Murray & Ors v ACC - the inherent tension between the accident compensation legislation and traditional insurance schemes

Rachael Schmidt Mccleave                 The recent decision of his Honour Kós J in Murray and Ors v Accident Compensation Corporation [2013] NZHC 2967 highlights the inherent tension that exists in New Zealand between our exemplary (and lauded) accident compensation scheme and the principles which underlie traditional private insurance. It is unfortunate that the consequences of the legislation underlying the decision are so dire for the claimants affected, but any change to benefit such claimants will require some very directed changes in policy and legislation.


The six applicants in the case (an application for special leave to appeal) were all denied weekly earnings-related compensation under s 100(1)(a) of the Accident Compensation Act 2001, (the Act), which provides that a claimant who has cover under the Act and lodges a claim for weekly compensation is entitled to receive it if the Accident Compensation Corporation (the Corporation) determines the claimant is incapacitated within the meaning of the Act and meets the eligibility requirements of the Act.

While all of the applicants in this case were employed at the time they became “incapable of working”, none were employed at the time of their respective injuries. In fact, three were still children at the time they were injured (those three were eligible for a lesser level of weekly compensation for loss of potential earnings under s 100(1)(a) of the Act, while the other three applicants were denied weekly compensation altogether).

All six applicants suffered serious injury: three suffered sexual, psychological and/or physical abuse at the hands of spouses and/or family members, one suffered severe injuries in a motor vehicle accident which resulted in a leg being amputated, one a severe electrical shock in her home from an unearthed oven and the sixth an unspecified injury while still a schoolgirl.

The issue of whether a claimant is entitled to accident compensation if he or she was not employed at the date of injury but is employed at the date of incapacity has vexed the courts, claimants and the Corporation for some years (for instance, see the decision involving one of the same six applicants in Accident Compensation Corporation v Coral Waitere [2012] NZACC and also Vandy v Accident Compensation Corporation [2010] NZACC 101).

While it is fair to say the accident compensation reviewers and the District Court have vacillated on the proper approach, the High Court, while recognising the potentially unfair consequences, has consistently held that the relevant statutory provisions for weekly compensation entitlement required both that that a claimant be an earner at the time of injury as well as at the date of subsequent incapacity (Accident Compensation Corporation v Vandy [2011] 2 NZLR  131 (HC)).

Despite that, the potentially harsh consequences of the approach led the applicants in Murray et al to have another bite at the cherry. It does not take much imagination to understand how heartbreaking it must be to be unable to work because of an injury which, but for its timing, would have allowed weekly compensation to be paid.

The facts behind the six applicants’ claims in Murray are apposite in this regard. To take one example of the six, Ms Waitere had not worked between 1999 and 2005, but in 2005 accepted a job with the Nelson Nursing Service. On the day before she was due to start her new job, she suffered an electric shock from an unearthed oven recently installed at her house.

The shock, incurred when she turned on a tap to wash the dishes, was so severe that she was propelled across her kitchen and was left temporarily paralysed, burnt (with a hole under her lip where the current exited her body) and with brain injuries.

Although Ms Waitere subsequently did start her employment some weeks late, she was forced by her ongoing injuries to give up her job some six months later. Her claim to weekly compensation was denied on the basis that she was not an earner at the date she suffered her injuries.

In ultimately declining the application for special leave to appeal, Kós J made some interesting comments on both the potential unfairness of the requirements at issue as well as on the Act itself.

His Honour commenced his discussion by noting the difficulties in construing the Act, referring to the observation by Elias CJ in Allenby v H ([2012] NZSC 33, [2012] 3 NZLR 425 at [7]) that: “[the Act] provides cover on the basis of line-drawing which reflects policy choices. Such line-drawing has resulted in legislation which is technical … Nor is this easy legislation to follow. It contains much cross-referencing, repetition, and circularity in expression.”

His Honour then went on to consider the relevant provisions and, in particular, s 103 of the Act, which requires the Corporation to determine the incapacity of a claimant who, at the time of the personal injury, was an earner or on unpaid parental leave.

He noted the claimants’ argument that it could not have been the intention of Parliament to deny weekly compensation to persons who have to give up their work through an injury covered by ACC, but which occurred at an earlier time when they were not earning.

His Honour also noted the claimants’ argument, represented in tabulated form, that the Vandy interpretation of the legislation creates some anomalies. But, his Honour said, “it is an anomaly that Parliament intended”. This was a case “where lines of delineation have been drawn clearly”.

Such a line had been drawn in s 103 of the Act and, indeed, Parliament had the opportunity to amend it at the time of the 2005 amendments and did not. It was therefore clear that Parliament intended “to identify a point in time at which injury and employments must be contemporaneous”. While the claimants’ argument has “an emotional cogency ... the statutory words cannot eliminate it”.

His Honour finally noted, in dismissing the application for special leave:

“The outcomes under the present Act are unquestionably anomalous. It was not suggested otherwise before me. No Judge could frame common law duties in so inconsistent and erratic a fashion. Nor could insurers achieve such outcomes in an informed market. But cover under the Act is the product of careful and crystalline drafting by legislators. The meaning and effect of the statutory words in issue is quite clear.”

So, despite all its apparent injustices, it is quite clear that the interpretation upheld by Kós J is the correct one and the one which Parliament, at this point in time at least, has intended. As noted by his Honour in Murray, in ordinary circumstances the insurance market would respond to the gap in “cover” and claimants would not fall between the cracks in such a manner.

Yet, controversially by some points of view, commendably by others, the New Zealand accident compensation scheme is not a conventional private insurance scheme. As such, it has always wrestled with the degree to which it ought to embrace private insurance principles. The passage of time since 1974 has seen cover expanded, pulled back again, expanded again, in line with the needs of the day and the philosophies of the government. In many ways, a “social insurance” scheme like accident compensation can respond to the hard outcomes of a market-driven private insurance scheme and that is one of its many strengths.

As has been noted by Dr Susan St John of Auckland University, social insurance “can cover new and unanticipated risks” (“Looking back at accident compensation: finding lessons for the future” (2003) 34 VUWLR 443).

Yet the scheme is still a creature of statute, and without parliamentary intervention to ameliorate problematical outcomes, those outcomes must remain.

There is little doubt that claimants like Ms Waitere and her fellow claimants in the Murray decision fall into the hard category of case. The answer for such claimants does not, however, lie with the courts under the legislation as it presently stands.

Legislative change will be needed and the claimants may take heart from the comments of the Minister of ACC, the Hon Judith Collins late last year (http://www.stuff.co.nz/dominion-post/news/9437185/Judge-criticises-ACC-act-as-unfair), that the eligibility criteria in the Act are reviewed from time to time and will be again this year.  

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