Many citizens and residents might not realise that they may not have ACC cover for injuries they suffer abroad. The relevant rules are arbitrary, drawing lines which seem to have little rationale. To make matters worse, the Courts have interpreted the provisions in the least generous, most literal way possible.
When the Woodhouse Commission reported on compensation for personal injury back in 1967, leading to the accident compensation system we have today, they envisaged that New Zealand residents temporarily abroad for periods not exceeding 12 months would continue to be protected. After 12 months, protection would be at ACC’s discretion.
This was not the accident compensation scheme that eventuated. Under the Accident Compensation Act 1982, earners (i.e., the self-employed and employees) were covered for personal injury suffered overseas for 12 months. There were no explicit provisions dealing with everyone else.
In 1988 the Law Commission recommended changes to the 1982 Act. Cover would extend to injury suffered outside New Zealand by a person whose “usual place of residence” was in New Zealand when the injury occurred, up to a year after their departure. The proposal was not adopted.
The current law is derived from the Accident Rehabilitation and Compensation Insurance (Ordinary Residence Definition) Regulations 1992, promulgated under the Accident Rehabilitation and Compensation Act 1992. This appears to have happened without Parliamentary oversight or review and has been incorporated into later versions of the legislation. Some of the reforms under the 1992 Act were controversial and have not endured, but the 1992 Regulations survived in a different guise.
Pursuant to s22 of the Accident Compensation Act 2001, a person has cover for personal injury if they suffer the personal injury outside New Zealand on or after 1 April 2002, and the person is “ordinarily resident” in New Zealand when they suffer the personal injury.
Section 17(1) of the 2001 Act says that a person is “ordinarily resident” in New Zealand if (1) they have their permanent place of residence in New Zealand; and (2) they are a New Zealand citizen, or residence class visa holder.
However, s17(2) says that a person does not have a permanent place of residence in New Zealand, if he or she “has been and remains absent from New Zealand for more than 6 months or intends to be absent from New Zealand for more than 6 months”.
This provision is then subject to s17(4) which deems New Zealand to be a person's permanent place of residence if (1) that person intends to resume a place of residence in New Zealand; and (2) is absent from New Zealand “primarily in connection with their employment duties”, the remuneration from which is “income derived in New Zealand” for tax purposes.
The negative deeming provision in s17(2) is a potential fish-hook for anyone not going overseas in connection with their employment.
You may be a New Zealand citizen or resident (satisfying s17(1)) but if you book flights overseas, returning to New Zealand in more than six months, you likely cease to be “ordinarily resident” on the day you leave. You intend to be absent for more than six months and are deemed not to have a permanent place of residence in New Zealand (s17(2)). Even if you are injured abroad within six months you are not covered, because although you have been absent for less than six months, you intended to be absent for longer. Unless, before you were injured, you changed your flights to return earlier, arguably your intention did not change.
The Courts have interpreted these requirements strictly, so that seemingly you must be both injured and return to New Zealand within six months.
In Estate of SC v ACC (2005/007) the applicant left New Zealand on 1 October 2002 for a working holiday. He died on 30 March 2003, prior to expiry of the 6-month period on 1 April 2003. He told his mother on 29 March 2003 that he was returning to New Zealand and had saved money to return home as soon as possible. No travel bookings were made to return. The District Court said the applicant probably intended to be absent from New Zealand for more than six months when he left on 1 October 2002. The applicant had changed his intention on 29 March 2003, from being overseas indefinitely to an intention to return to New Zealand as soon as he could arrange to do so. However, because it was impractical in all the circumstances to return to New Zealand by 1 April 2003, it followed that he still intended to be absent from New Zealand for more than six months.
The same approach has been adopted in respect of sensitive claims. In BL v ACC [2023] NZACC 106 the applicant was a New Zealand citizen. On 13 January she left for an exchange visit overseas. The visit was intended to last 10-11 months. Her passport was confiscated when she arrived and the applicant was sexually abused over a period of months. The US Embassy helped to retrieve her passport, and she was put on a plane home. The applicant returned to NZ six months and six days after her departure. In the District Court, the applicant’s lawyer argued that her age and health precluded her from forming the necessary intent to return. Even if she did want to leave, she had no way to travel without her passport and the application of s17(2) would be unreasonable.
The Court rejected these arguments:
In the applicant’s case, in the period when she suffered her mental injury, she was and remained absent from New Zealand for over six months. It is acknowledged by the applicant’s counsel that this fact is not disputed. The effect is that the applicant, when she suffered her mental injury, did not have a permanent place of residence in New Zealand, was not ordinarily resident in New Zealand when the relevant act was performed, and therefore does not have cover for her injury.
This Court is bound by the plain and ordinary meaning of the Accident Compensation Act, and the Court has no jurisdiction in this case to fill a perceived gap in the drafting of this Act. The plain and ordinary meaning of section 17(2) is not at odds with the purpose of the Act as reflected in its purpose, being to provide for a fair and sustainable scheme for managing personal injury (section 3). While the applicant’s experience is a most unfortunate one, this Court finds that, when balanced against the proper role of the Courts, any redrafting of section 17(2) of the Act should be left to Parliament.
It is suggested that while the approach to s17(2) may be strictly correct from a legal perspective, it is far too literal, and inconsistent with the bargain New Zealanders thought they were making when they surrendered their right to sue for personal injury, in return for coverage from ACC.
A legislative amendment clarifying that cover continues for citizens and residents who are injured within 6 months of departure, but who always intended to return to New Zealand, would do something to ameliorate the arbitrariness of the timeframes. The Law Commission’s proposals, with their emphasis on a continuing residential connection, also deserve reconsideration, as does a special provision for sensitive claims.
MIKE EDISON