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Accident Compensation Cases

New Zealand Guardian Trust Company Ltd v Pora (HC, 31/10/06)

Judgment Text

JUDGMENT OF WINKELMANN J 
Winkelmann J
[1]
The plaintiff, New Zealand Guardian Trust (NZGT), is the property manager of the affairs of Ms Judy Pora. In 1974, when she was 7 years old, Judy Pora was struck by a car and was left with permanent physical and intellectual impairment. Over the ensuing 32 year period she has been cared for by various members of her family. Until recently those family members have been unpaid in respect of that care. In 2002 the Accident Compensation Corporation agreed to make payment for attendant care compensation in respect of Judy for the period 22 February 1975 to 22 March 2002. Following the appointment of NZGT as Judy's property manager, and following further negotiations and discussions between NZGT and ACC, ACC made a lump sum payment to NZGT of $1,466,499. 
[2]
NZGT now seeks declaration as to whether it is entitled to hold and retain that amount for the benefit of Judy or whether any of various claimants are entitled to some or all of that lump sum compensation. 
[3]
The first defendant, Noomataiti Pora, is the trustee and executor of the estate of Judy's father, Mr Tuamure Pora. The second defendant, Perpetual Trust Ltd, is the trustee and executor of the estate of Ms Rita Pora, Judy's mother. The first and second defendant argue that the payment by ACC is held on trust for those family members who provided care to Judy prior to 2002. 
[4]
Other members of Judy's family were also represented before me. Ms Vicky Pora is the sister of Judy. Mrs Rita Pora, Mr Tuamure Pora and Ms Vicky Pora were at various times caregivers for Judy. Ms Vicky Pora continues in that role. Also represented at the commencement of the proceeding were Kirihita Pora, Mihi Tuhua, Terry McLoughlin, Mary Elder, Tokoaa Nga Pora and Alice Pora and Matajohn Otene. All of these are children of Rita Pora and have an interest in the proceeding only as potential beneficiaries of her estate. Mr Brown-Haysom for Kirihita Pora and Mr McCarthy for Mihi Tuhua, Terry McLoughlin, Mary Elder, Tokoaa Nga Pora, Alice Pora and Matajohn Otene sought leave to withdraw at the commencement of the hearing. They were content that their client's interests would be adequately represented by Mr Muir (for Perpetual Trustee) and Mr Sinisa (for Vicky Pora) at the hearing. 
[5]
As most of the key personalities involved in this proceeding share the family name “Pora”, I propose to refer to Judy Pora and Vicky Pora by their first names, and to their now deceased parents as Mr and Mrs Pora. No disrespect is intended by this, but it is desirable to avoid prolixity. 
Factual background 
Care of Judy Pora 
[6]
On 14 December 1974 Judy was struck by a motor vehicle and was left severely injured. From the date of Judy's discharge from hospital on 27 February 1975 through until Mrs Pora's death on 27 July 1991, Mrs Pora was the principal caregiver for Judy. Although other family members provided respite care from time to time no claims are advanced by the family in relation to that respite care, all such members of the family having been served with these proceedings. 
[7]
From the date of death of Mrs Pora, Judy's father, the late Mr Pora, was principally responsible for Judy's care. Since his death on 6 March 2001 Judy has been cared for by her sister Vicky. Judy and Vicky reside at 7 Julian Place, Otara. This was previously the parents' house and is the house in which Judy has lived all her life. They live there with Vicky's two daughters, Jasmine and Deanna Pora. The property is now registered in the name of the first defendant as executor of the estate of Mr Pora. Beneficiaries of Mr Pora's estate are Judy, Jasmine and Deanna each as to a one-third share. 
[8]
When Mrs Pora died in 1991, she died intestate. Accordingly her interests in the property at 7 Julian Place, Otara, passed to her husband Mr Pora by virtue of the laws of survivorship. There were no other assets in the estate, although that position will be different if Mrs Pora's estate is entitled to part of the fund the subject of this application. 
ACC claims 
[9]
No claim was lodged with the ACC in respect of Judy's accident until September of 1977. When a claim was lodged ACC made two lump sum payments relating to Judy's accident injuries. Those payments were paid into a fund administered by NZGT. There is now little remaining of those lump sum payments. In addition, since she turned 16, Judy has been receiving a weekly payment for loss of potential earnings, paid in accordance with the compensation provisions of the ACC regime. 
[10]
In 2002, Vicky made inquiries with ACC as to the possibility of receiving payment for the on-going provision of care by her to Judy. Vicky also filed a claim for retrospective attendant care compensation. In August 2002 she was reimbursed by ACC for a portion of the attendant care she had provided to Judy for the period between 22 March 2002 and 11 August 2002, and from that time on she has been receiving payment from ACC for care provided to Judy. That is at a rate of approximately $1,086 per week, although the level of payment is apparently the subject of regular re-assessment. 
[11]
These payments by ACC left the issue of payment for attendant care for Judy during the period 1974 up until 2002 unresolved. 
ACC deliberations and offer 
[12]
Although ACC was not represented at the hearing, the contents of the ACC file in relation to Judy's entitlements and Vicky's claim to retrospective compensation were made available to the parties. Produced into evidence was an internal memorandum dated 10 September 2003 from a Nicki Smith, Operations Analyst to Gary Wilson, the then Chief Executive of ACC. 
[13]
The memorandum sets out a comprehensive needs assessment undertaken by Ms Phillipa Corby, occupational therapist, as to the care that Judy would have required during the period from February 1975 through to March 2002. That assessment is broken down in time periods. For the period February 1975 to February 1977 Ms Corby assesses that Judy would have required 40.75 hours per week of attendant care. She notes that this was the time during which Judy was in the acute stages of recovery from her accident. She required support to carry out activities of daily living, especially in the areas of mobility, transferring, planning activities, therapy and positioning. Ms Corby's view was that oversight supervision was required at this time, but as Judy was still a child who would require supervision to avoid dangers anyway, she would not have required specific funding for this. 
[14]
The next period is February 1979 to December 1981. During this period of time Ms Corby records that the symptoms of Judy's post-traumatic epilepsy developed significantly. She was having two to three seizures per day and experiencing periods of unconsciousness due to her seizures. Judy continued to go to school until approximately 1981. During this period of time Judy continued to have mild loss of intellectual function due to her brain injury, almost total impairment of her upper limbs, impairment of her lower limbs and regular epileptic seizures. Ms Corby assesses that Judy would have required 45.5 hours per week of attendant care during this period. 
[15]
During the next period December 1981 to 22 March 2002 Ms Corby assesses that Judy would have required 168 hours per week of attendant care. She continued to experience physical and cognitive difficulties associated with her initial injury and her epileptic seizures increased. These became her main area of difficulty from 1981.Judy turned 14 in 1981, and the assessment is that she would have required more oversight supervision than other people of her age. The report comments that Judy was never left alone and required oversight supervision 24 hours per day. This was due to the risk of her having seizures or not being aware of the hazards in using electrical appliances. She was also at risk in an emergency of not being able to exit the house so was therefore not able to be left at night alone. 
[16]
The report writer comments that ACC clearly failed to provide Judy with attendant care under the legislation despite a clear need following her discharge from hospital in 1975. That failure resulted from ACC relying on her family to provide unpaid attendant care to meet her injury related attendant care needs. 
[17]
Accordingly the report writer recommends that the Chief Executive approve payment to Judy of $1,466,499 as payment of attendant care that should have been assessed and paid under the relevant Accident Compensation legislation. Due to default by ACC no payment was made “and therefore is offered by way of settlement.” The report writer comments, 
“It is determined that this is a serious failure by the Corporation in terms of something it should have done in respect of its legislative mandate and has resulted in quantifiable loss for the claimant with a right to seek compensation. ”
The report writer however recommends that entitlement to backdated attendant care compensation pursuant to s 80(3) of the Accident Compensation Act 1982 be declined. That provision dealt with payment for attendant care where the claimant required 24 hour care. The report writer concludes that Ms Pora did not meet the “stern test” of requiring constant personal attention. The recommendation is noted as approved by the Chief Executive. 
[18]
On or about 8 October 2003, a representative of ACC presented Vicky with an offer in respect of the claim for attendant care arrears compensation. The letter records, 
“ACC is prepared to offer Judy an amount of $1,466,499.00 in full and final settlement of any claim for attendant care for the period 22 February 1975 (the date Judy was discharged from hospital) to 22 March 2002 when ACC commenced funding attendant care under the Accident Insurance Act 1998. 
This offer is based on ACC's failure to provide payment for necessary attendant care under the legislation, despite a clear need. ”
[19]
The letter writer, Ms McMurdo, states, 
“ACC's obligation is to pay entitlements directly to the claimant. However when a claimant is unable to manage their affairs, as in Judy's case, then the Corporation asks that a Property Manager is appointed to receive and administer the funds under the Protection of Personal and Property Rights Act 1988. ”
[20]
The letter concludes: 
“I want to offer you and your family a very sincere apology for ACC's failure to ensure that appropriate needs assessments were conducted following injury. Failure to conduct these assessments resulted in ACC not providing entitlements that otherwise would have been provided to Judy following her injury. The settlement offer set out in this letter seeks to address ACC's failure to provide adequate support to Judy in the past. ”
[21]
On 30 September 2004 the Manukau Family Court appointed NZGT property manager of Judy's affairs. Following that appointment and further negotiations and discussions between NZGT and ACC, the lump sum payment was paid to NZGT on 11 March 2002. It is now held on interest bearing account pending the outcome of this proceeding. 
[22]
Before accepting the offer on behalf of Judy, NZGT (through its solicitors) requested clarification as to the provisions of the Accident Compensation legislation under which the payment would be made. NZGT's solicitor received an email response from ACC operations support, in the following terms: 
“This payment is a settlement outside the scope of the legislation, in recognition that ACC failed to assess or pay attendant care despite a clear need. ”
[23]
On 25 January 2005 as property managers for Judy, NZGT signed a form entitled “Summary of Offer Attendant Care Compensation”. The form records that in accepting the offer NZGT acknowledged: 
“That ACC had met its obligation to compensate Judy for attendant care for the period 22 February 1975 to 22 March 2002. 
The payment represents full and final settlement of all claims she may have on ACC arising out of attendant care for that period. 
That ACC has no obligation to pay any other person in relation to the attendant care. 
That ACC will refer any person who makes a claim against it for attendant care to NZGT. 
That any liability that exists to such a person in relation to attendant care Judy received is NZGT's responsibility. ”
[24]
NZGT also undertook that if for any reason ACC is held liable to another person for any claim arising out of the attendant care Judy received, it would indemnify ACC against such claims. 
[25]
NZGT accepts that there are various competing claims to the lump sum payment and seeks this Court's determination of them. In the pleading filed the Trustees seek determination of the following questions by way of declaratory judgment or order: 
(a)
Whether NZGT in its capacity as the property manager for Judy is entitled to hold and retain the entire lump sum compensation payment for the benefit of Judy; 
(b)
Whether the first and/or second defendant (estate of Judy's father and Judy's mother respectively) are entitled to any of the lump sum compensation payment, and if so, in what amount; 
(c)
Whether any other claimants are entitled to any of the lump sum compensation payments and if so, in what amount; 
(d)
The determination of any other issues, or questions which are relevant. 
[26]
It is NZGT's position that it is in Judy's best interests that the funds should be held by it to be applied to her maintenance, education, advancement and benefit. 
Entitlements to compensation 
[27]
When Judy's claim for compensation for the 1974 accident was first lodged in 1977, the Accident Compensation Act 1972, as amended by the Accident Compensation Amendment Act 1975, was the applicable statute. Although no payment was made to Judy or her family to provide for her care needs, there was statutory provision for such compensation. The section which governed payments for attendant care was s 121 which provided in material part: 
“121 Compensation for pecuniary loss not related to earnings 
(2)
Where a person suffers personal injury by accident in respect of which he has cover under this Act, or where a person dies as a result of personal injury so suffered, the Commission, having regard to any other compensation payable, may – 
(a)
Pay to any member of the household of which the injured or deceased person was a member on the date of the accident such compensation as the Commission thinks fit for any quantifiable loss of service proved to have been suffered by the person to whom the payment is made as a result of the injury or death for such period as the Commission thinks fit, not being longer than the period for which that member could reasonably have expected to receive the service: 
(b)
Pay to any person, or to the administrator of the person, such compensation as the Commission thinks fit for any identifiable actual and reasonable expenses [or losses] incurred by the person in giving help to the injured person while he is suffering from incapacity resulting from the injury or in taking any necessary action following and consequential upon the death of the injured person. 
(3)
Where a person suffers personal injury by accident in respect of which he has cover under this Act and the injury is of such a nature that he must have constant personal attention, the Commission, having regard to any other compensation payable, may pay to that person, or if it thinks fit to the administrator of that person, in addition to all other compensation and rehabilitation assistance to which he may be entitled, such amounts as the Commission from time to time thinks fit in respect of the necessary care of the person in any place of abode or institution. ”
[28]
Under the Accident Compensation Act 1982, the relevant provision for attendant care was s 80. Sub-sections 80(2) and (3) largely mirrored the provisions in sub-sections 121(2) and (3) above. Section 80 provided in material part: 
“Compensation For Pecuniary Loss Not Related To Earnings 
(2)
Where a person suffers personal injury by accident in respect of which he has cover, or where a person dies as a result of personal injury so suffered, the Corporation, having regard to any other compensation payable, may – 
(a)
Pay to any member of the household of which the injured or deceased person was a member on the date of the accident such weekly compensation as the Corporation thinks fit for any quantifiable loss of service of a domestic or household nature which was previously provided on a regular basis and which is proved to have been suffered by the person to whom the payment is made as a result of the injury or death for such period as the Corporation thinks fit, not being longer than the period for which that member could reasonably have expected to receive the service: 
(b)
Pay to any person, or to the administrator of the person, such compensation as the Corporation thinks fit for any identifiable and reasonable expenses or losses incurred by the person in giving help to the injured person while he is suffering from incapacity resulting from the injury or in taking any necessary action following and consequential upon the death of the injured person. 
(3)
Where a person suffers personal injury by accident in respect of which he has cover and the injury is of such a nature that he must have constant personal attention, the Corporation, having regard to any other compensation payable, may pay to that person, or if it thinks fit to the administrator of that person, such amounts as the Corporation from time to time thinks fit in respect of the necessary care of the person in any place of abode or institution. ”
[29]
From the internal ACC memoranda it is apparent that when ACC did its retrospective needs assessment, it concluded that Judy did not require constant personal attention at any stage as a consequence of her injury, so that s 121(3) and s 80(3) could not apply. 
[30]
Compensation payable for attendant care under the 1972 or 1982 schemes persisted under the Accident Rehabilitation and Compensation Insurance Act 1992 and the Accident Insurance Act 1998 by virtue of the savings provisions contained in sections 149 and 439 of those Acts respectively. Section 149 provided in material part: 
“Compensation For Pecuniary Loss Not Related To Earnings 
(1)
Where any person was receiving or entitled to receive any compensation under section 121 of the Accident Compensation Act 1972 or section 77 or section 80 of the Accident Compensation Act 1982 immediately before the 1st day of July 1992, that section shall continue to apply to payments in respect of that person until the 31st day of December 1992 as if those sections had not been repealed. 
(2)
The reference to the 31st day of December 1992 in subsection (1) of this section shall be read as the 30th day of June 1993 in respect of compensation under section 121 of the Accident Compensation Act 1972 or section 80 of the Accident Compensation Act 1982 that is compensation in respect of – 
(a)
Provision of attendant care (being personal care and mobility assistance necessary for the injured person); or 
(b)
Household help (being provision of assistance in respect of domestic activities that would be performed by the injured person if not injured and is necessary to enable the person to remain in or take up suitable residence); or 
(c)
Loss of quantifiable service (being payment for services of a domestic and household nature or for the care of children, where the services were previously provided on a regular basis by the deceased person for a family or household of which they were a member); or 
(d)
Teacher hours, teacher-aide hours, and transport to school (being payment for the provision of additional teacher hours and teacher-aide hours at school and transport to school, for a child or young person requiring special assistance as the result of personal injury, to enable the child or young person to attend and benefit from education in a regular school environment). 
(3)
Notwithstanding subsections (1) and (2) of this section, where any person was receiving compensation under section 121 of the Accident Compensation Act 1972 or section 80 of the Accident Compensation Act 1982 in respect of attendant care (being personal care and mobility assistance necessary for the injured person) at a weekly rate of $350 or more immediately before the 1st day of July 1992, those sections shall continue to apply in respect of that person as if those sections had not been repealed and the entitlements in respect of the person may be reassessed from time to time under those sections. 
(4)
Where any person who qualifies under subsection (3) of this section was receiving compensation under section 121 of the Accident Compensation Act 1972 or section 80 of the Accident Compensation Act 1982 in respect of household help (being provision of assistance in respect of domestic activities that would be performed by the injured person if not injured and is necessary to enable the person to remain in or take up suitable residence) immediately before the 1st day of July 1992, that entitlement is deemed to be an entitlement to compensation in respect of attendant care and subsection (3) of this section shall apply accordingly. ”
[31]
Section 439 provided in material part: 
“Compensation for pecuniary loss not related to earnings under 1972 and 1982 Acts 
(1)
Subsection (2) applies if, because of section 149(1) or (2) of the Accident Rehabilitation and Compensation Insurance Act 1992, a person was entitled to receive any compensation on or before 31 December 1992 or 30 June 1993, as the case may be, under – 
(a)
Section 121 of the Accident Compensation Act 1972; or 
(b)
Section 80 of the Accident Compensation Act 1982. 
(2)
Compensation not paid by the former Corporation before those dates under those sections remains payable. ”
[32]
Those savings provisions have the effect of preserving the rights of claimants to seek compensation that existed under the 1972 and 1982 Acts, although those entitlements had not been recognised before the enactment of the 1992 or 1998 legislation. However, under the Injury Prevention, Rehabilitation and Compensation Act 2001, the savings provisions are different. They preserve entitlements where compensation for attendant care had been paid under the 1972 or 1982 Acts immediately prior to 1 July 1992, and that entitlement to payment was preserved under s 149(3) or (4) of the 1992 Act, or when a person was “entitled to compensation” as a result of a decision on review or appeal given on or after 1 July 1992 on an application for review made before 1 October 1992. Section 374 provides in material part: 
“Compensation for pecuniary loss not related to earnings under 1972 and 1982 Acts: attendant care and household help 
(1)
This section applies if 
(a)
a person was receiving compensation at a weekly rate of $350 or more immediately before 1 July 1992; and 
(b)
the compensation was paid under section 80 of the Accident Compensation Act 1982 or section 121 of the Accident Compensation Act 1972 and was for – 
(i)
attendant care, meaning personal care and mobility assistance necessary for the injured person; or 
(ii)
household help, meaning provision of assistance for domestic activities that would be performed by the injured person if not injured and that is necessary to enable the person to remain in or take up suitable residence; and 
(c)
the compensation was payable because of section 149(3) or (4) of the Accident Rehabilitation and Compensation Insurance Act 1992. 
(2)
The sections referred to in subsection (1)(b) – 
(a)
continue to apply to the person and to his or her entitlement to attendant care or household help; and 
(b)
can be used from time to time to reassess the person's entitlement to attendant care or household help. 
 
(5)
For the purposes of subsection (1), a person was receiving compensation immediately before 1 July 1992 if he or she was entitled to do so because of a decision on review or appeal given on or after that date on an application for review made before 1 October 1992. ”
[33]
In this case there was no payment before 1 July 1992 for attendant care so subsection (1) cannot apply. Although subs (5) does provide an extended definition of “receiving compensation”, it only extends this term to include situations where compensation was immediately pending at the time, where an application for review was brought prior to 1 October 1992. Therefore neither s 374(1) or (5) apply to preserve Judy's entitlement to attendant care payments under the 1972 or 1982 Acts. 
[34]
NZGT argues that the phrase “was receiving compensation” in s 374 (1)(a) above should be read to include situations where a person was entitled to compensation although that person had not been paid that compensation. NZGT relies upon Taylor v Taite and Others HC AK M13/00 23 May 2002 Chambers J at [28], as authority for this submission. In that case Chambers J considered entitlement under the 1992 Act: 
“As at 1 July 1992, Jeremy was not in fact receiving compensation under s 80 ‘at a weekly rate of $350 or more’. But it is common ground that he should have been. The only reason he was not receiving compensation at a weekly rate of more than $350 was that ACC was at that time misapplying the law. Clearly, therefore, since Jeremy should have been receiving compensation at a weekly rate of $350 or more, he continued to be entitled to compensation under s 80 of the 1982 Act. At no time did he or his parents elect to switch to the new regulatory regime. It would never have been in their financial interest so to do. ”
[35]
NZGT's submission misconstrues Chambers J's point, which was simply that the savings provisions in the 1992 Act applied in that case. Section 149 of the 1992 Act expressly continued coverage under the 1972 and 1982 Acts where a person either was receiving or entitled to receive any compensation under section 121 of the Accident Compensation Act 1972 or section 77 or section 80 of the Accident Compensation Act 1982. Given the contrasting language used in s 374 to that contained within the savings provisions in the 1992 and 1998 Acts, it is not a tenable statutory construction to read in the phrase “or entitled to receive compensation.” 
[36]
Judy's entitlement for backdating payments under the 1972 and 1982 Acts were therefore not preserved under the 2001 Act. It is likely that it is on this basis that ACC, when asked to specify which sections were relied upon in making the payment, described the payment to NZGT as being “outside the scope of the legislation”
[37]
Having considered the content and legislative history of the attendant care provisions I therefore conclude that Judy's entitlements under the 1972 and 1982 Acts were not preserved by the transitional provisions of the 2001 Act, so that Judy had no entitlement under the provisions of the 2001 Act for backdated payments in relation to attendant care. However, it is apparent that ACC turned its mind to the nature of the entitlement Judy would have had under the 1972 and 1982 Acts for payment for attendant care and concluded that she would not have been entitled to cover under s 80(3) of the 1982 Act. It is therefore likely that when ACC acknowledged that payments should have been made for Judy's attendant care it had in mind the provisions of s 121(2)(b) of the 1972 Act, and s 80(2)(b) of the 1982 Act. 
[38]
If Judy had been entitled to and had received compensation under s 80(3) it would have been paid direct to Judy (or her personal representative in this case). However, entitlements under ss 121(2)(b) and s 80(2)(b) are to be paid direct to the caregiver. 
Plaintiff's arguments 
[39]
NZGT says that the compensation which should have been paid under the ACC legislation was payment for the necessary care of Judy. Through ACC's failure to pay this compensation, Judy did not receive the benefit of the care and therefore missed out on the significant opportunities such care would have provided for her rehabilitation and advancement over the nearly 30 years of ACC's default. Therefore Judy was the intended ultimate beneficiary. 
[40]
NZGT says that the payment was made to Judy's trustees and as such, the provisions of s 126 of the 1972 Act apply. Section 126(2) provides that the Commission may, in its discretion, pay on such terms and conditions as it sees fit, the whole or any part of the compensation to a person to be held in trust and applied for maintenance, education and advancement or benefit of the claimant. NZGT submits that s 126 allows payments made by ACC in settlement of attendant care claims to be held for the maintenance, education and advancement or benefit of the victim. It relies upon the case of Re an Application by Anne Elizabeth Henderson HC ROT CP1/01 14 February 2001, in which Pankhurst J approved a settlement between the parties over compensation paid by ACC in respect of its failure to pay for attendant care for the victim, Mr Trevor Kidd. The settlement involved creation of a Trust Deed which gave the Trustees discretion to distribute trust proceeds amongst various classes of beneficiaries including Trevor, the primary beneficiary, those who in the past had provided care to Trevor, the discretionary beneficiaries, and the ultimate recipients of Trevor's estate, the final beneficiaries. 

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