High Court clarifies entitlement to reparations for loss of earnings involving deceased victims

Oceana Gold (NZ) Ltd v WorkSafe NZ & Cropp Logging Ltd v WorkSafe NZ [2019] NZHC 365

On 7th March, the High Court of New Zealand released its decision regarding two appeals from sentences imposed pursuant to the Health and Safety at Work Act 2015 (HSWA).  

The appeals involved two companies: Oceana Gold (New Zealand) Limited (Oceana Gold) and Cropp Logging Limited (Cropp Logging).

The Oceana Gold matter involved the death of a mine worker whose vehicle fell off a 15-metre drop and its appeal focused on the entitlement of the worker’s family to reparations for his loss of income.  

The Cropp Logging matter involved the significant injuries an employee suffered after being crushed by a log.  Its appeal addressed whether consideration of a victim’s contributory conduct should be taken into account at sentencing.

The issues in the Oceana Gold appeal largely took primacy in the High Court’s decision, although the Cropp Logging matter included some useful commentary regarding itemising reparation awards and the Court’s refusal to recognise contributory conduct of a victim.

Reparations for loss of earnings

In the Oceana Gold appeal, the key issue considered by the High Court was whether the family of the deceased victim was entitled to reparations for the victim’s loss of earnings.

Section 32 of the Sentencing Act 2002 (SA) empowers the Court to impose a sentence of reparation where a person has suffered (a) loss or damage to property, (b) emotional harm, or (c) loss or damage consequential on any emotional, physical harm or loss or damage to property.

Further, s4(a)(iv) of the SA defines “victim” to include a member of the immediate family of a person who dies as the result of an offence committed by another.

Considering the above, the Court concluded that pursuant to s32 of the SA it had the power to award reparation for loss of income and that, as the deceased’s wife and child were victims pursuant to s4(a)(iv) of the SA, they were entitled to reparations for consequential loss (pursuant to s32(1)(c) of the SA), separate to their entitlement to emotional harm reparations (pursuant to s32(1)(b) of the SA).

However, the Court acknowledged that such an award must recognise the victims’ entitlements to compensation under the ACC scheme.  The Court referred to this as the “Statutory Shortfall’ approach. For example, the partner of a qualifying victim may be entitled to ACC compensation payments for loss of the victim’s income for five years, or until the youngest child of the deceased victim in the partner’s care turns 18.  Accordingly, the Court noted that this practically requires compensation from ACC to be deducted from any ordered consequential loss of earning reparations.

This means that the immediate family members of a deceased victim will be entitled to a top up by reparations for the shortfall between the deceased victim’s income and the ACC payments which they are entitled to.  This is a similar approach to the entitlement afforded to injured employees, who are entitled to top-ups, via reparation, for the difference between their income and their ACC entitlements.

So, what did this conclusion mean practically for the two appeals?

Oceana Gold Limited

The deceased employee had a salary of approximately $100,000 a year at the time of his death.  An actuarial report calculated the estimated value of the deceased employee’s projected lost earnings over the course of his working life to be between $700,000 and $2.77 million.  

However, the District Court Judge did not agree with the report and fixed a figure of $350,000 as more realistic.  The Judge considered that further payments for emotional harm were not warranted given payments already made by Oceana Gold and proposed a fine of $378,000 plus costs.  

On appeal, the High Court set the reparation order against Oceana Gold aside.  The High Court found that pursuant to the statutory shortfall approach lost earnings of the deceased was $121,000.  Further, the emotional harm reparations would likely be between $80,000 and $100,000, making a total reparation award of approximately $220,000.  However, as Oceana Gold had already made payments pursuant to life insurance policies of $450,000, along with other payments totalling $200,000 to the deceased employee’s partner and child, no further payments were required.

Pursuant to the express wishes of Oceana Gold, who did not want the victim’s family to suffer any loss as a result of the appeal pursued by its insurer, the Court exercised its discretion under section 350 of the Criminal Procedure Act 2011 and did not order the return of the payments already made.

Cropp Logging

At the District Court Ingram J imposed a reparation order of $80,000. This was not broken down into separate parts for emotional harm and other loss. The Judge also awarded $20,000 for costs, ordering Cropp Logging to pay a total of $100,000.

The High Court found that Ingram J erred by failing to separately identify the amounts for emotional harm and the statutory shortfall for lost earnings.  He also erred by considering increasing the award for inflation without any evidential basis. However, the High Court did not accept Cropp Logging’s submission that Ingram J was in error for declining to consider the employee’s contribution to the accident.  The reason being that the Court concluded that recognition of contributory conduct would undermine the core duty of employers under the HSWA.

The High Court recognised that as a result of the accident and the injuries suffered, the victim was struggling to cope with the long-term impacts of the injuries and the effects of those on his life and relationships.  In the circumstances, the Court considered that reparation of $7,500 for loss of earnings and $50,000 for emotional harm was a more appropriate order.

Accordingly, the appeal was allowed, to the extent that the reparation order of $80,000 was set aside and replaced with a reparation order of $57,500.

Comment from Bradley Alcorn

The High Court’s decision has provided useful guidance and clarity with regards to a Court’s refusal to reduce a reparation award for a victim’s contributory conduct, in terms of the entitlements of victims who have not suffered physical loss and also in terms of calculating reparations, particularly when loss of earnings of the victim is concerned.  

This decision, together with the High Court’s decision in Stumpmaster (which set down the appropriate banding for fines under the HSWA but did not significantly address the issue of reparations), now provides insurers and their clients with greater certainty as to the insured (reparations) and uninsured (fines – particularly their starting points) exposures that will be faced by a defendant at sentencing.

This decision also provides a useful framework for insureds when taking steps to support a victim and/or a victim’s family following an accident.  Given the comments of the High Court in Stumpmaster – that steps should be taken to support a victim as soon as possible after the accident – being able to assess the appropriate entitlements of the victim/victims will be an important tool.

Bradley Alcorn is a Senior Associate at Fee Langstone

Bradley Alcorn is a Senior Associate at Fee Langstone