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Accident Compensation Cases

McKenzie v Attorney-General (HC, 03/12/90)

Judgment Text

JUDGMENT OF HERON J. 
HERON J
The first plaintiff (Mr McKenzie) was employed by the New Zealand Electricity Department (N.Z.E.D.) from 1950 to 1981. He now suffers from mesothelioma, a form of cancer of the lining of the chest or abdomen. Between 1950 and 1963, as part of his employment as a young engineer he worked on power station sites at Kings Wharf (Auckland) and Wairakei, where he was exposed to asbestos dust, which he alleges caused his present sickness. Bringing proceedings (in which his wife is also a plaintiff) at common law for damages he alleges his employer was in breach of a duty of care owed to him as employee. 
His employer claims that he has cover under s 28 Accident Compensation Act 1982 and as a result his claim is barred by virtue of s.27 of that Act. 
Whether that is so depends on the interpretation of s.28(1) which reads: 
“(1)
If a person's total or partial incapacity or death results from any disease, and the disease is or was due to the nature of any employment in which the person was employed as an earner during a period that ended on or after the 1st day of April 1974, cover shall exist as if the disease were a personal injury by accident arising out of and in the course of his employment, and all the provisions of this Act shall apply accordingly subject, however, to this section. ”
These proceedings are brought by virtue of Rule 418 High Court Rules which provides: 
“Orders for decision — The Court may, whether or not the decision will dispose of the proceeding, make orders for — 
(a)
The decision of any question separately from any other question, before, at, or after any trial or further trial in the proceeding; and 
(b)
The formulation of the question for decision and, if thought necessary, the statement of a case. ”
On 25 June 1990 the Master ordered the following pre-trial question be set down for answer. 
“Is the period of employment described in s 28(1) (which ends on or after 1 April 1974) of the Accident Compensation Act 1982 restricted to that part of the person's employment which gave rise to the disease? ”
As the answer to the question will effectively determine whether the plaintiff has cover under the Act the defendant might well have asked that the matter be sent to the Accident Compensation Corporation for determination pursuant to s.27(4). Crown counsel submits that having regard to the special circumstances of this case, in particular the need for expedition, no objection is raised to having the matter determined in this way. 
Counsel have agreed, without prejudice to their position at trial, that: 
1.
The first plaintiff suffers a disease due to the nature of his employment. 
2.
The period of employment when the first plaintiff was exposed to asbestos, giving rise to the disease now suffered, was 1950-1963. 
3.
The first plaintiff was continuously employed by the defendant from 1950 to 1981. 
Mr McKenzie wants to preserve his action for damages — he does not seek accident compensation. He wishes to pursue his claim as if the Accident Compensation legislation was never enacted. The N.Z.E.D. wish to deal with the case as employers have done since 1974, by referring it to the Accident Compensation Corporation for it to be administered under that legislation. 
The plaintiff says that the requirement in s.28 for the employment to end after 1 April 1974 (which it otherwise did) is qualified by reference to the words “nature of employment”. The period of employment which ends on or after 1 April 1974 must be employment giving rise to the disease. Only relevant employment is to be considered in determining whether it has continued beyond 1 April 1974. As a result of that argument the relevant employment ended in 1963 when the exposure to asbestos ended, whilst employment from the point of view of a master-servant relationship, and as commonly understood, ended in 1981. 
Arguing that the words “nature of employment” qualify the period of time, Mr Corkill referred to this now familiar expression as it has been considered in a number of cases and in particular Commonwealth v Bourne [1960] 104 CLR 32 and Commonwealth v Thomson [1960] 104 CLR 48. The use of the phrase in the legislation creates the need to show a link between the disease complained of and the nature of the employment, not merely the employment itself. In New Zealand in both Workers Compensation Act 1956 cases and cases decided under the Accident Compensation Acts the same test has been applied and this question needs little further discussion. Mr Corkill referred me to the following passage in “Accident Compensation in New Zealand” by Judge A.P. Blair (1983) at p.88: 
“The meaning of the words ‘due to the nature of’ has been considered by a number of English and Australian authorities. In Eaton v George Whippy and Co [1938] 1 KB 363 it was said that ‘it is essential to observe that the words are 'due to the nature of the employment and that they are not 'caused by the employment' or 'contributed to by the employment'.’ (These words were cited with approval by Dixon CJ in Bourne's case — cited infra). Earlier in Blatchford v Stadden and Founds [1972] AC 461. Viscount Sumner referred to the words and said ‘their meaning cannot be the same as if the section had simply said 'is due to' any employment’. ”
Mr Corkill urges that the word employment is not only the employment giving rise to the disease, but also the same employment in which the person was employed for a particular period. The noun “employment” is qualified first by its relationship to the disease, and thus qualified, by the condition as to time. No doubt that could be so if the draftsman intended it to be so. Equally however it could be that the section firstly has to provide for that category of disease which may be regarded as equivalent to personal injury by accident, where the nature of the employment is relevant and secondly to fix a period of time after which cover exists. Employment need not have the same meaning because different factors are under contemplation; the nature of the disease on the one hand and the existence of the employment relationship on the other. Those two elements are precisely described in Blatchford v Stadden and Founds [1927] A.C. 461 by Lord Blanesburgh when he said: 
“The word ‘employment’ is not, as I think, in this phrase used immediately to describe the relation between employer and workman, a sense in which it is so frequently used through the Act and the sense in which the Court of Appeal in Deans case supposed it to be used here. In this phrase, as it seems to me, the word very clearly refers to the work or process in which the workman had been engaged and not to his contract with an employer to engage in it. ”
(Emphasis added.)
It should be pointed out that the distinction drawn in that case was in the context of a 1906 Workers Compensation Act when liability to pay compensation was fixed as against an employer engaged in a class of employment where disease (lead poisoning) could result. The legislation was designed to overcome the case where there were other like employments but no certain date as to the contraction of the disease. It was not a case where the distinction emphasised in the passage cited above was drawn within the one or same employment. 
Mr Corkill's point is grammatically logical if the words “nature of any employment” qualify the employment “in which” the person was employed. I am not convinced that they should be so construed. When considering questions of duration and the additional requirement of “earner” the language suggests an employment per se. When considering the type of disease which will amount to personal injury by accident the nature of the employment rather than the existence of it is all important. When considering the question of time that factor need not be important at all, only the existence of employment. 
The legislation has run the two things together and I think made the plaintiff's argument logically tenable but regard must be had to the scheme of the Act before accepting such an interpretation. There would seem to be little requirement to write down or limit the employment relationship in this way to achieve the objectives of the Act. 
The use of the words “is or was” in s.28 also suggests a division in time when the disease is contracted and the continuation of employment thereafter. That phrase does not appear in s 67 of the Accident Compensation Act 1972 and s 19 of the Workers Compensation Act 1956 discussed hereafter. 
The predecessor to s.28 is s 19 Workers Compensation Act 1956 
S.19 reads: 
19.
Compensation for diseases arising out of employment —  
(1)
Where a worker's total or partial incapacity for work or a worker's death results from any disease, and the disease is due to the nature of any employment in which the worker was employed within the prescribed period before the date of the commencement of the incapacity (or the date of the death if there has been no previous period of incapacity), compensation shall be payable as if the disease were a personal injury by accident arising out of and in the course of that employment, and all the provisions of this Act shall apply accordingly, subject, however, to the provisions of this section. 
(2)
For the purposes of this section, the term ‘prescribed period’ means — 
(a)
In the case of any disease due to exposure to X-rays, ionising particles, radium or other radioactive substances, or other forms of radiant energy, a period of five years: 
(b)
In any other case, a period of two years. 
(3)
No compensation shall be payable under this section in respect of the incapacity or death of a worker if that incapacity commences or that death happens, as the case may be, more than the prescribed period after the worker has ceased to be employed by the employer from whom the compensation is claimed in any employment to the nature of which the disease is due: Provided that this subsection shall not apply to the death of a worker when his death has been preceded, whether immediately or not, by any period of incapacity in respect of which the employer is liable under this section. 
(4)
. . . to (9). . . ”
Here the emphasis is on the duration of the contract of employment as well as the nature of the employment. Time factors govern the employment relationship independently of the need for a work resulting disease. 
Amongst the cases on industrial diseases decided under the Workers Compensation Act 1956 counsel were unable to refer to a case where s.19(3) was interpreted as depending, so far as time calculation was concerned, on the duration of the disease resulting work as contrasted with the employment itself. 
Section 67 of the 1972 Act is structured in a similar way and retained prescribed periods but required employment in a period ending after the 1972 Act was passed and within the prescribed period. It reads: 
67.
Compensation for diseases arising out of employment —  
(1)
Where an earner's total or partial incapacity for work or an earner's death results from any disease, and the disease is due to the nature of any employment in which the earner was employed during a period that ended after the commencement of this section and within the prescribed period before the date of the commencement of the incapacity (or the date of the death if there has been no previous period of incapacity), cover shall exist, rehabilitation assistance shall be given, and compensation shall be payable as if the disease were a personal injury by accident arising out of and in the course of his employment, and all the provisions of this Act shall apply accordingly subject however, to the provisions of this section. 
(2)
For the purposes of this section, the term ‘prescribed period’ means — 
(a)
In the case of any disease due to exposure to X-rays, ionising particles, radium or other radioactive substances, or other forms of radiant energy, a period of 20 years, or such other period as the Governor-General may (by Order in Council) prescribe. 
(b)
In the case of hydatid disease, a period of 10 years, or such other period as the Governor-General may (by Order in Council) prescribe: 
(c)
In relation to any other disease for which, by Order in Council, a special period is for the time being prescribed for the purposes of this section, the period so prescribed: 
(d)
In any other case, a period of 2 years. 
(3)
… to (8) …  ”
As personal injuries by accident were covered from 1974, but most diseases which were deemed to be such, were subject to a period of two years limitation, the differentiation between work related diseases and personal injuries by accident became more pronounced. The 1982 amendment removed time restraints and again required the existence of employment which had a disease resulting characteristic and which continued after 1 April 1974. All of the policy is clear enough but the absence of any logical connection between the duration of the disease resulting employment per se and the employment overall, in the legislation makes one question that the words emphasised in s.28 are so limited. 
Insisting on the disease resulting employment continuing beyond 1 April 1974, restricts the category of claimants to those still employed after that date and by an employer still so engaged. It is not widening the range of claimants a great deal more to insist only that the employment continue irrespective of the disease resulting factor remaining, given the general likelihood of changes of employment in any event. This is no floodgate situation. 
There will be anomalies and exceptions in this legislation, see A.C.C. v N.Z. Meat Industry Association [1988] 1 NZLR 1, but the link between cover and an existing employment having regard to the structure of the Act is in my view logical. To limit cover to persons whose employment continued disease resulting characteristics would be illogical and in some cases might result in a very complicated inquiry to establish the start and finish of the employment characteristics I have referred to, let alone the question as to whether the disease was due to the nature of the employment. I think the legislation intended to include all persons who continued to have the same employment whether or not at 1 April 1974 it was a disease resulting form of employment at that time. 
Mr Corkill said that an anomaly can be demonstrated by the facts in this case. If Mr McKenzie had left the N.Z.E.D. in 1965, he would not now be covered but fortuitously he has continued with the same employer and has cover if the Crown's interpretation of s.28 is correct. But it would be equally anomalous if an employee exposed to disease resulting employment could not have cover if six months before 1 April 1974 the employer desisted from such employment. I think s.28 was intended to extend the range of cover to the wider group and not by definition to a smaller group. 
Nor do I think, as Mr Corkill suggests, the legislation is truly retrospective. The disablement and incapacity are occurrences which have occurred recently, well after the passing of both Accident Compensation Acts. To grant cover on the basis of the position in 1974 is not really acting retrospectively for it is dealing with events which would occur after the passing of the Act but limited to a claimant whose employment was as categorised in s.28. The history of dealing with industrial disease in the context of employees' compensation is to equate the disability flowing from the onset of the disease to the accident causing personal injury. 
Mr Lawrence submits that to construe the word employment as meaning “the hazardous part of the employment only” is to read down the word employment. He further submits that there is nothing in s.28 or the Act generally to support such a view. 
The concept of employment is very broad by definition in the statute and such broad coverage of what is meant by employment militates against restricting it in the case of s.28. I would agree in general with that proposition but it is not conclusive on a specific section which relates to the treatment of industrial disease. 
Some help is gained from s.29 relating to industrial deafness, where the cover is carefully confined to events after 1 April 1974. It is I think a pointer to the irrelevance from the point of view of industrial disease whether the disease resulting employment as such continued after 1974. 
Of more weight is perhaps the policy objectives behind the legislation overall. The long title to the Act amended in 1973 reads: 
“An Act to make provision for safety and the prevention of accidents; for the rehabilitation and compensation of persons who suffer personal injury by accident in respect of which they have cover under this Act; for the compensation of certain dependants of those persons where death results from the injury; and for the abolition as far as practicable of actions for damages arising directly or indirectly out of personal injury by accident and death resulting therefrom and certain other actions. ”
Emphasising the need for the disease resulting employment as such to continue beyond 1 April 1974 is concentrating on the cause of the disease or injury and not adressing the fact of disease or injury. The section still requires an inquiry into cause so the section preserves that factor in s.28 cases. But I think one could say that if the test is an employment, which continues and which at some stage has been responsible for a disease contracted by an employee, then it is more in keeping with the spirit of the Act, than a requirement that the special characteristic of the employment which gave rise to the disease continues. 
In other words, one inquiry into causation not two are required under s.28. First and only that the disease was due to the nature of the employment and not whether that state of affairs continued after 1 April 1974. Mr Lawrence in referring to the Woodhouse Report suggested that such an approach with its emphasis on the state of affairs within the employment rather than the employment itself runs counter to the fundamental reform which followed in the Accident Compensation Acts, namely the avoidance of any inquiry into fault or cause but a concentration on the fact of injury by accident. 
The strongest point in favour of the defendant's case is the long title to the Act as now incorporated in the 1982 legislation. A construction which will avoid the resurrection of a common law action dependent on fault with all that conveys, must be preferred here. If, as seems to be the case, asbestos exposure may give rise to claims Mr McKenzie may have the disputed benefit of Accident Compensation where others will have, by virtue of a change of employment before 1974, only their rights at common law. Those rights, if they have been breached, have I suspect been grossly prejudiced by the passage of time and in many cases no remedy in damages and no Accident Compensation will be available. Mr McKenzie has at least (subject to proof of causation) the security of Accident Compensation. Venturing out once more on the uncertain common law action for damages with the attendant need to ascertain the standard of care owed by employers to employees 30 to 40 years ago, is a speculative exercise indeed. 
For these reasons I would answer the question, No. The consequences of this decision will be that the case is to be referred to the Accident Compensation Corporation accordingly. 
Counsel may submit a memorandum as to costs. 

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