The no-fault ACC scheme will remain intact and employers can breathe a sigh of relief after the Supreme Court quashed earlier decisions allowing reparations in sentencing.

The ACC scheme was under-threat all because an untethered mattress fell from a trailer in Christrchurch. This mattress caused a cyclist to crash and injure herself – she was off work for five months.

That meant a conviction for careless driving and a $20,500 reparations bill for driver Peter Davies, who was towing the trailer.

The High Court then confirmed the District Court was entitled to award the victim the difference between ACC weekly compensation, which is 80% of an employee's ordinary income, and their total lost wages or salary - allegedly $15,894 in the present case.

It was feared by employer groups that this decision would lead to increased bills when the court’s decision was applied to work place injury prosecutions. Not only would ACC levies have to be paid but businesses could face hefty reparation bills.

But that fear has been quashed by a decision released by the Supreme Court of New Zealand. A majority of the sitting judges found that the Sentencing Act excludes compensation for loss of earnings because the victim had entitlements in respect of the loss under the Injury Prevention, Rehabilitation and Compensation Act 2001.

Justices Sian Elias, Peter Blanchard and Noel Anderson noted the anomaly of only allowing top up payments for victims of crime.

“Such payments are inconsistent with the further policy of the Injury Prevention, Rehabilitation and Compensation Act in setting compensation at a level which encourages rehabilitation,” they said in a judgment released yesterday.

“We reach the conclusion that s32(5) is a bar to reparation for loss of earnings consequential on physical harm largely as a matter or interpretation of the provisions of the Sentencing Act.”

Justice John McGrath dissented from the majority view – he would have held that reparation could be paid for the 20% of income that ACC does not pay.

Reparations have been controversial for employers since being allowed by the Sentencing Act 2002. Department of Labour prosecutors have asked for, and been given, increasingly large reparation awards as a lump sum in cases of injury.

Earlier this year, Judge Allan Roberts fined Taranaki Recyclers $100,000 on two charges of breaching the health and safety laws and ordered the company to pay Ben Hekenui $76,900 in reparation after he lost one leg above and other below the knee in a workplace accident.