The High Court has released an important decision on the correct approach to reparation payments made under the Health and Safety at Work Act 2015 (HSWA). Reparations have been an area of some uncertainty and considerable interest, especially following the compensation orders made by the District Court in the Oceana Gold case, which exceeded $800,000.
In his recent decision, Justice Venning considered two appeals, one by Oceana Gold (New Zealand) Limited and one by Cropp Logging Limited.
Oceana Gold operates the Waihi Mine, where an employee lost his life in an accident in 2016. The District Court judge effectively fixed reparations of $810,000 in ordering $350,000 for consequential economic loss in addition to payments of $460,000 that it recognised had already been made by the company (although it appears that an additional $200,000 had been paid as well). The High Court concluded that reparations should have been set at $220,000 in total, with economic losses counting for approximately $120,000.
Cropp Logging is a family logging operation in the Bay of Plenty. An employee was badly injured in an accident on his first day of work in 2017. The District Court ordered reparations of $80,000. The High Court reduced this to $57,500, reflecting $50,000 for emotional harm and $7,500 for economic losses.
The correct approach to reparations
The Court answered two important questions: first, could family members receive reparations for the loss of earnings of the deceased; second, how should the loss of future earnings be calculated?
The Court confirmed that family members were entitled to receive reparations for both emotional harm and consequent economic loss because they are “victims” under the Sentencing Act 2002.
The Court considered two approaches to the calculation of the loss of future earnings. The first would use actuarial techniques to determine the value of someone’s lifetime earnings discounted to present value. It preferred a second approach, under which reparations amount to the difference between Accident Compensation Corporation (ACC) payments and the worker’s wages, calculated over the period of time for which ACC entitlements would be payable.
This approach was considered to be consistent with the Accident Compensation Act itself, and provide a simple and consistent way forward. The decision provides clear and easily applicable guidance for future cases.
What does it all mean?
The decision provides welcome guidance on how reparations for economic losses are to be determined, and its approach should be able to be easily applied, at least when ACC entitlements are clear. It also means that organisations will be able to proactively compensate workers appropriately, and consistently with the common practice of “topping up” ACC payments.