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Accident Compensation Cases

Davis v Portage Licencing Trust (EMC, 13/11/03)

Judgment Text

COLGAN J (reserved):
Kevin Davis claims that his former employer breached its contractual obligations to him and that these breaches caused him harm, loss, damage, distress, hurt and embarrassment, including ongoing Post-Traumatic Stress Disorder (“PTSD”), hyper-arousal, sleep disorder, flashbacks and significant depression. He claims damages for these breaches. 
The questions for decision in this preliminary consideration of the case are: 
Whether the proceeding has been brought within 2 years of the accrual of the intending plaintiff's causes of action against the intended defendant; 
if not, whether the intending plaintiff was under a disability so that, under s 24 Limitation Act 1950, time for filing his proceeding should be extended; 
alternatively, whether the 2 year limitation period for bringing this proceeding has been waived, or acquiesced in, by the intended defendant so that it cannot now take the point of limitations; 
alternatively, whether the intending plaintiff should have leave to bring his proceeding because the delay in doing so was occasioned by mistake of fact or of law, or because the intended defendant has not been materially prejudiced in its defence or otherwise by the delay, or there is other reasonable cause for delay; and it is just to do so in all the circumstances. 
An earlier application by the intending plaintiff for a declaration that the proceeding is founded on simple contract under s 4(1)(a) Limitation Act and is not one in respect of bodily injury to any person under s 4(7), was abandoned at the beginning of the hearing. The intending plaintiff now accepts that his claim in contract is one in respect of bodily injury under s 4(7) although it is also common ground that the bodily injury that Mr Davis has clearly suffered was not personal injury by accident within the terms of the then applicable accident compensation legislation. Compensatory and exemplary damages may now be claimed if the proceeding has been brought within time or if leave is granted. Nor are Mr Davis's injuries now compensable under a criminal injuries compensation regime. The former Criminal Injuries Compensation Act 1963 was repealed by the accident compensation legislation in the 1970s. 
There is a further feature of the case which makes it unusual. Mr Davis was one of the victims of three armed robberies of his employer's work premises within a 3 month period. None of the robbers has yet been apprehended or prosecuted for these crimes. For that, and no doubt other practical reasons, Mr Davis is not suing these persons for compensation for his injuries and losses. He seeks to recover compensation from his former employer for what he says were breaches of his employment contract that permitted or encouraged the robberies which in turn caused his injuries, and in respect of his treatment by his employer following the robberies. 
The nature of the claim 
Although a statement of defence has now been filed by the Trust and many of the essential ingredients of Mr Davis's claim are denied by it, this is, of course, not the decision of the merits of the case. Rather, the following account of the statement of claim provides the background to a consideration of the issues at this stage. 
Mr Davis was employed as a barman/chef at the Trust's tavern in Owairaka known as Richardson's Tavern. He claims his employment contract contained a number of implied terms relating to the Trust's health and safety obligations (to take reasonable care to avoid exposure of the intending plaintiff to unnecessary risk of injury or further injury to his physical or psychological health and the provision and maintenance of a safe work system) and that the Trust would not conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust, confidence and fair dealing between the parties. 
Mr Davis says that whilst at work at the tavern in early to mid-1999 he was the victim of three armed robberies that occurred within less than 3 months. He says that after each armed robbery he was traumatised and sustained personal injury. He says that after the third robbery, he was diagnosed as suffering from PTSD. He also says that whilst he was off work on sick leave as a consequence of his stress disorder, he was unlawfully dismissed by the Trust. Mr Davis's claims include for lost wages at the rate of between $18,720 and $20,800 per annum, a claim for future lost earnings until the age of 65, compensatory damages of $100,000, reimbursement of medical expenses, exemplary damages of $50,000, interest, and costs. 
The breaches of contract relied upon by the intending plaintiff in his statement of claim span a period only described as being prior to 28 February 1999 (allegations of inadequate security before the first robbery that took place on that date) and 28 June 1999 when the intending plaintiff claims to have been dismissed unjustifiably by cessation of his pay. 
Paragraph 11(j) of the intending plaintiff's statement of claim alleges that “the defendant dismissed the plaintiff without notice or fair procedure on or about 28 June 1999”. However, in submissions counsel for Mr Davis contended that although his pay ceased on 28 June 1999, he was not dismissed until August 2001. The causes of action do not include a challenge to the lawfulness of the dismissal: indeed, if Mr Davis alleges that he was not dismissed until 2001, the provisions of the Employment Relations Act 2000 require any challenge to his dismissal to be brought by personal grievance (commenced in the Employment Relations Authority at first instance). Not only has no such claim been brought, but it is common ground that Mr Davis will be substantially out of time to do so. The significance of the apparently altered date of contended dismissal lies in the intending plaintiff's proposition that his employer continued to act in breach of his employment contract throughout the duration of his employment and until his dismissal in August 2001. 
These proceedings were filed on 23 December 2002. 
The relevant facts 
I have benefited considerably in deciding these issues by observing Mr Davis give evidence over several hours during most of which time he was cross-examined on his affidavits. I find Mr Davis to have been a witness of truth whose inability to recall some matters was both genuine and occasioned by a combination of his own inherent intellectual characteristics, the lapse of time since those events occurred, and no doubt in part by the PTSD he has suffered (accepted by the intended defendant) as a result of the robberies. Mr Davis's evidence is particularly important in ascertaining whether, as he asserts but the intended defendant denies, he was under a disability preventing him from bringing these proceedings until he did. 
Mr Davis is now aged 55 or 56 years. He was born in the late 1940s and went to school in the 1950s. He left secondary school before sitting the School Certificate examination in the 5th form at what I infer was probably the minimum leaving age of 15 years. He worked for about 3 years before embarking on a long-term career as a cook on both coastal and international ships. He did that for more than 30 years. He only came ashore because the shipping company for which he worked went broke and, I infer, the well-known decline in seafaring opportunities for New Zealanders meant that he had to look for alternative work, especially as the redundancy or superannuation payment that he might have expected in the region of $100,000 produced only about $1,000 for him even with the concerted assistance of his union. 
In December 1998 Mr Davis began work with the Trust at Richardson's Tavern as a cook/barman. This was his first job ashore after a period of unemployment. During the early months of 1999 Mr Davis became the caregiver for one of his brothers who was dying of cancer. He moved into his brother's home during this period. Mr Davis's brother eventually died in mid-1999 after the third armed robbery. 
Mr Davis's job as a cook was very different to the predictable and well structured duties of a ship's cook. Another significant change to his life was the necessity to live ashore full-time after a working lifetime at sea. It seems that his only close relative was his brother who was unwell and died during the same period as Mr Davis was suffering PTSD as a result of the robberies. Although he was not called to give evidence, it is clear from the documents and cross-examination of Mr Davis that he had a knowledgeable and generous friend who assisted him to deal with the otherwise overwhelming bureaucratic tasks of not only seeking compensation for his injuries but of even such fundamentals as maintaining an income. This was Jimmy Savage, mistakenly but perhaps prophetically referred to by Mr Davis's counsellor (John McEwan) in his notes on one occasion as “Micky Savage”. More of Mr Savage's role later. 
The first tavern robbery in which Mr Davis was a victim was on 28 February 1999. The second was on 21 March 1999 and the third robbery on 23 May 1999. On the following day, 24 May 1999, Mr Davis arrived at work at the tavern to find another man bleeding and, as it transpired, dying in the tavern carpark in unnatural circumstances. Mr Davis witnessed this event until the man's removal by ambulance to hospital where he died. Mr Davis did not return to work at the tavern but took leave, among other things, to receive psychological assistance and counselling provided by the Trust. 
On 28 June 1999 the Trust ceased paying Mr Davis's wages. On 12 July 1999 Mr Davis received written advice from the Trust that he had been on paid leave from 30 May to 28 June and was thereafter regarded as being on unpaid leave but without a prospective return to work date. On 29 July 1999 Mr Davis wrote to the Trust requesting continued payment of his wages. The trust's letter in reply dated 4 August 1999 declined to continue payment of his wages but urged him to consider an accident compensation claim and advised him that if compensation was granted, the Trust would top up the remaining 20 percent shortfall from his wages for a period of 2 months from commencement of ACC payments with a review of the situation if he was not back at work after the expiry of that 2 month period. 
The Accident Compensation Corporation declined Mr Davis's claim for compensation. In turn he applied to the Department of Social Welfare (“WINZ”) for a benefit but this was declined because WINZ considered he should be in receipt of accident compensation. However, on 2 August 1999 Mr Davis began to receive a sickness benefit from WINZ on the basis that he could have this until accepted for accident compensation payments. The sickness benefit was at the rate of $197 per week calculated from 18 July 1999. This was less than the wages Mr Davis had received working at the Trust and, combined with the absence of any income for a period in early July, caused his already modest financial circumstances to become even more straitened. 
On 18 August 1999 Mr Davis met with employment relations consultant John Watson. He did so because of the attractive and necessary prospect that Mr Watson would not charge a fee, at least initially or in the absence of obtaining a beneficial result. Mr Davis's purpose in consulting Mr Watson was to attempt to persuade the Trust to assist him with his income. Mr Davis was adamant that he did not wish to bring a statutory employment claim against the Trust: he regarded himself as still being employed by it and hoped to return eventually to work there. Although it seems likely that Mr Watson discussed the 90 day limitation period for bringing a personal grievance under the then applicable Employment Contracts Act 1991, for these reasons Mr Davis was not interested or concerned to do so. No other form of possible claim was discussed between Mr Davis and Mr Watson. Mr Watson's letter to the Trust written on the same day was solely an appeal for financial help, was expressed to be not a challenge at law to the Trust's actions, and cannot be interpreted as having referred to any liability by the Trust either for Mr Davis's injuries or to continue paying his income. 
The Trust's response to Mr Watson's letter of appeal was by letter dated 19 August to Mr Davis, both suggesting that he make an accident compensation claim and agreeing to support such a claim as might be made by him. 
On 27 August 1999 Mr Davis lodged a claim for accident compensation for his PTSD. On 3 December 1999 Mr Davis's claim for accident compensation cover was declined. Two days later, on 5 December, Mr Davis wrote to his newly elected Member of Parliament, pointing out the refusal of accident compensation coverage and, 2 days later, on 7 December, he likewise advised the Trust in writing. On 15 December 1999 Mr Davis's Member of Parliament's agent advised him to seek a review of the Accident Compensation Corporation and encouraged him to pursue these claims. Mr Davis lodged his accident compensation review application on 30 December 1999. The Corporation, upon receipt of that review application, itself reviewed its own decision but, on 11 January 2000, advised Mr Davis that, upon reconsideration, it would not change its determination. Mr Davis's application for review, which was heard on 14 July 2000 and determined on 2 August 2000, was likewise unsuccessful. Following that unsuccessful review, Mr Davis sent relevant ACC papers to the Trust. He kept it posted about his claims for compensation. 
On 21 August 2000 Mr Davis's accident compensation advocate filed an appeal against the review decision in the District Court but this was eventually withdrawn on 15 February 2001. 
During December 1999, and as arranged by his counsellor Mr McEwan, Mr Davis appeared on a television programme called “Holmes” and featured in a New Zealand Herald newspaper article, dealing with deficiencies in accident compensation cover for sufferers of PTSD. Although with assistance, he was able to face and handle the experiences of giving long interviews for these items about the events that led to his PTSD. 
In August 2000 Mr Davis obtained casual employment making snack foods at a children's playground called “Chipmunks”. Although this was stressful, he worked there for several months until resigning on advice from Mr McEwan and others. 
On 13 September 2000 the Trust advised Mr Davis that it would not continue to pay for further counselling of him as it had done to that date. Its letter contains an indication that it regarded itself as no longer employing Mr Davis. His last counselling appointment with Mr McEwan was on 13 September. Mr Davis did not attend on his counsellor again for some 13 months, until 5 October 2001. Although Mr McEwan appears not to have kept clinical notes, I accept his evidence that from time to time during this period Mr Davis rang him informally (including at home) and they discussed the intending plaintiff's ongoing disabilities including the provision of strategies to alleviate or prevent the worst manifestations of his condition. It follows that although there are not even the brief memory-jogger clinical notes maintained by Mr McEwan during his more formal consultations with Mr Davis, the counsellor nevertheless maintained a more or less continuous observation of his patient's condition. He has given evidence both of what he was told by Mr Davis was happening from time to time and of his professional assessment of the significance of this advice together with such other independent observations as may have been able to have been made by telephone given Mr McEwan's good knowledge of his patient and Mr Davis's presentation. 
On 4 April 2001 Mr Davis first consulted his solicitors, Brookfields. He did so on the recommendation of a community advice organisation called The People's Centre and about his accident compensation claim. On 24 April Brookfields confirmed to Mr Davis that he was not entitled to statutory accident compensation cover but told him that he might have a claim against his employer. The staff solicitor at Brookfields with whom he dealt, Jeanette Hobbs, believed that because such a claim would be based on contract, the limitation period for bringing it would be 6 years from the accrual of the cause of action, a period that Mr Davis was well within on any calculation. 
Mr Davis regarded proceedings against his former employer as a last resort. He wanted to settle his claim without going to court. The advice he received from Mr McEwan, his counsellor in particular, and also from Ms Hobbs, was to attempt to settle his claim without suing. Mr Davis having no money to pay solicitors' costs, he was sent and completed an application for legal aid. Ms Hobbs's evidence was that in such cases, the legal aid authorities now determine grants for possible litigation stage by stage and, on 25 July 2001, the Legal Services Agency (“LSA”) agreed to legal aid for mediation only. 
On 25 September 2001 Brookfields sent a draft statement of claim in this proceeding to the Trust. It was in materially similar form to that now filed. Mediation was eventually attempted on 20 February 2002 but was unsuccessful. On 27 February Mr Davis's solicitors applied to extend his grant of legal aid to include the essential preliminary disbursement of instructing a security expert. The legal aid authorities approved that disbursement on 25 June 2002 and Mr Davis's solicitors received their security expert's report on 26 September 2002. This report was sent on to the LSA with a request for further legal aid funding on 8 November 2002. By this time, the Trust had become an active participant in the legal aid application process, by implication seeking to dissuade the LSA from making a grant. On 11 December 2002 the LSA approved legal aid for commencing proceedings including instructing senior counsel. On 12 December 2002 Mr Davis's file was referred to senior counsel Mr Rennie QC and on 23 December 2002 this proceeding was filed. 
The intended defendant's opposition 
The Trust does not consent to the extension of time for bringing these proceedings and opposes Mr Davis's application. It says the delays are unreasonable because Mr Davis consulted an industrial relations consultant in August 1999. Further, it says that it did not require him to pursue a claim for accident compensation, that he was sufficiently able to seek advice about his affairs and rights and did so from as early as August 1999, and that the Trust is not in breach of the employment contract. The Trust says it is prejudiced by the delay in filing these proceeding in that it has provided significant support to Mr Davis, it has not acquiesced in the passage of time and is not required to raise any limitation issue unless and until a claim is actually filed. The Trust says it attended mediation without prejudice to any denial of liability and has been required to disclose documents to Mr Davis by virtue of a request under the Privacy Act 1993. It says that at no stage has it waived its right to raise a limitation defence. Finally, the intended defendant says its ability to defend the case is affected by the death of a key witness who would otherwise have given evidence of security procedures it implemented between February and May 1999. 
The Trust's chief executive officer, Murray Spearman, says that after the second robbery and among other things the employer did, he met with police from Avondale but no notes of those discussions were kept (in his case) or have been able to be located (in the case of the police). Mr Spearman also says that, to date, he has been unable to locate records of his order for security cameras for the tavern made after the first robbery but not installed until after the second. Although Mr Spearman initially thought that the company from which the cameras were purchased had closed down, that may not now be so. 
The principal of the security company with which the Trust dealt (Mr Stan Podgson) died “In or about the Christmas/New Year period of 2002” that I take to mean either in late 2001 or early 2002. Mr Spearman says he has been unable to locate Mr Podgson's recommendations to the Trust prepared after the second robbery. He says that although the security company does have records about these matters, he understands they are incomplete and that a number of his discussions with Mr Podgson seem not to have been recorded in written form and that the Trust has been unable to locate a copy of Mr Podgson's recommendations. 
Mr Spearman says the lapse of time since the robberies has adversely affected the Trust's ability to gather information relevant to its defence. He says that recently received copies of documents held by the police on the subject of the robberies amount to only 24 pp and only one witness statement is included, that of Mr Sonny Stephen, the former manager of the tavern. Mr Spearman says the police have declined to provide him with any further documentation “for operational reasons”
The Trust also says it has been difficult to obtain records from its insurer which completed regular security arrangement audits at its premises. Mr Spearman says the intended defendant's policy was to implement any of its insurer's recommendations but, to date, NZI has been unable to locate copies of these reports and it appears that the person who prepared them is no longer with that company. 
The intended defendant relies upon a substantial affidavit from a registered psychologist, Renate Bellvé-Wack. Ms Bellvé-Wack's evidence seeks to persuade the Court of several matters. She accepts that Mr Davis was exposed to extremely frightening events in his work environment in close succession and that the symptoms documented following the third robbery were commonly associated with PTSD. Ms Bellvé-Wack opines that it is likely that additional exposure to the unrelated but tragic death of another person in the tavern carpark very soon after the third robbery added to Mr Davis's stress at a time when a close relative was also dying or had died. Ms Bellvé-Wack accepts that before the robberies Mr Davis was probably coping well with life's difficulties but that these events undermined his ability to work and enjoy life so that he developed PTSD and depressive symptoms, although it is difficult or impossible to delineate the specific contributions of the various stresses to these consequences. 
However, the psychologist concludes that after the robberies Mr Davis was able to attend to a number of activities necessary to seek redress for their consequences, some of which required the same abilities or competencies that would have been necessary to bring this claim against the Trust. Ms Bellvé-Wack goes further and says that some of these activities occurred during times when Mr Davis reported experiencing an exacerbation of his symptoms. She points out that although Mr Davis says that he felt let down and angry at his employer's stopping of his wages, there is no mention in the therapy notes of his counsellor of any struggle with the conflict of needing to bring a claim but feeling unable or fearful to do so, as might have been expected. Rather, the psychologist says it appears that Mr Davis was fully focussed on dealing with his ACC claim alone. 
Ms Bellvé-Wack concludes that although Mr Davis did have a disability during the time in question (PTSD), and that this was likely to have been triggered by the three successive robberies he experienced at work, the documentation available to her does not suggest that this disability interfered with his ability to bring a claim against the Trust. 
Limitations generally 
Two sections of the Limitation Act 1950 are at issue. First, in logical order of decision, is s 24 that provides materially: 
Extension of limitation period in case of disability 
If, on the date when any right of action accrued for which a period of limitation is prescribed by or may be prescribed under this Act the person to whom it accrued was under a disability,— 
In the case of any action … in respect of the death of or bodily injury to any person, or of any action to recover a penalty or forfeiture or sum by way thereof by virtue of any enactment where the action is brought by an aggrieved party, the right of action shall be deemed to have accrued on the date when the person ceased to be under a disability or died, whichever event first occurred; or 
In any other case the action may be brought before the expiration of 6 years from the date when the person ceased to be under a disability or died, whichever event first occurred,— 
notwithstanding that, … the period of limitation has expired: ”
The second is s 4(7) which provides: 
“4. Limitation of actions of contract and tort, and certain other actions 
An action in respect of the bodily injury to any person shall not be brought after the expiration of 2 years from the date on which the cause of action accrued unless the action is brought with the consent of the intended defendant before the expiration of 6 years from that date: 
Provided that if the intended defendant does not consent, application may be made to the Court, after notice to the intended defendant, for leave to bring such an action at any time within 6 years from the date on which the cause of action accrued; and the Court may, if it thinks it is just to do so, grant leave accordingly, subject to such conditions (if any) as it thinks it is just to impose, where it considers that the delay in bringing the action was occasioned by mistake of fact or mistake of any matter of law other than the provisions of this subsection or by any other reasonable cause or that the intended defendant was not materially prejudiced in his defence or otherwise by the delay. ”
The Limitation Act's provisions relating to proceedings in respect of bodily injury date from a time when very different legal regimes prevailed in two relevant respects. First, personal injuries litigation provided the opportunity for those injured, predominantly at work or in motor vehicle collisions, to obtain redress if they were not at fault or not completely at fault. It is now 25 years or more since the effects of the accident compensation legislation have eclipsed the consideration by lawyers and potential plaintiffs of that litigation option. The limitation legislation dates from a time when a work-injured person would think of consulting a lawyer (or in many cases a union that would assist in doing so) as a first step. The 2 year limitation period contained in s 4(7) maintained a balance between plaintiffs having sufficient time for their injuries to stabilise and a medical prognosis to be formulated on the one hand and, on the other, allowing defendants the certainty of knowing within a reasonable period whether they may be liable for those injuries. There was a statutory presumption that reasonable plaintiffs would consult a lawyer within that 2 year period. The Act also recognised that by their nature, injuries and disabilities the subject of intended litigation might well see the time limits not met and so provided mechanisms for extending these in appropriate cases. 
Not unconnected was the solicitor/plaintiff-client relationship in personal injuries matters at that time. Apart from many work accidents following which unions arranged for representation and met the costs of this at least until a judgment or settlement was obtained, plaintiffs' lawyers accepted instructions on the basis that fees would be taken from monies recovered and sometimes disbursements would be advanced by those firms. Thus, even impecunious plaintiffs could generally bring proceedings without the need to worry about the costs of doing so. There was no effective civil legal aid to enable them to do so. 
As this case illustrates, however, the present circumstances are very different. Applications for legal aid are scrutinised carefully and require substantial supporting evidence. Such applications take many months to decide. Grants of legal aid limited to only preliminary aspects of the litigation (even only for mediation) are made and plaintiffs and their lawyers are reluctant to incur time and expense without a grant of legal aid or other certainty of payment for work done and disbursements incurred. So in many cases there is much more to be done in the 2 year period, established in a very different earlier litigation regime, some of which might not even be completed within that time. 
Another difference, although one less relevant to the issues I have to decide, was the initial dispute resolution strategy attempted by Mr Davis's solicitors. He was encouraged to try mediation and indeed sought a grant of legal aid to do so and had to wait until this was available. Although, in substance but not form, modern mediation may be much the same as the informal interchanges between solicitors in personal injury litigation in earlier times (although usually conducted with greater urgency as the courtroom door was approached), the mediation process, too, is more time-consuming than might ever have been contemplated in the middle of the last century when Parliament set the time limits for personal injury litigation. 

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