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Brief Counsel

Small change, big deal

17 November 2014

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From 6 December, people injured by an offender in the conduct of a crime will be able to receive reparation for the difference between the compensation received from ACC and their actual loss. 

This is a significant conceptual inroad into the logic of ACC’s universal ‘no-fault’ coverage, which prohibits recovery of compensatory damages for personal injury.

The change was introduced in an amendment to the Sentencing Act 2002 and will be particularly relevant in prosecutions for workplace accidents where a company is found liable.

Employers (both the employing entities and their directors and officers) should check their insurance arrangements to make sure that the extra exposure is covered.

The context

Currently, victims of crime who suffer personal injuries may obtain weekly compensation from ACC, capped at 80% of the claimant’s salary (up to a maximum of $1,847.23 per week).  For many, the difference is significant between what they would actually receive had they not been injured, and what they receive from ACC. 
Mr Davies was charged with operating a vehicle carelessly and causing injury to a cyclist, hurt when a mattress fell off the trailer which Mr Davies was towing.  The District Court ordered him to pay reparation for the 20% differential between the victim’s ACC compensation and his actual lost earnings. 
This decision was upheld by the Court of Appeal but was overturned by the Supreme Court in Davies v New Zealand Police [2009] NZSC 47. 
The Supreme Court, consistent with the no-fault principle at the heart of the ACC scheme, held that sentences of reparation could not be made in respect of any consequential loss or damage where the victim already had some entitlement to ACC compensation.  The amendment effectively overturns that judgment.

The amendment

Under the current law, reparations are not payable for loss or damage in respect of which there is an ‘entitlement’ to ACC cover – i.e. for personal injury.  The amendment prohibits payments of reparations for loss or damage only for which ACC compensation is to be paid.
A meaningful part of ACC’s ‘social contract’ is to minimise the impact of injury on the community, specifically including the economic and personal costs of pursuing personal injury litigation.  At least for injuries caused by criminal conduct, the amendment tends to normalise an expectation of indemnity for losses caused by personal injury. The social contract, however, acknowledged ‘fair’, rather than full, compensation for personal injury by accident.
Given that inroad into ACC’s principled logic, at least from the perspective of the injured, it is unclear why their recovery of full compensation should be dependent on the injurer’s criminality and consequent sentencing.  Exercise of the prosecutorial discretion may be expected also to take into account the quantum of victims’ losses.

What it will mean in practice

The effect will not be restricted to the shortfall between ACC entitlement and lost earnings.  It will also enable victims to claim reparation to top-up other shortfalls, such as medical bills and loss of benefits.
We are likely to see an increase in reparation orders by the courts – especially in relation to prosecutions under the Health and Safety in Employment Act 1992 and its successor legislation, the Health and Safety at Work Act (when enacted). 

High reparation awards are already made in workplace injury cases.  Recent examples include:

  • WorkSafe New Zealand v Woods Contracting Services Limited (23 July 2014) – Woods was ordered to pay $22,500 in reparation after an employee’s pelvis was crushed (only $2,560 related to actual losses suffered over and above lost wages which were not recoverable)
  • WorkSafe New Zealand v Hunter Laminates Nelson Limited (1 October 2014) – Hunter Laminates was ordered to pay $35,000 in reparation after an employee suffered serious crushing injuries to his legs (no specific monetary losses were claimed, reparation related to the long term consequences and emotional harm suffered by the victim), and
  • WorkSafe New Zealand v Busck Prestressed Concrete Limited (15 September 2014) – Busck was ordered to pay $60,000 in reparation after the death of an employee who was run over by a telehandler.
Most companies are insured for reparation awards made to victims.  However, the change to the Sentencing Act is a good reason for employers to ensure that they have statutory liability insurance, at an adequate level of cover. 
For further information please contact the lawyers featured. 

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