Roydhouse v Accident Rehabilitation and Compensation Insurance Corporation

IN THE DISTRICT COURT Decision No. 1 197 HELD AT WELLINGTON 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 SOPHIA JANE ROYDHOUSE Appellant (Appeal No. DCA 28/96) AND ACCIDENT REHABILITATION AND COMPENSATION INSURANCE CORPORATION a body corporate duly constituted under the provisions of the said Act Respondent HEARD on the 19th day of November 1996 R G Hall for appellant G S Hancock for respondent DECISION OF JUDGE D A ONGLEY. This is an appeal in respect of a claim for legal costs incurred in assisting the claimant. The costs do not relate to a review application but to the legal work involved in negotiating the claim with the Corporation. A special aspect of the claim is that the claimant was a young woman who had suffered through medical misadventure as a result of misdiagnosis of a congenital hip abnormality when she was aged 7. A claim was filed by her solicitors in time to obtain lump sum compensation under the Accident Compensation Act 1982. The claim was certainly one that justified or required legal professional advice and assistance in order to properly establish the claim. - 2- The appellant's submission is that the legal costs were incurred in connection with a claim that was made and granted under the 1982 Act. The respondent submits that the legal expenses were substantially incurred after the commencement of the 1992 Act and the claim has to be considered under that Act. The only statutory provision that enables payment of losses and expenses is s 80 of the 1982 Act. There is also a question of the application for review bring brought out of time. I have concluded in any case that costs cannot be claimed so the point of extension of time does not have to be considered. I think that the respondent is correct in submitting that the claim is brought under the 1992 Act. It is not a claim for a form of compensation under the 1982 Act preserved by the 1992. But there is no necessity to wade through the labyrinth of transitional provisions under the 1992 Act because it appears, in any case, that the claim would fail under either Act. Under the 1982 Act the Corporation had power to meet actual and reasonable expenses and proved losses "necessarily and directly resulting from the injury". There is a line of decisions of the Accident Compensation Authority refusing payment of legal costs under s 80 particularly Stebbing 14.3.78, Flannigan 352/92 and Bagnall 257/95. The principle reflected in those decisions is that legal costs are not an expense necessarily and directly resulting from the injury. Mr Hall submitted that a strict interpretation of that section would exclude even medical costs, because a person does not necessarily have to accept medical treatment. If such a strict interpretation is wrong then, the appellant submits, the section confers not only a right to compensation for medical costs necessarily and directly resulting from the injury, but also incidental costs such as legal costs necessarily and directly resulting from the injury. It is argued, in this case, that because of the complexity of the claim and the young age of the claimant, the legal costs were necessarily and directly incurred. The distinction which has been drawn by the Accident Compensation Appeal Authority is that a claim for compensation is a collateral question that does not arise necessarily and directly from the injury. A direct consequence of an injury is the need for treatment and the cost of professional and technical services required in the course of treatment. Compensation is a different matter. It is a remedy for the effects of the injury on the claimant's enjoyment of life and ability to engage in employment or carry out other responsibilities. Unlike treatment and associated costs, it does not address the injury directly but instead addresses the consequences of the injury on the life of the injured person. Compensation takes different forms, sometimes dealing with a replacement of financial support through earnings, or dealing with a range of compensatable consequences including physical, social and vocational rehabilitation. There is a clear difference between the necessary cost of treatment for the injury and the cost of obtaining a remedy for consequential losses. Section 80 has been interpreted in the past on the basis that it is not wide enough to encompass the latter. There is no reason to review that accepted interpretation of the section. In some cases the need for legal advice will be more acute because of complexity or other reasons. However, that is not the point. The reason that legal costs have traditionally been - 3- excluded is because the seeking of compensation is itself a collateral result and not a necessary and direct result of the injury. The expression "necessarily and directly resulting from the injury" invites an interpretation excluding compensation for consequences of injury. The view which the Appeal Authority has taken over the years is amply justified and it would not be appropriate for this Court to adopt a different interpretation. The claim must fail if it is made under the 1982 Act. Under the 1992 Act there is no provision at all and the claim must also fail under that Act. The appeal is therefore dismissed. DATED at WELLINGTON this 23'd day of JANUARY 199 7. D A Ongley District Court Judge