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Accident Compensation Cases

Pearce v Accident Compensation Corporation (HC, 10/10/91)

Judgment Text

PENLINGTON J:
The defendant, the Accident Compensation Corporation, applies to strike out in whole or in part the plaintiff's second amended statement of claim and in the alternative applies for an order requiring the plaintiff to file a more explicit statement of claim under r 185 High Court Rules. 
The plaintiff suffered personal injury by accident. He then made a claim for accident compensation under the Accident Compensation Act 1982. 
The plaintiff now seeks to recover $50,000 exemplary damages together with costs from the defendant as the result of certain alleged actions on the part of the defendant and a private investigator. The second amended statement of claim was filed after discovery had been taken by the plaintiff against the defendant. The statement of claim purports to plead two causes of action. 
The second amended statement of claim 
I first summarise what is set out as the first cause of action. 
Between 1984 and 1988 the defendant was being paid accident compensation. The plaintiff sought review of the quantum of that compensation on five occasions as he considered that he was receiving the incorrect amounts. Ultimately, he obtained a finding which was favourable to him. Then, on 4 November 1987, the defendant ceased paying weekly compensation. The plaintiff made representations to the defendant. Payments resumed but were stopped once again on 22 January 1988. The plaintiff sought a review of the defendant's decision. In para 5 of the second statement of claim the plaintiff pleads that while the review application was pending the defendant employed a private investigator: 
“to act as its agent and spy on the plaintiff, take photographs and/or video tape recordings of him and generally attempt to search for any evidence the defendant hoped might be of assistance to it in repelling the plaintiff's claim for reinstatement of his weekly compensation payments. ”
Then the plaintiff goes on to plead in para 6 of the second amended statement of claim: 
“That on or about the 27th day of April 1988 while acting as the defendant's agent the private investigator threatened to strike the plaintiff and then did strike him several blows on the arm with a baton, causing the plaintiff distress, worry, anger, shock and humiliation. In addition at the same time and on other diverse occasions, the private investigator, while acting as the defendant's agent committed offences under s 52 of the Private Investigators and Security Guards Act 1984 by taking photographs and/or videotape recordings of the plaintiff and the plaintiff's wife, without their consent. ”
The weekly compensation recommenced on the order of a review officer after a hearing on 14 June 1988. 
The private investigator is not named in the pleading and that person is not cited as a second defendant. 
The plaintiff pleads that in all the circumstances the actions of the defendant were “high-handed, contumelious and contumacious conduct” and that he is entitled to an award of exemplary damages. $50,000 is claimed. 
I next summarise what is set out as a further or alternative claim. The plaintiff repeats what he has previously pleaded in the statement of claim. He then goes on to plead what appears to be an allegation of negligence on the part of the defendant. That pleading is in the following form: 
“(10) At all material times the Defendant had a duty of care to the Plaintiff as follows: 
(a)
In pursuance of its statutory obligation to assist in the rehabilitation of the Plaintiff as an accident victim, to take steps reasonably available to it towards his rehabilitation. 
(b)
To make itself familiar with the law relating to the taking of photographs and/or film by a private investigator. 
(c)
Insofar as its actions affected the Plaintiff, to itself comply with the law, and not to instruct or permit an agent to act contrary to the law. 
(11) That the Defendant did not comply with its duty of care to the Plaintiff in that: 
(a)
It failed to take reasonable steps towards the rehabilitation of the Plaintiff in the following respects; 
(i)
By stopping making payments of compensation to the Plaintiff on the 14th day of November, 1987 and again on the 22nd day of January, 1988. 
(ii)
In instructing or permitting a private investigator to take photographs and video film of the Plaintiff, contrary to the law. 
(iii)
By its agent, threatening and then striking the Plaintiff on or about the 27th day of April, 1988. 
(b)
It failed to read the Private Investigators and Security Guards Act 1974, and in particular section 52 thereof, to ascertain the legal position concerning the taking of photographs and/or film by a private investigator. 
(c)
After learning that the private investigator had acted contrary to the law in breach of section 52 of the Private Investigators and Security Guards Act 1984, and intended to repeat such breach, it instructed the private investigator to continue. ”
Once again, the plaintiff pleads that the actions of the defendant “amounted to high-handed contumelious and contumacious conduct” and that they entitle him to an award of exemplary damages. Once again, the sum of $50,000 by way of exemplary damages is claimed. 
The defendant has not, so far, pleaded to the second amended statement of claim. 
When it pleaded to the original statement of claim, it admitted that, for the purposes of a lump-sum payment the plaintiff was 20 percent incapacitated; that the plaintiff had applied for a review of five of the decisions of the defendant; that it ceased paying weekly compensation on 4 November 1987 and again on 22 January 1988 and that the plaintiff applied for a review of the defendant's decision to cease payments. 
As to the allegation concerning the private investigator, the defendant admitted instructing Auckland Investigations Ltd to report whether it considered the plaintiff was incapacitated for work. It also admitted that on 27 April 1988, an employee of Auckland Investigations Ltd had an altercation with the plaintiff. Otherwise the defendant denied the plaintiff's various allegations concerning the private investigator. 
The original statement of claim did not contain any allegation of negligence. The defendant has therefore not so far pleaded to that allegation. 
The competing cases 
The defendant attacks the second amended statement of claim (to which I shall now refer as “the statement of claim”) as to both its form and its substance. The defendant's primary application is that the statement of claim should be struck out in whole or in part. In the alternative, the defendant seeks a more explicit pleading. 
The plaintiff resists the defendant's application on two grounds. First, the plaintiff says that there has been no failure to comply with the High Court Rules and that if there has been a failure it is a mere irregularity which can be corrected by amendment. And, secondly, he says that the statement of claim puts forward a case in respect of which it cannot be said that the plaintiff would not possibly succeed, and that it is not frivolous or an abuse of process. 
I deal first with the defendant's complaints as to the form of the statement of claim. 
Pleading defects 
Mr Lucie-Smith for the defendant relied on r 186(b) and (c) and r 108 High Court Rules. 
Rule 186(b) and (c) states: 
Striking out pleading — Without prejudice to the inherent jurisdiction of the Court in that regard, where a pleading— 
 
(b)
Is likely to cause prejudice, embarrassment, or delay in the proceeding; or 
(c)
Is otherwise an abuse of the process of the Court,— 
the Court may at any stage of the proceeding, on such terms as it thinks fit, order that the whole or any part of the pleading be struck out. ”
Rule 108 states: 
Statement of claim to show nature of claim etc — The statement of claim— 
(a)
Shall show the general nature of the plaintiff's claim to the relief sought; and 
(b)
Shall give such particulars of time, place, amounts, names of persons, nature and date of instruments, and other circumstances as may suffice to inform the Court and the party or parties against whom relief is sought of the plaintiff's cause of action; and  
(c)
Shall state specifically any claim for interest; and 
(d)
In a proceeding against the Crown that is instituted against the Attorney-General, shall give particulars of the Government department or officer of the Crown concerned. ”
Mr Lucie-Smith analysed the statement of claim. He pointed out, as I have earlier stated, that in form it appears to plead two causes of action. In fact, however, he contended that that is not so. Mr Lucie-Smith's careful analysis yielded no less than three possible causes of action in what purports to be the first cause of action, namely: 
(1)
Breach of the Accident Compensation Act; 
(2)
Assault on the plaintiff by the private investigator; 
(3)
Breach of s 52 Private Investigators and Security Guards Act. 
Then, what appears as the second cause of action, an allegation of negligence, was attacked by Mr Lucie-Smith as being defective in a number of respects. He submitted that this apparent claim in negligence in fact disguised five or possibly six causes of action, namely: 
(1)
Breach of statutory duty under the Accident Compensation Act; 
(2)
Negligence in exercising a statutory duty under the Accident Compensation Act; 
(3)
Misfeasance in public office; 
(4)
Breach of s 52 Private Investigators and Security Guards Act; 
(5)
Assault; 
(6)
Negligence in failing to become informed as to the law. 
When Mr Garbett opened his argument, upon questioning from me he accepted that only three causes of action were raised in the statement of claim. They were: 
(a)
Assault and battery; 
(b)
Breach of statutory duty arising out of an alleged breach of s 52 Private Investigators and Security Guards Act; 
(c)
Negligence in the ways alleged in para 11 of the statement of claim. 
Mr Garbett expressly disavowed allegations of either a breach of statutory duty under the Accident Compensation Act or misfeasance in public office. 
It therefore follows that the plaintiff's claim is focused on the actions of the defendant in engaging the private investigator and the subsequent actions of the private investigator vis-à-vis the plaintiff. 
It is not concerned with the defendant's actions in relation to the payments of compensation to the plaintiff. 
The statement of claim must now be examined in the light of this concession. 
First, r 108(a) and especially 108(b) are in point. I have already set out r 108. 
The purpose of r 108(a) is to enable the Court and the defendant to be able to see in a general way the basis upon which the plaintiff claims relief: McGechan on Procedure HR108.10. The purpose of r 108(b) is to inform the Court and the defendant of the plaintiff's cause of action. In Letang v Cooper [1965] 1 QB 232, 242, Diplock LJ defined a “cause of action” as: 
“A factual situation, the existence of which enables one person to obtain from the Court a remedy against another person. ”
To comply with r 108(b), the statement of claim must sufficiently inform the Court and the defendant of the factual situation the existence of which, if proven, entitles the plaintiff as a matter of law to relief. 
Both the defendant and the Court are entitled to be informed of the legal basis for the plaintiff's claim for relief in the clearest terms: A M Satterthwaite & Co Ltd v Knight Tailors Ltd unreported, Williamson J, 9 May 1989, HC Christchurch CP16/86. 
What purports to be the first cause of action in the statement of claim is confusingly drafted. It refers to factual matters the existence of which are unnecessary to enable the plaintiff to obtain a remedy against the defendant. For example, whether the defendant properly complied with the statutory regime for the payment of compensation under the Accident Compensation Act is an irrelevant and unnecessary pleading in relation to the alleged assault and battery or to the alleged breach of s 52 Private Investigators and Security Guards Act. The effect of the inclusion of paragraphs in the statement of claim relating to the review of the payments of compensation and the cessation of those payments is to mislead the Court and the defendant into thinking that a breach of statutory duty under the Accident Compensation Act is relied on when in fact that is not so. In the absence of amendment, such a pleading can only result in preparation by a defendant to meet a case which the plaintiff does not intend that the defendant should have to meet. 
A defendant should not be prejudiced in this way. A defendant's preparation for trial and the length of the trial should not be unnecessarily extended because of the anticipation of claims which are not in fact being made by the plaintiff. 
I therefore consider that the statement of claim does not comply with r 108(b) in this regard. 
Mr Lucie-Smith also attacked the degree of particularity of the pleadings in the statement of claim. I uphold his submission. Rule 108(b) has not been complied with in this regard as well. 
The plaintiff has not set out the factual basis for an award of exemplary damages. In Donselaar v Donselaar [1982] 1 NZLR 97, the Court of Appeal recognised that a claim for exemplary damages for assault could be made notwithstanding the enactment of the Accident Compensation Act “if accompanied by insult or contumely which touch the life of ordinary men and women”: see Cooke J at p 106. Later in his judgment Cooke J sounded a warning as to when exemplary damages would be allowed: see p 107. 
In the present case the plaintiff has not given any particulars as to the “distress, worry, anger, shock and humiliation” which the blows on the arm caused him. Likewise, the plaintiff has not given any particulars of the alleged “high-handed contumelious and contumacious conduct” upon which he relies in support of his claim for exemplary damages. 
The defendant and the Court are entitled to these particulars. In view of the observations in Donselaar the Court must be wary of a plaintiff bringing a disguised claim for personal injuries which is now precluded by the Accident Compensation Act in the form of a claim for exemplary damages. 
Secondly, r 181(1) is in point. It provides: 
“Distinct causes of action and distinct grounds of defence, founded on separate and distinct facts, shall be stated as nearly as may be separately and clearly. ”
Mr Lucie-Smith submitted that the purpose of this rule is to require the plaintiff to separate out into distinct sections of the statement of claim different causes of action based on different facts. Where different unrelated causes of action arising from unrelated facts exist, then r 181 clearly applies. Where there is some factual overlap and some unrelated facts in each cause of action, then it is necessary to plead separately each cause of action. Even where two causes of action are founded on identical facts the practice is to plead each cause of action separately: see McGechan HR181.04. See also Thompson v Westpac Banking Corp (No 2) (1986) 2 PRNZ 505 in which Eichelbaum J said (pp 508-509): 
“The several causes of action listed in para 4 are not stated separately and clearly. Nothing in the new rules derogates from the principle and practice long recognised in New Zealand that separate causes of action are best identified by some suitable introductory phrase, for example ‘For a further (and alternative) cause of action the plaintiff repeats paras 1, 2 and 3 and says … ’. It is true that the rule, in its terms, applies only where the causes of action are founded on separate and distinct facts but I cannot see that the identical facts can possibly all be relevant to breach of fiduciary duty, breach of contract, undue influence, unconscionable transaction, ordinary negligence and negligent misstatement. No doubt a substantial substratum is applicable to all of them, but at some stage the causes of action must diverge; for example, the particulars of the contract and its breach on the one hand, the duty of care and particulars of negligence on the other, details of undue influence and so on. ”
I therefore conclude that the statement of claim does not comply with r 181(1) as applied by Eichelbaum J in Thompson v Westpac. Both the alleged assault and the alleged breach of s 52 Private Investigators and Security Guards Act are pleaded in what appears to be the first cause of action in the statement of claim. Assault and battery and breach of statutory duty are separate and distinct torts. They should have been separately and distinctly pleaded. In the event, however, this pleading defect is overtaken by the findings which I make later in this judgment. 
Thirdly, r 114 is in point. It provides: 
Relief to be sought for each cause of action — A statement of claim which includes two or more causes of action shall specify separately the relief or remedy sought by the plaintiff on each cause of action. ”
Mr Lucie-Smith submitted that r 114 had not been complied with in that each cause of action should separately specify the relief sought. 
I agree with Mr Lucie-Smith's submission. That non-compliance follows from the failure to plead separately and distinctly the three causes of action relied on by the plaintiff. Again, this defect is overtaken by my later findings. 
Mr Garbett was unable to offer much resistance to the pleading deficiencies which have been revealed. As the argument proceeded he came to accept that the statement of claim required repair. 
Mr Lucie-Smith, on the other hand, went further. He submitted that the statement of claim should be struck out under r 186(b) and (c) on account of the deficiencies. He pointed out that the Court was now considering the plaintiff's third statement of claim. I have a measure of sympathy for the defendant. I nevertheless consider that the statement of claim is capable of repair by substantial amendment. That can be ordered on strict terms. I am not disposed to hold that the deficiencies which have been exposed are likely to cause prejudice, embarrassment, or delay, or are otherwise an abuse of the process of the Court which would justify me on those grounds in striking out the statement of claim. 
At this point, before dealing with the amendments required, I propose to go on and consider the defendant's challenge to the substance of the statement of claim. 
Defects in substance 
In this regard, Mr Lucie-Smith relied on r 186(a) which reads as follows: 
“Without prejudice to the inherent jurisdiction of the Court in that regard, where a pleading— 
(a)
Discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; 
 
the Court may at any stage of the proceeding, on such terms as it thinks fit, order that the whole or any part of the pleading be struck out. ”
The relevant principles are well-established. In Innes v Ewing (1986) 4 PRNZ 10 Eichelbaum J dealt with an application under r 186. He adopted the same principles as those which are relevant to the exercise of the Court's inherent jurisdiction. Eichelbaum J said: 
“It is well recognised that since it is a strong step to keep the plaintiff from the judgment seat, the jurisdiction is not exercised except in plain cases; where the claim is plainly untenable. ”
The principles were restated by Richmond P in R Lucas & Son (Nelson Mail) Ltd v O'Brien [1978] 2 NZLR 289 at p 294. Richmond P referred to the judgment of Barrowclough CJ in Peerless Bakery Ltd v Watts [1955] NZLR 339 in which the Chief Justice said: 
“The jurisdiction should not be exercised except with great circumspection and unless it is perfectly clear that the plea cannot succeed; … On the other hand, if the action cannot ‘by any possibility be maintained’ then the Court ought to dismiss it: Chatterton v Secretary of State for India ([1895] 2 QB 189). ”
Richmond P then referred to the judgment of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at p 128. In that case Barwick CJ said: 
“In my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality, a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. 
On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. ”
Richmond P adopted the conclusions arrived at by Barwick CJ. He considered them to be entirely applicable to the exercise of the inherent jurisdiction in New Zealand. 
The Privy Council in Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990] 3 NZLR 513; (1990) 2 PRNZ 291, per Lord Lowry affirmed the test articulated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) and adopted by Richmond P in R Lucas & Son (Nelson Mail) Ltd v O'Brien
These authorities show that the essential test which I must apply is: 
“Is the plaintiff's claim so clearly untenable that it cannot possibly succeed? ”
They also show that in dealing with an application to strike out the Court is guided by a number of subsidiary principles. The allegations of fact in the statement of claim are assumed to be true except where the opposite is shown conclusively: Abrahams Wool Exchange Ltd v Norlake Wool Ltd (1986) 1 PRNZ 101. But this rule does not extend to the length of asserting that allegations of law must be taken to be correct: Cameron v Minister of Foreign Affairs unreported, 9 August 1990, CA11/90. 
Evidence by affidavit is admissible if that evidence is not contradicted and does not itself contradict what appears on the pleadings. If this is so, then it can be looked at and taken into account. 
It is proper to record that in this case the defendant filed three affidavits in support of its application to strike out. The evidence in the affidavits shows: 
(i)
Shaughan Adrianne Bruce was the private investigator responsible for observing the plaintiff on or about 27 April 1988; 
(ii)
At the material time, Bruce held a certificate of approval as a responsible employee of Auckland Investigations Ltd. That certificate had been issued by the Registrar of Private Investigators and Security Guards at Auckland on 1 April 1988; 
(iii)
The defendant instructed Auckland Investigations Ltd to carry out observations on the plaintiff. One Dennis Brett Bodle, the district manager of the defendant at Rotorua was responsible for liaising with Auckland Investigations Ltd once that company had been instructed by the defendant; 
(iv)
The decision to instruct Auckland Investigations Ltd was prompted by information received by the defendant in the form of anonymous telephone calls about the plaintiff which suggested that the plaintiff might not be suffering from any incapacity which entitled him to compensation. The defendant considered that it had a duty to take some steps in order to ensure that the public funds administered by it were being correctly paid; 
(v)
When Auckland Investigations Ltd was instructed and during the course of Bodle's liaison with that company he was unaware that it was an offence under s 52 Private Investigators and Security Guards Act 1974 for a private investigator to take a photograph or a videotape recording of a person without that person's consent; 
(vi)
By the end of February 1988 Bodle had become aware that photographs and videotape recordings of the plaintiff had been taken by the private investigator employed by Auckland Investigations Ltd. 
The principles which I have summarised must now be applied to each of the three causes of action relied on by the plaintiff. 
Assault 
The plaintiff relies on the intentional tort of assault and battery. He seeks to fix the defendant with liability for assault on an allegation of agency. He pleads that the defendant employed the private investigator to spy on the plaintiff and that the assault on him by the private investigator occurred while the latter was “acting as the defendant's agent”
In its statement of defence to the original statement of claim, the defendant admitted instructing Auckland Investigations Ltd “to report whether it considered the plaintiff was incapacitated for work”. The affidavit evidence filed in support of this application confirms that the defendant engaged the private investigator to make inquiries on the defendant's behalf concerning the plaintiff. Thus, the engagement of the private investigator to carry out surveillance on the plaintiff is not in issue. 
I first summarise the opposing arguments. 
Mr Lucie-Smith's argument under this head started with the pleadings. He pointed out that the plaintiff had not pleaded that the defendant instructed the private investigator to assault the plaintiff or that it was part of the alleged contract of agency between the defendant and the private investigator that the private investigator was authorised to assault the plaintiff. 
Mr Lucie-Smith submitted that a bare plea of agency was insufficient and that to make the defendant liable the plaintiff must allege that the private investigator committed the assault within the real or ostensible authority of the defendant. He further submitted that the alleged assault was an act which was outside the contract of agency between the defendant and the private investigator and that accordingly no cause of action existed which would render the defendant liable in exemplary damages for the assault. 
Mr Garbett accepted that assault and battery is an intentional tort. He submitted that a plea of agency was sufficient to fix the defendant as principal with liability for the actions of the defendant as agent. 
Mr Garbett also accepted that for the defendant to be liable for an assault on the plaintiff it must have been part of his work for the defendant; or put another way, it must have been his way of carrying out the instructions which he received from the defendant, those instructions being to spy on the plaintiff, take photographs and/or videotape recordings of him and generally to obtain evidence to resist his claim for reinstatement of weekly compensation. 
Mr Garbett also accepted that if it was demonstrated that the private investigator assaulted the plaintiff as an act of personal vengeance or while engaged on a frolic of his own, then the corporation would not be liable. 
Mr Garbett recognised that without the plea of agency the plaintiff could not maintain this cause of action. 
I now consider these contentions. 
What the plaintiff is alleging is that the defendant is vicariously liable for the deliberate tort of the private investigator. Ultimately, whether the defendant is so liable turns on the nature and scope of the authority given by the defendant to the private investigator. 
The relevant general rules are set out in Bowstead on Agency (15th ed) in arts 29 and 30. 
Article 29 at p 108 states: 
“Every agent who is authorised to conduct a particular trade or business or generally to act for his principal in matters of a particular nature, or to do a particular class of acts, has implied authority to do whatever is incidental to the conduct of such trade or business, or of matters of that nature, or is within the scope of that class of acts, and whatever is necessary for the proper and effective performance of his duties: but not to do anything that is outside the scope of his employment and duties. ”
Article 30 at p 111 states: 
“Every agent who is authorised to do any act in the course of his trade, profession or business as an agent has implied authority to do whatever is normally incidental, in the ordinary course of such trade, profession or business, to the execution of his express authority, but not to do anything which is unusual in such trade, profession or business, or which is neither necessary for nor incidental to the execution of his express authority. ”
See also 1 Halsbury (4th ed) paras 846 and 847. 
Mr Lucie-Smith, in support of his argument, relied on Warren v Henlys Ltd [1948] 2 All ER 935 per Hilbery J in the King's Bench Division and Auckland Workingmen's Club & Mechanics Institute v Rennie [1976] 1 NZLR 278 per Mahon J in the Supreme Court. He sought to distinguish the decision of the Court of Appeal in Pettersson v Royal Oak Hotel Ltd [1948] NZLR 136 (CA). Each of these cases involved the question of the liability of a master to a third person for the act of a servant in assaulting that person. The critical issue in each case was whether the servant was acting within the scope of his authority from the master. 

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