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Accident Compensation Cases

Smith v Accident Rehabilitation & Compensation Insurance Corporation (HC, 05/02/98)

Judgment Text

This is an appeal against a decision of the Accident Compensation Appeal Authority. It concerns the appellant's entitlement to earnings related compensation under s 59 of the Accident Compensation Act 1982. 
On 9 April 1981 the appellant suffered back injuries when a tree fell on him during the course of his employment as a bushman. He was placed on earnings related compensation. Later that year he was assessed as having a permanent partial disability of 10%. Subsequently he received awards under s 119 and 120 of the Act. His injuries rendered him unsuitable for heavy work. 
Between 1982 and 1987 the appellant worked as a self-employed fencing contractor. From 1987 until 1991 the appellant held a full-time position which he relinquished in July 1991 because he did not consider that it was sufficiently financially rewarding. Thereafter he held a number of part-time jobs until early 1992 when temporary work on a dam project came to an end. 
On 2 April 1992 the respondent advised the appellant that because of his failure to keep it informed about his earnings it would cease to make payment of earnings related compensation as from 29 March 1992. This prompted the appellant to provide information about his earnings. But the respondent was not prepared to reinstate earnings related compensation. The respondent relied, inter alia, on the fact that the appellant had voluntarily relinquished long term employment. 
The appellant sought review of the respondent's decision. The Review Officer upheld the Corporation's decision. An appeal to the Appeal Authority was also unsuccessful with the Appeal Authority concluding: 
“The medical evidence is that the appellant is fit to do work other than bush work or work of a very heavy nature which requires lifting and bending. The appellant has demonstrated over a period of some eight years that he has a capacity to work and for a period earned in excess of his relevant earnings … The appellant has chosen not to work full-time because he does not consider the reward warrants that and relies on make-up earnings related compensation for the balance of his income. 
That, in my view, is the most that he can expect. He has not demonstrated that he has suffered loss of earning capacity as a result of personal injury but only that from time to time he has suffered temporary loss of earnings. ”
That decision prompted this appeal. 
For the appellant Mr Sara argued that the appellant's periods of employment after the accident did not extinguish the impact of the accident on the appellant's ability to earn. He said that medical certification established that as at April 1992 the appellant was still partially unfit for work by reason of his back injury with the result that he was entitled to earnings related compensation pursuant to s 59 of the Act. According to Mr Sara it was useful in this case to ask whether but for the back injury the appellant would have suffered a temporary loss of earning capacity. He said the appellant's back injury had ruled out any prospect of heavy work and that it had been accepted by the Appeal Authority that at the relevant time the appellant was without income. It followed, said Mr Sara, that s 59 applied. Mr Sara claimed that the Appeal Authority had mis-directed himself as to the correct interpretation of s 59. 
In response Mr Barnett submitted that it is not the case that whenever a person suffers a loss of earning capacity there will necessarily be a causative link back to the original injury. In this case the necessary causative link between the injury and the loss of earnings was missing. He said that the Appeal Authority had carefully examined the history of the matter and that there was sufficient evidence to support the Appeal Authority's conclusion in this regard. 
The key provision is s 59 of the Accident Compensation Act 1982. The relevant portions of this section provide: 
Where, as a result of incapacity due to personal injury by accident, an earner suffers any temporary loss of earning capacity as determined under the provisions of this section during any period after the expiration of the working week comprising the day of the accident and the 6 days thereafter, the Corporation shall pay him earnings related compensation in respect of that loss at the rate of 80 percent of the amount of his loss of earning capacity due to injury. 
For the purposes of this section, an earner's temporary loss of earning capacity due to the injury shall, subject to this section, be determined by deducting from the amount of his relevant earnings for a like period the aggregate of the amount of his earnings as an employee (if any) and the amount of his earnings as a self-employed person (if any) during the period. ”
When originally enacted subs (2) included a proviso which empowered the Corporation to reduce the amount of earnings related compensation if the Corporation considered, having regard to medical and other evidence available to it, that the earner was not endeavouring to work or earn to the extent of his capacity or was not working or earning to the extent to which the earner would be able to do so if the only factor affecting his ability to work or earn in paid employment was his incapacity for work due to the injury. That proviso was repealed by s 9 of the Accident Compensation Amendment Act 1985. The removal of the proviso featured prominently in Mr Sara's submissions. 
It was not disputed by Mr Sara that a causal connection between the injury and the temporary loss of earning capacity is essential. This is apparent from the words as a result of appearing in subs (1). The 1985 repeal of the proviso did not affect this requirement. 
In Wicks v Accident Rehabilitation and Compensation Insurance Corporation (Auckland Registry, HC50/93, 22 March 1995) Robertson J noted that the section called for an inquiry as to whether the loss of earning capacity is as a result of the accident. He also noted that the causative link was not necessarily broken by post-accident employment and that what has happened during the period between the accident and the alleged temporary loss of earning capacity will constitute evidential material which will need to be weighed and assessed. Robertson J considered that neither loss of earnings nor intervening employment constituted sole issues. In other words, it was necessary in any particular case to assess all the evidence to determine whether the necessary causative link had been established. I agree with those observations. 
The Appeal Authority clearly proceeded on the basis that the causal connection between the appellant's injury and his loss of earning capacity was a crucial issue. Specific reference was made to Wicks. The Appeal Authority noted that the appellant had demonstrated a capacity to work over some eight years, at times earning in excess of the relevant earnings, and that ultimately the appellant had chosen not to work full-time because the remuneration was not sufficiently rewarding. Although he might not have said so in so many words the Appeal Authority obviously reached the conclusion that the necessary causative link had not been established. 
As indicated by Davison CJ in Harvey v Accident Compensation Commission (High Court, Wellington, M177/77): 
“The function of this Court is not to review a decision of the Appeal Authority on the facts if there is evidence on which such a finding could have been made so long as the Appeal Authority applies to his consideration of those facts any relevant principles of law applicable to this decision. ”
The Appeal Authority carefully assessed the full history of the appellant's problems. On the evidence it was open to the Appeal Authority to conclude that the necessary causative link had not been established. There is no sound basis for concluding that he misinterpreted s 59 of the Act. I do not accept that the Appeal Authority's decision leads to the conclusion that he was effectively applying the repealed s 59 proviso or the provisions of s 60. 
At first blush Mr Sara's argument that but for the injury the appellant would not have suffered the temporary loss of earning capacity has some attraction. But on further consideration I have reached the view that such an approach is too narrow and represents an over simplification of s 59. Taken to extremes the but for approach could undermine the causal connection requirement built into the legislation. The proper approach, as explained by Robertson J in Wicks, is to weigh and assess the available evidential material relating to events between the time of injury and the time of the alleged temporary loss of earning capacity. Naturally evidential material relating to the time of when it is alleged that there has been a loss of earning capacity will also be relevant. From this overall picture a judgment can be made as to whether the necessary causative link has been established. 
The appeal is dismissed accordingly. The respondent is invited to file and serve a memorandum as to costs within 21 days. The appellant will have a further 14 days to respond. 

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