise as to the exact percentage of disability within the range that he had earlier given. Dr Williams did not re-examine the appellant nor consider any additional medical evidence, he simply reported that he had again looked at the AMI Guidelines and on looking again at his report he felt that the appropriate figure was at the lower level of 55%. It so happens that Mr Mee, Neurosurgeon, did not make his assessment in respect of the appellant's head injuries suffered in a fall until December 1995. His assessment of the percentage of disability was directed to the loss of sensation of the ophthalmic branch of the trigeminal nerve and trigeminal region pain. He placed a combined percentage of impairment of 8% of the whole person. Little is known of the details of the other injury suffered by the appellant for which a lump sum was paid but it was a physical injury rather than the mental injuries with which Mr Williams was concerned. Therefore I find as a fact that Mr Williams did not include any other injuries when he made his assessment of the appellant's permanent disability for the purposes of a lump sum settlement under section 1 19 of the 1972 Act. Counsel for the appellant's final submission was that the provisions of section 54(14) only allowed for a deduction for any previous lump sum award in respect of the same injury for which an assessment for independence allowance was being made. Counsel cited the decision of Hart (supra) in support. Having considered His Honour Judge Middleton's decision in Hart I find that it is not supportive of the appellant's submission. In fact the particular aspect of that decision to which counsel refers was a decision of His Honour relating to section 148 of the 1992 Act, being the transitional provision whereby a person who had obtained a lump sum in respect of a particular personal injury could nevertheless apply for an independence allowance in relation to that particular injury if there had been an increased degree of permanent loss or impairment since that lump sum payment. In those circumstances the percentage upon which that lump sum was based was required to be deducted from the amount of any whole person impairment that may be assessed under section 54 and section 54A of the 1992 Act. 9 That decision was upon an entirely different point than the issue which has been raised in this appeal. On the other hand there is authority from this Court and also from the High Court that section 54 (14) is not so confined to previous settlements involving the same injury. The High Court decision of ARCIC v Allen (AP 100/96 Wellington Registry). His Honour Justice Gallon at page 10 of his judgment stated: "Whilst of course the assessments are reached on a different basis because of changes in legislation, nevertheless it is a reduction of one percentage of disability by another percentage of disability. The clear purpose and intent of the legislation in our view require that there be a subtraction process in reducing the percentage of disability upon which a payment is assessed and a proper interpretation of the subsection does not justify the use of calculation process by which there is a multiplication of a figure expressed in percentage terms. In any case where a disability exists it is not possible to say that it can be reduced to nothing. That is an absurdity. However the reducing exercise does not relate tot he disability which as a matter of common sense remains but to the formula which determines whether an independence allowance can be made. In our case what diminishes or is lessened in size is the disability expressed as a percentage for the purpose of obtaining an independence allowance and such diminution can only logically arise through the deduction of the former disability percentage from present disability." The matter has also been considered by this Court in the decision of Bourke (39/97) where His Honour Judge Middleton stated: "The appellant was concerned that as his previous lump sum assessment was made in respect of serious industrial deafness arising out of his previous occupation as a mine worker it had no relationship to the injury to his thumb. As I explained to him the section makes no differentiation between the nature 10 of the particular injury for which the award is made. This section simply requires the respondent to have the assessment of permanent disability made and if it is less than the assessment of a permanent disability for which he has already received an award under the 1992 Act. While in the circumstances, this may appear to be harsh that is the clear interpretation of the section and the respondent and this Court are bound to apply to it in that way. I explained to the appellant that I sympathise with him in his position, but I have absolutely no discretion in this matter and the appeal must be dismissed." The foregoing decisions are simply correctly interpreting section 54(14) and in particular the phrase "shall be reduced by the percentage or percentages of permanent loss for impairment of bodily function upon which any payment or payments ... were based. " The words "any payment" clearly cannot mean that the payment must be limited to a particular injury. I therefore, follow and adopt the decision of the High Court and the previous decisions of this Court on this point. For the foregoing reasons therefore, I find that the respondent was entitled to take account of all the percentages on which lump sum payments had been made to the appellant for previous personal injuries and that the final percentage upon which the appellant's entitlement to an independence allowance was made was correctly fixed at 29.4%. This appeal is therefore dismissed. DATED at WELLINGTON this 4th day of June 1999 Death M J Beattie District Court Judge Erwood.doc(gm)