Palmdale AGCI Ltd v Workers' Compensation Commission (NSW) [1977] HCA 69; (1977) 140 CLR 236 (22 December 1977)

HIGH COURT OF AUSTRALIA

PALMDALE A.G.C.I. LTD. v. WORKERS' COMPENSATION COMMISSION (N.S.W.) (1977) 140 CLR 236

Constitutional Law (Cth)

High Court of Australia
Barwick C.J.(1), Stephen(2), Mason(3), Jacobs(4) and Aickin(5) JJ.

CATCHWORDS

Constitutional Law (Cth) - Inconsistency between Commonwealth and State laws - Insurance - Workers' Compensation - Commonwealth Act requiring companies to obtain authority to carry on insurance business - State law requiring workers' compensation insurers to be licensed - Statement in Commonwealth Act of Parliament's intention not to exclude certain provisions of the State and Territory laws - The Constitution (63 & 64 Vict. c. 12), s. 109 - Insurance Acts 1973 (Cth), Pt III, ss. 99, 100 - Workers' Compensation Act, 1926 (N.S.W.), ss. 18 (1), 27, 28, 29.

HEARING

Sydney, 1977, August 25; December 22. 22:12:1977
DEMURRER.

DECISION

December 22.
The following written judgments were delivered: -
BARWICK C.J. I have had the advantage of reading the reasons prepared in myself arrived, that there is no relevant inconsistency between Pt III or Pt IIIA or any provision of either part of the Workers' Compensation Act, 1926 (N.S.W.), as amended, and the Insurance Acts 1973 (Cth), as amended. Consequently, the declaration sought by the plaintiff ought not to be made. (at p239)

2. I agree with the reasons which my brother Mason assigns for this conclusion. I agree that the demurrer should be allowed and the action dismissed. (at p239)

STEPHEN J. I would uphold the demurrer for the reasons stated by my brother Mason, with whose judgment I am in agreement. (at p239)

MASON J. The plaintiff is an insurance company which has been granted an authority by the Treasurer under Pt III of the Insurance Acts 1973 (Cth), as amended ("the Commonwealth Acts"), to carry on insurance business. It made application to the defendant Commission under s. 27 (1) of the Workers' Compensation Act, 1926 (N.S.W.), as amended ("the State Act"), for a licence to carry on in New South Wales the business of insuring employers against liability to their workers under the Act and independently of the Act. The application was refused. The plaintiff now seeks a declaration that the provisions of Pt III and Pt IIIA of the State Act are inoperative and do not apply to a body corporate such as the plaintiff which has been granted an authority to carry on insurance business under s. 23 of the Commonwealth Acts on the ground that the relevant provisions of the State Act are inconsistent with the Commonwealth Acts. The plaintiff also seeks a consequential declaration that, by virtue of its authority under s. 23, it is entitled to carry on in New South Wales the business of insurance of employers against liability to their workers under, and independently of, the State Act. The Commission has demurred to the plaintiff's statement of claim. (at p240)

2. The plaintiff's case of inconsistency is put in two ways. First, it is said that the Commonwealth Acts constitute a comprehensive and exclusive regulation of the right and entitlement of natural persons and bodies corporate to carry on insurance business, so that any State law upon the topic is necessarily inconsistent. Secondly, it is said that there is a direct conflict between the provisions of the two statutes in that the grant of authority to carry on insurance business under the Commonwealth Acts is a positive authority so to do, with the consequence that there is an inconsistency between s. 27 of the State Act whereby the Commission may refuse a licence to a body corporate to which authority has been granted under s. 23 of the Commonwealth Acts and whereby the Commission may attach conditions which are at variance with an authority granted under s. 23 of the Commonwealth Act. (at p240)

3. It is convenient in the first instance to look to the Commonwealth Acts. The heading to Pt III which contains most of the relevant provisions is "Authority to carry on Insurance Business". Part VII, with which we are not presently concerned, regulates the entitlement of Lloyd's underwriters to carry on insurance business in Australia. Part III commences with s. 21 (1) which prohibits, subject to the Commonwealth Acts, a person other than a body corporate or a Lloyd's underwriter from carrying on insurance business. Sub-section (2) then prohibits a body corporate from carrying on such business unless it is authorized so to do under the Commonwealth Acts. Provision is made for a body corporate to apply to the Commissioner for an authority (s. 22 (1)), and the form and contents of the application are prescribed. An applicant is required to provide amongst other things details of its capital, particulars of the business it carries on or proposes to carry on and such other matters, including matters relating to its assets and liabilities and its ability to meet its obligations, as are prescribed. The Treasurer is empowered to grant an authority if he is satisfied of certain matters in relation to the body corporate, as for example that the value of its assets in Australia exceeds the amount of its liabilities here by not less than $100,000, that its arrangements for reinsurance have been approved by the Commissioner under s. 34 or that it has been granted an exemption under that section, that it is and is likely to continue to be able to meet its liabilities and that it is and is likely to continue to be able to comply with such of the provisions of the Commonwealth Acts as are applicable to it (s. 23). (at p241)

4. In the case of a body corporate that carried on insurance business before 9th December 1971 it is the Commissioner who is to consider the application and grant the application if he is satisfied of certain similar matters (s. 24). Special provision is made in respect of capital requirements by s. 26 for certain bodies corporate that carried on business before 9th December 1971. The Commissioner may grant under s. 26 (1) an authority if he is satisfied of the matters referred to in s. 24 other than par. (a) of that section, so long as the body corporate has a paid-up capital of not less than $20,000 and less than $200,000. An authority granted under s. 26 (1) is subject to a condition that the body corporate shall not carry on insurance business other than such business as the Commissioner specifies in the authority or insurance business included in such class of insurance business as the Commissioner so specifies (s. 26 (2) (b)). (at p241)

5. When the Treasurer refuses to grant an authority he is required to give notice to the body corporate (s. 27 (1)). When the Commissioner refuses an application he is required to inform the Treasurer who shall then grant or refuse the authority (s. 27 (2)). A refusal by the Treasurer is subject to review in accordance with Pt VI. An authority granted to a body corporate is subject to specified conditions and such other conditions as the Treasurer or the Commissioner specifies (s. 29). (at p241)

6. There are detailed provisions regulating what is to be included and excluded in the making of any computation of the assets and the liabilities of a body corporate (ss. 30 and 31), other provisions for the determination of what is premium income (s. 32), and additional provisions dealing with the valuation of assets (s. 33) and reinsurance arrangements (s. 34). (at p241)

7. Some light is thrown upon the scope and purpose of the provisions contained in Pt III by s. 38 and by ss. 99 and 100 which are the principal provisions in Pt VIII. Section 38 provides that nothing in Pt III authorizes the carrying on by a body corporate of any business that it would not have been authorized to carry on if the Part had not been enacted. According to the terms of s. 38 the grant of an authority under Pt III does not overcome a want of authority to carry on insurance business which arises dehors the Commonwealth Acts. A Pt III authority is not intended to overcome, for example, an absence of authority arising under a pre-existing State law. Thus a company prohibited by a State law from carrying on insurance business immediately before the commencement of the Commonwealth Acts would continue to be subject to that prohibition despite the grant of an authority to carry on insurance business under Pt III. This provision in itself is sufficiently explicit to dispel the notion that the provisions of Pt III are intended to be a comprehensive and exclusive regulation and control of the right or entitlement of bodies corporate to carry on insurance business and the associated notion that a Pt III authority is a positive authority to a body corporate to carry on insurance business which is intended to take effect to the exclusion of any other law. (at p242)

8. Part VIII bears the heading "Effect of Act on Other Laws". Section 99 is a difficult section, expressed as it is in the style which the parliamentary counsel has made his own. Section 99 (1) provides:
"It is the intention of the Parliament that sub-section 21 (2) and (3) shall not, subject to sub-section (2), apply to the exclusion of a law of a State or Territory."
Section 99 (2) is in these terms:
"Sub-section (1) does not apply in relation to a law in so far as that law has the effect of -
(a) authorizing a body corporate or a Lloyd's underwriter to carry on insurance business generally; or
(b) authorizing a body corporate, being a body corporate that is not authorized under this Act to carry on insurance business, to carry on specified insurance business or to carry on insurance business included in a specified class of insurance business."
Sub-section (1) is a general declaration that the provisions contained in s. 21 (2) and (3) of the Commonwealth Acts that the prohibitions against a body corporate and a Lloyd's underwriter carrying on insurance business without an authority under those Acts do not apply to the exclusion of State or Territory laws. But sub-s. (2) then declares that the general intention not to exclude State or Territory laws has no application to such a law to the extent to which it constitutes an authorization in terms of pars (a) and (b). The intention expressed in sub-s. (2) is that s. 21 (2) and (3) shall apply to the exclusion of so much of a State or Territory law as confers authority in terms of those paragraphs. (at p242)

9. Even so, s. 99 provides no comfort to the plaintiff. It evinces a clear intention not to impinge on the operation of prohibitions arising under State law. And to the extent to which it expresses an intention to oust State law that intention is confined to so much of State law as has the effect of authorizing a body corporate or Lloyd's underwriter to carry on insurance business generally or authorizing a body corporate, not authorized under the Commonwealth Acts to carry on insurance business, to carry on specified insurance business or business included in such a specified class of insurance business. (at p243)

10. So far as it is relevant, s. 100 then provides:
"100. Subject to section 99, it is the intention of the Parliament that no provision of this Act shall apply to the exclusion of a law of a State or Territory in so far as that law has the effect of -

. . .
(b) requiring a specified contract of insurance or a contract included in

a specified class of contracts of insurance to be made with a specified person or a person included in a specified class of persons;
(c) prohibiting a person other than a specified person or a person included in a specified class of persons, from carrying on specified insurance business or insurance business included in a specified class of insurance business or from undertaking liability under a specified contract of insurance or a contract included in a specified class of contracts of insurance;
. . . " (at p243)

11. Paragraph (b) of s. 100 makes it clear that, subject to s. 99, the Commonwealth Acts intend to leave on foot and in operation a State law which requires a specified contract of insurance or a contract included in a specified class of contracts of insurance to be made with a specified person or a person included in a specified class of persons. Paragraph (c) likewise makes it plain that the Commonwealth Acts are intended to keep on foot a prohibition directed to the persons therein mentioned from carrying on specified insurance business or insurance business included in a specified class of insurance business or from undertaking liability of the kind mentioned. (at p243)

12. As I pointed out in General Motors Acceptance Corporation, Australia v. Credit Tribunal [1977] HCA 34; (1977) 137 CLR 545 , although a provision in a Commonwealth statute which attempts to deny operational validity to a State law cannot of its own force achieve that object, it may nevertheless validly evince an intention to make exhaustive or exclusive provision on the subject with which it deals. Conversely a Commonwealth statute may provide that it is not intended to make exhaustive or exclusive provision with respect to the subject with which it deals thereby enabling State laws, not in direct conflict with a Commonwealth law, to have an operation. Considered in this light the two paragraphs reinforce the view that the Commonwealth Acts do not constitute a comprehensive and exclusive code intended to take effect independently of State law. In conjunction with s. 38 and s. 99 the two paragraphs demonstrate that the Acts are not intended to cover the entire field of regulation and control of the right or entitlement of bodies corporate to carry on insurance business, but are intended to have an operation which to the extent provided for, is concurrent with the operation of State and Territory law on that topic. (at p244)

13. The plaintiff submits that ss. 99 and 100 are ineffective to achieve this result on the ground that they seek to give an application to the operative provisions in Pt III which those provisions cannot, according to their language, sustain - this because the Pt III provisions are so detailed as to amount to comprehensive and exclusive regulation of the right of bodies corporate to carry on insurance business. The plaintiff is then driven to say that ss. 99 and 100 should be disregarded so far as they are contradictory to its case. It is a convenient but not a convincing answer. The correct approach to what is a question of statutory construction is to read Pt VII and Pt III together, an exercise which entails little difficulty, once s. 99 is placed in perspective, because the provisions of Pt III are quite susceptible of the application which Pt VII seeks to attribute to them. Enough has already been said to dispose of the plaintiff's first submission without referring to the State Act. However, reference must be made to the State Act in order to deal with the suggested case of direct conflict, and for that matter to reinforce the conclusion already reached, by identifying particular provisions of the State Act to which in my opinion par. (b) of s. 100 is specifically addressed. (at p244)

14. Under the State Act every employer who is not self-insured is bound to obtain from an insurer licensed under that Act a policy of insurance or indemnity for the full amount of his liability under that Act to all workers employed by him and for an amount of at least $100,000 in respect of his liability independently of the State Act for injury to any such workers (s. 18 (1)). Every insurer carrying on the business of workmen's compensation insurance is liable to lodge a deposit (s. 19). Provision is made for the making of an application by any person to the Commission for a licence to carry on in New South Wales the business of insurance of employers against their liability to workers for injury under, and independently of, the State Act, the form and content of the application being prescribed (s. 27). Detailed provision is made for the submission by an applicant to the Commission of detailed information relating to its financial position and affairs (s. 28). The Commission may grant or refuse an application and may grant it without conditions or subject to such conditions as it thinks fit (s. 27). The Commission may on a variety of grounds which include a breach of a condition of a licence, suspend or terminate a licence and it may attach conditions to a licence after the licence has been granted (s. 29). (at p245)

15. The State Act does not contain an express prohibition against carrying on the business of workmen's compensation insurance without a licence. But it does compel an employer, not being a licensed insurer, to insure with an insurer licensed under Pt III of that Act. Section 18 which imposes this obligation is a State law of the kind referred to in s. 100 (b) of the Commonwealth Acts and it therefore does not trespass upon the field marked out by the legislative provisions contained in the Commonwealth statute. Indeed, even apart from the operation which s. 100 (b) attributes to Pt III of the Commonwealth Acts, s. 18 of the State Act by requiring an employer to insure with an insurer licensed by the Commission under the State Act stands outside the scope of Pt III of the Commonwealth statute because it does not attempt to deal with obligations of that kind or to occupy the relevant field. (at p245)

16. It follows that there is no direct conflict between s. 18 of the State Act and s. 23 of the Commonwealth statute. Nor, in my opinion, is there a direct conflict between s. 27 of the State Act and s. 23 of the Commonwealth statute. Once the true sphere of operation of Pt III of the Commonwealth Acts is identified there can be no direct collision of the kind suggested by the plaintiff. Even if a licence under s. 27 is made subject to a condition which is the converse of a condition imposed under the Commonwealth Acts there is no direct conflict. The result may be that a body corporate entitled to carry on business under the Commonwealth Acts is not a licensed insurer with which an employer can insure under the State Act, but this is of no relevance because it is not a matter which the Commonwealth statute attempts to regulate. (at p245)

17. In argument the plaintiff, though endeavouring to distinguish Australian and International Insurances Ltd. v. Workers' Compensation Commission (N.S.W.) [1972] HCA 30; (1972) 125 CLR 470 , sought to extract some support from it. There are differences between that case and this. There, perhaps more obviously, the Commonwealth legislation did not purport to occupy the whole field of the control and regulation of insurance business and, as Barwick C.J. observed (1972) 125 CLR, at p 477 , "The Act as a whole presupposes that, but for its own provisions, the business of insurance may be lawfully carried on." However, within somewhat narrow limits the same comments may be made of the present Commonwealth legislation. (at p246)

18. For these reasons there is no inconsistency and no foundation for the operation of s. 109 of the Constitution. I would uphold the demurrer. (at p246)

JACOBS J. I agree with the reasons which have been expressed by Mason J. and with his conclusion. (at p246)

AICKIN J. I have had the advantage of reading the reasons for judgment of my brother Mason. I agree with what he has said and have nothing to add. (at p246)