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Accident Compensation Cases

McCafferty v Accident Compensation Corporation (HC, 11/04/02)

Judgment Text

This is an application for special leave to appeal to this Court on questions of law under s 165(3) of the Accident Insurance Act 1998. 
The appeal arises from a decision by the respondent Corporation, that the appellant, Ms McCafferty, was not entitled to weekly payments of compensation for a period after 1 November 1998 following an injury she sustained in 1994. The decision of the Corporation was subsequently confirmed by a Review Officer and later by a District Court Judge on appeal. An application for leave to appeal to this Court was refused which has led to the present application. 
In broad terms, the application raises the following questions: 
Whether the application for leave is out of time. 
Whether the Corporation was obliged to apply the provisions of the Accident Insurance Act 1998 or whether the provisions of the Accident Rehabilitation and Compensation Insurance Act 1992 were applicable. 
Whether the District Court Judge erred in law in finding that the Corporation had correctly determined that the appellant was not entitled to receive weekly compensation. 
Background Facts 
The appellant sustained an accident on 30 October 1994 when she jammed her thumbs in an oven door. She was then employed by Air New Zealand as a clerk but, as I understand it, the accident did not occur in the course of her employment. At that time, she received weekly compensation and returned to work in 1995. In 1996 she lodged a claim for cover for a gradual process injury to her back. That claim was initially declined by the Corporation but, as a result of a report from a Dr E W Dryson dated 10 February 1997, the Corporation eventually accepted that Ms McCafferty was suffering from fibromyalgia, a condition which increases the sensitivity of the pain-carrying nerves in the spinal cord. It is now accepted by the Corporation that this condition derives from the original accident and injury in 1994. 
In a report dated 17 June 1998 Dr Dryson noted there had been an improvement in Ms McCafferty's condition and that she had temporary work as a shop assistant. However, the syndrome was still present and she was fit only for light work at that time. 
In August 1998, Ms McCafferty presented to the Corporation a medical certificate dated 10 August 1998 from her general practitioner, Dr J F V White. The certificate indicated there had been no change from Ms McCafferty's previous condition but it was suggested she could consider a graduated return to work within 12 weeks. 
On 31 October 1998, Ms McCafferty's weekly compensation ceased at her request as she wished to become independent of the Corporation and the compensation payments. It is evidence from an earnings certificate subsequently supplied by Ms McCafferty that she worked for her sister in a florist shop for three weeks between 5 and 24 December 1998. In those weeks she worked 20, 30 and 40 hours respectively. 
Thereafter her condition deteriorated and she was examined by Dr White's locum on 27 January 1999. A medical certificate was provided indicating that Ms McCafferty was suffering from increasing pain and was becoming depressed and agitated. It was considered that she required physiotherapy and neurological review and that she was not fit to return to work. The clinical notes taken on that occasion confirmed that Ms McCafferty's fibromyalgia was worse and that she felt the need to recontact ACC. 
The Corporation required more information and, on 23 March 1999 Dr Dryson provided the Corporation with a further report confirming his view that Ms McCafferty's fibromyalgia was caused by the 1994 injury. That view was confirmed by a report obtained by the Corporation by Dr J Monash dated 17 May 1999. Dr Monash considered that Ms McCafferty ought to have some counselling and while he was encouraging of her intention to set up some form of retail opportunity, he did not consider her to be in completely good health. However, he saw her as having “a good outcome” after recommended therapeutic adjustments and noted that she had made substantial improvements over the last two years. In an addendum to his report the following month, Dr Monash advised that he considered Ms McCafferty had the capacity to do sedentary work for a minimum of 20 to 30 hours per week with an increase to 40 hours per week within three months. He considered she should not be required to do heavy work. He did not see any need for retraining. I note that both Doctors Dryson and Monash are described as occupational medicine specialists. 
On 5 July 1999 Ms McCafferty was examined again by Dr White. She issued a medical certificate on that date indicating that Ms McCafferty had only been fit for selected work over the period from 1 November 1998 (when the weekly payments had ceased) to 27 January 1999 (when Ms McCafferty was seen Dr White's locum after her three weeks' work prior to Christmas). Dr White noted that her patient had been trying to be independent of ACC in that period by attempting a gradual return to work. 
In a follow-up report from Dr Dryson of 9 July 1999, he gave advice to Ms McCafferty about the prospects of returning to work. He gave Ms McCafferty information about drug treatment for the syndrome and provided her with material designed to assist people with her condition in returning to work, including the kinds of work which might be suitable. It is evident that she had not then returned to full health. 
The decision by the Corporation 
By letter of 9 August 1999 the Corporation wrote to Ms McCafferty advising that it had considered her “request for weekly compensation for a subsequent incapacity starting on 27 January 1999”. After referring to ss 3, 39 and 40 of the 1992 Act and the cessation of payments of compensation on 30 October 1998, the application for weekly compensation was declined “because you were not an earner immediately prior to your incapacity” (in terms of the sections quoted). 
The Review decision 
Ms McCafferty brought an application for review of the Corporation's decision. That application was dismissed in a written decision dated 5 April 2000. The Review Officer found there were two issues. The first was whether Ms McCafferty was entitled to weekly compensation because she was not an earner as at 27 January 1999. In that respect, he noted that Ms McCafferty's employment with her sister had concluded on 23 December 1998 and he agreed that she was not, therefore, an earner immediately before the commencement of the present incapacity. 
The second issue identified by the Review Officer was whether Ms McCafferty could be said to have been incapacitated throughout the period from 1 November 1998 until 27 January 1999. He noted that a retrospective certificate such as that provided by Dr White in July 1999 should be treated with caution. Having reviewed the relevant medical evidence and the fact that she had worked for three weeks in December, he concluded that Ms McCafferty had not shown on the balance of probabilities that she was continuously incapacitated from 1 November 1998. 
The decision in the District Court 
Ms McCafferty appealed to the District Court and a written decision was issued on 26 March 2001 by Judge Middleton. It is clear that the argument before the District Court proceeded on the basis that the 1992 Act applied and, after reviewing the evidence, the Judge concluded that Ms McCafferty had elected to forego weekly compensation and had worked during part of December 1998, during which time she was able to demonstrate “a capacity for work”. He noted that Dr Monash considered that she had a capacity for work when he assessed her in May 1999. He also referred to Dr Monash's view that she had shown “big improvements” over the last two years which the Judge considered did not support Ms McCafferty's complaint to her general practitioner that she had suffered a “flare-up” in January 1999. 
The Judge concluded finally that the Corporation was correct in its decision not to accept the back-dated certificate from Dr White because she had not seen the appellant during that period and issued the certificate some nine months after the last one in August 1998. The Judge also accepted the Corporation's submission that as Ms McCafferty was not an earner at the date of the alleged incapacity, she was not entitled to weekly compensation. The appeal was dismissed accordingly. 
The final step was a decision by Judge Willy on 24 August 2001 to decline the application for leave to appeal on the grounds that the sole question for determination was whether the appellant was an earner at the time she suffered her incapacity and the Judge considered that was solely a question of fact. 
Although Judge Willy's decision was dated 24 August 2001 the letter from the Registrar of Accident Compensation Appeals of the same date did not include the correct decision. The correct decision was not sent to the appellant's counsel until 3 September 2001 and the application for special leave was filed in this Court on 21 September 2001. 
Is the application for special leave within time? 
The 1998 Act came into force on 1 July 1999 before the Corporation's initial decision declining weekly compensation on 9 August 1999. 
In Hampson v Accident Compensation Corporation (unreported, High Court, Auckland Registry, M661/01, 1 October 2001) I decided that s 453(2) of the 1998 Act meant that Part VI of the 1992 Act applied in any case where a review or appeal had been filed before 1 July 1999. However, in this case all relevant decisions were made after 1 July 1999 and I am satisfied that s 165 of the 1998 Act applies to appeals to this Court. In terms of s 165(3) and (4), where the District Court refuses to grant leave, this Court may grant special leave to appeal but the application must be brought under Part V of the District Courts Act 1947 and within 21 days of the refusal of leave in the District Court. 
Prima facie, the application for special leave is out of time because it was not lodged within 21 days of Judge Willy's decision on 24 August 2001 although it was lodged within 21 days of counsel's receipt of the correct decision on 3 September 2001. However, by s 165(5) of the 1998 Act, s 72 to 78A of the District Courts Act apply, with any necessary modifications, to an appeal to the High Court under this section. By virtue of s 73(1) where an appeal is not brought within the period stipulated, the High Court may allow further time on an application made to it within one month of the expiration of the stipulated period. 
Although no application for extension of time has been filed, I am in the circumstances prepared to treat the lodging of the application for special leave on 21 September 2001 as incorporating an application for leave to extend time. Given the unfortunate fact that the correct decision was not promptly received, I exercise my discretion to extend time to bring the application for special leave to the date of filing on 21 September 2001. 
Does the 1992 Act or the 1998 Act apply to the Corporation's decision to decline weekly compensation? 
This is a matter of some complexity requiring consideration of the transitional provisions of the 1998 Act. Those provisions distinguish between the existence and continuation of “cover” under the legislation and issues relating to weekly compensation. 
In relation to cover, s 421 of the 1998 Act provides that a person is deemed to have cover under Part 3 of the 1998 Act if a claim for cover for that person has been accepted before 1 July 1999 for personal injury covered under the previous legislation. Here, there can be no question that the Corporation accepted under the 1992 Act that Ms McCafferty had cover following the injuries she sustained in 1994. Accordingly, that “cover” continues under the 1998 Act. 
As to entitlement to weekly compensation, s 428 of the 1998 Act provides that a person continues to be entitled to compensation under the 1998 Act if they were, immediately before 1 July 1999, entitled to compensation under ss 39 to 46 or 183(3) of the 1992 Act and would have continued to be so entitled after 1 July 1999. If compensation is continued under s 428, then, by s 433, ss 83(2) to 100 apply to any such continued compensation. Those sections make detailed provision relating to the Corporation's obligations when determining capacity for work issues. 
The application of s 428 of the 1998 Act depends on the prior question whether Ms McCafferty was entitled to weekly compensation under the 1992 Act immediately before 1 July 1999. It must follow that her entitlement prior to that date be considered under the 1992 Act. Indeed, in the end, both counsel agreed that was the correct approach. 
Did the District Court Judge err in law? 
For the appellant, Mr Minchin did not seek to dispute the findings by the District Court Judge that the Corporation was correct in concluding that Ms McCafferty was not an earner immediately prior to 27 January 1999. Rather, Mr Minchin's argument focused on the logically prior question which was whether the Corporation had been correct in determining that Ms McCafferty had suffered a fresh incapacity for work on 27 January 1999 (and, by necessary implication), that she was not incapacitated for work in the prior period between 1 November 1998 and 27 January 1999. 
In support of that argument, Mr Minchin submitted that the mere fact that Ms McCafferty had elected to cease receiving compensation from 1 November 1998 should not have been taken as an acceptance or indication that she was no longer incapacitated. Rather, he submitted, she was attempting, quite properly, to attempt to return to work and to become self-reliant rather than dependent on the receipt of weekly compensation. I agree with Mr Minchin so far as his submission goes. Notwithstanding an election of the kind made by Ms McCafferty, it is still necessary to determine whether, during the relevant period, she was incapacitated for work. 
However, Mr Minchin took the argument further by submitting that the Corporation could not “remove” Ms McCafferty's entitlement to compensation except by the procedures envisaged by s 37A or ss 50 and 51 of the 1992 Act. It is therefore necessary to examine those provisions. 
Part IV of the 1992 Act relating to issues of capacity and incapacity to work were amended with effect from 2 September 1996 by the insertion of new ss 37, 37A and 37B. Section 37(1) provides that, where the Corporation is required to consider the claim of any person for weekly compensation, it shall determine that person's “incapacity” under s 37A or s 37B as the case may require. If the Corporation determines that the person is “not incapacitated” within the meaning of those sections, then the person shall not be eligible to receive weekly compensation. However, if the person is determined to be incapacitated within the meaning of s 37A or s 37B, then the person is entitled to weekly compensation. 
In terms of s 37(2) while a person is receiving weekly compensation, the Corporation may further determine from time to time under s 37A or s 37B the person's “incapacity” and may assess the person's “capacity for work” from time to time under s 51. 
A person's entitlement to weekly compensation may cease as a consequence of the operation of ss 37A, 37B or s 51, but nothing in the section limits any other provision of the 1992 Act: s 37(3) and (4). 
In the present case, s 37A is the relevant provision for determination of incapacity in relation to persons who were earners at the time of their original injury for which cover has been accepted. For the purposes of Part IV the Corporation is obliged to determine the incapacity of a person in accordance with the section. By subs (2): 
Determination of incapacity in relation to earners generally — 
The object of a determination of incapacity under this section is to determine whether or not the person is, by reason of his or her personal injury, for the time being unable to engage in employment in which the person was engaged when the personal injury occurred. ”
The Corporation may make a determination under s 37A “at any time and from time to time” and in so doing may obtain such professional, technical, specialised or other advice as it considers appropriate (subs (3)). 
The Corporation also has power to carry out an assessment of a person's “capacity for work” under ss 50 and 51 which includes the person's “capacity to engage in work for which the person is suited by reason of experience, education, or training, or any combination of those things and that capacity shall be determined having regard to the consequences of the person's personal injury”: s 51(2). Where such person is assessed under s 51 as having a capacity for work, entitlement to compensation for loss of earnings or loss of potential earning capacity ceases upon the expiration of three months after the person is notified of the Corporation's assessment. The Act also provides that a determination that a person has capacity for work under s 51 shall be regarded as a determination that the person is able to engage in employment in which the person was engaged when the injury occurred: s 51(7)(a) and s 37A(5). 
Mr Minchin submitted that the Corporation had not made any finding as to Ms McCafferty's incapacity for work under ss 37 and 37A nor her capacity for work under ss 50 and 51. There can be no question in view of Ms McCafferty's election not to receive weekly compensation from 1 November 1998 that the Corporation was fully entitled to cease payments at that point. It would be in dereliction of its public obligations if it continued to make payments notwithstanding such an election. 
However, once the further medical certificate of 27 January 1999 was received, the Corporation was then obliged to consider under ss 37 and 37A whether Ms McCafferty was, during the period from 1 November 1998 to 27 January 1999 (notwithstanding her election), by reason of her personal injury, for the time being, unable to engage in the employment in which she was engaged when the injury occurred. 
It is true that the Corporation did not, in terms, determine the question of incapacity in terms of s 37A(2). Its decision of 9 August 1999 assumed that the incapacity started on 27 January 1999 and proceeded on the basis that she was not entitled to compensation because she was not an earner immediately prior to that date in terms of ss 39 and 40 of the 1992 Act. However, the issue was more fully considered by the Review Officer in his decision of 5 April 2000 and again by Judge Middleton in his decision of 26 March 2001. The Review Officer clearly found that Ms McCafferty had not established on the balance of probabilities that she was continuously incapacitated from 1 November 1998. 
Judge Middleton approached the matter from the point of view of “capacity for work” rather than incapacity in terms of s 37A(2). However, the issue is largely one of semantics given the inter-relationship between ss 37A and 51 of the 1992 Act. It is clear from Judge Middleton's decision that he regarded the foregoing of weekly compensation coupled with the period of employment in December 1998 as indicating a capacity on the part of Ms McCafferty for work which is to be regarded, according to the statute, as a finding that she was able to engage in her employment at the time of the injury in terms of s 37A(2). 
Essentially, the assessment of capacity or incapacity under the relevant provision is a question of fact. I am satisfied that this factual question has been fully examined and determined under the various stages of review and appeal prior to the matter reaching this Court and that there is no basis for finding any error of law in the findings made. 
In particular, there was adequate evidence both medical and otherwise to support the view adopted by the Review Officer and Judge Middleton and it was open to each of them to be cautious (or even sceptical) about the reliability of Dr White's medical certificate provided some months after the relevant events. 
Some mention was made by Mr Minchin of the onus of proof, but in the end it was not seriously pursued. For myself, I have some sympathy with the views expressed by Priestley J in Jackson v Accident Compensation Corporation (unreported, High Court, Auckland Registry, AP96/01, 14 February 2002) at paragraphs [34] to [39] to the effect that issues as to onus of proof are not particularly helpful in a situation where the Corporation is required by the statute to make determinations on issues such as capacity or incapacity. I am not satisfied there was any error in that respect given the findings of both the Review Officer and Judge Middleton on those issues which were open to them, irrespective of any onus of proof falling on the appellant. 
I have considered the merits of the appeal because they were fully argued but, in view of my conclusions, any appeal could not succeed. It follows that the application for special leave to appeal must be dismissed. Counsel may submit memoranda as to costs within 14 days of the date of this decision if agreement cannot be reached. 
I add that the appellant still has cover under the 1998 Act and it remains open for her to seek weekly payments of compensation if the relevant criteria are made out in relation to any subsequent incapacity arising from the injury she sustained in 1994. 

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