ACC v ESTATE OF ROB LEHMANN HC WN CIV-2004-485-213

Appearances: W M Wilson QC and A D Barnett for Appellant
J M Miller, H Armstrong and B Thompson for Respondents

Judgment: 3 June 2005

JUDGMENT OF GODDARD J

[1] The Injury Prevention, Rehabilitation, and Compensation Act 2001 (“the 2001 Act”) reintroduced lump sum compensation for personal injury occurring after 1 April 2002. This replaced independence allowances available under the 1992 and 1998 Acts. Liability for the Corporation to pay lump sum compensation from 1 April 2002 is provided by cl 54 of Schedule 1 of the Act, which reads:

54 Lump sum compensation for permanent impairment
(1) The Corporation is liable to pay the claimant lump sum compensation in accordance with this schedule, if -
(a) the claimant has suffered personal injury, after the commencement of this Part, for which he or she has cover; and …
(2) To avoid doubt, there is no entitlement to lump sum compensation in respect of personal injury suffered before 1 April 2002 or in respect of any subsequent consequences of any such personal injury.

[2] There are transitional limits on eligibility for lump sum entitlement for certain categories of personal injury however. These categories are mental injury caused by a criminal act specified in Schedule 3 to the Act; personal injury caused by a work-related gradual process, disease or infection in the circumstances described in s 30(2) of the Act; and personal injury caused by medical misadventure. Each of those categories of personal injury is subject to a temporal limit on eligibility for lump sum compensation, detailed in cl 55 of Schedule 1 of the Act. In the case of personal injury caused by a work-related gradual process, disease or infection in the circumstances described in s 30(2) of the Act, the transitional limit on eligibility for lump sum entitlement is as follows:

55 Transitional limits on eligibility for lump sum entitlements – …
(2) A person who suffers personal injury caused by a work-related gradual process, disease, or infection in the circumstances described in section 30(2) is not entitled to lump sum compensation for permanent impairment if one of the following dates preceded 1 April 2002:
(a) the date on which the person last performed the task or was employed in the environment in those circumstances:
(b) the date on which the person first received treatment for the personal injury as that personal injury.

[3] Clause 55(5) further provides that:
(5) This clause overrides sections 36 to 38.

[4] Mr Lehmann, whose estate is the respondent in the appeal, suffered from a personal injury caused by an occupational disease, namely mesothelioma. The latency period for that disease renders it difficult to pinpoint Mr Lehmann’s precise injury date, although medical evidence confirms that his condition was caused by exposure to asbestos in employment that he undertook in or about 1960.

[5] Mesothelioma is one of a number of occupational diseases listed in Schedule 2 to the Act. The diseases there listed are included in the definition of “personal injury caused by a work-related gradual process, disease, or infection” in s 30(1) of the 2001 Act. That definition is exclusive, as s 30(1) makes clear:

30 Personal injury caused by work-related gradual process, disease, or infection
(1) Personal injury caused by a work-related gradual process, disease, or infection means personal injury—
(a) suffered by a person; and
(b) caused by a gradual process, disease, or infection; and
(c) caused in the circumstances described in subsection (2).

[6] The causative “circumstances described in subsection (2)” are variously prescribed in s 30(2) as follows:

(2) The circumstances are—
(a) the person—
(i) performs an employment task that has a particular property or characteristic; or
(ii) is employed in an environment that has a particular property or characteristic; and
(b) the particular property or characteristic—
(i) causes, or contributes to the cause of, the personal injury; and
(ii) is not found to any material extent in the nonemployment activities or environment of the person; and
(iii) may or may not be present throughout the whole of the person's employment; and
(c) the risk of suffering the personal injury—
(i) is significantly greater for persons who perform the employment task than for persons who do not perform it; or
(ii) is significantly greater for persons who are employed in that type of environment than for persons who are not.

[7] Section 30(3) provides for Schedule 2 occupational diseases to be included as personal injuries:

(3) Personal injury caused by a work-related gradual process, disease, or infection includes personal injury that is of a type described in Schedule 2 that is suffered by a person who is or has been in employment involving exposure to agents, dusts, compounds, substances, radiation, or things (as the case may be) described in that schedule in relation to that type of personal injury.

[8] Section 30(4) provides that a Schedule 2 occupational disease does not require to be assessed as to causation, so that a person suffering from a Schedule 2 disease who was in related employment is deemed to be suffering a personal injury within the definition of s 30(1):

(4) Personal injury of a type described in subsection (3) does not require an assessment of causation under subsection (1)(b) or (c).

[9] As is evident, personal injury caused by a work-related disease is an injury caused in the circumstances described in s 30(2). By virtue of s 30(4), a Schedule 2 personal injury does not require an assessment of causation by reference to the s 30(2) circumstances. Rather, on diagnosis, a Schedule 2 occupational disease, contracted whilst in related employment, automatically satisfies the causation criteria in s 30(2). By definition therefore a claimant diagnosed as suffering from a personal injury caused by a Schedule 2 work-related disease is suffering from a personal injury as defined in s 30(1)(a).

[10] The question on appeal is whether Mr Lehmann, as a person suffering from a Schedule 2 occupational disease, was precluded from entitlement to lump sum compensation (as opposed to an independence allowance) by the transitional limit imposed in cl 55(2)(a) of Schedule 1. The issue was said by the appellant to resolve into the question of whether a Schedule 2 disease can be said to occur “in the circumstances described in s 30(2)”.

[11] Pursuant to s 37 of the Act (which is expressly overridden by cl 55), Mr Lehmann’s personal injury has a deemed date of 11 December 2002, when he was first treated for the disease. (Section 37 provides deemed dates for s 30 personal injuries as well as mental injury and injury from medical misadventure.) The date on which a person suffering personal injury caused by a work-related gradual process, disease or infection is deemed to be the earlier of either:

a) the date on which the person first received treatment from a registered medical practitioner for that personal injury as that personal injury:

b) the date on which the personal injury first results in the person’s incapacity.

[12] However s 37 is subject to cl 55(2) of Schedule 1 (s 37(5)), this mirroring the exclusionary effect of cl 55(5).

[13] A further aspect is the effect of the ratification by New Zealand of the International Labour Organisation Convention 42 on Mr Lehmann’s case. The schedule to that Convention was given effect in New Zealand domestic law when it was enacted as Schedule 2 of the Accident Insurance Act 1998 and subsequently as Schedule 2 of the 2001 Act.

[14] Article 1 of the Convention states:

Each member of the ILO which ratifies this convention undertakes to provide that compensation shall be payable to workmen incapacitated by occupational diseases, or in the case of death from such diseases, to their dependants, in accordance with the general principles of the national legislation relating to compensation for industrial accidents.

[15] Article 2 of the Convention commences:

The rates of such compensation shall be not less than those prescribed by the national legislation for injury resulting from industrial accidents.

[16] On behalf of Mr Lehmann it was submitted that the effect of the ratification of the Convention in the New Zealand accident compensation scheme was two-fold. First, that a prescription now exists for the covering of occupational diseases listed in Schedule 2, distinct from that under which other gradual process claims are considered. Second, that the driving principle of the Convention – that the entitlements of those suffering from certain occupational diseases must be no less than that of persons suffering personal injury by accident – has been imported into the accident compensation scheme.

[17] The submission was made that Parliament, cognisant of its duties under the Convention, had deliberately chosen to exclude s 30(3) claims from the limit on lump sum compensation, with the result that all claimants suffering a Schedule 2 injury with a (deemed) date of injury after 1 April 2002 are entitled to lump sum compensation, as are claimants suffering personal injury by accident with a (actual) date of injury after 1 April 2002. As Mr Lehmann’s deemed date of injury was late 11 November 2002, when he was first treated for his personal injury as that personal injury, that is the date of his “incapacity” by virtue of s 37(1)(b). “Incapacity” rather than exposure was said to be the triggering factor for entitlement to lump sum compensation, because entitlement as a result of “incapacity” is in accordance with the wording of article 1.1 of the Convention and with the requirement in article 1.2 for rates of compensation for incapacity by occupational disease to not be less than the rate prescribed for injury by accident.

The District Court judgment

[18] In the District Court, Judge Ongley found that all injuries under s 30 fall under the description “personal injury caused by work-related gradual process, disease or infection” and that Schedule 2 injuries were not a different category but “included in that general description”. He further found that Schedule 2 injuries do not require the same elements of proof of risk in the workplace. This underlying policy, he thought, arose from the “notoriously work-related” nature of Schedule 2 injuries or diseases so that it was “unfair or at least unnecessary” to require a claimant to prove that the risk occurred in employment. It was for that reason that the Corporation assumes the burden of proving the contrary.

[19] However, Judge Ongley also found that “the s 30(2) circumstances do not apply as the test of a claim for a Schedule 2 injury”. This, he said, was because the onus and the strict qualifying conditions in s 30(2) do not apply to those injuries:

… The reference in cl 55 to personal injury in the circumstances described in s 30(2) does not naturally refer to subs(3) injuries and cl 55 does not use clear language to apply the exclusion to those injuries. It would have been a simple matter to word cl 55 differently if the intention had been to catch both kinds of work-related gradual process injuries.

[20] Such an approach, he said, was in accordance with the purpose of the Act, which is one of fair compensation for gradual process work-related injuries and with the “generous unniggardly interpretation of personal injury by accident” approved by the Court of Appeal in decisions such as ACC v Mitchell [1992] 2 NZLR 436 at 438-9; Harrild v Director of Proceedings [2003] 3 NZLR 289; and Campbell & Handley v ACC CA138/03 29 March 2004.

[21] Judge Ongley further found that had it been intended that cl 55 should apply to a Schedule 2 case such as Mr Lehmann’s, it would have been logical for express reference to be made to a person suffering personal injury in the circumstances described in s 30; or in the circumstances described in either s 30(2) or s 30(3). He said:

… There are different sets of circumstances for s 30(2) or s30(3), in the former case a list of tests for risk, and in the latter, merely to have been in employment involving exposure to a substance corresponding with a disease listed in Schedule 2.

[22] Judge Ongley was satisfied that the interpretation he favoured was further assisted by the words in cl 55(2)(a) “… the date in which the person last performed the task or was employed in the environment in those circumstances”. The date was thus fixed by time of last employment, where the prevailing circumstances were as described in s 30(2) and such a test was not appropriate for a s 30(3) type injury.

Discussion

[23] The reintroduction of lump sum payments by the 2001 Act necessarily had to be accompanied by a clearly defined transition from the former regime of independence allowances to the new regime of lump sum payments. Whatever transition date was nominated, some claimants would fall on one side of entitlement to lump sum payment or on the other side: so it is with the nominated date of 1 April 2002.

[24] The transitional limits placed on eligibility for lump sum entitlements for mental injury, medical misadventure and work related gradual process, disease or infection in cl 55 undoubtedly derive from the more complex causal nexus and latency of those categories of injury. Nevertheless, the transitional limits themselves are clearly prescribed and unambiguous in their terms. These transitional limits are expressed to override s 37, which fixes deemed dates of injury and in turn, s 37 itself is expressed to be subject to cl 55(2). The intention of Parliament could not be more explicitly expressed in these provisions.

[25] The plain meaning of s 30 is that a Schedule 2 personal injury caused by disease, such as Mr Lehmann’s, satisfies the qualifying criteria described in s 30(2) of the Act by virtue of ss 30(3) and (4). Once diagnosis and related employment are established it is accepted that the disease is a personal injury “suffered” in terms of s 30(1)(a). To interpret the provisions of s 30(1), (2), (3) and (4) otherwise would be to deprive s 30(4) of any logic or purpose.

[26] Whilst I agree with Judge Ongley, that the critical words for interpretative purposes are “in the circumstances described in s 30(2)” and that Mr Lehmann did not have to establish the requirements of s 30(2) to prove that his injury occurred “in the circumstances described in s 30(2)”, I respectfully differ from his finding that there are “different sets of circumstances for s 30(2) or s 30(3)”. The circumstances are the same in each case. The only distinguishing factors are the necessity for affirmative proof in the case of personal injury caused by work-related gradual process, disease or infection not of a type described in Schedule 2 and legislative acceptance of proof in cases that are of such a type.

[27] The definition of “personal injury” in s 30(3) is not a separate definition to the definition in s 30(1); rather, it is an included definition, as the wording of s 30(3) makes clear. The circumstances required to prove personal injury by work-related gradual process, disease or infection are the same so that ss 30(1) and (2) are subsumed in ss 30(3) and (4) for the purposes of Schedule 2 claimants. Although it is accurate to say that the legislature could have expressed cl 55(2) as referable to ss 30(1), (2), (3) and (4), there was simply no need to do so. Clause 55(2) applies to all of those subsections.

[28] In determining transitional limits for personal injuries not instantly manifest in the workplace, the legislature has not acted inconsistently with its obligations under the ILO which are to provide equal minimum rates of compensation for injuries by disease and injuries by accident. Both categories of injury carry equal entitlement to an independence allowance prior to 1 April 2002 and lump sum compensation after 1 April 2002. The imposition of transitional limits on personal injuries that are by their nature latent is a matter well within the province of the New Zealand legislature and therefore “in accordance with the general principles of the national legislation relating to compensation for industrial accidents”. On this issue, I note that Judge Ongley was satisfied that the Convention had been recognised by the inclusion of industrial disease in s 30(2) and that:

… Recognition of obligations under the Convention does not lead to a conclusion that diseases listed in Schedule 2 were intended to have an accompanying advantage of lump sum compensation long after the end of the employment related exposure.

Conclusion

[29] A Schedule 2 disease can be said to occur “in the circumstances described in s 30(2)” of the Act. On that basis, the appeal must be allowed.

Addendum

[30] Although it has played no part in the interpretative exercise it is nevertheless appropriate to note the concern expressed in the report from the Health Committee on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill (No 3). That report was placed before me by the respondent, and submissions were made by counsel for each side in relation to it.

[31] The Bill, which proposed amendments to s 30 and cl 55 of Schedule 1 of the Act, was assented to on 10 May 2005. Those amendments are not relevant to the issue which is the subject of this appeal. Nevertheless, the concern expressed by the Health Committee on any possible effect of the proposed amendment to s 30 and cl 55 on Judge Ongley’s decision in Mr Lehmann’s case is appropriately mentioned.

[32] Judge Ongley’s decision was delivered within six days of the Bill having been referred to the Health Committee on 5 August 2004. The Corporation’s appeal from Judge Ongley’s decision was filed later in this Court, on 5 October 2004. In its report, dated 17 December 2004, the Health Committee, made the following statement:

Transitional limits on eligibility for lump sum entitlements

Some of us are concerned that proposed new clause 55(2)(c) of Schedule 1 of the principal Act could be used adversely against claimants seeking lump sum compensation for Schedule 2 diseases. We were assured by our advisors that this clause in no way affects the part of clause 55(2)(c) (sic) which enabled Mr Lehmann (in ACC v Estate of Lehmann, 11 August 2004, Ongley DCJ, decision no. 225/04) to be awarded a lump sum.

[33] The concern referred to in the above passage was that of the Green Party. It was set out in the body of the Health Committee’s report as follows: We are extremely concerned that an amendment to Schedule 1 (clause 55(2)) will mean that anyone who has suffered a gradual process injury before April 2002 will not be entitled to lump sum compensation, no matter how clear-cut or apparently justified their claim is. Given that gradual process injuries normally have a long period of latency, we believe it is totally unfair to set an arbitrary cut-off date before which such injuries will not be covered.

[34] The above is included as an addendum to my judgment because the Health Committee may have been unaware that an appeal against the Lehmann decision had been filed and was pending. That appeal has now been successful and the issue may or may not be tested further on appeal. On the law as it presently stands, claimants such as Mr Lehmann are precluded from entitlement to lump sum compensation and are entitled only to an independence weekly allowance for their lifetime. If there is a perceived injustice in that situation, then that is an injustice that can only be remedied by legislative amendment. Solicitors:

Broadmore Barnett, Wellington, for Appellant
John Miller and Hazel Armstrong, Wellington, for Respondent
Deliver at 12pm on Friday 3 June 2005.

ENDS

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