Withers v The Accident Compensation Corporation [2004] NZCA 84 (8 June 2004)

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Withers v The Accident Compensation Corporation [2004] NZCA 84 (8 June 2004)

Last Updated: 30 June 2004

IN THE COURT OF APPEAL OF NEW ZEALAND

CA129/03

BETWEEN MICHAEL MELVYN WITHERS
Appellant

AND ACCIDENT COMPENSATION CORPORATION
Respondent

Hearing: 20 May 2004

Coram: Anderson P
McGrath J
Chambers J

Appearances: J C Gwilliam for Appellant
B A Corkill and N D Lawson for Respondent

Judgment: 8 June 2004

JUDGMENT OF THE COURT DELIVERED BY CHAMBERS J

[1] Recently this court delivered judgment in a case which threw up some tricky transitional problems arising from wholesale revisions of the accident compensation legislation: see Thimbleby v Accident Compensation Corporation CA42/03 12 May 2004. Now we have another one: this one is even more complicated, as to get to the right result one has to consider all four major revisions of the original Accident Compensation Act 1972. The exercise of statutory interpretation required in this case challenges even skilled practitioners in the field, such as those who presented the case before us.
[2] In December 1988 Michael Withers was gardening. In the course of shifting some bricks he strained his back. He had a week off work and then resumed his employment as a bus driver. In January 1990, he injured his back again. It was another lifting incident. He sought medical attention. He was certified as unfit for work. He applied for cover and earnings related compensation. The Accident Compensation Corporation granted cover. It started paying earnings related compensation. Mr Withers has never worked since.
[3] In 1999, ACC decided to have Mr Withers’s medical condition reviewed. As a result of that review, ACC decided on 11 September 2000 that Mr Withers was no longer covered by the accident compensation scheme and that his entitlements to compensation should cease. ACC determined, on the basis of medical evidence it obtained, that Mr Withers’s current back problem was not a result of the incidents of 1988 or 1990. His ongoing incapacity was wholly or substantially due to degenerative lumbar spondylosis and two level spinal fusion. ACC noted that Mr Withers had had a history of back problems, dating back to well before the 1988 incident.
[4] Mr Withers applied to review ACC’s decision. On 8 December 2000, the reviewer upheld the decision. He found, on the balance of probabilities, that the onus of proof in connecting Mr Withers’s current symptoms to his 1988 injury had not been satisfied.
[5] Mr Withers appealed to the District Court. Judge Beattie dismissed the appeal on 28 September 2001. Mr Withers did not attempt to appeal that decision further.
[6] Rather, almost a year later, he commenced an application for judicial review under the Judicature Amendment Act 1972 in the High Court at Wellington. He argued that ACC’s decision of 11 September 2000 to suspend his weekly compensation was unlawful, as it had not been made under the correct Act. The statement of claim ignored the fact that Mr Withers had applied unsuccessfully for a review of that decision. It also ignored the fact that he had prosecuted an appeal from the review decision.
[7] ACC applied to strike out the application for judicial review and the statement of claim on which it was based. There were two grounds for the strike-out. First, ACC contended that Mr Withers’s legal analysis of the relevant legislation was wrong. Secondly, ACC said, that in any event, there was a privative provision in the legislation which prevented recourse to the courts other than by means of the appeal procedure which has been a feature of every Act in this field. Goddard J heard the application to strike out. On 6 May last year she granted it. She accepted ACC’s statutory analysis. She also considered that the privative provision relied on by ACC prevented the prosecution of the application for judicial review.
[8] Mr Withers appealed against Goddard J’s decision to strike out. The essential issues on the appeal remain as they were before Goddard J. They are:

(a) Did ACC adopt the correct procedure when cancelling Mr Withers’s compensation? This issue involves an analysis of the accident compensation legislation and, in particular, an analysis of what Act or Acts Mr Withers’s case was governed by.

(b) Is Mr Withers’s application for review barred by the privative provision in one or other of the Acts?

[9] Goddard J found against Mr Withers on both grounds. If Mr Withers is to succeed on this appeal, he must show us that Her Honour was wrong on both counts.

Legal analysis of Mr Withers’s position, step by step

[10] The decision under challenge in this case is ACC’s decision of 11 September 2000. At that date, the Accident Insurance Act 1998 was in force, but, because of the complicated transitional provisions in that Act, it is necessary to track Mr Withers’s position back to 1990. That was when he first applied for cover under the Accident Compensation Act 1982 and was granted it.
[11] It is common ground that in 1990 ACC accepted that Mr Withers had suffered personal injury by accident and was entitled to cover under the Act. It is also accepted that ACC thereafter paid Mr Withers’s earnings related compensation under s59 of the 1982 Act. It is also accepted that ACC at no time made an assessment of permanent incapacity in terms of s60 of the 1982 Act.
[12] In 1992, Parliament passed the Accident Rehabilitation and Compensation Insurance Act 1992. For current purposes, that Act can be regarded as having come into force on 1 July 1992. That Act repealed the 1982 Act. It contained detailed transitional provisions. Section 138 of the 1992 Act (as enacted in 1992) read as follows:

138. Weekly compensation – (1) Where any person is, immediately before the 1^st day of July 1992, in receipt of or would have been entitled to be in receipt of compensation calculated under any of the provisions of sections 113, 114, 116, 117, and 118 of the Accident Compensation Act 1972 or of sections 59, 60, 61, 62, 63, 64, and 88 of the Accident Compensation Act 1982, that compensation shall continue to be payable or be paid as if it had been calculated under this Act; and the personal injury by accident suffered by that person shall be deemed to be personal injury within the meaning of this Act.
(2) Notwithstanding subsection (1) of this section, adjustments to the calculations referred to in that subsection that are to be made other than pursuant to an Order in Council or regulations shall be made under the Accident Compensation Act 1972 or the Accident Compensation Act 1982, as appropriate.

[13] The effect of s138 on Mr Withers was:

a) He was deemed to have suffered "personal injury" within the meaning of the 1992 Act;
b) He continued to be entitled to the same compensation he had been receiving as if it had been calculated under the 1992 Act;
c) Any adjustments to the calculation of his compensation had to be made under the 1982 Act, unless the adjustment was one required by an Order in Council or regulations.

[14] Section 139 of the 1992 Act provided that "the continued eligibility of any person to receive compensation under section 138 of [the 1992] Act shall be determined in accordance with [the 1992] Act". That provision had the effect of bringing into play s73 of the 1992 Act. Under s73, ACC was required to suspend or cancel the payment of compensation "if not satisfied on the basis of the information in its possession that a person [was] entitled to continue to receive [that] compensation".
[15] ACC did not review Mr Withers’s entitlement to compensation while the 1992 Act was in force. Had it done so, however, and had it come to the same opinion as it did in September 2000, there can be no doubt that it could have suspended or cancelled Mr Withers’s entitlement to compensation under ss139 and 73. Had Mr Withers’s disputed the decision, he could have applied to review it under s89 of the 1992 Act. He would have had further rights of appeal under that Act as well.
[16] In 1998, Parliament passed the Accident Insurance Act 1998. For present purposes, that Act can be regarded as coming into force on 1 July 1999. The 1998 Act repealed the 1992 Act. Mr Withers’s position after 1 July 1999 was governed by Part 13 of the 1998 Act. Part 13, encompassing ss418-482, contained a number of detailed transitional provisions. The purpose of Part 13 was to set out entitlements of those who had suffered personal injury before 1 July 1999, which might involve applying a former Act: see s420.
[17] By s421, if a claim for cover for a person had been accepted before 1 July 1999 for personal injury covered by one of the former Acts (by which was meant the 1972 Act, the 1982 Act, or the 1992 Act), that person was deemed to have cover under Part 3 of the 1998 Act. By this means, Mr Withers got cover under Part 3 of the 1998 Act. His personal injury was of the kind described in s29(1)(b). It was caused by an accident, in terms of s39(1)(c) and (2)(a).
[18] Section 426(1) of the 1998 Act provided as follows:

Sections 427 to 442 provide for entitlements for a person who, having suffered personal injury before 1 July 1999, has cover accepted under any of ss421 to 423.

[19] Mr Withers had cover accepted under s421. Accordingly, his entitlements after 1 July 1999 were governed by ss427 to 442 of the 1998 Act. How ACC was to determine those entitlements was set out in s426(3): ACC was to utilise the procedure under Part 5 of the 1998 Act, unless the effect of any of ss427 to 450 was to the contrary.
[20] The relevant section so far as Mr Withers was concerned is s429. By subs(2), Mr Withers, after 1 July 1999, continued to be entitled to compensation under s138(1) of the 1992 Act. By subs(3), changes in the calculation of the compensation (apart from changes made under an Order in Council or regulations or under s430) had to be made in accordance with the 1982 Act.
[21] The significance of this transitional provision so far as Mr Withers was concerned was that:

a) He remained entitled to compensation under the 1992 Act;
b) Any changes in the calculation of that compensation were, generally speaking, to be made in accordance with the 1982 Act.

[22] One of the sections in Part 5 of the 1998 Act was s116. Subsection (1) of that section read as follows:

[ACC] may suspend a statutory entitlement if it is not satisfied, on the basis of the information in its possession, that an insured is entitled to continue to receive the statutory entitlement.

[23] Section 116(1) is the successor to s73(1) of the 1992 Act. The only change of significance for current purposes is that the power conferred by s116 is limited to a power of suspension, whereas under the old s73 ACC could also "cancel". ACC’s decision of 11 September 2000 was purportedly made under s116. Its entitlement to act under that section was not questioned before the reviewer or Judge Beattie. It is, however, challenged in the present proceeding.
[24] Mr Gwilliam, for Mr Withers, argues as follows. Mr Withers’s entitlement to weekly compensation was not "a statutory entitlement" as that term is defined in s13 of the 1998 Act. Accordingly, ACC had no power to suspend it under s116. Mr Gwilliam submitted that the relevant section was s87 in the 1982 Act. Under that section, ACC was entitled to suspend payment of compensation if a person unreasonably refused to submit to medical examination or medical or surgical treatment. That section is far more limited in its scope than s116 of the 1998 Act. Clearly, if s87 of the 1982 Act is the appropriate section, ACC has acted wrongly in suspending Mr Withers’s compensation, as there is no suggestion that he has refused to submit to medical examination or treatment. Mr Gwilliam argued that s87 of the 1982 Act was applicable by virtue of s429(3) of the 1998 Act. He argued that what ACC was effectively wanting to do was change "the calculation of the compensation". Such a change, he submitted, could be made only in accordance with the 1982 Act.
[25] Goddard J did not accept Mr Gwilliam’s argument on this point. Nor do we. We are satisfied that ACC acted lawfully when it made its decision under s116 of the 1998 Act. We accept that Mr Withers’s entitlement was not "a statutory entitlement" as defined in s13 of the 1998 Act, but we do not consider that that prevented ACC from relying on s116 in this case. That is because of the effect of s426(3) of the 1998 Act. That subsection required ACC to determine entitlements under, inter alia, s429 "under Part 5", unless the effect of any of ss427 to 450 was to the contrary. Clearly, the power to determine entitlements includes the power to determine the cessation of entitlements. Part 5 contained a provision applicable to the suspension of entitlement: that was s116. In the context where the entitlement arose under Part 13, s116 should be read as applying to it. The definition of "statutory entitlement", like all definitions in s13 of the 1998 Act, is expressed to be subject to context requiring a different interpretation. A different interpretation is here required because of s426(3).
[26] Contrary to Mr Gwilliam’s submission, we do not accept that a decision that someone is no longer suffering "personal injury" as defined in the 1992 Act is a decision to "[change] the calculation of the compensation" for the purposes of s429(3) of the 1998 Act. It is a much more fundamental decision which fell to be determined under the 1998 Act.
[27] Mr Withers’s application for review is fundamentally misconceived. Contrary to the pleading in his statement of claim, ACC was able to utilise s116 of the 1998 Act: that section did apply to Mr Withers at the date on which the decision was made. Since the grounds of alleged invalidity were all ultimately founded on ACC’s reliance on s116, the claim was properly struck out in the High Court.
[28] We record that the above analysis is in essence that advanced by Mr Corkill, for ACC. We have accepted that his analysis is correct, as did Goddard J in the High Court.

The privative provision

[29] In view of our finding on the first point, it is unnecessary to consider the second ground on which ACC relied on its strike-out application. That was a privative provision. There was dispute before us as to which privative provision applied, if any. Mr Withers commenced his application for review on 13 September 2002. By that date the Injury Prevention, Rehabilitation, and Compensation Act 2001 was in force. That Act repealed the 1998 Act: see s339(1).
[30] Mr Gwilliam accepted that, if we upheld Goddard J on the statutory analysis (as we have), then the application for review was doomed. In those circumstances, whether the claim may also have been barred by a privative provision becomes irrelevant.
[31] Mr Corkill submitted that, if Mr Gwilliam’s statutory analysis was accurate, the application for review would still be barred by a privative provision in the 1998 Act. We are not certain that this is necessarily right. But we take the analysis no further because we consider that the discussion is based on Mr Gwilliam’s flawed statutory analysis.
[32] The privative provisions work as they are supposed to when the 1998 Act is correctly interpreted. But when the 1998 Act is correctly interpreted, ACC does not need to rely on a privative provision to defeat this application for review: that is because it must fail in any event for the reasons given in the previous section of this judgment.

Result

[33] We agree with Goddard J that ACC was entitled to make a determination under s116 of the 1998 Act in respect of Mr Withers’s entitlement to weekly compensation. Accordingly, Mr Withers’s application for review, based as it was on a premise that s116 of the 1998 Act was inapplicable, is misconceived and must fail. It follows that Goddard J was right to strike out the statement of claim on that basis. We dismiss the appeal from her judgment.
[34] We note that Goddard J made no order for costs in the High Court. That may be because Mr Withers is legally aided. If he is legally aided, then presumably ACC will not seek costs. If he is not legally aided, then we consider that he should pay costs to ACC. We trust that the parties will be able to resolve any questions of costs. If they cannot, then memorandums may be filed. Costs will be dealt with on the papers.

Solicitors
John Gwilliam & Co, Upper Hutt for Appellant
Manager Legal Services, Accident Compensation Corporation for Respondent

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[1]	Recently this court delivered judgment in a case which threw up some tricky transitional problems arising from wholesale revisions of the accident compensation legislation: see Thimbleby v Accident Compensation Corporation CA42/03 12 May 2004. Now we have another one: this one is even more complicated, as to get to the right result one has to consider all four major revisions of the original Accident Compensation Act 1972. The exercise of statutory interpretation required in this case challenges even skilled practitioners in the field, such as those who presented the case before us.
[2]	In December 1988 Michael Withers was gardening. In the course of shifting some bricks he strained his back. He had a week off work and then resumed his employment as a bus driver. In January 1990, he injured his back again. It was another lifting incident. He sought medical attention. He was certified as unfit for work. He applied for cover and earnings related compensation. The Accident Compensation Corporation granted cover. It started paying earnings related compensation. Mr Withers has never worked since.
[3]	In 1999, ACC decided to have Mr Withers’s medical condition reviewed. As a result of that review, ACC decided on 11 September 2000 that Mr Withers was no longer covered by the accident compensation scheme and that his entitlements to compensation should cease. ACC determined, on the basis of medical evidence it obtained, that Mr Withers’s current back problem was not a result of the incidents of 1988 or 1990. His ongoing incapacity was wholly or substantially due to degenerative lumbar spondylosis and two level spinal fusion. ACC noted that Mr Withers had had a history of back problems, dating back to well before the 1988 incident.
[4]	Mr Withers applied to review ACC’s decision. On 8 December 2000, the reviewer upheld the decision. He found, on the balance of probabilities, that the onus of proof in connecting Mr Withers’s current symptoms to his 1988 injury had not been satisfied.
[5]	Mr Withers appealed to the District Court. Judge Beattie dismissed the appeal on 28 September 2001. Mr Withers did not attempt to appeal that decision further.
[6]	Rather, almost a year later, he commenced an application for judicial review under the Judicature Amendment Act 1972 in the High Court at Wellington. He argued that ACC’s decision of 11 September 2000 to suspend his weekly compensation was unlawful, as it had not been made under the correct Act. The statement of claim ignored the fact that Mr Withers had applied unsuccessfully for a review of that decision. It also ignored the fact that he had prosecuted an appeal from the review decision.
[7]	ACC applied to strike out the application for judicial review and the statement of claim on which it was based. There were two grounds for the strike-out. First, ACC contended that Mr Withers’s legal analysis of the relevant legislation was wrong. Secondly, ACC said, that in any event, there was a privative provision in the legislation which prevented recourse to the courts other than by means of the appeal procedure which has been a feature of every Act in this field. Goddard J heard the application to strike out. On 6 May last year she granted it. She accepted ACC’s statutory analysis. She also considered that the privative provision relied on by ACC prevented the prosecution of the application for judicial review.
[8]	Mr Withers appealed against Goddard J’s decision to strike out. The essential issues on the appeal remain as they were before Goddard J. They are:

[10]	The decision under challenge in this case is ACC’s decision of 11 September 2000. At that date, the Accident Insurance Act 1998 was in force, but, because of the complicated transitional provisions in that Act, it is necessary to track Mr Withers’s position back to 1990. That was when he first applied for cover under the Accident Compensation Act 1982 and was granted it.
[11]	It is common ground that in 1990 ACC accepted that Mr Withers had suffered personal injury by accident and was entitled to cover under the Act. It is also accepted that ACC thereafter paid Mr Withers’s earnings related compensation under s59 of the 1982 Act. It is also accepted that ACC at no time made an assessment of permanent incapacity in terms of s60 of the 1982 Act.
[12]	In 1992, Parliament passed the Accident Rehabilitation and Compensation Insurance Act 1992. For current purposes, that Act can be regarded as having come into force on 1 July 1992. That Act repealed the 1982 Act. It contained detailed transitional provisions. Section 138 of the 1992 Act (as enacted in 1992) read as follows:

[14]	Section 139 of the 1992 Act provided that "the continued eligibility of any person to receive compensation under section 138 of [the 1992] Act shall be determined in accordance with [the 1992] Act". That provision had the effect of bringing into play s73 of the 1992 Act. Under s73, ACC was required to suspend or cancel the payment of compensation "if not satisfied on the basis of the information in its possession that a person [was] entitled to continue to receive [that] compensation".
[15]	ACC did not review Mr Withers’s entitlement to compensation while the 1992 Act was in force. Had it done so, however, and had it come to the same opinion as it did in September 2000, there can be no doubt that it could have suspended or cancelled Mr Withers’s entitlement to compensation under ss139 and 73. Had Mr Withers’s disputed the decision, he could have applied to review it under s89 of the 1992 Act. He would have had further rights of appeal under that Act as well.
[16]	In 1998, Parliament passed the Accident Insurance Act 1998. For present purposes, that Act can be regarded as coming into force on 1 July 1999. The 1998 Act repealed the 1992 Act. Mr Withers’s position after 1 July 1999 was governed by Part 13 of the 1998 Act. Part 13, encompassing ss418-482, contained a number of detailed transitional provisions. The purpose of Part 13 was to set out entitlements of those who had suffered personal injury before 1 July 1999, which might involve applying a former Act: see s420.
[17]	By s421, if a claim for cover for a person had been accepted before 1 July 1999 for personal injury covered by one of the former Acts (by which was meant the 1972 Act, the 1982 Act, or the 1992 Act), that person was deemed to have cover under Part 3 of the 1998 Act. By this means, Mr Withers got cover under Part 3 of the 1998 Act. His personal injury was of the kind described in s29(1)(b). It was caused by an accident, in terms of s39(1)(c) and (2)(a).
[18]	Section 426(1) of the 1998 Act provided as follows:

[19]	Mr Withers had cover accepted under s421. Accordingly, his entitlements after 1 July 1999 were governed by ss427 to 442 of the 1998 Act. How ACC was to determine those entitlements was set out in s426(3): ACC was to utilise the procedure under Part 5 of the 1998 Act, unless the effect of any of ss427 to 450 was to the contrary.
[20]	The relevant section so far as Mr Withers was concerned is s429. By subs(2), Mr Withers, after 1 July 1999, continued to be entitled to compensation under s138(1) of the 1992 Act. By subs(3), changes in the calculation of the compensation (apart from changes made under an Order in Council or regulations or under s430) had to be made in accordance with the 1982 Act.
[21]	The significance of this transitional provision so far as Mr Withers was concerned was that:

[23]	Section 116(1) is the successor to s73(1) of the 1992 Act. The only change of significance for current purposes is that the power conferred by s116 is limited to a power of suspension, whereas under the old s73 ACC could also "cancel". ACC’s decision of 11 September 2000 was purportedly made under s116. Its entitlement to act under that section was not questioned before the reviewer or Judge Beattie. It is, however, challenged in the present proceeding.
[24]	Mr Gwilliam, for Mr Withers, argues as follows. Mr Withers’s entitlement to weekly compensation was not "a statutory entitlement" as that term is defined in s13 of the 1998 Act. Accordingly, ACC had no power to suspend it under s116. Mr Gwilliam submitted that the relevant section was s87 in the 1982 Act. Under that section, ACC was entitled to suspend payment of compensation if a person unreasonably refused to submit to medical examination or medical or surgical treatment. That section is far more limited in its scope than s116 of the 1998 Act. Clearly, if s87 of the 1982 Act is the appropriate section, ACC has acted wrongly in suspending Mr Withers’s compensation, as there is no suggestion that he has refused to submit to medical examination or treatment. Mr Gwilliam argued that s87 of the 1982 Act was applicable by virtue of s429(3) of the 1998 Act. He argued that what ACC was effectively wanting to do was change "the calculation of the compensation". Such a change, he submitted, could be made only in accordance with the 1982 Act.
[25]	Goddard J did not accept Mr Gwilliam’s argument on this point. Nor do we. We are satisfied that ACC acted lawfully when it made its decision under s116 of the 1998 Act. We accept that Mr Withers’s entitlement was not "a statutory entitlement" as defined in s13 of the 1998 Act, but we do not consider that that prevented ACC from relying on s116 in this case. That is because of the effect of s426(3) of the 1998 Act. That subsection required ACC to determine entitlements under, inter alia, s429 "under Part 5", unless the effect of any of ss427 to 450 was to the contrary. Clearly, the power to determine entitlements includes the power to determine the cessation of entitlements. Part 5 contained a provision applicable to the suspension of entitlement: that was s116. In the context where the entitlement arose under Part 13, s116 should be read as applying to it. The definition of "statutory entitlement", like all definitions in s13 of the 1998 Act, is expressed to be subject to context requiring a different interpretation. A different interpretation is here required because of s426(3).
[26]	Contrary to Mr Gwilliam’s submission, we do not accept that a decision that someone is no longer suffering "personal injury" as defined in the 1992 Act is a decision to "[change] the calculation of the compensation" for the purposes of s429(3) of the 1998 Act. It is a much more fundamental decision which fell to be determined under the 1998 Act.
[27]	Mr Withers’s application for review is fundamentally misconceived. Contrary to the pleading in his statement of claim, ACC was able to utilise s116 of the 1998 Act: that section did apply to Mr Withers at the date on which the decision was made. Since the grounds of alleged invalidity were all ultimately founded on ACC’s reliance on s116, the claim was properly struck out in the High Court.
[28]	We record that the above analysis is in essence that advanced by Mr Corkill, for ACC. We have accepted that his analysis is correct, as did Goddard J in the High Court.

[29]	In view of our finding on the first point, it is unnecessary to consider the second ground on which ACC relied on its strike-out application. That was a privative provision. There was dispute before us as to which privative provision applied, if any. Mr Withers commenced his application for review on 13 September 2002. By that date the Injury Prevention, Rehabilitation, and Compensation Act 2001 was in force. That Act repealed the 1998 Act: see s339(1).
[30]	Mr Gwilliam accepted that, if we upheld Goddard J on the statutory analysis (as we have), then the application for review was doomed. In those circumstances, whether the claim may also have been barred by a privative provision becomes irrelevant.
[31]	Mr Corkill submitted that, if Mr Gwilliam’s statutory analysis was accurate, the application for review would still be barred by a privative provision in the 1998 Act. We are not certain that this is necessarily right. But we take the analysis no further because we consider that the discussion is based on Mr Gwilliam’s flawed statutory analysis.
[32]	The privative provisions work as they are supposed to when the 1998 Act is correctly interpreted. But when the 1998 Act is correctly interpreted, ACC does not need to rely on a privative provision to defeat this application for review: that is because it must fail in any event for the reasons given in the previous section of this judgment.