Donaldson v Accident Compensation Corporation

IN THE DISTRICT COURT AT CHRISTCHURCH DECISION NO 128/ 2007 UNDER The Injury Prevention, Rehabilitation and Compensation Act 2001 IN THE MATTER of an application for leave to appeal BETWEEN SHELLEY JUSTINE DONALDSON (Estate of David Alexander Dowell) Appellant (Appeal No: AI 578/02) AND ACCIDENT COMPENSATION CORPORATION Respondent DECISION ON APPLICATION FOR LEAVE TO APPEAL TO THE HIGH COURT Introduction 1. The appellant is the mother of Caitlin Emma Donaldson, a child born on 12 March 1991. The late David Alexander Dowell ("the deceased") was adjudged the father of Caitlin by order of the District Court at Hokitika dated 2 December 1992. 2. Prior to January 1997, the deceased lived and worked in New Zealand. However, on 6 January 1997 he started working in Bolivia. His contract with the Bolivian employer was for a term of one year commencing 6 January 1997. 3, On 7 May 1997 the deceased was killed as a result of an accident in Bolivia. 4. In September 2001 the appellant lodged a claim for backdated childcare in respect of Caitlin. On 30 November 2001, ACC declined the claim because it considered that, as at the date of his death, the deceased was not ordinarily resident in New Zealand. Accordingly he did not have cover under the Accident Insurance Act 1998. 5. Until his departure overseas, the deceased had lived with his parents in Hokitika, owned a motor vehicle which remained in Hokitika, and operated a bank account there. Both parties to this application recognise that the deceased intended to return to New Zealand at the expiration of his contract. 6. The contract of employment was governed by the laws of Bolivia. The deceased was paid in Bolivian currency and was taxed at the applicable rate by the Bolivian tax authorities. 7 . After an unsuccessful review hearing, the appellant appealed to the District Court on 8 November 2005. The appeal was dismissed. The Issue 8. The issue that needed to be determined at the hearing was whether at the date of his death the deceased was "ordinarily resident in New Zealand" in accordance with s 41(1)(c) Accident Insurance Act 1998. It is agreed that if the deceased was "ordinarily resident in New Zealand" when the accident occurred then he would have had cover in terms of s 41. Application for Leave to Appeal 9. The grant of leave requires that the appellant show a tenable case that the decision of the District Court was wrong in law. 10. Over the years, the Courts have given some guidance as to what constitutes a point of law: 10.1 The issue must arise squarely from "the decision" challenged: eg Jackson v ACC unreported, HC Auckland, Priestley J, 14 February 2002, AP 404-96-01; Kenyon v ACC (2002) NZAR 385, 390 Fisher J. Leave cannot for instance properly be granted in respect of obiter comment in a judgment: Albert v ARCIC unreported, France J, HC Wellington, AP 287/01, 15 October 2002; 10.2 The contended point of law must be "capable of bona fide and serious argument" to qualify for the grant of leave: eg Impact Manufacturing unreported, Doogue J, HC Wellington, AP 266/00, 6 July 2001; 10.3 Care must be taken to avoid allowing issues of fact to be dressed up as questions of law; appeals on the former being proscribed: eg Northland Co-operative Dairy Co Ltd v Rapana [1999] 1 ERNZ 361, 363 (CA); and 10.4 Where an appeal is limited to questions of law, a mixed question of law and fact is a matter of law: CIR v Walker [1963] NZLR 339, 354. 10.5 It is well settled that a decision-maker's treatment of facts can amount to an error of law. There will be an error of law where there is no evidence to support the decision, the evidence is inconsistent with, and contradictory of the decision, or the true and only reasonable conclusion on the evidence contradicts the decision: Edwards v Bairstow [1995] 3 All ER 48, 57. 10.6 Whether or not a statutory provision has been properly construed or interpreted and applied to the facts is a question of law: Commissioner of Inland Revenue v Walker [1963] NZLR 339, 353-354 (CA); Edwards & Bairstow [1995] 3 All ER 48, 57. 10.7 Even if the qualifying criteria are made out, the Court has an extensive discretion in the grant or refusal of leave so as to ensure proper use of scarce judicial resources. Leave is not to be granted as a matter of course. One factor in the grant of leave is the wider importance of any contended point of law: eg Jackson and Kenyon above. 10.8 Recently, the Supreme Court when quashing a decision of the Court of Appeal that it had jurisdiction to entertain a matter as an appeal on law stated in Bryson v Three Foot Six Limited [2005] NZSC 34: "[21] ... The task which the Lower Court is engaged upon is the application of the law to the facts before it in the individual case. It involves a question of law only when the law requires that a certain answer be given because the facts permit only one answer. Where a decision either way is fairly open, depending on the view taken, it is treated as a decision of fact, able to be impugned only if in the process of determination the decision maker misdirects itself in law... [25] An appeal cannot, however, be said to be on a question of law where the fact finding Court has merely applied law which it has correctly understood to the facts of an individual case. It is for the Court to weigh the relevant facts in the light of the applicable law. Provided that the Court has not overlooked any relevant matter or taken account of some matter which is irrelevant to the proper application of the law, the conclusion is a matter for the fact finding Court, unless it is clearly unsupportable. (40] .. Whether or not Judges in an appellate Court might, if sitting in the Employment Court, have reached a different conclusion, as the majority in the Court of Appeal certainly would have done, it cannot be said that Judge Shaw has made a decision which is inconsistent with the evidence or contradictory of it or one which can properly be described as "insupportable"." Relevant Legislation 11. Section 41(1) Accident Insurance Act 1998 states: (1) An insured has cover for a personal injury if- (a) He or she suffers the personal injury outside New Zealand on or after 1 July 1999; and (b) The personal injury is any of the kinds of injuries described in s 29(1)(a), (b), or (c); and (c) the insured is ordinarily resident in New Zealand when he or she suffers the personal injury; and (d) is one for which the insured would have cover if he or she had suffered it in New Zealand ... . (4) An insured who suffers personal injury of the kind described in s 29(1)(d) outside New Zealand does not have cover for the personal injury under this section, but under s 40" (Although the accident occurred on 7 May 1997, s 41 applies by virtue of s 423 Accident Insurance Act 1998). 12. Section 24 defines the expression "ordinarily resident in New Zealand". The relevant portions of the section read: A person is ordinarily resident in New Zealand if he or she- (a) Has New Zealand as his or her permanent place of residence, whether or not he or she also has a place of residence outside New Zealand; and (b) Is in 1 of the following categories: (i) A New Zealand citizen: ... (2) A person does not have a permanent place of residence in New Zealand if he or she has been and remains absent from New Zealand for more than 6 months or intends to be absent from New Zealand for more than 6 months. This subsection overrides subsection (3) but is subject to subsection (4). (3) A person has a permanent place of residence in New Zealand if he or she, although absent from New Zealand, has been personally present in New Zealand for a period or periods exceeding in the aggregate 183 days in the 12-month period immediately before last becoming absent from New Zealand. (A person personally present in New Zealand for part of a day is deemed to be personally present in New Zealand for the whole of that day). ( 4 ) A person does not cease to have a permanent place of residence in New Zealand because he or she is absent from New Zealand primarily in connection with the duties of his or her employment, the remuneration for which is treated as income derived in New Zealand for New Zealand income tax purposes, or for 6 months following the completion of the period of employment outside New Zealand, so long as he or she intends to resume a place of residence in New Zealand. 13. If s 24(4) applies, then the question arises as to whether the deceased's remuneration would have been treated as income derived in New Zealand for income tax purposes. In this regard, s BB3 Income Tax Act 1994 has relevance: "Section BB3 - Liability to tax of income derived from New Zealand and abroad - Subject to this Act- (a) All income derived by any person who is resident in New Zealand at the time that the person derives that income shall be assessable for income tax, whether it is derived from New Zealand or elsewhere. (b) All income derived from New Zealand shall be assessable for income tax whether the person deriving that income is resident in New Zealand or elsewhere. (c) No income which is neither derived from New Zealand nor derived by a person then resident in New Zealand shall be assessable for income tax" 14. As Judge Beattie found that s BB3(a) was relevant, it became necessary to determine whether the deceased was "resident in New Zealand". Thus, s OE1 Income Tax Act 1994 is relevant. It reads: "Section OF1 - Determination of residence of person other than a company- (1) Notwithstanding any other provision of this section, a person other than a company is resident within New Zealand within the meaning of this Act if that person has a permanent place of abode in New Zealand, whether or not that person also has a permanent place of abode outside New Zealand (2) Where a person other than a company is personally present in New Zealand for a period or periods exceeding in the aggregate 183 days in any period of 12 months, that person shall be deemed to be resident in New Zealand from the first day within that period of 12 months on which that person was permanently present in New Zealand. (3) Where a person other than a company is resident in New Zealand and is personally absent from New Zealand for a period or periods exceeding the aggregate 325 days in any period of 12 months that person shall be deemed not to be resident in New Zealand on the first day within that period of 12 months on which that person was personally absent from New Zealand and subject to this section thereafter". 15. Judge Beattie considered s OE(4) Income Tax Act 1994 relevant. The section determines which classes of income are deemed to be derived from New Zealand. Section OE(4)(c) reads: "all salaries, wages and allowances and emoluments of any kind earned in New Zealand in the service of any employer or principal whether resident in New Zealand or elsewhere" Case for ACC 16. For ACC, it is argued that the determination as to whether the deceased at the date of his death was a person ordinarily resident in New Zealand was a question of fact and not law. To determine the appeal, a factual inquiry was required. This was not a case where the facts permitted "only one answer" ( Bryson) and Judge Beattie properly applied the relevant statutes. Judge Beattie's Decision 17. In his decision, Judge Beattie recognised that he needed to determine whether the deceased at his death was "ordinarily resident in New Zealand". He considered s 24 and concluded that s 24(4) was applicable. He stated that the key issue was whether the deceased's remuneration for his contract in Bolivia would be treated as income derived in New Zealand for income tax purposes. (He recognised that the deceased's situation did satisfy the requirements of s 24(1)(a) and (b)(i)). 18. He then referred to s BB3(a), recognising that if the income were derived from a person who could be described as being "resident in New Zealand" that income would be assessable for New Zealand income tax (notwithstanding it might have been derived from out of New Zealand). To determine whether or not the income derived by the deceased was derived by "a person who is resident in New Zealand" he looked to s OE1. He concluded that the deceased could not be regarded as being a person whose remuneration was income derived in New Zealand and stated "his remuneration from his Bolivian employer would not be treated as income derived in New Zealand or by a person then resident in New Zealand". He referred to s OE4(c) and concluded that the deceased was not personally present or personally absent within either of the exceptions contained in s OE1(c). He concluded: "Whilst it is the case that the deceased clearly intended to return to New Zealand at the conclusion of his contract and that he retained all trappings of intending to retain a New Zealand residency, in law he did not have a permanent place of residence in New Zealand at the time of his death. The provisions of s 24(2) and (4) are such that he must be taken as being excluded from coming within the definition of being "ordinarily resident in New Zealand". Appellant's Case 19. The appellant argues that Judge Beattie's decision did not involve a factual finding. The facts were not in dispute. Rather, it involved the application of statutory provisions to accepted facts. The appellant submits that Judge Beattie misinterpreted the relevant statutory provisions. Thus, the appeal involves a question of law arising from the decision which is capable of bona fide and serious argument. The concepts expressed in paras 10.1, 10.2 and 10.6 are relied on. Determination 20. I agree with the appellant that the facts were undisputed and the appeal involved an interpretation of the expression "ordinarily resident in New Zealand" 21. It is not for this Court, on an application for leave to appeal, to determine whether Judge Beattie correctly interpreted the relevant statutory provisions. However, in determining if there is an argument that his decision might have been wrong in law, it is useful to consider if there might be an alternative interpretation available. 22. Of the various submissions contained in the memoranda, only two raised legal points. The first reads: [7] Section 24(2) uses the words "... subject to subsection (4)" which at first reading suggests that s 24(4) assumes a superior and independent role in defining "ordinarily resident", in which case a failure to qualify under 24(4) means that a person cannot qualify under 24(2). It is submitted that this is not the case. The words "subject to .. " do not create a discrete definition for "ordinarily resident" under 24(4), but instead "subject to" provides an exception to the six month time limitation in s 24(2) where a person is overseas primarily in connection with his or her employment. [8] The qualification of s 24(4) to s 24(2) is further supported by the use of the words in s 24(2) "A person does not have a permanent place of residence in New Zealand if ..." which are followed by the words in s 24(4) "a person does not cease to have a permanent place of residence in New Zealand because ..." (my emphasis). Thus ss 24(2) and 24(4) ought to be read together and not treated as discrete definitions. [10] In summary, it is submitted that the words in s 24(2) "...subject to subsection (4)" are not intended to create a discrete definition for "ordinarily resident". Rather s 24(4) extends definition under the circumstances of being absent from New Zealand for over six months primarily in connection with employment overseas whose income is treated as income derived in New Zealand. If the facts show that s 24(4) applies, then any application of s 24(2), disqualifying residence status is over-ridden, thus s 24(2) is, in operation, subject to s 24(2). Thus s 24(4) must be read in conjunction with s 24(2) rather than both being treated as discrete defining provisions". 23. I have some difficulty with this submission. It seems to import a meaning into the second sentence of s 24(2) which contradicts what seems to me to be clear and unambiguous. Nevertheless, I confess to having some difficulty in understanding the submission and, in the circumstances, am prepared to recognise that it may raise legal argument worthy of debate. 24. The second submission reads: Strict Interpretation of 24(2) [19] Finally, due to the construction of s 24(2), the subsection requires the person to have a positive intention to remain absent from New Zealand. The drafters may never have considered the application of this section to a dead person. Nevertheless, under the express language used in s 24(2) the appellant must show that Mr Dowell, some time leading up to, or at the time of, his death, no longer intended to be absent from New Zealand beyond the six month period. (20] A dead person does not have any intentions and therefore it was impossible for the second limb to apply. A literal interpretation of s 24(2) means that Mr Dowell, without an intent to remain absent from New Zealand and the fact of his physical presence under the first limb, means that he is not barred from attaining ordinary residence status under s 24(2). 25. I doubt that this submission can be said to raise a point of law "capable of bona fide and serious argument". To determine the deceased's intentions, all relevant factors leading up to the date of his death are relevant. In this case, as mentioned in para 5, both parties accept that the deceased intended to return to New Zealand at the expiration of his contract. I question the relevancy of the submission. 26. I think that to determine whether or not the deceased was "ordinarily resident in New Zealand" required a consideration as to whether the deceased had New Zealand as his "permanent place of residence". If s 24(4) applied, then this involved a determination as to whether the deceased was "resident in New Zealand" at the relevant time. In terms of s OE1, this involved the determination as to whether the deceased had his "permanent place of abode" in New Zealand. It also involved a determination as to whether the deceased was "personally present in New Zealand" in terms of s OE1(2). There may be something in "Alice in Wonderland" which describes this situation. 27. Under s 24(1) Accident Insurance Act 1998 prima facie the deceased was "ordinarily resident in New Zealand" as he had a permanent place of residence in New Zealand and was a New Zealand citizen. 28. However, s 24(1) is qualified by s 24(2). The deceased ceased to have a permanent place of residence in New Zealand as he intended to be absent from New Zealand for more than six months (as indicated by his 12-month employment contract). 29. Then s 24(4) became relevant as the deceased was absent from New Zealand because of his employment; but did intend to return to New Zealand. The issue under s 24(4) is whether his remuneration derived from his Bolivian employment would have been income derived in New Zealand for New Zealand income tax purposes. (my italics) 30. To determine this, s BB3(a) Income Tax Act 1994 must be considered. In this regard, the first question which arises is if the deceased was resident in New Zealand when he earned his Bolivian income. Under s OE1(1) he was resident in New Zealand as his permanent place of abode was in New Zealand, viz. Hokitika. This conclusion is reinforced by s OE1(2) as the deceased had been personally present in New Zealand for a period exceeding 183 days for the 12 months preceding his death. 31. In his decision Judge Beattie thought that s OE(4)(c) applied. Section OF(4) determines which classes of income are deemed to be derived from New Zealand. However, s 24(4) qualifies the words "income derived in New Zealand" by the words "for income tax purposes". Perhaps, then, it could be argued that s BB3(a) applies as it determines which income is assessable for income tax - viz. "income tax purposes" (s 24(4). 32. Under s BB3(a) whether or not the income is deemed to have been derived in New Zealand is irrelevant for taxation assessment purposes. Regardless of where the income was derived, if the deceased was resident in New Zealand at the time it was derived, then, that income became assessable for New Zealand income tax: thus it would have been treated as income derived in New Zealand. 33. If this is correct, then, in terms of s 24(c) and (4), the deceased at the time of his death would have been "ordinarily resident in New Zealand and would have had cover for the personal injury in terms of s 41(1). If an argument such as this is to succeed, the "purpose" provisions of the Interpretation Act 1989 may be relevant. Conclusion 34. From the foregoing, it will be apparent that I have found the interpretation of the relevant statutory provisions difficult. Whilst I have tentatively suggested a different conclusion from Judge Beattie, this does not mean that Judge Beattie's conclusion is incorrect. However, it does indicate that the appeal involves questions of law which are capable of bona fide and serious argument. 35. Accordingly, the application for leave to appeal to the High Court is allowed. Dated at Wellington the 19th day of June 2007 at 12.30 am/pm Judge J D Hole