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A fresh reading of the Report of the Royal Commission of Inquiry, Compensation for Personal Injury in New Zealand, raises a series of unexplored themes, forty years after the Report laid the foundation for the accident compensation scheme in New Zealand. The original vision remains obscured by various myths and compromises, reflected in a turbulent cycle of legislative revisions and implementation. Recovering that early vision can clarify the past, but it may also point to a new policy in the future, one in which the fundamental goals of the ACC scheme play a more central role in the fields of health and environment, welfare, and justice.

The Woodhouse Report is most widely remembered for its recommendation to remove claims for compensation for personal injury from the New Zealand courts, and instead to refer all personal injury cases to a social insurance provider for assessment of cover on a no-fault basis. But the Woodhouse Commission had a wider concern to reduce or prevent all forms of adversarial litigation, not just negligence actions. Hence, the Woodhouse Commission’s vision for a state monopoly that comprehensively covers work-related and off-the-job injuries, as well as non-earners, on a universal basis has the advantage of avoiding much litigation about cover and about the distribution of liabilities. The Woodhouse Commission even recognized that the distinction between accident and illness, as causes of disability that attract different entitlements, would eventually need to be overcome by a full extension of its principles. Unfortunately, in spite of cross-party support for the Woodhouse principles, successive governments have tinkered with the ACC scheme in ways that reintroduce such disputes and litigation, and there is a limited appreciation of the scope of the Woodhouse Commission’s desire to prevent litigation. This article looks at two recent cases that highlight the problems that remain within the ACC scheme, and suggests that the Woodhouse principles have yet to be fully and consistently adopted by Parliament.

The current accident compensation scheme must manage long-term claimants with partial incapacity more effectively if it is to achieve the Woodhouse principle of “complete rehabilitation”. Most injured workers require little assistance from the Accident Compensation Corporation scheme prior to returning to employment. However, a small but costly number suffer reduced earnings upon return to work, or are unable to return to work at all. The author proposes a focus that centres more upon the claimant achieving complete rehabilitation, and submits that extensive reshaping of the vocational rehabilitation process is needed to maximize claimant outcomes by retraining and/or matching claimant skills with labour market realities.

The boundary areas between illness and disease will always be difficult to draw. This paper considers two areas that have led to difficulty in the context of the accident compensation scheme: cases involving mental injury alone and cases of unplanned pregnancy. The author argues that in a comprehensive accident compensation scheme the definition of personal injury should take cognizance of developments in medical knowledge, and include mental injury. An unplanned pregnancy as a personal injury to the mother creates special difficulties, and indeed does some violence to the definitions in the legislation. The author suggests that a legislative amendment to clarify this is desirable.

This article reflects the author's personal experience with the development of accident compensation policy and his involvement with Sir Owen Woodhouse, chair of the Woodhouse Commission which recommended the New Zealand scheme. Reflections are made concerning the uniqueness of the New Zealand scheme in the common law world. Attention is drawn to the challenge that accident compensation posed at its inception and still poses for the “income maintenance” systems as a whole. It is argued that future policy requires the inequalities that now characterize “income maintenance” in New Zealand and that result from accident compensation be addressed. Some analysis is also offered to show that costs will increase should the administration of accident compensation return to private enterprise.

 The author examines the rather limited nature of legal scholarship relating to the Accident Compensation Corporation (“ACC”) scheme. He points out that a proper academic approach to the ACC scheme must take into account both the public aspects of that scheme, such as its accountability mechanisms, as well as its private aspects. Future scholarship ought to take greater account of the complex interaction between the common law and the ACC scheme, and the author argues that it is no longer good enough just to focus on the bar on common law actions or the availability of exemplary damages. The author suggests that a more fruitful aspect for inquiry is the degree to which the ACC scheme itself depends on basic common law notions, and the extent to which the inability of the ACC scheme to escape those notions might reveal new insights about compensation schemes more generally. The author examines the use of common law notions in three areas: claims for mental injury, causation in medical misadventure cases, and claims involving coverage for pregnancy or stillbirth. He argues that judges and other decision-makers ought to begin with a principle of “integrity” in resolving borderline decisions as to whether a claim ought to be within the ACC scheme or not. Such a principle of integrity might start with the most important of the Woodhouse principles that of “comprehensive entitlement” and “community responsibility”, but the integrity principle must also reflect the reality that the New Zealand Parliament has consistently failed to provide for comprehensive entitlement, and in particular that judges and other decisions must take seriously the deliberate exclusion of illness from cover. 

 The Woodhouse Commission examined the common criticisms of the common law action for negligence in relation to personal injury. The criticisms included the risk of litigation (the uncertainty of outcome); the reduction of damages if there was any contributory negligence; the long delays before the receipt of compensation, if any; the high costs of determining who was and who was not entitled; the need to find a solvent defendant; the adverse effects on rehabilitation; and the inappropriateness of lump sum awards of damages to provide for long-term incapacity. The Woodhouse Commission concluded that “the time [had] clearly come for the common law action to yield to a more coherent and consistent remedy in the whole area of personal injury”, and it recommended “that the Court action based on fault should now be abolished in respect of all cases of personal injury, no matter how occurring”. This article examines the continued application of the common law of negligence in relation to personal injury in Australia, with particular reference to decisions of the High Court of Australia. It demonstrates that the criticisms made by the Woodhouse Commission remain valid 40 years later, and contrasts the decisions of the High Court with how similar injuries would be dealt with in New Zealand. For pragmatic reasons, the Woodhouse Commission confined its recommendations to accidental injuries, and hoped that other forms of incapacity could be accommodated later. The later “Australian Woodhouse Report” recommended the extension of the compensation scheme to incapacity caused by congenital conditions and sickness, but that scheme was never implemented. The failure to extend the New Zealand compensation scheme in this way means that some of the High Court decisions on the common law deal with situations on the borderline of the New Zealand compensation scheme and are likely to give rise to similar problems.