Thomas v Accident Compensation Corporation [2012] NZHC 1073 (18 May 2012)

Last Updated: 23 May 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-002458 [2012] NZHC 1073

IN THE MATTER OF the Accident Rehabilitation and

Compensation Act 1992

AND

IN THE MATTER OF the Accident Compensation Act 2001

BETWEEN ALAN THOMAS Applicant

AND ACCIDENT COMPENSATION CORPORATION

Respondent

Hearing: 14 February 2012

Counsel: D G Hayes for the Applicant

D K L Tuiqereqere for the Respondent

Judgment: 18 May 2012

_{JUDGMENT OF DUFFY J}

This judgment was delivered by Justice Duffy on 18 May 2012 at 10.00 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Counsel: D G Hayes P O Box 9323 Waikato Mail Centre Hamilton 3240 for the

Applicant

Solicitors: Medico Law Limited P O Box 78965 Grey Lynn Auckland 1245 for the

Respondent

_{Copy To: Brook Law P O Box 9600 (DX GB21525) Waikato Mail Centre Hamilton 3240}

THOMAS v ACCIDENT COMPENSATION CORPORATION HC AK CIV-2011-404-002458 [18 May 2012]

[1] The applicant, Alan Thomas, seeks special leave to appeal to this Court against a decision of the District Court in which the District Court dismissed Mr Thomas’ appeal against the decision of a review officer dismissing Mr Thomas’ view of a decision of the Accident Compensation Corporation (ACC) ceasing Mr Thomas’ entitlements under the relevant legislation. The application for special leave to appeal is opposed.

Facts

[2] On 18 August 1997, ACC wrote to Mr Thomas advising him that it had cancelled his continuing entitlements, and disentitled his claim under s 73 of the Accident Rehabilitation and Compensation Insurance Act 1992 (the ARCI Act). The ARCI Act was the legislation then in force. Mr Thomas exercised his right of review, pursuant to s 90 of the ARCI Act. The review was heard on 5 January 1998.

[3] On 25 February 1998, the review officer issued a decision in which he found that, from Mr Thomas’ own evidence, he had been working. Furthermore, the available evidence was found to indicate that Mr Thomas had been working for the purposes of pecuniary gain or profit. The reviewer noted that Mr Thomas may not have enjoyed some pecuniary gain or profit as a consequence of that work because of unfortunate setbacks, but the reviewer considered that to be peripheral to the fact that Mr Thomas was working. The reviewer concluded that it was evident that Mr Thomas worked quite extensively in various businesses. The reviewer considered that Mr Thomas had set up a number of companies (without ACC’s knowledge) and claimed they were for the purpose of self-rehabilitation when, in the reviewer’s mind, those companies were set up to generate income and clearly did so. The reviewer concluded that the available evidence showed Mr Thomas was working for a considerable period of time without ACC’s knowledge, and the reviewer rejected Mr Thomas’ statements that the activities he was obviously involved in were only part of a rehabilitation programme and not work at all. Accordingly, the reviewer found the Corporation’s decision to cancel Mr Thomas’ continuing entitlements and to disentitle his claim to be sound.

[4] Mr Thomas then exercised his right of appeal to the District Court. Section 92 of the ARCI Act provided that appeals to the District Court were by way of rehearing. The appeal was heard on diverse dates between 2006 and 2009, and a decision issued on 21 April 2010. The decision of the District Court, which ran to 95 pages, was that the District Court was left in no doubt that the detailed evidence adduced before it showed that as at 18 August 1997, Mr Thomas was not incapacitated, by reason of personal injury, from performing the type of work he undertook prior to 27 December 1989 (being the date of his accident). The District Court Judge also concluded that as at 18 August 1997, Mr Thomas was working full-time as a controlling executive in the companies in which he had an interest. The District Court Judge concluded that, on the balance of probabilities, ACC was entitled to be satisfied from the information then available to it and in its possession that Mr Thomas was not entitled to continue receiving entitlements and that they should be suspended.

[5] Mr Thomas applied to the District Court for leave to appeal to this Court. On

11 April 2011, the District Court refused leave. Hence, the application that has now been made to this Court.

Law

[6] Section 391(2) of the Accident Compensation Act 2001 continues the appeal provisions that were in force at the time the decision that is the subject of review or appeal was made. Section 97 of the ARCI Act allowed a party to an appeal who was dissatisfied with the decision as being wrong in law and who had been refused leave to appeal by that Court to apply to this Court for special leave to appeal.

[7] A helpful test for when this Court will grant special leave is that set out in

Kenyon v ACC [2002] NZAR 385 (HC) by Fisher J at [15]:

[15] In his helpful submissions Mr Corkhill summarised the effect of the authorities relating to special leave as follows:

(a) The purpose of requiring leave for certain appeals is to ensure that scarce judicial time is allocated sensibly: Sandle v Stewart [1982] 1 NZLR 708 (CA)

(b) Although it is ultimately a matter for the discretion of the Court, it will normally be necessary to show that there is an issue of principal at stake or that a considerable amount hinges on the decision, and that there is a reasonable prospect of success: Sandle; Manawatu Co-op Dairy Company Limited v Lawry [1988] DCR 509; Brown v Chowmein Fashions Limited (1993) 7 PRNZ 43

(c) The fact that special leave is required is significant and suggests that leave ought not to be granted as a matter of course: O’Loughlin v Healing Industries Limited (1990) PRNZ 464

(d) It is for the Applicant to show that leave is required in the interests of justice: Avery v No. 2 Public Service Appeal Board [1973] 2 NZLR 86 (CA)

(e) As leave has already been refused by the District Court, however, there will normally have to be some extraordinary factor which has not been properly taken into account: Brown v Chowmein Fashions Limited (supra).

[8] Here, Mr Thomas has sought to identify five such questions of law. They are:

(a) Was it an error of law for the District Court to determine the correctness of a decision on a statutory basis other than that used by ACC?

(b) Does s 73 of the ARCI Act allow cancellation of entitlements for

“working”?

(c) Do ss 37 and 37A of the ARCI Act invoke s 73?

(d) Does the application of ss 37 and 37A of the ARCI Act require an occupational medical assessment by a qualified person?

(e) As a matter of law, has there been a deemed decision accepting the claim under s 60 of the Accident Compensation Act 1982?

[9] Mr Thomas argues that a “considerable amount” hinges on the present decision, as about 14 years of earnings related compensation is at stake. He calculates this as amounting to approximately $425,000.

[10] The decision against which special leave to appeal is sought ruled on Mr Thomas’ entitlement under the now repealed ARCI Act. It follows that this Act is still to be applied when considering the proposed questions of law. Before addressing the proposed questions of law, it is helpful to identify the relevant statutory provisions.

[11] The original decision to cancel Mr Thomas’ entitlements was said by ACC to

be made under s 73 of the ARCI Act. At the time, s 73 read as follows:

73. Suspension, cancellation or refusal of compensation and rehabilitation—
    

(1) The Corporation shall, ... if not satisfied on the basis of the information in its possession that a person is entitled to continue to receive any treatment, service, rehabilitation, related transport, compensation, grant or allowance under this Act, suspend or cancel that payment for treatment, service, or related transport, or the payment of compensation, grant allowance or provision of rehabilitation.

(2) The Corporation shall ... upon the unreasonable refusal or failure of any person to—

(a) comply with any requirement made under any provision of this Act relating to any claim; or

(b) undergo medical or surgical treatment in respect of personal injury (irrespective of whether the Corporation is required or permitted to contribute towards the cost of that treatment); or

(c) agree to, or comply with, an individual rehabilitation programme—

decline to make any payment under this Act.

[12] Other relevant provisions are those to be found in the ARCI Amendment Act (No 2) 1996, which amended the principal Act inter alia by substituting provisions relating to incapacity. The relevant parts of these provisions were ss 37 and 37A, which set out the test for incapacity on which qualification for earnings related compensation was based:

37 Application of incapacity and work capacity provisions

(1) Where the Corporation is required to consider the claim of any person for weekly compensation under this Act—

(a) The Corporation shall determine the person's incapacity under section 37A or section 37B of this Act, as the case may require; and

(b) If the Corporation determines that the person is not incapacitated within the meaning of section 37A or section

37B of this Act, as the case may be, the person shall not be

eligible to receive weekly compensation under this Act; and

(c) If the Corporation determines that the person is incapacitated within the meaning of section 37A or section

37B of this Act, as the case may be, the person shall be eligible to receive weekly compensation under this Act and

the provisions of this Act (including sections 22 and 23)

apply accordingly.

(2) While a person is receiving weekly compensation under this Act, —

(a) Section 37A or section 37B of this Act, as the case may be, shall continue to apply to the person and the Corporation may further determine from time to time, in accordance with section 37A or section 37B of this Act, as the case may be, the person’s incapacity:

(b) Section 51 of this Act shall also apply to the person and the Corporation may from time to time assess, in accordance with that section, the person’s capacity for work.

(3) A person’s entitlement to weekly compensation under this Act may

cease as a consequence of the operation of section 37A or section

37B or section 51 of this Act.

(4) Nothing in this section limits any other provision of this Act.

37A Determination of incapacity in relation to earners generally

(1) For the purposes of this Part of this Act, the Corporation shall determine the incapacity of a person (other than a person to whom section 37B of this Act applies) in accordance with this section.

(2) The object of a determination of incapacity under this section is to determine whether or not the person is, by reason of his or her

personal injury, for the time being unable to engage in employment in which the person was engaged when the personal injury occurred.

(3) The Corporation may make a determination under this section at any time and from time to time, and, in so doing, the Corporation may obtain such professional, technical, specialised, or other advice from such persons as it considers appropriate.

(4) If the Corporation determines under this section that a person is able to engage in employment in which the person was engaged when the personal injury occurred, then,—

(a) If the person is not at that time receiving weekly compensation under this Act for loss of earnings, that person shall not then be eligible to commence receiving weekly compensation for such loss:

(b) If the person is at that time receiving weekly compensation under this Act for loss of earnings, that entitlement shall cease immediately and the power to assess the person under section 51 of this Act shall no longer be exercisable.

(5) If a person is assessed under section 51 of this Act as having a capacity for work, then,—

(a) For the purposes of this section, that assessment shall be regarded as a determination that the person is able to engage in employment in which the person was engaged when the personal injury occurred; and

(b) The person shall cease to be entitled to receive weekly compensation under this Act for loss of earnings (with section 49 of this Act determining the time when the entitlement actually ceases).

37B. Determination of incapacity if person has ceased to be an employee or in cases of loss of potential earning capacity—

(1) For the purposes of sections 44, 45, and 46 of this Act, the Corporation shall determine a person’s incapacity in accordance with this section.

(2) The object of a determination under this section is to determine whether or not the person is, by reason of his or her personal injury, for the time being unable to engage in work for which the person is suited by reason of experience, education, or training, or any combination of those things.

(3) The Corporation may make a determination under this section at any time and from time to time, and, in so doing, the Corporation may

obtain such professional, technical, specialised, or other advice from such persons as it considers appropriate.

(4) If the Corporation determines under this section that a person is able to engage in work for which the person is suited by reason of experience, education, or training, or any combination of those things, then,—

(a) If the person is not at that time receiving weekly compensation under this Act for loss of earnings or loss of potential earning capacity, that person shall not then be eligible to commence receiving weekly compensation for such loss:

(b) If the person is at that time receiving weekly compensation under this Act for loss of earnings or loss of potential earning capacity, that entitlement shall cease and the power to assess the person under section 51 of this Act shall no longer be exercisable.

(5) If a person is assessed under section 51 of this Act as having a capacity for work, then,—

(a) For the purposes of this section, that assessment shall be regarded as a determination that the person is able to engage in work for which the person is suited by reason of experience, education, or training, or any combination of those things; and

(b) The person shall cease to be entitled to receive weekly compensation under this Act for loss of earnings or loss of potential earning capacity (with section 49 of this Act determining the time when the entitlement actually ceases).

[13] The ARCI Amendment Act (No 2) also amended ss 49 to 51 by substituting the following sections:

49. Cessation of weekly compensation when person has capacity for work –
    

Every person assessed under section 51 of this Act as having a capacity for work shall cease to be entitled to receive compensation for loss of earnings or loss of potential earning capacity upon the expiration of 3 months after the person is notified of that assessment.

50. Procedure for assessment of capacity for work –

(1) For the purposes of section 51 of this Act, the Corporation shall develop a procedure for the assessment of the capacity for work or persons covered by this Act.

(2) The Corporation shall publicly notify a draft of its proposed procedure by publishing in the Gazette, and in a daily newspaper circulating in each of the cities of Auckland, Hamilton, Wellington, Christchurch, and Dunedin, a notice relating to the draft of the proposed procedure.

(3) The notice shall—

(a) State that a draft procedure has been developed; and

(b) State where copies of the draft procedure may be obtained; and

(c) Explain the Corporation’s draft procedure, or state where a copy of that explanation may be obtained; and

(d) Invite members of the public to make written submissions on the draft procedure; and

(e) State the last date on which the Corporation will receive written submissions on the draft procedure (which date shall be not less than 42 days after the date of the publication of the notice in the Gazette).

(4) The Corporation shall—

(a) Consider all submissions on the draft procedure that are received by the Corporation not later than the date stated pursuant to subsection (3) (e) of this section; and

(b) Make such amendments to the draft procedure as the

Corporation considers appropriate; and

(c) Publicly notify the Corporation’s final draft of the procedure by publishing in the Gazette, and in a daily newspaper circulating in each of the cities of Auckland, Hamilton, Wellington, Christchurch, and Dunedin, a notice—

(i) Stating either that the draft procedure has been amended or that no amendments have been made; and

(ii) Stating where copies of the final draft of the procedure may be obtained; and

(iii) Explaining why the Corporation has amended, or has decided not to amend, the draft procedure; and

(iv) Inviting members of the public to make written submissions on the final draft of the procedure; and

(v) Stating the last date on which the Corporation will receive written submissions on the final draft of the procedure (which date shall be not less than 28 days after the date of the publication of the notice in the Gazette); and

(d) Consider all submissions on the final draft of the procedure that are received by the Corporation not later than the date stated pursuant to paragraph (c) (v) of this subsection; and

(e) Make such amendments to the final draft procedure as the Corporation considers appropriate; and

(f) Publicly notify its final version of the procedure (hereafter in this section referred to as the procedure) by publishing in the Gazette a notice—

(i) Setting out in full the procedure or giving a summary of it; and

(ii) Stating where copies of the procedure may be obtained; and

(g) Forthwith after publishing a notice under paragraph (f) of this subsection, deliver a copy of the notice to the Minister, who shall, within 10 working days after receiving a copy of the notice, lay a copy of the notice before the House of Representatives.

(5) The object of the procedure is to provide a reasonable method of making assessments under section 51 of this Act.

(6) The procedure shall not be invalid merely because the procedure disregards—

(a) Any inability to do any thing that does not result from—

(i) Personal injury covered by this Act; or

(ii) Personal injury by accident in respect of which a claim has been accepted under the Accident Compensation Act 1972 or the Accident Compensation Act 1982; or

(b) Whether or not there are any employment opportunities existing in any employment for which the person is then suited.

(7) The procedure may allow for the provision of professional, technical, specialised, or other advice.

(8) The Corporation may from time to time—

(a) Amend the procedure; or

(b) Revoke the procedure, and substitute a new procedure,—

and the provisions of subsections (2) to (4) of this section, with any necessary modifications, shall apply to any proposed amendment or substituted procedure unless the changes are of a minor or technical kind and the Corporation is satisfied that compliance with all or any of those provisions is unnecessary.

(9) The consultation procedure contained in subsections (2) to (4) of this section constitutes a code that sets out all the obligations of the Corporation in relation to consultation over the development of the procedure for the assessment of the capacity for work of persons covered by this Act.

51. Assessment of capacity for work –

(1) For the purposes of determining whether or not a person who is receiving compensation for loss of earnings or for loss of potential earning capacity, or who may have any entitlement to compensation for loss of potential earning capacity, has a capacity for work, the Corporation shall determine the person’s capacity for work in accordance with this section.

(2) For the purposes of this Act, the term ‘capacity for work’, in relation to any person, means the person’s capacity to engage in work for which the person is suited by reason of experience, education, or training, or any combination of those things, and that capacity shall be determined having regard to the consequences of the person’s personal injury.

(3) Every assessment under this section shall be carried out –

(a) In accordance with the procedure for the time being determined by the Corporation under section 50 of this Act; and

(b) In accordance with the principles of natural justice. (4) Every assessment under this section shall be undertaken by

or on behalf of the Corporation and at its expense.

(5) The Corporation may require a person to be assessed at any time and from time to time at such reasonable intervals as the Corporation considers appropriate in each case.

(6) If a person’s entitlement to compensation for loss of earnings or loss of potential earning capacity has ceased, whether by virtue of this section or otherwise, and the Corporation considers that the person’s capacity for work has deteriorated since that cessation,—

(a) The Corporation may reassess the person’s capacity for work under this section; and

(b) If the person is assessed as no longer having a capacity for work, then, subject to the provisions of this Act, the person shall be entitled, as from such date as the Corporation shall determine, to compensation for loss of earnings or loss of potential earning capacity.

(7) If a person is assessed under this section as having a capacity for work, then,—

(a) For the purposes of section 37A of this Act, that assessment shall be regarded as a determination that the person is able to engage in employment in which the person was engaged when the personal injury occurred:

(b) For the purposes of section 37B of this Act, that assessment shall be regarded as a determination that the person is able to engage in work for which the

person is suited by reason of experience, education, or training, or any combination of those things.

[14] Some understanding of how these provisions operated is needed before turning to the proposed questions of law.

[15] The ARCI Amendment Act (No 2) 1996 introduced provisions that dealt specifically with considerations of “work capacity” and “incapacity” in s 37, s 37A and s 37B. Those provisions in turn referred to s 51, which specifically provided for how the assessment of a claimant’s capacity or incapacity for work was to be carried out. Section 51 provided that this assessment was to be carried out in accordance with the procedures determined under s 50 of the Act. Section 50 set out a comprehensive regime for ACC to devise, consult on and then produce a procedure to be applied for assessments under s 51. All those provisions were inserted in Part IV of the principal Act, which is headed “Compensation”.

[16] The overall impact of those provisions suggests an intent on the part of Parliament to introduce a comprehensive, specific statutory scheme for determining work capacity and incapacity and, therefore, when earnings related compensation would be payable and when it would not be payable.

[17] The presence of such a scheme in Part IV of the ARCI Act could, therefore, suggest that cancellation of earnings related compensation was to be done in accordance with that scheme. However, s 37(4) undermined the appearance of an exclusive statutory regime by providing that nothing in the section limited any other provision in the Act. This needs to be kept in mind when considering s 73.

[18] Section 73 sits in Part V of the Act, which is headed “Claims for payments”; the provision sits under the sub-heading “Miscellaneous provisions”. There is nothing that expressly connects s 73 with the comprehensive regime in Part IV of the Act dealing with compensation. Section 73 does not expressly refer to a claimant working as being a disqualifying factor; but the section makes it clear that any information that shows a claimant is not entitled to continue to receive any entitlement will result in suspension or cancellation of that entitlement. What that information might be would need to satisfy a test of “reasonableness”, so that

provided the information relied upon to cancel any ACC entitlement reasonably supported the conclusion that the power to cancel could be used.

[19] It is notable that none of the provisions in Part IV are directed at persons who are actually working but who have failed to inform ACC of this circumstance. Instead, the focus in those provisions is on whether claimants have the capacity to work or are under such incapacity that they qualify for earnings related compensation. Thus, Part IV appears to be directed more at those who are not working for remuneration but who perhaps are capable of doing so; hence, the need to assess their capacity to work. Furthermore, cancellation of earnings related compensation on the ground a claimant was no longer suffering incapacity could be done without recourse to s 73; see ss 37(3) and 37A(4) or 37A(5).

[20] Whether it would be reasonable, therefore, to cancel payment of weekly earnings related compensation under s 73 on the ground a claimant was already engaged in full-time work for remuneration is a question of law that seems to me to have nothing to do with questions of “capacity” for work or “incapacity”. The first takes into account work that a claimant is actually performing and considers if it disqualifies him or her from receiving weekly earnings related compensation, whereas, the second assesses a claimant’s potential capability to work and considers if that would disqualify him or her from receiving such compensation. It is against this legislative context that the proposed questions of law should be considered.

Proposed question one

[21] This proposed question asks whether or not it was an error of law for the District Court to determine the correctness of a decision on a statutory basis other than that used by ACC. The way in which this question is framed assumes that the District Court has in fact applied a different statutory test to the one applied by ACC. Before assessing whether this question qualifies for special leave to appeal, it is first necessary to determine the assumed facts.

[22] On 18 August 1997, ACC wrote the following advice to Mr Thomas:

The Corporation has cancelled your continuing entitlements and disentitled your claim under s 73 of the Accident Compensation and Rehabilitation Insurance Act

1996. This section provides ...

[23] The writer then said that Mr Thomas’ claim had been disentitled from

18 August 1997, as ACC believed that he was working while in receipt of full weekly compensation.

[24] The following observations can be made about this letter. First, the writer appears to have referred to the wrong legislation. The relevant principal Act was the ARCI Act. This 1992 Act was amended by the ARCI Amendment Act (No 2) 1996, which inserted the amendments to Part IV that are discussed above. However, the amendments that were made by this legislation did not directly affect s 73. The letter writer’s reference to reliance on the 1996 Act in the context of exercising authority under s 73 is, therefore, an error.

[25] Section 73, as expressed in the letter of 18 August 1997, replicates the relevant parts of the principal Act. Whilst the writer of the letter has clearly misdescribed the source of her authority by attributing it to one of the amending Acts passed in 1996, rather than to the principal Act, it seems to me to be clear nonetheless that she has applied a power that was available under the Act at that time, namely the power under s 73 of the principal Act. It also seems clear to me that ACC had applied s 73 because it was satisfied that the actual work that Mr Thomas was then engaged in disqualified him from continuing to receive payment of earnings related compensation. There is nothing in the contents of the letter to cause me to think that ACC were dealing with Mr Thomas on the basis he no longer had incapacity to work, though this conclusion is something that would inferentially follow from him being engaged in full time work for remuneration.

[26] The review officer had the benefit of receiving a considerable amount of information from Mr Thomas to support the argument that the activities he had engaged in were in fact done for the purpose of rehabilitation and were not, therefore, work that disqualified him from receiving earnings related compensation. The review officer appears to have considered carefully all the information that Mr Thomas placed before him, but concluded that those activities amounted to work

for the purpose of pecuniary gain or profit. The review officer then concluded that the nature of Mr Thomas’ engagement in this work disqualified him from receiving weekly earnings related compensation. At page 12 of the review decision, the reviewer found:

Clearly, and from Mr Thomas’ own evidence, he was working in the natural sense of the word. Furthermore, the available evidence indicates he was working for the purposes of pecuniary gain or profit. That he may not have had some pecuniary gain or profit as a consequence of that work because of unfortunate business setbacks, is peripheral to the fact that he worked. It is also evident that he worked quite extensively in various businesses.

[27] The reviewer went on to say that he believed Mr Thomas had clearly avoided informing ACC about his business activities and, in this regard, the reviewer found:

I also believe that his statutory declaration is quite fatal to his claim, as it is quite clearly at variance with his statements at the hearing and the available information and evidence surrounding his work activities.

The history of the file records the claimant’s involvement in setting up a number of companies (without ACC’s knowledge) under the aegis of self rehabilitation, all of which were clearly set up to generate income, which they clearly did.

[28] The reviewer concluded:

On the balance of probabilities the available evidence including that of [Mr Thomas] establishes that he was working for a considerable period of time without ACC’s knowledge. I do not accept Mr Thomas’ statements that the activities he was obviously involved in are really just a self-rehabilitation programme and not work at all. He appears to justify this semantic legerdemain in respect of the definition of work.

Thus, the reviewer found that ACC’s decision was sound and should not be

disturbed.

[29] The reviewer’s decision refers to ACC “ceasing [Mr Thomas’] weekly compensation” as he had been working. The decision discusses the meaning of “work” under the ARCI Act. The decision does not refer to s 73 or any other statutory provisions. Instead, the reviewer’s approach is that there was ample evidence before him of Mr Thomas engaging in work for payment and this coupled with Mr Thomas’ failure to disclose this circumstance to ACC was sufficient to

support the decision to stop paying him earnings related compensation. Whilst the reviewer has not identified s 73 as the source of the authority, this to me looks like a classic case of ACC exercising the power under s 73 to cancel earnings related compensation because the information before it (evidence of the nature of Mr Thomas’ work activities and his failure to disclose them to ACC) was enough to leave ACC no longer satisfied that Mr Thomas should continue to receive earnings related compensation. The difference between ACC being “not satisfied” of a claimant’s right to entitlements and being “satisfied” a claimant is not entitled to statutory entitlements is discussed in Ellwood v ACC [2007] NZAR 205 by Mallon J at [62]-[63].

[30] At [69]-[72] of the judgment, the District Court set out what it considered to be the relevant law to dispose of the appeal before it. These were ss 37, 37A and 73 of the ARCI Act.

[31] The District Court then proceeded with an in-depth analysis of the evidence it received and the arguments made before it regarding whether, as at 18 August 1997, Mr Thomas suffered from “incapacity” in terms of s 37A. It concluded ultimately that Mr Thomas suffered from no such incapacity. This caused it to find that ACC had acted correctly. The District Court found that, on the balance of probabilities, ACC was entitled to be satisfied from the information then available to it that Mr Thomas was not entitled to continue receiving payment of earnings related compensation and so ACC was right to suspend those payments.

[32] ACC, in the original decision, and the District Court in its decision, refer to s 73 as the source of authority to cancel an entitlement. In the original decision, ACC does not refer to ss 37 and 37A, nor does the reviewer, whereas the District Court does rely on those provisions as the source of authority on “incapacity” under the ARCI Act.

[33] The District Court appears to have focused on a different question from that focused on by ACC. Whilst ACC has treated evidence of actual work as a foundation for exercising authority under s 73 to cancel Mr Thomas’s earnings related compensation, the District Court has focused on whether Mr Thomas suffered

from incapacity to work under s 37A and, having concluded he did not, the

District Court then upheld ACC’s decision under s 73 and dismissed the appeal.

[34] Whilst incapacity to work can in a factual sense be disproved by evidence of actual engagement in work, the approach taken by the District Court has cut across the legal regime inserted in Part IV of the ARCI Act for determining in the legal sense whether a claimant has a recognisable “incapacity” under the ARCI Act. Given the legal consequences that attach to this determination (potential loss of entitlement to earnings related compensation) and the presence of the safeguards Parliament has inserted into the Act (ss 37, 37A, 37B, 49, 50 and 51), there is a reasonable and serious argument to be had for the proposition that any cancellation of entitlements on the ground of a claimant no longer being under “incapacity” to work should be made in accordance with the scheme in Part IV. Where this would take Mr Thomas is a different matter because in his case, the original cancellation was not based on his perceived capacity to work but on the fact he had actually been working and had failed to inform ACC of this.

[35] If the District Court has asked itself a different question (what was Mr Thomas’ incapacity to work) from that asked by ACC (did Mr Thomas’ actual engagement in work and his failure to disclose this to ACC warrant cancelling his benefit), it would follow that the District Court has determined the correctness of ACC’s decision on a different statutory basis from that used by ACC. This could permit a reasonable argument to be made that Mr Thomas was denied a fair opportunity to be heard on appeal on the issue of importance that was raised by him: namely, how ACC had approached his case.

[36] Whilst an appellate body can on rehearing reach the same conclusion for different legal reasons from those of the original decision-maker, here there is a further factor that may alter this general rule. There is a reasonably strong argument available to Mr Thomas to the effect that the District Court has proceeded to assess whether Mr Thomas was still under incapacity in terms of ss 37 and 37A in a way that did not fit with the statutory scheme in Part IV. It could be argued that if cancellation of earnings related compensation was to be determined using ss 37 and

37A, then the District Court should have considered the application of those

provisions in the light of the entire statutory scheme in Part IV, which required assessments of incapacity to work to be done in accordance with ss 49, 50 and 51. Thus, any argument ACC might raise that Mr Thomas was equally vulnerable to having his earnings related compensation cancelled under Part IV would then be vulnerable to the counter argument that in considering such cancellation the District Court did not comply fully with Part IV’s requirements.

[37] Looked at overall, I am satisfied that, in terms of the tests in Kenyon, proposed question one raises a serious question of law on which a considerable amount hinges for Mr Thomas. Whether an appeal decision can stand when the appellate body has addressed a different question from the matter being taken on appeal raises an issue of principle that has ramifications beyond Mr Thomas’s case. I consider that there are reasonable prospects of Mr Thomas succeeding with an argument that the District Court’s use of a different statutory approach to that taken by ACC has effectively denied him his right on a first tier appeal to have the merits of his case properly considered.

[38] I am not sure of Mr Thomas’s chances of success ultimately, as consideration of the evidence relied on by ACC may cause this Court on appeal to conclude that, irrespective of what has gone before, the decision to cancel under s 73 was reasonable and open to ACC. It may be that evidence of Mr Thomas working for reward was so overwhelming that on any view, a reasonable decision-maker would conclude that Mr Thomas was no longer entitled to receive earnings related compensation. Thus, even if the wrong legal test were applied in the District Court, the outcome could still be shown to be the same once the correct legal tests were applied. However, it seems to me that this is an issue which would be better resolved in the context of an appeal hearing with consideration being given to whether this Court, when hearing the appeal, can cure any legal error on the part of the District Court. Since the view I have reached means that Mr Thomas may not have had a chance to have his arguments against the merits of ACC’s decision addressed on appeal, I consider that in the context of an application for special leave, it is not for me to foreclose that opportunity simply because I have concerns that the evidence relied upon ACC may ultimately be found to support its decision.

[39] Leave is, therefore, granted to Mr Thomas to appeal on proposed question one.

Proposed question two

[40] This proposed question asks whether s 73 of the ARCI Act allowed cancellation of entitlements for working.

[41] The answer to this question affects whether at the relevant time ACC could cancel Mr Thomas’s earnings related compensation by using powers that sat outside Part IV of the ARCI Act. If s 73 was a discrete power to cancel that sat outside of Part IV, then the question would be whether the exercise of s 73 in Mr Thomas’ case was reasonable. On the other hand, if when it came to earnings related compensation cancellation of such payments could only be done in accordance with the statutory scheme in Part IV, then it would necessarily follow that if neither ACC nor the District Court had acted in accordance with that scheme then their decisions were an error of law. Before any of these questions can be answered, the initial question to be answered is whether s 73 allowed cancellation of entitlements for working. The answer to proposed question two will influence the answer to proposed question one. This in itself would warrant a grant of leave to appeal on this question.

[42] In addition, I consider that there are issues of principle at stake. If Parliament in enacting Part IV of the Act had intended that claimants’ earnings related compensation not be cancelled without compliance with the procedures in Part IV, then what has occurred here could reasonably be said to have by-passed that process completely. A public authority like ACC should not be permitted to ignore statutory process, especially when the result is to deprive a claimant of entitlements of which he has been in receipt.

Proposed question three

[43] This question asks whether ss 37 and 37A of the ARCI Act invoke s 73. The question queries the connection, if any, between Part IV of the ARCI Act and s 73.

The answer to this question is inextricably bound up with questions one and two. I

consider, therefore, that leave should be granted to appeal this question as well.

Proposed question four

[44] This question asks whether the application of ss 37 and 37A of the ARCI Act requires an occupational or medical assessment by a qualified person. I read this as a question that asks whether it was reasonable on the part of the District Court to form a view of Mr Thomas’s incapacity under ss 37 and 37A without first obtaining an occupational or medical assessment by a suitably qualified person.

[45] The answer to this question in part hinges on the answers to questions one, two and three regarding whether cancellation of earnings related compensation should occur in accordance with the statutory scheme in Part IV, or whether it can be done under s 73 without regard to the specific statutory scheme in Part IV. It may well be that the scheme in Part IV requires such assessments to be undertaken. Insofar as any consideration of Mr Thomas’ case on appeal might permit consideration of ss 37 and 37A, this question becomes relevant. For this reason, I consider that special leave should be granted to appeal proposed question four.

Proposed question five

[46] This question asks whether there has been a deemed decision accepting

Mr Thomas’s claim under s 60 of the Accident Compensation Act 1982 (the 1982

Act).

[47] The reviewer’s decision records that Mr Thomas suffered personal injury by accident on 27 December 1989; he was treated for this injury on 3 April 1990 and certified unfit for work thereafter. This informs me that originally, Mr Thomas’ injury came under the 1982 Act.

[48] I have considered s 60 of the 1982 Act. The provision authorises ACC to make assessments of permanent incapacity. Unlike ss 56 to 58 of the 2001 Act, which do contain provisions deeming decisions to be made in a claimant’s favour if

ACC has delayed overly long (timeframe specified in the legislation) in making a decision, I cannot see such a provision in s 60 of the 1982 Act. Mr Thomas has not directed my attention to where in s 60 this provision might be found. Consequently, I am unable to see how the proposed question of law makes sense, let alone has any serious meaning. It follows that special leave to appeal on this proposed question of law is not granted.

Result

[49] Mr Thomas is granted special leave to appeal proposed questions one, two, three and four. Special leave to appeal question five is refused.

[50] If the parties are unable to agree costs, they have leave to file memoranda on costs.

Duffy J