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Accident Compensation Cases

Naysmith v Accident Compensation Corporation (HC, 20/06/05)

Judgment Text

Baragwanath J
Mr and Mrs Naysmith appeal against a decision of Judge Sharp striking out their proceedings which allege against the Accident Compensation Corporation (“the Corporation”) negligence, breach of statutory duty and abuse of public office. They claim that the Corporation wrongly failed to undertake or advise the appellants of the need for them to undertake remedial treatment in relation to his head injuries, as a result of which he has permanent symptoms. 
On 30 December 1989 Mr Naysmith was grievously injured in a motor accident caused by the intoxicated driver of another car. His four year old son died; another son and a nephew were injured. His injuries were compensable by the accident compensation scheme of which a prime element is rehabilitation. While Mr Naysmith was in a coma following the accident his wife was assured by a Corporation representative that it would look after her husband. On 11 January 1990 the Corporation advised Mr Naysmith that it had accepted his claim for compensation and assistance. 
At the hearing on 10 December 2004 the appellants sought and were granted leave to amend their pleading. An amended statement of claim was filed on 4 February 2005. On 15 March 2005 the Corporation filed an affidavit challenging various of the facts alleged. Mrs Naysmith replied on 29 April 2005. At the hearing on 20 May 2005 Mr Perry without objection from Mr Tuiqereqere made further amendments to the appellants' pleading. 
In response to a time limitation plea, the appellants assert that their knowledge of the essential facts was delayed because of the trauma of the accident and its consequences, and the lack of information discovered. It was only on later discovery of the Corporation's file that the appellants had the essential facts necessary to issue proceedings. The argument did not extend to this limitation plea which can be resolved only at trial. 
The appeal, like the Corporation's successful application, is to be approached on the basis that all allegations of fact made by the appellant can be proved, save insofar as there is incontrovertible evidence to the contrary: Attorney-General v Prince and Gardner [1998] 1 NZLR 262, 267; Attorney-General v McVeagh [1995] 1 NZLR 558, 566. Where the law is uncertain and developing it is not normally appropriate to strike out; development of the law should be on the basis of actual facts found at trial rather than on a factual hypothesis that may turn out to be wrong: Sew Hoy & Sons Ltd v Coopers & Lybrand Ltd [1996] 1 NZLR 392, 407 per Thomas J; Barrett v Enfield London Borough Council [2001] 2 AC 550, 558 per Lord Browne-Wilkinson. 
The claim 
Mr and Mrs Naysmith allege effectively three causes of action: 
Breach of statutory duty imposed on it by s 36 of the Accident Compensation Act 1982 and the equivalent provisions in the 1992 and 2001 Acts; 
Common law negligence; and 
Abuse of public office. 
A claim for exemplary damages is separately pleaded, no doubt as potentially surviving a strike-out of other claims. In the event it does not require discussion. 
The Corporation does not seek to strike out the third cause of action. 
The appellants contend that the Corporation, which described Mr Naysmith as its “client”, assumed the responsibility to obtain the medical reports and arrange the treatment necessary for his recovery and rehabilitation. In respect of his orthopaedic injuries that was done. But although the Corporation was aware that Mr Naysmith had sustained head injury and was exhibiting concerning symptoms, it made no response to a report from its orthopaedic surgeon on 7 December 1990 which in addition to dealing with orthopaedic injuries stated that the head injury should be the subject of expert consideration. Nor did the Corporation inform the appellants of the head injury or of Mr Peters' advice or suggest that they should arrange for the necessary report to be obtained. So while orthopaedic assistance was furnished, weekly compensation was paid and a lump sum payment of $10,000 in relation to the orthopaedic injuries was provided, the head injury symptoms received no attention. To the later great surprise of a neurologist who belatedly examined Mr Naysmith in March 1997 he returned to work on his farm. In 1992 the Kaitaia office of the Corporation which had been handling the matter was closed. It was not until a second accident on 25 April 1995 that Mr Naysmith's medical condition was reconsidered by the Corporation which in ultimately February 1999 obtained a neurological report. It revealed Mr Naysmith's incomplete recovery from his head injury. 
Mr Naysmith claims that in breach of its undertaking, of a common law duty of care and of an alleged statutory duty, from the time of his recovery of consciousness in about February 1990 until 28 May 1999 the Corporation took no effective steps to rehabilitate him or assist him to recover his former mental resourcefulness to successfully resume his work on the dairy farm. As a result of the delay in providing appropriate neurological therapy and vocational training Mr Naysmith lost the opportunity to recover the whole of his former mental ability which would have been restored had the Corporation provided timely treatment and care to him after the accident. He has therefore been left with a determinate cognitive deficiency in his mental health for which he claims damages. 
Mrs Naysmith claims damages for her stress, anguish and financial loss as a result of what has happened to her husband. 
The contentions 
The Corporation 
The Corporation contends that the claim is fundamentally flawed. The functions and powers of the Corporation conferred by the legislation do not extend to giving advice to claimants or to assuming the obligations on which the appellants rely. It denies both duty of care and jurisdiction in the District Court and this Court to consider the claim. 
It further contends that the claim relating to symptoms of the head injury is, self-evidently, a:  
“ … proceeding … for damages arising directly or indirectly out of personal injury [caused by accident]. ”
More generally it contends that the scheme of the legislation is simply inconsistent with the claim alleged which was properly struck out. 
The appellants 
In response to the Corporation's submission that the claim is barred by s 14 of the Accident Compensation Act 1992 (which refers to injury covered by the 1982 and 1992 Acts) and its equivalent in later statutes, Mr and Mrs Naysmith submit that the claim is not a:  
“ … proceeding … for damages arising directly or indirectly out of personal injury [caused by accident]. ”
They claim that had the Corporation performed its undertaking the head injury and its symptoms would have been cured completely. It follows that the whole of the continuing injury and its symptoms were caused by the Corporation's breach of duty in relation to which it is liable in accordance with settled principles of the common law. Accordingly the claims should be permitted to go to trial to determine whether that can be established factually. 
The arguments require appraisal of the scope, purpose and limits of the accident compensation legislation and its interface with the common law. Under the legislative scheme that removed New Zealanders' entitlement to claim damages for compensation for personal injury Mr Naysmith was entitled to the assistance afforded by the Accident Compensation Act 1982 and its successor statutes the Accident Rehabilitation and Compensation Insurance Act 1992, the Accident Insurance Act 1998 and the Injury Prevention, Rehabilitation, and Compensation Act 2001. As the Woodhouse Report, the titles to the 1992 and 2001 statutes and specific provisions in each piece of legislation all record, rehabilitation is a policy of importance. Section 36 of the 1982 Act which was in force at the time of the accident required the Corporation to provide rehabilitation. The true construction and effect of that provision is central to the appellants' argument that the case should be permitted to go to trial. 
The facts 
The advice by the rehabilitation officer 
Mr Naysmith alleges that on or about 3 January 1990 a rehabilitation officer, Mr Page, contacted Mrs Naysmith and assured her that the Corporation would look after her husband “to ensure he received all of the assistance he needed to recover from his injuries”
On 11 January 1990 the Corporation advised Mr Naysmith that it had accepted his claim for compensation and assistance. 
The Corporation learns of the head injury 
The Corporation knew of Mr Naysmith's head injury at latest a month after the accident. By letter dated 30 January 1990 the Corporation was informed by a surgical house surgeon at Kaitaia Hospital that in addition to multiple injuries Mr Naysmith had suffered “A moderately severe head injury.” On 16 October 1990 the Corporation's rehabilitation co-ordinator saw Mr Naysmith and noted that he had sustained a head injury. She recorded: 
“In relation to his head injury he reports headaches, decreased concentration, decreased memory and irritability but I am sure there is more, his retrograde amnesia was from the date of the accident to March 1990. ”
The orthopaedic surgeon advises the Corporation to refer the head injury to the General Surgeon; the advice is not heeded 
On 8 November 1990 the rehabilitation co-ordinator wrote to Ian Peters, orthopaedic surgeon, referring to her seeing Mr Naysmith on 16 October and stating: 
“At the time I saw him Ross had returned to his farming but was still suffering from his injuries, particularly his head injury. I will be maintaining regular contact, especially as I am concerned [with] the lack of facilities in Kaitaia that will assist him to deal with their problems at present. ”
Mr Peters replied on 7 December 1990, reporting as to orthopaedic injuries and stating: 
“The query regarding his head injury should be addressed to the General Surgeon. ”
But that was not done. Nor was Mr Peters' advice conveyed to Mr and Mrs Naysmith. 
The Corporation provides weekly compensation but no response to the head injury 
The Corporation paid weekly compensation in the amount of $180 per week and responded to invoices for accommodation, travel, telephone and food expenses. 
In the meantime the rehabilitation co-ordinator had noted that Mr Naysmith's doctor had certified him fit for duties and stated: 
“But after some discussion with Ross and his wife Judy it is apparent that this is not so and that the doctor needs to get some more information from Ross so that he can make a better decision on this. ”
She said that there was little she could do for Mr Naysmith as “he continues to improve and has a lot of community and family support”. She noted: 
“I will however continue to see them as they are involved in setting up a victim support group and have asked for my input in this … I have already volunteered my assistance in setting up a Head Injury Support Group in Kaitaia and I would anticipate that I would also have further contact with them through that. ”
But the failure to heed Mr Peters' advice concerning the head injury was not picked up and acted upon. 
Payment of lump sum compensation (s 79) but again no response to the head injury 
On 4 December 1990 Dr Young prepared a medical certificate recording that Mr Naysmith had tried to return to full duties from 1 October but was able to work at only 30% of his normal capacity. 
On 4 February 1991 Mr Naysmith was advised of his entitlement under s 79 to the maximum lump sum payment of $10,000 and that a decision as to the s 78 award had been deferred. 
On 18 March 1991 the rehabilitation officer called into the Naysmith's residence and recorded that he “is progressing well and things seem to be a lot more settled in this household”
During 1991 surgery was performed on Mr Naysmith to remove a plate. The Corporation later enquired whether Mr Naysmith had returned to work and whether he was considering a permanent disability claim. He responded that he was back at work but could not deal with the permanent disability matter as he was to have another operation early in 1992. 
In 1992 there was correspondence about Mr Naysmith's entitlement to earnings relating to compensation and an approval of private hospital treatment for further surgery. But the head injury went unremarked. 
Closure of the Kaitaia office without reference to the head injury 
On the closure of the Kaitaia office the files were sent to Whangarei but still the head injury received no attention. 
May 1995 Mr Naysmith's doctor refers to the head injury but still no treatment of it. Corporation memo discerns lack of follow up 
There is nothing else recorded on the Corporation file until May 1995 when Mr Naysmith's doctor recorded that Mr and Mrs Naysmith were suffering intense grief and enquired whether the Corporation could contribute towards the farm and counselling for the grief. The doctor advised “This man … had a head injury … and was obviously very badly smashed up.” The Corporation replied that the legislation did not provide for contribution towards replacement labour costs but provided a form for claiming contribution towards extra farm help and for counselling. Still there was no investigation of the need to respond to the head injury. 
From 10 May 1995 the Corporation arranged for payment to Mr Naysmith of weekly compensation and the reimbursement of travel costs. An internal Corporation memo stated: 
“It is obvious there has been lack of follow through by branch staff in this particular case, and not only does this indicate a need for training but also suggests the potential for performance issues. ”
On 1 June 1995 Mr Naysmith's doctor certified him fit for selected or alternative work. 
On 7 September 1995 the Corporation approved a request to reimburse the cost of twenty hours of counselling. 
1 October 1995 Mr Peters provides orthopaedic assessment under s 78 and again recommends that head injury be formally assessed but no response 
On 1 October Mr Peters provided an orthopaedic assessment of permanent loss of bodily function assessed under s 78 as 33% and said: 
“Regarding his head injury it is my opinion that this should be formally assessed. ”
But still that was not done. 
The Northland Area Health Board orthopaedic notes for 9 May 1996 record Mr Naysmith's condition and state: 
“His main concern in fact seems to be with ACC. Certainly I think he would justify a disability assessment. However this opportunity may now have expired and he needs to clarify this with his client officer. ”
Section 78 award of $5,610. Mr Wallace's surprise at Mr Naysmith's return to heavy work. But still no response to head injury 
On 9 January 1997 the Corporation advised Mr Naysmith of his entitlement under s 78 to a 33% award of $5,610. It later arranged for Mr Naysmith to be examined by Mr William Wallis, neurologist. His report of 6 March 1997 recorded that for some reason Mr Naysmith had never received his s 78 payment which was later paid. The report recorded Mr Naysmith's physical and neurological injuries and continued: 
“One unusual aspect of his injuries is that this man managed, somehow, to return back to doing heavy work on his farm. In my experience, it would be exceptional for people with injuries of this sort to manage this type of achievement. It is clear, however, that this has been done at considerable expense physically and emotionally to him and his family. 
In most individuals, injuries of this sort would have led to permanent loss of work capacity and indefinite support by the ACC. The corporation should take this into account when making the award. ”
Reference to Ms Quarrie of Far North Counselling 
In February 1998 two ACC officers visited Mr and Mrs Naysmith to discuss Mr Naysmith's entitlement. They discussed such matters such as weekly compensation and counselling and agreed to seek a report from Ms Quarrie of Far North Counselling. 
On 13 March 1998 Ms Quarrie wrote to the Corporation: 
“Ross Naysmith was referred to me by a Dr Tom Young in June 1995. Ross showed symptoms consistent with Post Traumatic Stress Disorder. I saw Ross for counselling, initially on a weekly basis, then fortnightly, from 16 June 1995 until 14 December 1995. I saw Ross again on 29 December and 3 October 1996 as he was again experiencing difficulty …  
Effects of accident 
When Ross first attended counselling with me, my assessment of the emotional effects of the accident were as follows: ”
Difficulty controlling anger/rage 
Cows were hit [by Mr Naysmith], a number of animals had to be destroyed 
Short term memory impairment 
Poor concentration 
Emotional isolation 
Low self-esteem 
Occluded memories 
Lack of energy 
Feelings of bitterness, aloneness, isolation 
Intrusive thoughts 
Loss of enjoyment of life 
“The focus of counselling with Ross were to address management of the above effects, to look at alternative strategies for dealing with his anger and other emotions. Ross had not attended the funeral of his child and has missed out on a great deal of the mourning with his family. This and issues surrounding this had to be revisited and addressed. 
Ross also had to do a great deal of work on addressing his role and relationships with his wife and children. Without question, the effects from the accident, and the aftermath of Ross's return home, affected his recovery greatly. 
His single-minded and unrelenting drive to work the farm, without assistance (other than that of his father in law in the early stages of Ross's return home) in spite of the physical and emotional state, has cost Ross and his family dearly. This is due to Ross being advised by the Kaitaia ACC office that he was not eligible for any assistance that would enable him to take the time to heal properly. He could not afford to lose his farm, so he worked his farm regardless. 
During counselling with Ross, I checked whether he had been assisted by ACC with weekly compensation or assistance with running the farm. I was appalled to discover that Ross (and his wife) had not been given proper advice about their entitlements by ACC at the time of the accident and the months following - in fact, as mentioned previously, they had been advised by the Kaitaia ACC office they were not entitled to any assistance other than medical! I suggested at that point they seek further advice about this. ”
Ms Quarrie found that Mr Naysmith was still experiencing most of the original symptoms and was experiencing relationship difficulties with his wife and children. She said: 
“I am aware that Ross has found it stressful dealing with ACC and in my opinion the stress of wrangling with ACC over money exacerbates the other effects he lives with. ”
Report from Dr Mearns 
On 27 October 1998 the Corporation obtained from a general practitioner, Dr Mearns, an assessment which included the summary: 
“Although he made a remarkable recover[y] from these complex injuries he has been left with physical and mental disability. His general personality has altered. His ability to make decisions has been affected, his cognitive ability has also decreased. He has also had a possible depression following the accident which has not responded particularly well to anti-depressants and may represent an affect of his head injury which was undoubtedly severe …  ”
February 1999 report from Dr Fernando, neuropsychologist and clinical psychologist. Diagnosis of incomplete recovery from head injury and relatively permanent brain impairment 
Eventually on 21 February 1999 the Corporation obtained a report from Dr Fernando, neuropsychologist and clinical psychologist: 
“ … cognitively Ross is not functioning at his pre-accident level … He is experiencing significant problems in terms of the rate with which he can process information, processing and manipulating information in short-term memory, speed of psychomotor responding and the rate to which he can commit new verbal and visual information to memory. Ross also has problems carrying out more than one task at a time, becomes easily distracted and has difficulty sustaining his attention on tasks of longer duration. 
Ross has made an incomplete recovery from his head injury which is not unexpected given the severity. He has suffered some degree of brain impairment which will be relatively permanent but this does not mean that he cannot make gains in terms of his everyday functioning. Given what the family has been through since the accident, it is credit to them that they have managed to retain the farm and are still an intact family unit … The family would benefit from additional assistance on the farm from July to October. I am unsure whether more funding is available from ACC for this purpose and the family should approach ACC to discuss this matter. ”
There followed a reference of Mr Naysmith to Burtons Healthcare Ltd for rehabilitation assistance. 
The claim of breach of statutory duty 
Section 36 
The section relied upon by the appellants provides: 
Corporation to promote rehabilitation 
The Corporation shall place great stress upon rehabilitation and shall take all practicable steps to promote a well co-ordinated and vigorous programme for the medical and vocational rehabilitation of persons who have cover and who become incapacitated as a result of personal injury by accident and are for the time being in New Zealand. 
The rehabilitation programme in relation to those persons shall have as its objectives- 
Their restoration as speedily as possible to the fullest physical, mental, and social fitness of which they are capable, having regard to their incapacity; and 
Where applicable, their restoration to the fullest vocational and economic usefulness of which they are capable; and 
Where applicable, their reinstatement or placement in employment. ”
The principles governing breach of statutory duty 
I do not accept Mr Perry's submission that simple breach of s 36 gives rise to a claim for breach of statutory duty. It is difficult to identify the principles by which a generally expressed obligation on the part of a statutory body will be treated as actionable. 
One example of such formula is in the sphere of education where: 
… the line of English authorities, commencing with R v Inner London Educational Authority [1992] Admin LR 822, … construed the generally expressed duty imposed by s 8 of the Education Act 1944 as a ‘target’ duty, designed to make general provision for those classes of people intended by Parliament to be its beneficiaries but not the subject of mandamus to compel tailor made provision for one with special needs: see RP v Further Education Funding Council [1996] EWJ No 1479 18 October 1996 per Jowitt J … The French system, with its Law of 27 July 1998 guaranteeing ‘effective access of all to the fundamental rights in the spheres of work, housing, health, education … ’, which is to be balanced against the constitutional responsibility to control public spending, is to similar effect: see Cabrillac and others Liberté)s et Droits Fundamentaux (7th ed) pages 722- 3, 732, 757-9 …  ”
(Daniels v Attorney-General HC AK M1616-SW99 3 April 2002 which was substantially revised on appeal at [2003] 2 NZLR 742. The Court of Appeal decision in Daniels, that no actionable statutory duty existed, turned on a comprehensive analysis of the legislation. In Carty v Croydon LBC [2005] 2 All ER 517 the English Court of Appeal has held that in that jurisdiction an actionable duty may exist: 
… where an education officer, in the performance of his or her statutory functions, enters into relationships with or assumes responsibilities towards a child, then he or she may owe a duty of care to that child.) ”
The statutory context: ss 18-20, 63, 89-91 and 97 of the 1992 Act 
Section 36 is to be read within its statutory context. That altered over the nine years between the Corporation's learning of the head injury and giving its assurance and eventually giving attention to it. The 1982 Act contained its own exclusion of damages claims (s 27). But the Corporation's argument focussed on the provisions of the 1992 Act of which the finance provisions came into effect on 1 April and the remainder on 1 July 1992. Both because that was the way the Corporation ran its case and since those dates were less a third of the way during the period when Mr Naysmith received no treatment for his head injury it is sensible to concentrate on the following provisions of the 1992 Act. Emphasis has been added: 
Application of Act excludes other rights 
No proceedings for damages arising directly or indirectly out of personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is suffered by any person shall be brought in any Court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment. 
For the avoidance of doubt, it is hereby declared that nothing in this section shall be affected by- 
The failure or refusal of any person to lodge a claim for any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act or those Acts; or 
Any purported denial or surrender by any person of any rights under this Act or those Acts; or 
The fact that a person who has suffered personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 is not entitled to any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act 
… ”
Right to rehabilitation 
Every person who has suffered personal injury for which the person has cover under this Act is responsible for his or her own rehabilitation to the extent possible having regard to the person's condition and is entitled to the extent provided by this Act to rehabilitation necessary to enable the person to lead as normal a life as possible, having regard to the consequences of his or her personal injury. ”

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