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Accident Compensation Cases

On the Go (New Zealand) Ltd v Accident Compensation Corporation (DC, 11/04/11)

Judgment Text

DECISION OF JUDGE D A ONGLEY ON LEAVE TO APPEAL TO THE HIGH COURT 
Judge D A Ongley
[1]
This is an application for leave to appeal against a judgment of His Honour Judge Beattie issued on 8 June 2010 On the Go (New Zealand) Ltd and others [2010] NZACC 78
[2]
The issue before the Court concerned the application of a levy payment classification for the activity of inspection of motor vehicles and issuing of warrants of fitness. Until an amendment to the relevant regulations in 2008, the applicants had been levied under a classification “CU 78290 Technical Services (not elsewhere classified)”. The applicants believed that to be a correct classification of their activity of providing technical services for vehicle compliance with regulatory standards. 
[3]
The Corporation brought the appeal against a review decision in which the Corporation had been directed to create a new classification. That finding went beyond the argument that had been presented at the review hearing. 
[4]
Section 170(1) of the Act 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. ”
[5]
The regulations made under that section were the Injury Prevention, Rehabilitation and Compensation (Work Account Levies) Regulations 2008. Schedule 1 of the Regulations set out the classifications and levy rates for employers. 
[6]
Under the new system of classification, the nearest equivalent to the former CU 78290 was “CU 78291 Professional, scientific, and technical services (not elsewhere classified)”. The applicants say their business is providing largely contestable technical services to the motoring public through a nationwide network. 
[7]
At the same time, a new classification was introduced “CU 96400 Regulatory Services (Licensing and Inspection) (not elsewhere classified)”
[8]
Because the applicants were in the business of inspection of motor vehicles and issuing of warrants of fitness, the Corporation applied the new classification of Regulatory Services (Licensing and Inspection). The previous classification of technical services still existed in a modified form, but the Corporation considered that “not elsewhere classified” no longer applied to the applicants who were providing regulatory motor vehicle testing services. 
[9]
The applicants say that they do not provide Regulatory Services, but they do provide Technical Services. The only change between the old CU 78290 and the new CU96400 is that technical services is combined with professional and scientific services. The applicants argued that the change was no reason to warrant classifying the applicants' activity elsewhere; Technical Services in the 2007 Regulations are the same as Technical Services in the 2008 Regulations. 
[10]
The new classification was contained in Schedule 1 and modelled on the classifications contained in the Australian and New Zealand Standard Classification 2006 (ANZSIC). Schedule 1 did not incorporate the ANZSIC classification by reference, nor did it include the full text of the classification. But the respondent itself, in its decision, regarded the ANZSIC classification as having authority in interpreting the classifications. In his judgment, Judge Beattie noted that the respondent's decision letter gave full details of the ANZSIC particulars on Regulatory Services and advised the applicants: 
“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). ”
[11]
The following is the relevant text of the ANZSIC particulars that were referred to in the decision letter as authority for the respondent's classification of the applicants' activity: 
“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 
Motor vehicle testing 
Exclusion References 
providing quality assessment services without enforcement of regulations are included in the appropriate classes of other divisions. ”
[12]
Clause 5 of The Injury Prevention, Rehabilitation, and Compensation (Work Account Levies) Regulations 2008 referred to Schedule 1 as follows: 
“5
Calculation of Work Account levy payable by employers and private domestic workers 
The amount of Work Account levy payable by employers and private domestic workers is calculated using the following formula: 
c/100 x d 
where - 
 
d
is the levy rate in Schedule 1 that applies to the classification unit in which the employer or private domestic worker is classified. ”
[13]
Schedule 1 prescribed a list of classifications and rates. The ANZSIC particulars were not referred to in the regulations, and Schedule 1 did not recite an exemption for providing quality assessment services without enforcement of regulations. It did not contain any explanatory material at all. At the appeal, the applicants accepted that this Court has been assisted in interpreting levy disputes by referring to the ANZSIC classifications, but submitted that the words of the statute or regulations must have precedence over any wording of the ANZSIC classifications where there is an inconsistency. 
[14]
So the applicants say that ANZSIC has no legislative authority and is only of marginal assistance. It would follow that a tail-end exclusion in the ANZSIC, on which the applicants rely, should not carry such interpretive weight as to affect the natural meaning of the classification. But the respondent itself relied on the authority of the ANZSIC and incorporated it in its decision. 
Appeal argument 
[15]
The applicants argued that: 
Their activity was most appropriately described in Classification Unit (CU) 78291 Professional, Scientific and Technical Services (not elsewhere classified). The business activity of the applicants was historically accepted by ACC as constituting “technical services” 
The Corporation had previously accepted that the applicants were carrying out a technical service, as they were included in CU 78290 and this now carried over into CU 78291 which most accurately described the applicants' activities because its provision of technical services, previously accepted by the appellant, had not changed. 
The description of Regulatory Services under ANZSIC should be limited to activities where regulations are being enforced by the regulator. The applicants say that they did not provide regulatory services. In New Zealand the service is not carried out by the regulator, whereas in Australia it is. 
In the alternative they argued that their activity was exempted by the exception under Regulatory Services in ANZIC. The applicants 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. 
The Corporation was required to make a fair assessment, included fairness as to the amount of the levy. 
[16]
The questions that were decided in the judgment were these: 
That the applicants' core activity was motor vehicle testing for the purposes of issuing Warrants of Fitness or Certificates of Fitness, and their other functions were ancillary to that undertaking. 
The exclusion concerning “quality assessment services without enforcement of regulations” did not apply because, when testing a motor vehicle for the purposes of a Warrant or a Certificate of Fitness, the applicants enforce the regulations by either granting or refusing to grant the Warrant of Fitness depending upon the compliance of the vehicle or otherwise. 
The former classification CU 78290 Technical Services (not elsewhere classified) did not particularise activity to the same degree as CU 96400 Regulatory Services (Licensing and Inspection), where motor vehicle testing was specified as a primary activity. 
It was unnecessary to decide whether the appellants' activity was described by the new classification CU 78291 Professional, Scientific and Technical Services because the qualification “not elsewhere classified” was an exclusion that applied by virtue of CU 96400 Regulatory Services (Licensing and Inspection). 
The contention that CU 78291, being the successor of CU 78290, should still apply, has no basis in fact having regard to the applicants' primary activities. 
The argument that the description of “Regulatory Services” under ANZSIC should be limited to activities where regulations are being enforced by the regulator was rejected. Merely because the applicants are not a regulatory body is of no consequence. 
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. 
Questions of law 
[17]
The questions of law the applicants seek to be addressed in the High Court are: 
(i)
Whether the applicants' activity is elsewhere classified other than CU 78291 Professional, Scientific and Technical Services (not elsewhere classified); if not 
(ii)
Whether the applicants' business activity is caught by the exception “quality assessment services without enforcement of regulations” referred to under Regulatory Services in the Australian and New Zealand Standard Industrial Classification 2006. 
[18]
The applicants submit that the findings that CU 78291 did not apply to the applicants, and the finding that the exclusion did not apply to the applicants' business activity, involve questions of law. Whether or not a statutory provision has been properly construed or interpreted and applied to the facts is a question of law: Commissioner of Inland Revenue v Walker [1963] NZLR 339 (CA)Has Cases Citing which are not known to be negative[Green] . A more recent authority on the test for a question of law is Bryson v Three Foot Six Limited [2005] 3 NZLR 721; [2005] NZSC 34Has Litigation History which is not known to be negative[Blue]  in which the Supreme Court stated: 
“[21]
… The task which the Lower Court is engaged upon is the application of the law to the facts before it in the individual case. It involves a question of law only when the law requires that a certain answer be given because the facts permit only one answer. Where a decision either way is fairly open, depending on the view taken, it is treated as a decision of fact, able to be impugned only if in the process of determination the decision maker misdirects itself in law …  
[25]
An appeal cannot, however, be said to be on a question of law where the fact finding Court has merely applied law which it has correctly understood to the facts of an individual case. It is for the Court to weigh the relevant facts in the light of the applicable law. Provided that the Court has not overlooked any relevant matter or taken account of some matter which is irrelevant to the proper application of the law, the conclusion is a matter for the fact finding Court, unless it is clearly unsupportable. 
[40]
… Whether or not Judges in an appellate Court might, if sitting in the Employment Court, have reached a different conclusion, as the majority in the Court of Appeal certainly would have done, it cannot be said that Judge Shaw has made a decision which is inconsistent with the evidence or contradictory of it or one which can properly be described as ‘insupportable’. ”
[19]
The respondent submits that the applicants' contention that CU78291, being the successor of CU78290, should still apply is a question of fact answered by determining the primary activities of the applicants. The applicants submit that there is first a question of law whether the Court correctly interpreted the meaning of the classifications. 
[20]
I identify the following questions in the points that the applicants wish to take on appeal. 
Question 1 
[21]
Whether the new CU 78291 Professional, scientific, and technical services (not elsewhere classified) was the proper classification for the applicants' activity that had previously been classified as CU 78290 Technical Services (not elsewhere classified). This is associated with the argument that CU 78291 was a continuation of the old classification which had been applied to the applicants' activity. 
[22]
The Court did not decide that question because “not elsewhere classified” was the question to be decided. 
Question 2 
[23]
Whether “not elsewhere classified” did not apply to the applicants' activity because the activity was elsewhere classified. 
[24]
This was a question of fact. The Court decided that the applicants' activity was elsewhere classified. In doing so it compared the activity with the description in CU 96400 Regulatory Services (Licensing and Inspection) (not elsewhere classified) and found that the activity matched the description. The decision did not involve an arguable question of law as to the meaning of the classification. There can be no genuine argument that the applicants were not carrying on the activity of Regulatory Services (Licensing and Inspection). That question of fact subsumed the first question. 
[25]
In taking that view, I bear in mind the applicants' argument that it does not provide regulatory services. I do not consider that there is a question of law that would justify the granting of leave. The ordinary meaning of the classification was applied to the facts concerning the applicants' activity. If the ANZSIC is to be used as a guide, the examples in the ANZSIC classification include motor vehicle testing. The application of the classification is sufficiently clear that there is no genuinely arguable question of law. 
Question 3 
[26]
Whether the decision of the respondent incorporated the ANZSIC and therefore falls to be tested by the framework of the ANZSIC rather than the bare classification of Schedule 1. 
[27]
That is a mixed question of law and fact. The question of law is whether the respondent's decision was correctly based on its interpretation of Schedule 1 by reference to the ANZSIC, and therefore whether this Court correctly referred to the Schedule when identifying an exclusion. 
Question 4 
[28]
The Court considered that if the ANZSIC has any interpretive authority, which the Court accepted, then the exclusion “without enforcement of regulations” did not exclude the activity of grant or refusal of a warrant after testing. This was a question of law. If the extended definitions applied, “without enforcement of regulations” could possibly be confined to such powers as imposing a penalty or removing a vehicle from the road. The Court decided that the vehicle testing activity included the withholding of a warrant, which is essentially a permit to drive the vehicle on a road. The activity thereby classifies a vehicle as one which cannot be driven on a road, but does not enforce that classification by further action. 
[29]
If that question is answered on the basis that the activity of the applicants did not include enforcement of regulations, then a different answer could be given to the question whether the activity was CU 78291 Professional, scientific, and technical services (not elsewhere classified). In that event a decision of fact would be required for which the matter may have to be referred back to this Court. 
[30]
A grant of leave requires that the intended appellant show an arguable case that the decision of the District Court is wrong in law. Even if the qualifying criteria are made out, the Court has an extensive discretion in the grant or refusal of leave so as to ensure proper use of scarce judicial resources. 
[31]
The applicants say that notwithstanding that there was no change in the business activity of the applicants, their ACC work account levy almost tripled as a result of the amendment. 
[32]
The respondent's position is that the current case is one turning on its own particular facts and circumstances. However it is conceded that the regulations may have re-legislated in similar terms for subsequent years. The details of ongoing legislation have not been discussed, but it appears that the pattern of classification by reference to services without enforcement of regulations may be continued or may recur. In that case, the point is one of substance for the applicants and leave should be granted. 
[33]
Leave is therefore given to appeal on the questions: 
(i)
whether the Court was should have taken the terms of the ANZSIC into account when deciding the correctness of classification; and 
(ii)
whether the activity of vehicle testing was conducted “without enforcement of regulations” where the applicants regulatory conduct was limited to the giving or withholding of a warrant or certificate of fitness. 

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