Brakespeare v Northern Assurance Co Ltd [1959] HCA 31; (1959) 101 CLR 661 (17 July 1959)

HIGH COURT OF AUSTRALIA

BRAKESPEARE v. THE NORTHERN ASSURANCE CO. LTD. [1959] HCA 31; (1959) 101 CLR 661

Workers' Compensation (W.A.)

High Court of Australia
Dixon C.J.(1), Menzies(1) and Windeyer(1) JJ.

CATCHWORDS

Workers' Compensation (W.A.) - Statute - Interpretation - Compulsory insurance - Extent of insurer's liability - Workers' Compensation Board - Jurisdiction - Determination of insurer's liability to employer under policy of insurance - Workers' Compensation Board Fund - Workers' Compensation Act 1912-1956 (W.A.) s. 29 (1)*.

HEARING

Perth, 1959, July 9, 17. 17:7:1959
APPLICATION for special leave to appeal from the Supreme Court of Western Australia.

DECISION

July 17.
THE COURT delivered the following written judgment:-
Upon an application for special leave to appeal from an order of the Supreme stated for that court's opinion by the Workers' Compensation Board we intimated that we considered the questions of sufficient importance to warrant us granting special leave and thereupon the matter was argued as if it were an appeal. The question of substance which is raised may be briefly stated. It is whether it is within the jurisdiction of the Workers' Compensation Board, when it has determined that an employer is liable to make compensation to a worker or his relatives, to entertain an application by the employer to enforce against the employer's insurer the indemnity to which, as the employer claims, he is entitled under his insurance policy. The same kind of question arose in New South Wales under the somewhat different legislation of that State and there it was decided by the Supreme Court that the insurer was subject to a liability enforceable in the Workers' Compensation Commission. The liability however was directly to the worker and not the liability to the insured to indemnify him. It is not unlikely that the New South Wales example forms the source of the contention in the present case that the Western Australian board has jurisdiction to enforce the alleged indemnity to which the insured claims to be entitled. For that reason it is perhaps better to explain the basis of the decisions in New South Wales before proceeding to deal with the rather different position in Western Australia. (at p665)

2. Stated very shortly the basis of the decisions in New South Wales is the existence of a provision (s. 18 (3) of the Workers' Compensation Act 1926 (N.S.W.) as amended) prescribing what the policy of insurance shall contain which the employer must obtain. Among other things it was required by the provision to include a clause providing that the insurer shall, as well as the employer, be directly liable to any worker insured. There was nothing in the Act otherwise which imposed a liability directly to the worker upon the insurer but the Supreme Court of New South Wales decided that the foregoing provision was enough; it necessarily imported an intention to give to the worker direct recourse to the insurer, although on the construction of the provision the liability of the employer must first be established. Accordingly the Workers' Compensation Commission could entertain an application to enforce the right as one involving a question arising under the Act: Devine v. Devine and Queensland Insurance Co. Ltd. (1928) 28 SR (NSW) 503; 45 WN 140 ; Devine v. Queensland Insurance Co. Ltd. (1928) 29 SR (NSW) 1; 46 WN 2 ; cf. Coleman v. The Mercantile Mutual Insurance Co. Ltd. (1933) 7 WCR (NSW) 231 . There is nothing in the Workers' Compensation Act 1912- 1956 (W.A.) corresponding with s. 18 (3) of the New South Wales Act and moreover there is really no analogy between the question decided by the Supreme Court of New South Wales and that which was presented for decision in the present case: for there is no analogy between the enforcement by the compensation tribunal of a direct right to compensation of the worker against the insurer and of a right of indemnity of the insured against the insurer. It follows that even if it be correct that the course of development by judicial decision in New South Wales did inspire the contention in the present case that the insurer fell within the ambit of the jurisdiction of the Western Australian Workers' Compensation Board there can be no guidance or assistance obtained from what occurred in that State. The question depends upon the entirely different provisions of the Workers' Compensation Act 1912-1956 (W.A.). Section 7 of that Act deals with the liability of employers to workers for injuries. Sub-section (4) of s. 7 provides that if, under the provisions of the Act, there arises any question or matter for determination it shall be determined in accordance with the provisions of the Act relating to the powers, duties and functions of the board. Section 29 (1) provides that subject to the provisions of the Act, the board shall have exclusive jurisdiction to examine into hear and determine all questions and matters arising under the Act. The sub-section goes on to give conclusive effect to the board's decision and to protect it from review or question whether by prerogative writ or otherwise. Directions are given by sub-s. (3) that the board shall act according to equity and good conscience and the substantial merits of the case without regard to technicalities and legal forms and shall not be bound by precedents, even its own, or by rules of evidence. Sub-section (7) contains a catalogue of particular things the board may determine. They concern with one exception matters affecting the liability of the employer to pay compensation and such matters as dependency, weekly payments and the like affecting the persons to benefit. The exception is the question whether an insurer shall be permitted to refuse the insurance of an employer against any liability under the Act. This of course has reference to the compulsory insurance provisions of the Act. Section 13 (1) enacts that it shall be obligatory for every employer to obtain from an incorporated insurance office approved by the Minister a policy of insurance for the full amount of the liability to pay compensation under the Act to all workers employed by him, except when the board permits a refusal. An employer who fails to comply with the provision is to be liable to a pecuniary penalty. Sub-section (4) provides that any incorporated insurance office which has received the approval of the Minister under the section shall, subject to certain exceptions and qualifications, insure any employer requesting it for the full amount of the liability of the employer to pay compensation under the Act to all workers employed by him. It will be noticed that rather general and unqualified words are used in imposing the respective duties to obtain and to grant insurance. All kinds of difficulties may be suggested as to the effect upon the employer and the insurer of issuing policies limited in extent, subject to restrictive conditions or voidable for breach of warranty, non-disclosure and so on. But no form of policy is prescribed by or under the Act and what the section commands is simply the obtaining of cover and of course the issue of cover when requested. The penalties for failure to comply with the command are certainly penalties for offences and it was not denied that the offences could not be prosecuted before the board but must be dealt with as summary offences by courts of petty sessions. The board is established by s. 25 and by the ensuing sections is given many powers of an administrative and judicial or quasi-judicial nature, but it certainly is not a court for hearing summary offences. The case however for the employer here is that the power conferred upon the board by s. 29 (1) extends to hearing and determining a claim by the employer for indemnity under the policy which as the employer says was issued to him and covers him against the liability to compensation which the worker has succeeded in establishing. Is that "a question or matter arising under the Act" within the meaning of s. 29 (1)? If the insurer is liable to the employer the liability arises under the contract of insurance assuming it to have been validly effected and to cover the particular claim by the worker to compensation. It could not be considered a matter arising under the Act unless, to put it shortly, the fact that the compulsory insurance provisions require the insurance and the insurance is or should have been effected in fulfillment of the requirement suffices. It is not to the point to say that the compulsory insurance is required as part of a policy to protect the worker. For we are concerned only in the indemnity of the employer, not direct liability to the worker. Why the insurer in this case disclaimed liability to indemnify the insured against the particular liability we do not know, nor for our purposes does it matter. But the possibilities are many. The terms of the policy may have been limited, so that it was excluded. The policy may have been regarded as voidable. The premium may have remained unpaid, and so on. Can these matters be said to arise under the Act within s. 29 (1)? If the result is that liabilities were not insured, contrary to s. 13, that surely can mean no more than that an offence was committed. The principle of the Act may be to require insurance against liability so that there will be a fund from which the liability to the worker may be satisfied. But that principle is not carried to the extent of giving to the worker a direct claim upon the insurer nor even to the extent of prescribing by statutory enactment what rights of indemnity the insured shall have against the insurer independently of the terms the contract of insurance may express. If there is a failure to insure and the employer cannot pay compensation it can be paid out of what is a public fund called the Workers' Compensation Board fund; see s. 27 (1) (b). While it is obligatory to insure, it is left to the employer and the insurer to make the contract and their rights and duties inter se rest solely on the contract they may have made. The question whether the insurer was obliged to indemnify the employer in respect of the worker who in this case obtained compensation depended wholly upon the terms and the validity of the contract of insurance made between the insurer and the employer and not upon the Act. Whether there existed an enforceable contract of indemnity was not a question or matter which arose under the Act. It arose under the policy or perhaps out of the dealings between the two parties. To state the conclusion in these terms means that the board possessed no jurisdiction over the matter. But it is doubtless proper to take into account wider considerations. Provisions such as s. 29 (1) derogate from the jurisdiction of the ordinary courts of justice. They are therefore not construed as going beyond the fair intendment of the language in which they are expressed. That is one consideration. Another consideration is that an examination of the Act makes it clear that a principle, that governing the provisions presently material, is that there shall be a quasi-administrative corporate body charged with the responsibility of dealing with the relations of workers entitled to compensation or claiming it to those liable as employers and generally settling questions between them or affecting the claimants' rights or the respondents' liabilities. It is a conception to which the contractual rights between the insurer and insured are foreign. (at p668)

3. From the foregoing it follows that the decision of the Full Court of the Supreme Court of Western Australia is correct. (at p668)

4. The order should be: Special leave granted. The appeal having been treated as instituted and heard instanter appeal dismissed with costs. (at p668)

ORDER

Special leave to appeal granted. The appeal having been treated as instituted and heard instanter, appeal dismissed with costs.