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Greater awards of reparation for significant life changing harm

01 September 2017 - By Catalijne Pille and Lucy Moffitt

Victims of offending may now be eligible to receive greater awards of reparation following the amendment of section 32 of the Sentencing Act 2002 to allow for recovery of consequential loss not covered by the Accident Compensation Act 2001.

The amendment effectively overturned the majority decision of the Supreme Court in Davies v Police [2009] NZSC 47 in which the court held that loss of earnings consequential on physical harm was not able to be the subject of a reparation order under s 32(1) of the Sentencing Act 2002.

Put simply, the wording of s 32 precluded recovery of lost earnings by way of reparation beyond the 80% paid by the Accident Compensation Scheme. This decision was the catalyst for the legislative amendment made on 6 December 2014.

Section 32(5) now allows reparation to be awarded for the difference between a victim’s full earnings and the 80% earnings that a victim may receive under the Accident Compensation Act 2001.

The impact of the amendment has been particularly significant in two very recent WorkSafe prosecutions in which victims have received large payments in respect of life changing harm.

In the prosecution of WorkSafe New Zealand v Wai Shing [2017] NZDC 10333, the victim, a 27-year-old worker, was struck by a bin filler when unloading a harvester from a truck. He sustained significant injury resulting in tetraplegia. His employer (Wai Shing Ltd) pleaded guilty to failing to take all practicable steps to ensure the safety of its employee, a breach of sections 6 and 50 of the Health and Safety in Employment Act 1992.

The worker received 80% of his average weekly earnings (calculated over a 12 month period) as a weekly payment from ACC following the incident. The worker had received a pay increase two weeks prior to the incident. A medical opinion stated that he was unlikely to ever return to work. The prosecution obtained a report from an actuary to assist the Court to quantify the ACC shortfall.

Prior to the amendment of s 32 of the Sentencing Act, the victim would not have been entitled to reparation for this loss. However, the court determined that this was the very kind of loss that the Sentencing Amendment Act 2014 was intended to address, as the offending was the direct cause of the victim losing his job, his income and any future income.

The court found that the loss should be calculated on the basis that the worker would have been expected to work until the age of 65. The court adopted a risk free discount rate of investment using the worker’s actual rate of earnings as at the date of the incident (as opposed to an average earning calculated over a 12 month period). The figure reached of $452,600 was discounted by 50% to take into account the ACC ethos and the cost/ burden on victims if they had to sue to recover this amount. The final amount ordered to be paid by the defendant for the ACC shortfall was $226,300 with an additional $110,000 awarded to the worker for emotional harm.

The decision in Wai Shing was considered in the recent sentencing of WorkSafe New Zealand vs Ask Metro Fire [2017] NZDC 4651. In that case, a worker sustained tetraplegia when he fell from a ladder positioned on top of scaffold while he was shifting cable wiring for an alarm system. The defendant pleaded guilty to a breach of ss 18 and 50 of the Health and Safety in Employment Act 1992. Taking the same approach adopted in Wai Shing, the court calculated the ACC shortfall on the basis that the worker should have been able to work until the age of 65.

There was no allowance made for promotional increase or change in hours. The incident cut short his working life at the age of 52. Again the court was assisted by an actuarial report. In reaching the ACC shortfall figure of $87,800 the court determined that the loss should only be discounted by 15% to take into account the benefit of receiving the payment by way of reparation. The final amount to be paid by the defendant for the ACC shortfall was $76,940, with an additional $20,475 reparation for accommodation costs and $100,000 for emotional harm also awarded to the worker.

It is clear from both of these recent decisions that the amendment to s 32 of the Sentencing Act allows the courts to consider much greater awards of reparation in cases of significant life changing harm.

Catalijne Pille is a senior solicitor and Lucy Moffitt is a senior solicitor with Worksafe New Zealand.

Last updated on the 1st September 2017