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Accident Compensation Cases

Accident Compensation Corporation v On the Go (New Zealand) Ltd (DC, 08/06/10)

Judgment Text

RESERVED JUDGMENT OF JUDGE M J BEATTIE 
Judge M J Beattie
[1]
The issue in this appeal concerns the appellant's decision of 30 September 2008, whereby the appellant classified the respondent's in Classification Unit 96400 - Regularity Services (Licensing and Inspection) (not elsewhere classified), pursuant to Section 170 of the Act, for the purposes of Employer Levies under the Act. 
[2]
It is the contention of the respondents that the correct Classification Unit, being the one that most accurately describes their activities, is CU 78291- Professional, Scientific and Technical Services (not elsewhere classified), it being the closest CU to that which applied prior to the regulatory amendment to the description of classification units which were made for the 2008/2009 levy year. 
[3]
Contrary to both the appellant's and respondents' contentions about the correct classification unit, the Review Decision in fact steered a third course and determined that, in accordance with Section 170(5), the classification units described in the Regulations did not specifically cover the particular activities of the respondents, and therefore the Reviewer directed that the Corporation make a new classification group and levy rate for the respondents. 
[4]
Neither the appellant nor the respondents support that decision and there has been agreement between counsel that in making that decision the Reviewer exceeded his jurisdiction and each party has come to this appeal asserting the appropriateness of their respective classification units referred to above. 
[5]
From the appellant's perspective, I consider that the provisions of Section 149(1)(a) of the Act, which refers to the right of an appeal from a review decision, puts the whole of that decision in issue, and in the present case I find that it is open to this Court to consider whether either of the classification units in question is the one that most accurately describes the respondents' activities before considering whether or not no particular classification unit covers their activities. 
[6]
The relevant facts are not in dispute and may be stated as follows: 
The respondents are respectively On the Go (New Zealand) Ltd, On Road (New Zealand) Ltd, and Vehicle Testing (New Zealand) Ltd, and collectively are known as the Vehicle Testing Group (VTG). 
The business activities of VTG, which are privately held companies, are as follows: 
(i)
Warrant/Certificate of Fitness Vehicle Inspections (not mechanical repair services); 
(ii)
used imported vehicle inspections and pre-sale vehicle inspections; 
(iii)
administrative agent for driver licensing (not road testing) road user charges and vehicle registrations; 
(iv)
services ancillary to the above. 
Down to the 2007 levy year the respondents were classified in Classification Unit 78290 - Technical Services (not elsewhere classified). 
In 2008, and for the 2008 levy year, changes were made to the classifications structure by way of Regulation, those changes resulting from changes to the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC) upon which the Schedule to the Regulations is founded. 
Those changes altered the scope of Classification Unit 78290 which became “Scientific Testing and Analysis Services”
The new Classification Unit 78291, favoured by the respondents, stated “Professional, Scientific, and Technical Services” (not elsewhere classified). 
New Classification Unit 96400, asserted by the appellant, states Regulatory Services - Licensing and Inspection), (not elsewhere classified). 
By way of primary decision dated 30 September 2008 the appellant advised the respondents that its new classification unit for the purposes of ACC levies was to be 96400, its decision stating that it contended that that CU most accurately described their activities. 
In its decision letter the appellant stated, inter alia, as follows: 
“In 2008 ACC'S classification units were reviewed. The purpose of this review was to align ACC's classifications with the Australian and New Zealand Standard Industrial Classification (ANZSIC) system. As a result, some classification units have been renamed, some have been deleted and some are new. Under these new classification units Motor vehicle testing falls within 96400 — Regulatory Services (Licensing and Inspection) (not elsewhere classified). ”
In addition the decision letter gave full details of the ANZSIC stated particulars on Regulatory Services. 
The respondents sought a review of that decision and a Review Hearing took place in February 2009 and concluded on 24 April 2009. 
In his decision, the Reviewer, Mr R Woodhouse, stated, inter alia, as follows: 
“I am satisfied that the newly assessed category of Regulatory Services is not adequately specific for the activities of the VTG group of companies. For that reason I have decided that ACC's decision cannot stand. 
I direct that ACC, pursuant to Section 239, define a new risk classification and levy rate for the activities of the VTG group. ”
[7]
As earlier noted, the classification units are very much modelled on the classifications contained in ANZSIC and it is the case that ANZSIC was updated in 2006, which brought about an amendment to the description of some classification units to be in line with that new version of ANZSIC. In the explanatory note to the Injury Prevention, Rehabilitation and Compensation (Work Account Levies) Regulations 2008, it is stated, inter alia: 
“There are changes to the wording in certain classifications, based on the Australian and New Zealand Standard Classification 2006. ”
[8]
It is the case that earlier regulations covering Employer Levies by classification unit specifically referred to ANZSIC, and an example of this is the Accident Insurance (Employer Premiums) Regulations — SR 2000/54, where in Regulation 8, which is the provision giving the Corporation power to determine classification, it is stated at Regulation 8(5): 
“The Corporation may have regard to or apply any industrial classification set out or contained in the ANZSIC when determining which classification unit in the opinion of the Corporation accurately describes that employer's activity. ”
[9]
In the 2006 version of ANZSIC the grouping described as Regulatory Services states as follows: 
“Regulatory Services 
This class consists of units both public and private mainly engaged in enforcing regulations, licensing and inspection activities (except regulation of financial and insurance markets, electricity markets and regulatory units with a dual role of regulation and public administration with a significant amount of public administration). The regulations enforced in this class are established by Acts of Parliament and cover technical details that may be subject to frequent change. They are signed into law through the Cabinet Committee, Executive Council or some other body less than Parliament. 
Primary activities 
Consumer protection service 
Licensing and permit issuance 
Motor vehicle testing 
Regulating casino and other gambling 
Regulating food and agricultural standards 
Regulating qualification standards 
Weights and measures regulations 
Exclusion References 
Units mainly engaged in 
operating tolls and weighbridge are included in Class 5299 Other Transport Support Services n.e.c; 
regulatory activities with a dual role of regulation and public administration are included in the appropriate classes of Subdivision 75 Public Administration; 
regulating and undertaking the activity at the same time are included in the appropriate classes of the division in which the activity is undertaken; 
building inspection services are included in Class 6923 Engineering Design and Engineering Consulting Services; 
regulating their own rules or codes of conduct (i.e. interest groups) are included in the appropriate classes of Group 955 Civic, Professional and Other Interest Group Services; 
And 
providing quality assessment services without enforcement of regulations are included in the appropriate classes of other divisions. ”
[10]
It is from the fact that one of the primary activities identified of a Regulatory Service is that of Motor Vehicle Testing that formed the basis for the appellant's decision that it was the classification unit which most accurately described the respondents' activities, in line with the statutory requirement in Section 170(1). 
[11]
Mr McBride further submitted that the former CU of the respondents', namely CU 78290, has been changed to that of “Scientific Testing and Analysis Services” and this was a significant alteration of the description of activities from that formerly applying, namely, Technical Services — (not elsewhere classified). 
[12]
Mr McBride submitted that there can be no dispute that the respondents' core business is that of Motor Vehicle Testing with ancillary activities, and as such it falls squarely within the ANZSIC classification of “Regulatory Services”. Counsel emphasised the fact that a primary activity identified under that Regulatory Services umbrella, was that of Motor Vehicle Testing. 
[13]
Mr McBride further submitted that on the basis of there being a specific classification for Motor Vehicle Testing, the suggested CU advanced by counsel for the respondents of 78291, Professional, Scientific and Technical Services (not elsewhere classified) does not most accurately describe the core services and activities of the respondents. 
[14]
Mr Cleary submitted that the Corporation was required to make a fair assessment and he included in the meaning of “fairness”, fairness as to the amount of the levy. He stated that the levy for the respondents under the new classification unit proposed is considerably greater than that which had applied under the earlier classification unit. 
[15]
Mr Cleary further submitted that the regulatory environment in New Zealand was different from that in Australia. In New Zealand the service is not carried out by the regulator, whereas in Australia it is. He stated that VTG cannot compel the public to do anything and therefore they would come within the exclusion referred to in the description of exclusions to activities covered by Regulatory Services. He submitted that VTG do not regulate and therefore the classification unit of Regulatory Services is not appropriate. 
[16]
Mr Cleary further submitted that the Corporation had previously accepted that VTG were carrying out a technical service, as they were included in CU 78290, which was Technical Services (not elsewhere classified), and that this now carried over into CU 78291, Professional, Scientific and Technical Services (not elsewhere classified). Counsel submitted that CU 78291 most accurately described the respondents' activities because its provision of technical services, previously accepted by the appellant, had not changed. 
Decision 
[17]
The statutory provisions by which the Corporation made the determination of the appropriate classification unit for the respondents, now in issue, is Section 170(1) which states: 
“The Corporation must classify an employer in an industry or risk class that most accurately describes the employer's activity, being an industry or risk class set out in regulations made under this Act for the purposes of setting levies payable under Section 168. ”
[18]
The Regulations made pursuant to that section are the Injury Prevention, Rehabilitation and Compensation (Work Account Levies) Regulations 2008 in which, under Schedule 1 to those Regulations, is set out the classifications and levy rates for employers. 
[19]
The key word in Section 170 I consider to be “activity” and this word is specifically interpreted in Section 6 of the Act to mean as follows: 
“Activity, for the purposes of Part 6, - 
(a)
means a business, industry profession, trade, undertaking of an employer, a self-employed person, or a private domestic worker; and 
(b)
includes ancillary or subservient functions relating to the activity, such as administration, management, marketing and distribution, technical support, maintenance, and product development; and 
(c)
in the case of a self-employed person, refers to the nature of his or her work rather than the context or business in which he or she is working. ”
[20]
In the case of VTG I find there can be no argument but that their core activity is motor vehicle testing for the purposes of issuing Warrants of Fitness or Certificates of Fitness, and that their other functions are ancillary to that undertaking. 
[21]
Whilst it may have been the case that previously motor vehicle testing came under the umbrella activity of Technical Services (not elsewhere classified), that classification unit did not then particularise activity to the degree now identified under Regulatory Services, where motor vehicle testing is specified a primary activity. 
[22]
It is, of course, the case that CU 78290 no longer exists with its former description and the CU which might be considered its successor, namely CU 78291, refers to Professional, Scientific and Technical Services (not elsewhere classified). Even if it were to be considered at first blush that motor vehicle testing could come within a range of activities which involved Professional and Scientific Services, nevertheless I find that where the words “not elsewhere classified” are included, and where “elsewhere classified” is motor vehicle testing in CU 96400, then I find that the contention that CU 78291, being the successor of CU 78290, should still apply, just has no basis in fact having regard to the primary activities of VTG. 
[23]
I do not find that Mr Cleary's contention that the description of “Regulatory Services” under ANZSIC should be limited to activities where regulations are being enforced by the regulator, which may be the situation in Australia, but which does not apply in New Zealand, and I find that merely because VTG are not the regulatory body is of no consequence. 
[24]
The whole basis of motor vehicle testing is to assess compliance with regulations pertaining to the granting of Warrants of Fitness or Certificates of Fitness for motor vehicles. I do not consider the exclusion referred to in the description of Regulatory Services to be a factor, as when testing a motor vehicle for the purposes of a Warrant or a Certificate of Fitness, VTG are in fact enforcing the regulations by either granting or refusing to grant the Warrant of Fitness depending upon the compliance or not of the vehicle in question. 
[25]
Finally, I consider that the quantum of the levy is not an issue which this Court can consider, as it is not an issue which comes within the context of an assessment of the activity which most accurately describes the employers' activity in terms of Section 170. 
[26]
Issues relating to levies within a classification unit are quite a separate and distinct matter and would need to be questioned as and when the precise levy is set, following identification of the correct Classification Unit. 
[27]
In all the circumstances, I find that the correct Classification Unit for the respondents is that of CU 96400, and the Reviewer was wrong to have determined that it was not, and in accordance with the powers vested in the Court on appeal pursuant to Section 161 of the Act, the review decision in question is quashed, and the appellant's primary decision of 30 September 2008 is hereby reinstated. 
[28]
In the circumstances I make no order for costs. 

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