An earlier Court of Appeal ruling found pregnancy was not a personal injury, closing the door to ACC compensation and allowing civil cases against doctors to proceed.
Dr Allenby has appealed that ruling in the Supreme Court.
His lawyer, Harry Waalkens QC, told the court today that cases in which women became pregnant after sterilisation were of high risk to doctors and health professionals.
"Doctors aren't going to do it if you've got that risk ... it's the only area that you are going to be sued."
He argued that a pregnancy arising from a failed sterilisation operation should be considered a personal injury.
The Accident Compensation Act 2001 did not specifically exclude pregnancy from personal injury and it was not the intention of Parliament to do so.
To exclude pregnancy following a failed sterilisation would go "completely against the tenet of the social contract" that ACC provided.
Manukau District Health Board (DHB) lawyer Paul White said if cases were pursued civilly, it would be not only doctors but also DHBs who would be hit by the costs.
Because DHBs were government-funded, as was ACC, the cost of compensation would in essence be transferred from one Crown entity to another.
Dealing with cases through ACC would offer certainty rather than exposing parties to litigation, he said.
Solicitor-General David Collins, who is acting for ACC as an interested party in the case, said pregnancy was not a personal injury and Parliament did not intend it to be in cases of medical misadventure.
"Pregnancy is a unique, natural, biological process that has to occur," Mr Collins said.
"It's the combination of these factors that distinguishes pregnancy from anything else which can occur to the human body."
Pregnancy had been a personal injury before 1992, when Parliament changed the ACC law to cut costs, and subsequent amendments had taken on the features of the 1992 law, he said.
Now, someone who picked up 8kg of books and strained their back would be covered by ACC but a woman who strained her back as a result of carrying an extra 8kg of weight during pregnancy was not.
"That is because personal injury does not cover pregnancy or the consequences of pregnancy," Mr Collins said.
Ms Hannam's lawyer, John Miller, did not make an oral submission other than to say he would accept the court's decision.
Speaking outside court, Mr Miller told APNZ his client would be happy for either outcome.
"The implications are that if the doctor wins, that means that her case is covered by ACC, which means she can't continue suing the doctor and will have to rely on any entitlements she gets from ACC.
"If, on the other hand, ACC win and they say that pregnancy is not covered by the ACC scheme, if it's not covered you can still sue for damages in New Zealand, and that's what we'll be doing."
Mr Miller said there was "not really" a preferred outcome for his client.
"It doesn't bother us. But I think philosophically I would prefer it to come under ACC, because I think that's better for claimants, better for the country," he said.
"We replaced suing for personal injury in New Zealand because of the length it takes, the time it takes, the costs and the procedural difficulties you have, whereas ACC is a nice clean scheme."
The five Supreme Court justices hearing the case reserved their decision.
