Sentencing Amendment Act 2014 – Changes to Sentence of Reparation
A new Sentencing Act provision has undermined a Supreme Court decision limiting the
scope of reparations with potential consequences for insurers of statutory liability. The
changes have created a division between criminal and civil liability when it comes to
compensatory awards for personal injury. While the status quo remains for civil liability,
Courts now have powers to award compensation for losses suffered as a result of
personal injury in the criminal courts through reparation orders.
Introduction
The 2009 Supreme Court Decision in Davies v New Zealand Police overturned the
decisions of the High Court and Court of Appeal and ruled that loss of earning
consequential on physical harm is not able to be subject of reparation under section
32(1) of the Sentencing Act. The Court ruled that such losses were losses in respect of
which the victim had entitlements within the meaning of section 32(5) and was therefore
excluded from the sentence by that provision, even if the amount payable by ACC did
not meet the full extent of the victim’s loss. The decision meant that where a victim of
offending who was entitled to compensation from ACC for any part of their claim,
regardless of the actual payment made by ACC, could not receive any compensation for
any loss from the offender through an order for reparation. Davies specifically concerned
consequential loss of earnings, where Mr Davies had been paid 80% of his income and
the District Court had ordered reparation for the 20% differential. The Court ruled that
such a top up was not legal under the Act.
Amendment to Sentencing Act
This precedent has however now been changed by the Sentencing Amendment Act 2014
(“the Act”). An amendment to section 32(5) would mean that a court would be able to
impose a sentence of reparation for consequential loss or damage to meet any statutory
shortfall in compensation. As a result of the Victims of Crime Reform Bill (“the Bill”), the
Government has passed the Act, which comes into force from 6 December 2014.
Changes to Sentence of Reparation 2final_461579_1.docx
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The Act has changed the wording of section 32(5) from “for which the Court believes
that a person has entitlements” to “for which compensation has been, or is to be, paid”.
The word that created the argument of no top-up, “entitlement”, has now been
removed. The reports on the Bill state that the purpose of the change is to allow a court
to be “able to impose a sentence of reparation for consequential loss or damage to meet
any statutory shortfall in compensation”.
Impact on Reparation Practice
This amendment will have a significant impact on the level of reparation awards. The
scheme created by the ACC Act establishes a significant difference between the preaccident earnings of victims and benefits (or compensation) payable under the ACC
scheme. This amendment will mean that the Court will be able to top up any difference
by way of a reparation award.
Moreover, the change is not limited to loss of earnings. The Court will be able to make
reparation awards to top-up shortfalls in other payments made by ACC including medical
bills, lost income, and costs of changes to a victim’s lifestyle.
Calculation of reparation awards will become an even greater part of sentencing and will
require extensive investigation on behalf of the offender to ensure that awards sought
are appropriate.
It has always been a difficult exercise in sentencing to balance the
victim's sensitivities against the offender’s own property or financial interests without
making an offender look less remorseful. However, opening up of this greater
entitlement of compensation to victims will require defence Counsel to take a vigorous
approach when it comes to compensatory calculation. It may also mean that defence
counsel may have to make pre-hearing applications for disclosure of documents
substantiating losses claimed and payments received. This may include seeking
disclosure of any other insurance pay-outs that the victim may have received as a result
of an accident including income protection insurance payments. At present, prosecution
submissions in relation to reparation do not contain much evidence, however this will
need to change. It will become vital for defence Counsel to seek reparation reports
pursuant to section 33 of the Sentencing Act to enable proper enquiries to be made.
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Impact for Insurers
We have carefully considered how the changes are likely to affect insurers. The most
significant impact will be on liability under the statutory liability policies. We do not
believe that there will be any significant impact on prosecutions under the Resource
Management Act, however, the law change will significantly affect all prosecutions under
the Health and Safety in Employment Act. Currently, reparation is insured under
Statutory Liability policies. This is where we have seen significant reparation awards as
most serious injuries occur in workplaces. As an aside, with the proposed amendments
to the Health and Safety in Employment Act, fines may also be insurable.
Contrary to what some commentators have said, we do not believe that this amendment
will affect the civil liabilities that any offender may have had in relation to any incident.
Section 317 of the Accident Compensation Act 2001 bars proceedings independently of
that Act for damages arising directly or indirectly out of personal injury covered under
that Act. Under section 317(7) this prohibition is unaffected by the fact that a person
who has suffered personal injury is not entitled to any “entitlements” under the Accident
Compensation Act. Interestingly, this is the wording that has now been amended in the
Sentencing Act, but not in the Accident Compensation Act. It is therefore unlikely that
victims would now have a right to claim payments for personal injury in civil courts.
We therefore do not believe that victims will now be able to claim in any civil courts,
damages for losses they suffer due to any shortfall payments made by ACC in relation to
their personal injury. The status quo in terms of that, in our view, remains for now. The
only claim in the civil courts will be for damage to personal property. Insurers may
however have to review all car insurance policies to determine whether any of the
policies provide cover for reparation that will be affected by the change to the
Sentencing Act.
Currently most policies exclude any prosecutions under the Land
Transport Act. As such, these policies will not be affected by the change as reparations
can only be awarded in a criminal prosecution under that Act.
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Conclusion
What we will now see is an increase in reparation awards. It will affect insurers on their
Statutory Liability policies as we believe that the greatest impact this change will have
on the insurer will be in Health and Safety prosecutions. It is now more important than
ever to undertake a comprehensive assessment on reparation claims prior to any
sentencing and seek as much detail as possible to be able to fairly determine the
legitimacy and accuracy of claims being made. This may mean that there will be an
increased need to dispute facts being submitted by the prosecution. This could lead to
more disputed facts hearings prior to sentencing for Health and Safety cases.
Shafraz Khan
Partner
DDI 09 915 2422
Email [email protected]