In Peter Miles Davies v New Zealand Police  NZSC
47 (25 May 2009), the Supreme Court of New Zealand determined an
important area of New Zealand's civil compensation system.
Where a victim's injuries are covered by the Accident
Compensation Corporation (ACC), reparation sentences can no longer
'top-up' the ACC payment.
Since the introduction of the ACC Scheme in New Zealand in the
1970s, any proceedings seeking damages directly or indirectly
arising out of injuries covered by the ACC Scheme have been statute
However, the Sentencing Act 2002 requires a criminal court to
not only punish the offender but to also consider reparation to
compensate the victim for:
Loss of damage to property.
Loss or damage caused by either one of the above.
The Sentencing Act 2002 addresses the issue of ACC payments
under section 32 (5) by requiring a court, when passing a sentence
of reparation, to not order reparation for losses likely to be
covered by entitlements under the ACC Scheme.
The recent case
When Dr Davies was sentenced for careless use of a motor vehicle
causing injury, the District Court awarded reparation to the victim
of an amount representing the shortfall between her
earnings-related compensation received from ACC, and her actual
earnings. This amount would not be available in any civil
proceedings because of the statute bar.
The issue before the Supreme Court of New Zealand was
determining whether the application of section 32 (5) of the
Sentencing Act 2002 requires a qualitative enquiry into the ACC
Scheme's coverage (ie are any entitlements available to the
victim at all?) or merely a quantitative enquiry (ie what is the
amount of that cover?). In other words, did the fact that some
coverage was available to the victim in this case prohibit
reparation or was the prohibition only in relation to the amount of
that coverage, so as to allow a 'top-up'.
Overturning the High Court and the Court of Appeal, the Supreme
Court of New Zealand held that section 32 (5) requires a
qualitative enquiry. The fact that the loss is the subject of any
entitlements under the ACC Scheme disqualifies it from being
included in a sentence of reparation. The Court noted that this was
consistent with the ACC Scheme and avoided a two-tiered
compensation system: victims of tortfeasors cannot have their ACC
entitlements 'topped-up', whereas victims of crimes
While the decision is relevant to the entire civil compensation
system in New Zealand, it is of particular interest to the
insurance industry. Insurers have noticed an increasing trend of
courts awarding reparation for injuries covered by the ACC Scheme.
This is particularly so for offences under the Health and Safety in
Employment Act 1992. Reparation sentences for offences under that
Act now cannot include losses covered by ACC to any extent unless
they fall within the category of 'emotional harm'.
The effect of this judgment is that the exposure for liability
insurers, in particular under Statutory Fines Policies, is now
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