New Zealand: NZ Government to reverse Supreme Court decision by amending Sentencing Act 2002
NZ Insurance Update

The Facts

Once a person is convicted of a crime, the Court must sentence the offender to an appropriate punishment and to pay reparation to the victim for any personal injury or property damage suffered because of the crime.

A reparation sentence is a form of civil damages the offender must pay. In the 2009 Supreme Court decision of Peter Miles Davies v New Zealand Police, the Supreme Court held that reparation sentences cannot top-up a victim's ACC entitlements. In other words, if the victim has suffered personal injury covered by ACC, the victim cannot make up any shortfall in the entitlements received from ACC by way of a reparation sentence.

The Minister of Justice, Simon Power, has recently announced that the Government intends to amend the Sentencing Act 2002 to reverse the effect of the decision. This is being done as part of a suite of reforms proposed by the Government to enhance the rights of victims of crime.

The Supreme Court noted in its decision that allowing victims of crimes to top up their ACC entitlements is contrary to the Woodhouse principles upon which ACC was based. In exchange for universal coverage, the right to recover damages from the liable party was removed. Allowing reparation sentences to top-up ACC entitlements partly undoes this. It results in a two- tiered civil compensation system in New Zealand. The rights of victims of crimes are enhanced above those of victims of civil wrongs such as negligence. A sentence of reparation is only available through the criminal justice system and not the civil justice system.

The proposed reform will also result in increased exposure for many liability insurers under their current liability and statutory fines policies.

We intend making our own submissions to the Government on this proposed reform and we are happy to assist clients if they also wish to make a submission.

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.