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Accident Compensation Cases

ACCIDENT COMPENSATION CORPORATION v MOHI-RUDOLPH (HC, 13/03/00)

Judgment Text

[ORAL] JUDGMENT OF WILLIAMS J 
Williams J
[1]
This is an appeal against an oral judgement of Jeremy Doogue DO delivered in the District Court Auckland on 22 June 1999 in which he upheld the entitlement of the respondent, Ms Mohi-Rudolph to be paid what are known as attendant care costs during her absence overseas. As the argument proceeded it became clear that the pivotal matter for determination in this appeal is the construction to be given to the Accident Rehabilitation and Compensation Insurance Act 1992 s 88(2) (“the Act”). 
[2]
Section 88 reads 
88. Payments to persons outside New Zealand 
(1)
Compensation based on weekly earnings, independence allowances, and survivors' grants shall be paid in accordance with this section to persons who are outside New Zealand. 
(2)
No payment shall be made under this Act in respect of any treatment, service. rehabilitation or related transport costs incurred outside New Zealand unless required or permitted by regulations made under this Act. 
(3)
No compensation based on weekly earnings shall be payable to any person who suffered personal injury outside New Zealand which is covered by this Act, and who is not for the time being in New Zealand, unless that person - 
(a)
Had earnings within the meaning of this Act whilst absent from New Zealand prior to suffering the personal injury; or 
(b)
Had earnings within the period of 6 months immediately before leaving New Zealand. 
(4)
No compensation based on weekly earnings and no independence allowance shall be payable to any person outside New Zealand unless the condition-of the person has been assessed for the purposes of this Act by a person approved for the purpose by the Corporation. 
(5)
Where compensation based on weekly earnings or an independence allowance is payable outside New Zealand and the person's continuing right to receive that compensation or allowance is to be assessed, the Corporation shall not be liable to meet any costs incurred by the person overseas or any costs relating to the return of the person to New Zealand for examination or assessment in excess of the costs that the Corporation would be required to meet if the person had remained in New Zealand. 
(6)
No compensation based on weekly earnings shall be payable outside New Zealand to any person whose entitlement to that compensation is based on earnings in employment in New Zealand that that person was not lawfully entitled to undertake by reason of that person not having appropriate New Zealand citizenship, residency, or permit qualifications. 
(7)
In making any payment to a person who is outside New Zealand the Corporation may make the payment to a New Zealand bank account denominated in New Zealand dollars; and if necessary the Corporation may open such an account at a New Zealand bank in the name of and at the expense of that person for that purpose. ”
[3]
Put briefly, the question in this case is whether the attendant care costs for Ms Mohi-Rudolph's care during her absence were “rehabilitation … costs incurred outside New Zealand”
[4]
The facts of the matter are not in contention and need only brief description. 
[5]
Ms Mohi-Rudolph was born on 25 May 1996. Unfortunately she suffered and will continue to suffer severe injuries arising out of asphyxia at birth. The Corporation as constituted under the Act and continued since has accepted that Ms Mohi-Rudolph was the subject of medical misadventure and that she is and will be entitled to compensation. 
[6]
On 7 May 1998 her mother, who is her primary caregiver, wrote to the Corporation advising that she intended to take her daughter to the United Kingdom for a period then said to be 11 May to 22 June 1998. She sought payment to her aunt of an attendant care allowance for the period of the child's absence from New Zealand for what was in essence 15 hours a day at $12.00 per hour. In fact it appears as though their departure was delayed until 18 May and that they returned early on 17 June 1998 but nothing hangs on that so far as this appeal is concerned. 
[7]
On 20 May 1998 the Corporation wrote to the respondent's mother, drawing her attention to the Accident Rehabilitation and Compensation Insurance (Complex Personal Injury) Regulations 1994 Reg 16(b) saying that the application for care was declined. It is accepted, for the purposes of this appeal, that the Complex Personal Injury Regulations applied to Ms Mohi-Rudolph. 
[8]
Ms Mohi-Rudolph's mother applied for a review of the Corporation's decision. That was heard by a Review Officer on 6 October 1998 and in a decision delivered on 23 November 1998 the Review Officer upheld the Corporation's position. 
[9]
Ms Mohi-Rudolph appealed. The appeal was allowed on 22 June 1998 and it is against that decision that appeal is brought with leave granted by consent. 
[10]
The learned District Court Judge reviewed the factual background before turning to construe s 88 holding (p 2) 
“Dealing first of all with the literal wording of the Act, I come to the conclusion that a payment of the kind specified here would not seem to contravene section 88(2). The focus in the section is on costs ‘incurred outside New Zealand’. That is not the same thing as payment for services performed outside New Zealand. It seems to me that the section is directed at the place where liabilities are incurred. On a purely commercial view of matters it seems to be the case that if (A) and (B) agree within New Zealand that (B) will provide services to (A) in return for which (A) will pay a certain amount then the liability is incurred when the contract is made in New Zealand, or alternatively a debt arises which is payable in New Zealand once the promised performance under the contract has been completed.. For that reason a liability for the cost of the service would be incurred inside New Zealand even although the service could impart if occurred outside New Zealand. …  
To resume, the application of ordinary commercial law principles would mean the liability was incurred within New Zealand. ”
[11]
The learned District Court Judge then considered the opposing arguments including reference to Reg 16 of the Complex Personal Injury Regulations but held that the Regulations were, at best, of limited applicability and that there was nothing either in policy or in the Regulations to disturb the conclusion which he had already tentatively reached. He accordingly allowed the appeal, set aside the Review Officer's decision and directed the Corporation to consider the claim afresh. 
[12]
In considering the correctness of the learned District Court Judge's views, it may be of assistance to begin by noting what is not in issue in relation to this appeal. 
[13]
As was explained during argument, Ms Mohi-Rudolph's mother has entered into an agreed social rehabilitation programme with the Corporation. Although that was not an issue raised by the grounds of appeal, it was accepted that Ms MohiRudolph is entitled to attendant care under that agreed programme whilst she is in New Zealand. The power for the parties to enter into a social rehabilitation programme appears in s 26 of the Act and in particular s 26(2)(a) which expressly includes provision of or payment for attendant care in the definition of “social rehabilitation”
[14]
The second matter to be noted is that other than to the limited extent later discussed, none of the provisions of the considerable number of regulations made under the Act are relevant to this case. In particular it was accepted that regulations such as the Accident Rehabilitation and Compensation Insurance (Treatment and Related Transport Overseas Costs) Regulations 1992 were not relevant and although Mr Hucker, for Ms Mohi-Rudolph, argued that the Accident Rehabilitation and Compensation Insurance (Ordinary Residence Definition) Regulations 1992 were relevant. the Court takes the view that other than is later discussed the statutory and regulatory regime relating to those “ordinarily resident in New Zealand” and their entitlements under the Act are, at best, of marginal relevance in this case. Similarly, although reference was made to the Accident Insurance Act 1998 ss 129, 130 in the Court's view, given the alterations in the accident compensation regime brought about by the enactment of that statute and the repeal of the 1992 Act, those provisions can have little bearing on the matters in issue. 
[15]
It is of assistance, first, to look at the terms of s 88 and the policy which is discernible as lying behind it in order to consider whether the learned District Court Judge was right in his views as a matter of statutory construction. As is well understood, the accident compensation regime which has operated in New Zealand since 1974 is intended to be primarily a domestic scheme supplanting workers' compensation and claims for damages for personal injury within this country. That comment remains valid notwithstanding the numerous changes brought about in the original scheme over the years since its inception. The abolition of workers' compensation and claims for damages for personal injury and their replacement by a form of universal accident compensation has never commended itself to any other country in the years since its adoption in New Zealand. 
[16]
It follows, therefore, that other than as exceptions the scheme is intended to provide compensation for persons within New Zealand but equally is not intended to provide compensation for those outside this country, even New Zealanders abroad, other than to the extent that such an approach is sanctioned by statute or regulation. Thus it follows if s 88 is considered in the light of that background, although subs (1) provides for compensation for weekly earnings, independence allowances and survivors' grants to be paid to persons outside New Zealand, subs (2) is clearly intended to limit the entitlement of persons otherwise entitled to cover under the Act for rehabilitation or related transport costs incurred outside this country unless they are empowered by regulation. In this case, subject again to what appears a little later. it was not suggested that there were regulations which permitted or required payment for the rehabilitation costs incurred by Ms Mohi-Rudolph. The remaining provisions of s 88 limit the entitlement of persons outside New Zealand to compensation of various types under this scheme and provide essentially that assessments under the scheme should be undertaken in accordance with the Act and that those overseas should not be entitled to charge such things as the costs of their return for examination other than in accordance with the statute. 
[17]
Section 88, in this Court's view, follows the statutory scheme of broadly making provision for accident compensation to all those inside the country but limiting the entitlement to compensation or benefits payable under the Act to those outside the country unless they can comply with the statutory requirements. 
[18]
Such authority as there is confirms that view. In Accident Rehabilitation and Compensation Insurance Corporation v ABC (12 November 1997 HC Wellington AP228/95) a Full Court allowed an appeal against a decision requiring the Corporation to pay the costs of counselling and other treatment costs incurred by the respondent outside New Zealand notwithstanding that the respondent had suffered personal injury by accident in this country in distressing circumstances and had felt obliged to leave the country in order to assist in her rehabilitation. The learned Judges of the Full Court held (pp 4-5): 
“The District Court Judge appears to have taken the view that, notwithstanding the clear language of s 88(2) of the Act and the clear language of the various regulations, which are specific in their terms, it was permissible to imply both the Accident Compensation (Psychiatrists. Psychologists and Psychotherapists Costs) Regulations 1990 and the Accident Rehabilitation and Compensation Insurance (Counselling Costs) Regulations 1992 were intended to have extraterritorial effect. He has endeavoured to do this by the mechanism of relying on the opening words in the interpretation provisions of those two sets of regulations, namely, ‘In these regulations unless the context otherwise requires’. The Judge properly recognised in his interim decision (No.42/94) of 19 August 1994: 
‘The words “unless the context otherwise requires” refer to the context of the regulations as a whole. ’
However, there is nothing within the particular regulations which requires the extended meanings that the District Court Judge gave to terms within the definition provisions of the two sets of regulations. Such extended meanings could only have been applicable if it was clear that the regulations were intended to apply to counsellors outside New Zealand not appropriately authorised or approved within New Zealand. That is not the case. ”
[19]
Focusing on the terms of s 88(2) against that background, the Court has already noted that the payment sought by Ms Mohi-Rudolph is accepted as not being required or permitted by regulations made under the Act, and the Corporation accepts that the attendant care payment which she sought comes within the definition of rehabilitation costs. The question therefore is whether they were costs that were incurred outside New Zealand. As earlier recounted, the learned District Court Judge took the view that because the contract between Ms Mohi-Rudolph's mother and the child's aunt was entered into within New Zealand, and because payment was to be made in New Zealand, and, coincidentally it seems, to a New Zealander, that the attendant care charged thereby did not come within the phrase “costs incurred outside New Zealand”
[20]
There is ample authority for the view that when Ms Mohi-Rudolph's mother and the child's aunt agreed that the aunt would provide the attendant care during the child's absence from New Zealand, Ms Mohi-Rudolph's mother could be said to have “incurred” a future obligation to meet the costs of the attendant care provided outside this country or that she entered into that contract in the understanding that the attendant care costs during the child's absence would be met by the Corporation (Commissioner of Inland Revenue v McDonald [1991] 1 NZLR 419, 422-423). 
[21]
However, this Court takes the view that the position needs to be considered against the background of the accident compensation scheme, against the general law of contract and against the statutory provisions. Seen in that light, what Ms Mohi-Rudolph's mother was doing in entering into the arrangement with the aunt for the provision of attendant care for Ms Mohi-Rudolph was entering into a contract which would have incurred an obligation for her or the Corporation to meet the costs accruing for that attendant care during the child's absence. For the purposes of s 88(2) the “costs” payable to the aunt were the fees payable on an hourly or daily basis for caring for the child whilst she was overseas. But in the view which this Court takes of the matter. that is a contract between Ms Mohi-Rudolph's mother and the aunt for the provision of future services to be supplied on a daily or possibly even hourly basis during the child's absence from this country. Though the contact was entered into in this country, and one of its terms provided for payment in this country, the performance of the contract by the aunt was to be outside New Zealand. The obligation incurred for the costs was accordingly for costs incurred on a daily or hourly basis outside this country. 
[22]
Put another way, the focus of the requirements of s 88(2) is on whether the costs were incurred outside New Zealand not on the place of making of the contract which gave rise to the provision of the services for which the costs were payable nor on the place of payment for those costs. If the costs themselves were incurred outside New Zealand then s 88(2) makes it clear that the corporation was under no liability to meet them, irrespective of where the contract for the services for which the costs were payable was made or where payment was to be made. 
[23]
Such contracts are by no means unknown to the law: examples include Law v Coburn [1972] 1 WLR 1238 at 1242-1244 and the cases there cited; Hawkins v Bank of China (1992) 7 ACSR 349 at 358. That such an interpretation should be adopted is demonstrated by postulating what would have occurred if, for whatever reason, the aunt terminated her performance while still outside the country or incurred a liability for medical or other costs of care whilst Ms Mohi-Rudolph was out of New Zealand. Plainly, in those circumstances the liability for the costs incurred outside New Zealand would then also have terminated or would not have been payable under s 88(2). In this Court's view, what accrued on the basis for which Ms Mohi-Rudolph's mother applied was the cost of attendant care which was incurred in the sense of performed or accrued outside New Zealand and in those circumstances the place of making of the contract and the place for payment of the amounts due under the contract were not determinative of the place of performance and thus the place where the costs were incurred. Those costs were incurred by, and were conditional on, the aunt being present attending to the child outside New Zealand and accordingly this Court takes the view that no entitlement has been made out for Ms Mohi-Rudolph having regard to the provisions of s 88(2). Such an interpretation not only accords with the scheme of the Act but it avoids such other anomalies as putting the power to commit the Corporation into the hands of persons such as Ms Mohi-Rudolph and the aunt. In essence, if the interpretation were otherwise they would be able to contract their way around the restrictive provisions of s 88(2). 
[24]
That interpretation also seems to be consistent with the other provisions of s 88 and in the Courts view it is similarly consistent with the regulations made under the Act which appear to have some bearing on the question. In particular, Reg 16(b) of the (Complex Personal Injury) expressly limits the content of social rehabilitation programme by precluding those programmes from providing for “social rehabilitation outside New Zealand”. Similarly, under the Accident Rehabilitation and Compensation Insurance (Social Rehabilitation-Attendant Care) Regulations 1993 attendant care is defined as meaning the “provision in New Zealand” of physical assistance for claimants in the way detailed in the Regulations. Those provisions reflect the scheme of the Act and its statutory confines and are consistent with the interpretation which, in this Court's view, is the correct interpretation of s 88(2). 
[25]
It follows that this Court is of the view that, with respect, the learned District Court Judge fell into error in his decision of 22 June 1999 and that the appeal should be allowed and that it should be held that the attendant care costs for the respondent during her absence from New Zealand in 1998 were rehabilitation costs incurred outside New Zealand, the payment of which is therefore not required to be met by the Corporation pursuant to s 88(2). 
[26]
No question of costs arises, that matter having been the subject of agreement between the parties. 

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