This is an appeal from a single Judge of the Supreme Court Trial Division. The provision in question was s.114(2A) of the Accident Compensation Act.

The Plaintiff was employed with the Salvation Army as a driver collecting donated goods. He had suffered injury on 19 April 2011 in the course of his employment for which weekly payments were paid. Some time after surgery he returned to work fulltime on modified duties whilst incapacitated for pre-injury duties.

On 18 May 2012 the worker attended upon a home of a donor to collect items for his employer. One of the items was a punching bag. He advised the donor that the item was unable to be collected on behalf of the Salvation Army however the donor told him he could collect the item for himself for personal use as he just wanted to get rid of it. Later that day the worker collected the item in his employer's van and delivered it to his own home. Four days later, 22 May 2012, his employment was terminated on the basis that this action amounted to theft in the eyes of the employer.

The worker sought reinstatement of weekly payments however by notice of 9 August 2012 the authorised insurer, Allianz, rejected the claim for reinstatement in reliance upon s.114(2A), noting his employment had been terminated due to misconduct.

At first instance in the Magistrates' Court, the Magistrate concluded the notice was to be set aside. The allegation of theft was not proven and the employer thus unable to use that as establishing misconduct.

On appeal to the Supreme Court Trial Division, the Court allowed the employer's appeal, set aside the order of the Magistrate and in lieu ordered that the Magistrates' Court proceeding be dismissed. In coming to a different conclusion, the Judge accepted that once the necessary precondition(s) was established (that is, misconduct and termination of employment), the Authority was entitled to refuse to pay weekly payments. The Court confirmed there remained a discretion to be exercised by the insurer in determining whether or not to pay weekly payments, however, noted 'usually the Court enquiring into the matter would only be able to properly exercise its discretion in the same manner as the Authority'.

On appeal to the Court of Appeal both sides accepted the majority of what was said below at the Trial Division however differed on whether there was any residual discretion either in the Insurer or the Court, once the necessary preconditions in s.114(2A) had been established.

In the Court immediately below His Honour Judge Riordan noted the Authority or Insurer had an interest in the decision and thus the Court on appeal cannot properly re-exercise the discretion other than for the benefit of the Insurer. The Court of Appeal did not agree. By its own submissions in the Appeal, the Authority accepted they did not have any 'private interest' which was relevant to the exercise of the discretion. There was no interest other than for the payment of compensation in accordance with the Act. The Court of Appeal agreed.

In its opinion, the discretion was more general. The Court considered the better view is that the relevance of the misconduct and the weight to be attached to it, falls to be considered when the Authority or the Court comes to determine whether or not to pay, or alter the amount of, compensation.

In short, a discretion is better exercised by weighing up all the evidence and in particular the actions alleged to be misconduct, versus the severity of the outcome, being a termination of entitlement to ongoing weekly payments.


The matter is now referred back to the Magistrates' Court for a full hearing of the evidence and determination as to whether the worker is entitled to ongoing weekly payments. The Magistrate must now apply s.114(2A) as discussed by the Court of Appeal, in particular, that once the preconditions have been satisfied there is a more general discretion the Court itself must apply as to whether weekly payments should, or should not be, payable in the circumstances. Discretion is to be exercised with consideration to the misconduct in question and in accordance with the objects of the Act.

In our view the case is now heading into murky territory. In effect, the Court is required to determine s.114(2A) for itself including the satisfaction of the two preconditions, and ultimately the exercise of its own discretion. Guidance as to how the discretion is exercised is broad and references the objects of the Act. We understand the objects to provide just compensation. Experience would indicate whenever the competing interests are weighed up by a Court, particularly when the outcome sought by the employer includes a finalisation of entitlements, in all but the most serious of cases the injured party succeeds.

In the current instance the misconduct is potentially minor, if it is misconduct at all noting the goods were gifted to him. Thus we suggest the current factual scenario is not the best test vehicle for the identified 'discretion'.

The decision will likely be different where the grounds are resignation, rather than misconduct. A Court will be more inclined to exercise its discretion favourably for an employer if the injured worker's voluntary resignation itself led to the reduction in current weekly earnings.