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BALLANTYNE v WORKCOVER AUTHORITY OF NSW [2007] NSWCA 239 (11 September 2007)

Last Updated: 12 September 2007

NEW SOUTH WALES COURT OF APPEAL

CITATION: BALLANTYNE v WORKCOVER AUTHORITY OF NSW [2007] NSWCA 239

FILE NUMBER(S):
40740/06

HEARING DATE(S): 24 July 2007

JUDGMENT DATE: 11 September 2007

PARTIES:
Michael and Alana Ballantyne – Appellants
WorkCover Authority of New South Wales - Respondent

JUDGMENT OF: Beazley JA Ipp JA Basten JA

LOWER COURT JURISDICTION: Workers Compensation Commission

LOWER COURT FILE NUMBER(S): WCC 18935-04

LOWER COURT JUDICIAL OFFICER: Anthony J Candy ADP

LOWER COURT DATE OF DECISION: 24 October 2006

LOWER COURT MEDIUM NEUTRAL CITATION:
[2006] NSWWCCPD 94R

COUNSEL:
S.G. Campbell SC – Appellants
G. Parker - Respondent

SOLICITORS:
Carroll & O’Dea, Lawyers – Appellants
Turks Legal - Respondent

CATCHWORDS:
WORKERS COMPENSATION – uninsured employer – relevant considerations to be taken into account by Workers Compensation Commission in making an order – [Workers Compensation Act] 1987 s 145

LEGISLATION CITED:
[Accident Compensation Act] 1985 (Vic), s 85
[Anti-Discrimination Act] 1977 (NSW), s 108
[Interpretation Act] 1987 (NSW), ss 5, 9
[Sex Discrimination Act] 1984 (Cth), s 81
[Supreme Court Act] 1970 (NSW), s 69
[Statute Law (Miscellaneous Provisions) Act (No. 2)] 1998 (NSW), Schedule 1 [1.47]
[Workers’ Compensation Act] 1926, s 36
[Workers Compensation Act] 1987 (NSW), ss 9, 9AA, 60, 66, 67, 139, 140, 141, 143, 144, 145, 155, 156, Part 4, Div 6
[Workers Compensation Act] 1958 (Vic), s 5
[Workplace Injury Management and Workers Compensation Act] 1998 (NSW), ss 22, 22B, 29, 58, 74, 350, 352, 353, 354, 362, Ch 5, Pt 9
[Workers Compensation Legislation Amendment Act] 1998 (NSW), Schedule 1 [63]
[Workers Compensation Legislation Amendment Act] 1999 (NSW), Schedules 1 [1], 3
[Workers Compensation Legislation Amendment Act] 2001 (NSW), Schedules 6.1 [73], 4.2 [17]

CASES CITED:
[Ballantyne v WorkCover Authority of New South Wales] [2006] NSWWCCPD 94
[Ballantyne v WorkCover Authority of New South Wales] [2006] NSWWCCPD 94R
[Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd] [1994] HCA 61; (1994) 182 CLR 51
[Crimmins v Stevedoring Industry Finance Committee] [1999] HCA 59; (1999) 200 CLR 1
[Dranichnikov v Minister for Immigration and Multicultural Affairs] [2003] HCA 26; (2003) 77 ALJR 1088
[Finance Facilities Pty Ltd v Federal Commissioner of Taxation] [1971] HCA 12; (1971) 127 CLR 106
[GRE Workers’ Compensation Insurance (NSW) Ltd v Nohil Pty Ltd] (1996) 13 NSWCCR 74
[Haider v JP Morgan Holdings Ltd] [2007] NSWCA 158
[Hall v A and A Sheiban Pty Ltd] [1989] FCA 72; (1989) 20 FCR 217
[Julius v Bishop of Oxford] (1880) 5 App Cas 214
[Mackley v WorkCover Authority of New South Wales] [2005] NSWWCCPD 32
[Minister for Aboriginal Affairs v Peko-Wallsend Limited] [1986] HCA 40; (1985) 162 CLR 24
[Mynott v Barnard] [1939] HCA 13; (1939) 62 CLR 68
[Ogden Industries Pty Ltd v Lucas] [1967] HCA 30; (1967) 116 CLR 537
[Qantas Airways Ltd v Gubbins] (1992) 28 NSWLR 26
[Raniere Nominees Pty Ltd v Daley] (2005) 66 NSWLR 594
[Raniere Nominees Pty Ltd v Daley] [2006] NSWCA 235
[Samad v District Court of New South Wales] [2002] HCA 24; (2002) 209 CLR 140
[Thomas v Airlines of NSW Pty Ltd] (1964) 64 SR(NSW) 176
[Tomalin v S. Pearson & Son Ltd] [1909] 2 KB 61
[Ward v Williams] [1955] HCA 4; (1955) 92 CLR 496
[WorkCover Authority of New South Wales v Mackley] (2006) 66 NSWLR 305; [2006] NSWCA 204

DECISION:
(1) Appeal allowed.[ ][ ](2) Decisions of the Acting Deputy President of the Workers Compensation Commission of 24 May 2006 and 24 October 2006 be set aside.[ ][ ](3) Appellants’ application to review the decision of the Arbitrator of 15 March 2005 be remitted to the Workers Compensation Commission for determination.[ ][ ](4) Respondent to pay the Appellants’ costs of the rehearing before the Acting Deputy President.[ ][ ](5) The costs of the initial hearing before the Acting Deputy President abide the outcome of the determination on remittal.[ ][ ](6) Respondent to pay the Appellants’ costs in this Court.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40740/06

WCC 18935-04

BEAZLEY JA

IPP JA

BASTEN JA

11 September 2007

BALLANTYNE & ANOR v WORKCOVER AUTHORITY OF NSW

Mr Crofton was employed as a deckhand on a fishing vessel owned and operated by the Appellants, Mr and Mrs Ballantyne. The business was carried on from Victoria, but the catch was frequently unloaded at a wharf in New South Wales, where Mr Crofton suffered a back injury in December 1999. Mr Crofton ceased work after a repetition of the injury in February 2000.

The Appellants held workers compensation insurance in Victoria but were uninsured in New South Wales. A claim was made with the Appellants’ insurer in Victoria in March 2000, resulting in weekly compensation payments being made to Mr Crofton.

In June 2001, Mr Crofton also issued proceedings in NSW against the Appellants and the WorkCover Authority, seeking lump sum compensation. On 9 April 2003, the Compensation Court of NSW ordered the Authority to pay compensation in favour of Mr Crofton and ordered the Appellants to reimburse the Authority for these amounts.

On 28 May 2003, the Appellants lodged with the Authority an application for waiver of their liability to reimburse the Authority. No response was received. On 26 August 2004, the Authority issued a notice requiring the Appellants to pay reimbursement in the amount of $88,523.25.

On 21 October 2004, the Appellants applied under s145(3) of the Act for a determination as to their liability to reimburse the WorkCover Authority, seeking an order that the amounts sought by the Authority be waived. On 15 March 2005, the Arbitrator dismissed the appeal, holding that the Commission had no power to waive the Applicant’s liability to reimburse WorkCover.

The Appellants appealed to the Commission constituted by the Acting Deputy President, who, on 22 May 2006, confirmed the decision of the Arbitrator. Subsequent to the decision of the NSW Court of Appeal in WorkCover Authority (NSW) v Mackley, the Appellants applied to the Commission for reconsideration of its earlier decision. On 24 October 2006, the Acting Deputy President confirmed his earlier decision. It is from this decision of the Acting Deputy President that the present appeal is brought.

The issue on appeal was whether the Acting Deputy President erred in holding that the Appellants’ connection with Victoria and the workers compensation scheme in that state were irrelevant considerations. On appeal, both parties declined to challenge the correctness of the decision in WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305.

The Court held, allowing the appeal:

(per Beazley JA)

1. The discretion under s 145(4) of the Workers Compensation Act is wider than that conferred by s 145(2): [12]-[13].

WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305 considered.

2. The Appellant’s connection with Victoria and the fact that workers compensation was in place in that state are relevant considerations in the exercise of discretion under s 145(4): [13]. The appeal should be allowed: [1]

3. The decision in WorkCover Authority of New South Wales v Mackley is wrong in principle and failed to follow existing authority in this Court: [14].

WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305 considered.

(per Ipp JA)

4. On the basis that WorkCover Authority of New South Wales v Mackley is correct as a matter of law, the matters listed in s 145(2) of the Workers Compensation Act 1987 are relevant considerations when exercising the discretion under s 145(4) of the Act. When evidence capable of establishing one or more of those matters is adduced and relied on, the decision maker is bound by the Act to take that evidence into account. Alternatively, a refusal to take such evidence is a constructive failure to exercise jurisdiction: [36].

Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40; (1985) 162 CLR 24; WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305 applied.

5. In excluding consideration of the Appellants’ connection with Victoria and the fact that they had workers compensation insurance in that state, the Acting Deputy President committed an error of law: [37]. The appeal should be upheld: [38].

(per Basten JA)

6. Prior to 1 January 2006, the basic premise upon which the Workers Compensation Act 1987 operated was that it might apply to any person who employed a worker to undertake work in New South Wales or to pass through New South Wales in the course of his or her employment: [65].

Tomalin v S. Pearson & Son Ltd [1909] 2 KB 61; Mynott v Barnard [1939] HCA 13; (1939) 62 CLR 68 applied.

(per Basten JA, Beazley JA agreeing)

7. The following propositions can be inferred from the language, structure and context of s 145 of the Workers Compensation Act 1987 (at [14], [78]):

(a) The purpose of Part 4, Division 6 is to ensure that a worker’s statutory rights to compensation are not compromised in circumstances where his or her employer is uninsured (or unidentifiable).

(b) A payment made by the Authority, which may be the subject of a notice under sub-s (1), is, relevantly for present purposes, a payment of “compensation in accordance with this Act”, made pursuant to s 143(1)(a) or pursuant to an award or order by the Commission, made under s 144(3).

(c) The notice served under s 145(1) will give rise to a debt enforceable in a court of competent jurisdiction, pursuant to sub-s (6) subject to two qualifications.

(d) The first qualification is that, if satisfied of one of the matters identified in paragraphs (a)-(f) of sub-s (2), the liability to make such payment may be waived by the Authority by instrument in writing.

(e) The second qualification is that the person served with the notice may dispute his or her liability in respect of the payment concerned, by a timely application to the Commission for a determination of the liability.

(f) In determining an application under sub-s (3), pursuant to the power conferred by sub-s (4)(a), the function of the Commission is to determine whether the payment made by the Authority was in fact a payment of “compensation in accordance with this Act”, which would otherwise have been payable by the employer or its insurer, and also, if the matter were in issue, to determine whether the person served was indeed the relevant employer or insurer of such employer.

(g) If satisfied as to the amount of the payment concerned and the identity of the employer, the Commission would ordinarily make whatever order it thought appropriate to dispose of the application according to law. As now envisaged by sub-s (7), the appropriate order would be that the person served with the notice pay the amount to the Authority by way of reimbursement of the WorkCover Authority Fund, within a specified time.

(per Basten JA)

8. The term “liability” as found in s 145 is to be understood as a legal liability, that is a liability enforceable by law: [80]. An application under s 145(3) is to be determined by the Commission by reference to the appropriate award for payment of compensation under the Act, and not otherwise: [84].

GRE Workers’ Compensation Insurance (NSW) Ltd v Nohil Pty Ltd (1996) 13 NSWCCR 74; Raniere Nominees Pty Ltd v Daley (2005) 66 NSWLR 594; Raniere Nominees Pty Ltd v Daley [2006] NSWCA 235 applied.

Ogden Industries Pty Ltd v Lucas [1967] HCA 30; (1967) 116 CLR 537; Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26; Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1 considered.

9. The use of the term “may” in a statutory provision does not necessarily confer a broad discretionary power, but may be limited by an obligation to exercise the power in certain circumstances. The scope of the power conferred must be determined with respect to the statutory context: [90]-[91].

Samad v District Court of New South Wales [2002] HCA 24; (2002) 209 CLR 140; Raniere Nominees Pty Ltd v Daley [2006] NSWCA 235 applied.

Hall v A and A Sheiban Pty Ltd [1989] FCA 72; (1989) 20 FCR 217 considered.

10. The powers of the Commission under s 145(4) are conferred for the sole purpose of determining an application made under s 145(3) with respect to the liability of a person served with a notice under s 145(1). Liability pursuant to s 145 depends on the following factors (at [106]):

(a) was the person properly served with a notice under sub-s (1);

(b) did the notice require payment of an amount not exceeding the payment made by the Authority;
(c) was the person served the employer or an insurer of the employer of the injured worker;
(d) was the payment made by the Authority a payment of “compensation in accordance with this Act”.

GRE Workers’ Compensation Insurance (NSW) Ltd v Nohil Pty Ltd (1996) 13 NSWCCR 74; Raniere Nominees Pty Ltd v Daley (2005) 66 NSWLR 594; WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305; Raniere Nominees Pty Ltd v Daley [2006] NSWCA 235 considered.

(per Basten JA, Beazley JA agreeing)

11. It was sufficient for the purposes of WorkCover Authority of New South Wales v Mackley that consideration of matters set out in s 145(2) of the Workers Compensation Act 1987 was not precluded as a matter of law. The judgment of Bryson JA in WorkCover Authority of New South Wales v Mackley should be understood as saying that the matters in s 145(2) are legitimate but not mandatory considerations which may be taken into account by the Commission in declining to make an order: [9], [113].

WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305 considered.

(per Basten JA)

12. A failure to take into account matters of fact which are not in dispute, or were established to the satisfaction of the Commission, and were material to the outcome of the application, could constitute a failure to exercise the power or jurisdiction conferred on the Commission and may thus involve an error in point of law: [114].

13. The question of connection with New South Wales depended entirely upon the place where the accident occurred. Those factors which demonstrated a connection between the Appellants and the State of Victoria were irrelevant to the question of whether the Appellants were an employer for the purposes of obligations imposed under the Workers Compensation Act 1987. The reasoning of Deputy President Candy reveals no error in point of law: [124]. The appeal should be dismissed: [129].

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40740/06

WCC 18935-04

BEAZLEY JA

IPP JA

BASTEN JA

11 September 2007

BALLANTYNE & ANOR v WORKCOVER AUTHORITY OF NSW

Judgment

1 BEAZLEY JA: I have had the advantage of reading in draft the judgments of Ipp and Basten JJA. Their Honours have reached opposite conclusions as to the outcome of the appeal. I have concluded that the appeal should be allowed, for the reasons I give below. As the surrounding facts, the determination of the Acting Deputy President and the relevant statutory provisions are set out in detail in the judgment of Basten JA, it is sufficient for me to refer to these matters in brief terms only.

2 The essential fact in this matter is that the appellants were an uninsured employer in New South Wales in circumstances where one of their employees sustained a work related injury in New South Wales and was thus entitled to be paid benefits under the Workers Compensation Act 1987 (NSW) (the Act). The benefits so payable were determined by the Workers Compensation Commission and paid by the WorkCover Authority pursuant to the uninsured liability scheme created by the Act.

3 The relevant statutory provision under consideration was s 145 of the Act. Section 145(2) provided that the WorkCover Authority may waive the liability of an uninsured employer to pay moneys specified in a notice given under s 145(1). Those moneys, in effect, amounted to the workers compensation that had been paid by the WorkCover Authority to the worker under the uninsured liability scheme created by the Act. The parties had agreed at the time when the worker’s benefits under the Act were determined, that the appellants could make an application under s 145(2) for a waiver of their obligation to reimburse the WorkCover Authority the amount of benefits so paid. This may have involved a misunderstanding of the way the Act operates.

4 But, in any event, the application which was made was not an application under s 145(2). Rather, it was an application under s 145(3) for a determination of the appellants’ liability in respect of the payment of compensation that had been made by the WorkCover Authority and which had been subject of a notice under s 145(1).

5 The argument on the appeal focused essentially upon the question whether the Acting Deputy President of the Workers Compensation Commission erred when he stated at [27] of his Reasons for Decision that

“The connection of the employer with the state of Victoria and the workers compensation insurance in that state, are ... irrelevant considerations.”

In particular, there was a question whether, by using the phrase “irrelevant considerations”, the Acting Deputy President was intending to use the language of judicial review.

6 It is apparent from his reasons that the Acting Deputy President, at [27], was referring to the provisions of s 145(2)(b) of the Act. Section 145(2)(b) provided, relevantly, that:

“(2) The Nominal Insurer may, by instrument in writing, waive the liability of an employer under subsection (1) to reimburse the Insurance Fund an amount, if the Nominal Insurer, in respect of the amount, is satisfied that:

...

(b) the employer could not reasonably have been expected to regard himself or herself as an employer at the relevant time ...”

7 Both the appellants and the respondent proceeded before the Acting Deputy President, in the circumstances explained by Basten JA, on the premise that the decision of this Court in WorkCover Authority of New South Wales v Mackley (2006) 66 NSWLR 305; [2006] NSWCA 204 (Mackley) was correct. They continued to accept the correctness of that decision before this Court.

8 The effect of the decision in Mackley is that the factors referred to in s 145(2) may be taken into account for the purposes of the exercise of the discretion under s 145(4). This is apparent from the comments of Bryson JA at [52] where his Honour stated:

“Although s 145(2) confers the waiver power on the Authority and not on the Commission, the six subjects listed in s 145(2) are relevant considerations when exercising a discretion within the limits of a discretion which may be exercised for the purposes of s 145(4). It could not be said, for example, that consideration by the Commission of the capacity of the employer to pay and basing its order under subs (4) on that consideration would take the Commission outside the purposes for which the power was conferred. Nor could it be said that consideration of whether the employer could reasonably have been expected to regard himself as an employer was outside the purposes of that power; nor could it be said that consideration whether it would or would not be commercially feasible for WorkCover Authority to attempt to recover the amount would be extraneous. The discretion of WorkCover Authority under s 145(2) is a discretion to waive the reimbursement ...”

9 Although at the commencement of this paragraph Bryson JA uses the term “relevant considerations”, Basten JA observes at [113] that it was sufficient for the purposes of Mackley that consideration of the matters in s 145(2) was not precluded. His Honour, therefore, did not understand Bryson JA to be saying any more than such factors could legitimately be taken into account under s 145(4) by the Commission in determining whether it would decline to make an order under that subsection. I agree with Basten JA in this understanding of his Honour’s judgment. That understanding of his Honour’s judgment has relevance to what I say below.

10 Basten JA concludes that it is doubtful that the Acting Deputy President, in using the expression “irrelevant considerations” at [27] of his Reasons for Decision, was intending to use the language of judicial review. For my part, I consider that was what he intended to do. That then raises the question as to whether the question of the employer’s connection with the State of Victoria and the fact that they had workers compensation in that State are relevant or irrelevant considerations.

11 The submission made by the appellants that these matters were relevant considerations, was made on the basis that they were relevant to a consideration of s 145(2)(b). I do not agree that those two matters were “relevant considerations” for the purposes of s 145(2)(b). The fact that the appellants made a mistake as to their insurance obligations in this State, and the fact that that mistake was likely to have been due to the fact that they had honoured their insurance obligations in the state of Victoria, is not relevant to the question as to whether they

“... could not reasonably have been expected to regard [themselves] as an employer at the relevant time”: s 145(2)(b)

12 However, if the discretion under s 145(4) is wider than that conferred by s 145(2), then, in my opinion, those matters would be relevant. In Mackley, Bryson JA stated at [51] that if s 145(4) was rightly understood as conferring a

“... broad discretion, that discretion is limited in a way which can only be stated in general terms, to the effect that it must be exercised in good faith for some sound ground or good reason relevant to the purposes of the legislation.”

13 As I understand his Honour, he considered that s 145(4) was to be so understood. Adopting that approach, I am of the opinion that the two matters under consideration, namely the connection with Victoria and the fact that workers compensation was in place in that state are relevant considerations in the exercise of the discretion under s 145(4). Section 145(2) focuses for the most part on financial considerations. However, s 145(2)(b) is in a different category. It poses, as a relevant consideration, whether the employer could reasonably have been expected to have regarded itself as an employer at the relevant time. If that is relevant, then it seems to me that it is a relevant consideration to the exercise of the discretion, as formulated by Bryson JA, that the employer could not reasonably have considered itself as uninsured at that time. I consider that to be a relevant consideration because the Act is concerned, inter alia, with the insurance obligations of employers.

14 That said, I agree with the comments of Ipp and Basten JJA in respect of the correctness of Mackley, which I consider to be wrong in principle and which failed to follow existing authority in this Court. I consider that the position taken by the WorkCover Authority in failing to challenge the decision to be unsatisfactory. The result, as I see it, is that this case has been decided on a wrong basis. If this Court had been able to determine the matter in accordance with the previous decisions of the Court and by the application of a correct construction of s 145, then I am of the opinion that the appeal should have been dismissed. In this regard, I would adopt as correct the reasoning set out by Basten JA at [78] of his reasons.

15 IPP JA: I have had the benefit of reading the reasons to be published by Basten JA. His Honour sets out all the relevant facts and circumstances.

16 On 4 March 2004, the Workers Compensation Commission (NSW) (“the Commission”) made a determination ordering the WorkCover Authority of New South Wales (“the Authority”) to make weekly payments of workers’ compensation to Mr Crofton, an employee of the appellants, at a specified rate.

17 On 26 August 2004, the Authority, acting under s 145(1) of the Workers Compensation Act 1987 (NSW), served on the appellants a notice requiring it to pay the Authority an amount in reimbursement of compensation the Authority had paid Mr Crofton.

18 On 21 October 2004, the appellants applied under s 145(3) of the Act for a determination as to their liability to reimburse the WorkCover Authority Fund (“the Fund”) in respect of payments the Authority had made to Mr Crofton. The appellants sought an order that the Authority “waive reimbursement of amounts paid and any amounts to be paid [by it to Mr Crofton]”. The matter came before an arbitrator who handed down a determination of the Commission on 15 March 2005. According to the arbitrator, the appellants sought “a review of their liability to pay WorkCover”.

19 The arbitrator described the second issue before her as being:

“May the Applicant Employer rely on s 145(3) and (4) of the 1987 Act in order to have the Commission determine or waive, under s 145(2) or otherwise, its liability to reimburse WorkCover?”

The arbitrator held that the Commission had no power to waive the applicant’s employer’s liability to reimburse WorkCover (or the Fund) and dismissed the appeal.

20 The appellants appealed to the Commission constituted by Acting Deputy President Candy. The Acting Deputy President agreed with the arbitrator and held that the Commission had no power “to make a determination of liability which is other than that of the employers to the worker”: Ballantyne v WorkCover Authority of New South Wales [2006] NSWWCCPD 94 at [37].

21 Thereafter, this Court delivered judgment in WorkCover Authority (NSW) v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305. In that case Bryson JA (with whom Hodgson and McColl JJA agreed) held (at 322, [53]) that the Commission had a “broad discretionary power” to decide “whether it thought fit to compel an uninsured employer to reimburse an amount which WorkCover Authority had paid out of the Fund and for which it sought reimbursement”. Bryson JA said (at 322, [53]):

“Section 145 does seem to convey in a formless way an understanding that reimbursement by an uninsured employer will be enforced unless there is a decision to do otherwise: but this falls short of conferral of a right to its enforcement. The discretion works both ways: it is discretion whether to order a reimbursement or not to do so. Section 145 does not create a prima facie outcome”.

22 The appellant, fortified by Mackley, thereupon applied to the Commission for reconsideration of its earlier decision. The Acting Deputy President, however, confirmed that decision: see Ballantyne v WorkCover Authority of New South Wales [2006] NSWWCCPD 94R. The present appeal is from that confirmation.

23 During the hearing of the appeal, all three members of the Court expressed misgivings as to the correctness of Mackley. Both parties, however, asserted that they did not wish to submit that Mackley was wrong in any respect. They requested that the Court determine the appeal according to the principles expressed in Mackley. As no application was made for leave to re-argue the issues decided in Mackley, I shall accept that it correctly reflects the law.

24 In Mackley, Bryson JA said (at 321 to 322, [52]):

“Although s 145(2) confers the waiver power on the Authority and not on the Commission, the six subjects listed in s 145(2) are relevant considerations when exercising a discretion within the limits of a discretion which may be exercised for the purposes of s 145(4).”

Hodgson JA said (at 307, [5]):

“[T]he close similarity between the wording of s 144(3) and that of s 145(4) strongly suggests that the Commission has a similar discretion under s 145(4). There is also a parallel between the Authority’s power under s 143(2) to refuse a claim, and its power under s 145(2) to waive an employee’s liability to reimburse it; and this also supports the view that in both cases the Commission is given a similar power. I think these considerations outweigh any suggestion to the contrary derived from s 140(3).”

25 Bryson JA accepted that s 145 did not confer a power on the Commission to waive the liability of an employer to reimburse the Fund for compensation payments made by the Authority. Hodgson JA was of a different view. All three judges, however, agreed that the Commission had a discretionary power under s 145(4) to refuse to order an employer to reimburse the Fund, even if the employer was otherwise liable under the Act to make reimbursement.

26 The application to the Acting Deputy President for reconsideration of his first decision was made on the ground that that decision was based on the premise that “the discretionary powers of the [Commission] were not sufficiently wide enough to make a determination to relieve the uninsured employer from liability”. In the application for reconsideration the appellants implicitly requested the Acting Deputy President (in the light of Mackley) to exercise its broad discretionary power (according to Mackley) not to order them to reimburse the Fund. In so doing, they were, presumably, as Basten JA points out, seeking an order, in the exercise of the Commission’s discretion, that their liability not be enforced.

27 The appellants’ argument to this Court rested on [25], [27] and [28] of the Acting Deputy President’s reasons. I shall quote these in full:

“[25] The matters upon which the Appellant relied in the original application may, I think, be summarised as follows:

· The business of the Appellant was situated in Victoria.

· The Appellant had appropriate workers compensation insurance under the laws of the State of Victoria.

· The Certificate of Survey in respect of the vessel concerned was obtained from the Marine Board of Victoria. The appellant believed that there was appropriate workers compensation insurance in place with respect to its employees.

· The Appellant would not reasonably regard itself as being a New South Wales employer.

...

[27] In relation to these matters there is no evidence that the amount sought is beyond the capacity of the employer to pay; the employer could not reasonably have been expected to regard itself as not being an employer at the relevant time; there is no evidence that the employer is bankrupt; and, there is no evidence that it would not be commercially feasible for the Authority to attempt to recover the amount. The connection of the employer with the state of Victoria and the workers compensation insurance in that state are, I think, irrelevant considerations.

[28] Having regard to all of these submissions as to why liability to reimburse the Respondent ought to be waived I am of opinion that such a determination ought not be made. I am mindful of the fact that the worker involved was a resident of New South Wales at the time of his injury, although there is no evidence as to where he entered into a contract of employment with the Appellant. The places of injury were in New South Wales. In my view the misunderstanding of the Appellant as to whether it was or was not a New South Wales employer is not sufficient to warrant making a determination pursuant to section 145(4) that the Appellant is not liable to reimburse any sum to the Respondent.”

28 The appellants focused on the Acting Deputy President’s statement that “[t]he connection of the employer with the State of Victoria and the workers compensation insurance in that State are, I think, irrelevant considerations”. Mr Campbell SC, who appeared for the appellants, submitted that the connection of the appellants with the State of Victoria and their connection with the workers’ compensation insurance in that State were relevant to whether the appellants could not reasonably have been expected to regard themselves as an employer in New South Wales under the 1987 Workers Compensation Act at the relevant time. He submitted that whether the appellants could not reasonably have been expected so to regard themselves was a relevant consideration in the exercise of the discretion that, according to Mackley, was conferred on the Commission. He submitted that the Acting Deputy President, by stating that the connection of the appellants with the State of Victoria and their connection with the workers’ compensation insurance in that State were irrelevant considerations, erroneously excluded those matters from the exercise of that discretion.

29 The Acting Deputy President seems to have accepted that the business of the appellants was situated in Victoria, the appellants had appropriate workers’ compensation insurance under the laws of Victoria, the certificate of survey in respect of the vessel concerned was obtained from the Marine Board of Victoria, and the appellants believed that there was appropriate workers’ compensation insurance in place with respect to their employees. The arbitrator found that the appellants lived and ran their business in Victoria. On 9 March 2000, the appellants’ Victorian insurers responded to Mr Crofton’s claim for compensation and weekly payments were made by it to him. On these grounds, the appellants submitted that they reasonably did not regard themselves as being a “New South Wales employer”.

30 In my opinion, the facts set out in [29] are relevant to whether the appellants “could not reasonably have been expected to regard [themselves] as an employer at the relevant time” (s 145(2)(b)). Those facts fall within the material that the Acting Deputy President regarded as irrelevant.

31 Mr G Parker, who appeared for the Authority, submitted that, despite the Acting Deputy President’s use of the phrase “irrelevant considerations”, he did take the facts set out in [29] into account. Mr Parker relied particularly on the Acting Deputy President’s reference to the appellants’ “misunderstanding” as to whether they were or were not a New South Wales employer.

32 In my opinion, the appellants’ misunderstanding as to whether they were a New South Wales employer is not the same as the appellants’ “connection” with the State of Victoria, the workers’ compensation insurance they took out in that State, and the reach of that insurance. In my opinion, the language used by the Acting Deputy President indicates that he did not take the facts set out in [29] into account because he thought they were irrelevant.

33 On the basis that Mackley is correct as a matter of law, the matters in question were not irrelevant to whether the appellants could not reasonably have been expected to regard themselves as an employer at the relevant time.

34 Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40; (1985) 162 CLR 24 said (at 39):

“The ground of failure to take into account a relevant consideration can only be made out if a decision-maker fails to take into account a consideration which he is bound to take into account in making that decision.”

35 His Honour said further (at 45):

“It would be a strange result indeed to hold that the Minister is entitled to ignore material of which he has actual or constructive knowledge and which may have a direct bearing on the justice of making the land grant, and to proceed instead on the basis of material that may be incomplete, inaccurate or misleading. In one sense this conclusion may be seen as an application of the general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made.”

36 Mackley holds that, according to s 145, the matters listed in paragraphs (a) to (f) of s 145(2) are relevant considerations when exercising the s 145(4) discretion. It follows, in my opinion, that when evidence capable of establishing one or more of those matters is adduced and relied on, the decision-maker exercising a s 145(4) discretion is bound by the statute to take that evidence into account. On another view, a refusal to take such evidence into account is a constructive failure to exercise jurisdiction.

37 In my opinion, the material set out in [29] was relevant to the issue raised by s 145(2)(b) and had persuasive force. The appellants relied on it when submitting that the s 145(4) discretion should be exercised in their favour. Accordingly, applying the criteria set out in the passages quoted from Minister for Aboriginal Affairs v Peko-Wallsend Limited, the Acting Deputy President, by excluding the material set out in [29], committed an error of law. The legal error is either a failure to take into account relevant considerations or a constructive failure to exercise jurisdiction. In my opinion, the error justifies appellate intervention.

38 I would uphold the appeal. The appellants seek an order that the matter be remitted to the Commission for determination of their appeal from the decision of the Arbitrator. I propose that such an order be made, which requires that the decisions of the Acting Deputy President be set aside. I would order that the respondent pay the costs of the appeal and the costs of the application that the Acting Deputy President reconsider his first decision. The costs of the initial hearing before the Acting Deputy President should abide the outcome of the determination on remittal.

39 BASTEN JA: This appeal concerns a decision by the Workers Compensation Commission (NSW) (“the Commission”) that the WorkCover Authority of New South Wales (“the Authority”) was entitled to recover from the Appellants an amount paid by the Authority to Mr Michael Crofton, an employee of the Appellants, who suffered personal injury whilst working for the Appellants. (The Appellants traded as a business under the name “M & A Ballantyne”, which will be referred to as “the employer”.) The payments were made by the Authority under a scheme designed to protect a worker who suffered injury in circumstances where his or her employer was uninsured, or could not be identified. The appeal is limited to the identification and correction of error “in point of law”: Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“the 1998 Act”), s 353(1).

Background

40 In December 1999–February 2000, Mr Crofton was employed as a deckhand on a fishing vessel “Episode” owned and operated by the Appellants. The Appellants may have then resided in South Pambula in New South Wales, but carried on their business from Lakes Entrance, in Victoria. For reasons of safety and convenience, the catch was frequently unloaded at a wharf at Eden, on the south coast of New South Wales. It was there that Mr Crofton suffered a disabling back injury, the first indications of which were identified in December 1999, after which there was a repetition on 6 February 2000, following which he ceased work.

41 The Appellants held workers compensation insurance in Victoria with MMI Workers’ Compensation (Victoria) Ltd. On 9 March 2000 a claim was made and accepted by the insurer and weekly payments were made to Mr Crofton.

42 Despite having lodged a claim for compensation in Victoria, on 5 June 2001, Mr Crofton issued proceedings under ss 60, 66 and 67 of the Workers Compensation Act 1987 (NSW) for lump sum compensation, naming the Appellants and the Authority as respondents. On 9 April 2003 a consent award was made by Judge Armitage in the Compensation Court of New South Wales, together with orders requiring payment by “the respondent” of amounts totalling $35,000, together with costs. Further orders identified the Appellants as the “First Respondent” and the Authority as “the Second Respondent” and were in the following terms:

“1. That the First Respondent was not insured as required by Act at the time of the Applicant’s injuries.

2. That the Second Respondent cause payment of the compensation and costs awarded against the first respondent to be made out of the WorkCover Authority Fund.

3. That the First Respondent re-imburse the WorkCover Authority such amount or amounts as may be paid out of such fund in respect of the compensation and costs awarded against the First Respondent in accordance with para 2 hereof and in respect of the costs of the WorkCover Authority.

4. That any application by the First Respondent for a waiver of the re-imbursement ordered in paragraph 3 hereof be made within a period of sixty (60) days from the date hereof.”

43 The consent orders were signed on behalf of Mr Crofton, the Appellants and the Authority.

44 As explained by Arbitrator Wynyard in a subsequent determination dated 17 December 2003, the award of compensation by the Commission on 9 April 2003 led to the termination of payments by the Victorian insurer, pursuant to the Accident Compensation Act 1985 (Vic), s 85. This in turn led to a further application for weekly payments under the Workers Compensation Act in New South Wales, against both the Authority and Appellants. The Authority, but not the Appellants, took steps to resist the application, but on 4 March 2004 the Commission made a determination in favour of Mr Crofton and ordered the Authority to make weekly payments at a specified rate.

45 On 28 May 2003, within the period permitted by the consent orders of 9 April 2003, the Appellants did lodge with the Authority an application for waiver of their liability to reimburse the Authority. No response was received to that application. The power of the Authority to waive a liability is identified in the provision pursuant to which the Authority may serve on the employer a notice requiring reimbursement: see Workers Compensation Act, s 145(1) and (2). The initial liability having resulted from an order made by the Commission, pursuant to an application to which both the Appellants and the Authority were party, no such notice had then been issued. Whether such a notice were necessary was not a matter which arose in these proceedings, but some time later the Authority did serve a notice dated 26 August 2004, pursuant to s 145(1) requiring the Appellants to pay an amount of $88,523.25. It will be necessary to consider below the statutory scheme entitling the Appellants to challenge the liability asserted in the notice by seeking a determination from the Commission pursuant to s 145(3).

46 By application dated 21 October 2004, the Appellants sought such a determination from the Commission. The application identified its subject matter, by a cross in a relevant box, as an application for “Waiver of Reimbursement Ordered, Section 145 Dispute”. The orders sought were identified as follows:

“1. A declaration that the employer was not insured as required by the Workers Compensation Act 1987 at the time of the applicant’s [sic] injury.

2. Orders:

(1) That WorkCover NSW pay any compensation and costs awarded against the employer from the WorkCover Authority Fund (the Fund) established under s34 of the Workplace Injury Management and Workers Compensation Act 1998.

(2) That the Second Respondent waive reimbursement of amounts paid and any amounts to be paid pursuant to matter no 57891/01 and related claims.”

47 The matter came before an arbitrator, Ms Serventy, who handed down a determination of the Commission on 15 March 2005. Two issues were addressed by the arbitrator: the first related to an apparent failure of the Appellants to file their application within time; the second concerned the entitlement of the Appellants to rely upon s 145(3) and (4) to challenge the failure by the Authority to waive the liability to make reimbursement under s 145(2).

48 The issue of timing was resolved in favour of the Appellants and does not arise on this appeal. In relation to the question of waiver, the arbitrator was satisfied that decisions of both the Compensation Court and the Commission bound her to conclude that the discretion to waive liability was conferred on the Authority and could not be exercised afresh by the Commission pursuant to any attempt to invoke its powers under s 145(3) and (4). The application was therefore dismissed, the determination of the Commission being expressed as an “award for the respondent”, without any order as to costs, presumably meaning that there was an enforceable determination in favour of the Authority permitting it to recover the amount stated in the notice.

49 The Appellants brought an appeal from that determination to the Commission constituted by Deputy President Candy, pursuant to s 352 of the 1998 Act. That appeal was determined by the Deputy President on 22 May 2006: Ballantyne v WorkCover Authority of New South Wales [2006] NSWWCCPD 94.

50 The principal issue before the Deputy President was whether the Commission had a power to review what was described as “a waiver application under s 145(2)” of the Workers Compensation Act. At that time, there was outstanding in this Court an appeal against a decision of Acting Deputy President Handley in the Commission, concluding that there was no such power: see Mackley v WorkCover Authority of New South Wales [2005] NSWWCCPD 32. The parties invited Deputy President Candy to stay the appeal before him, pending the decision of this Court in Mackley. He declined to do so and, on the basis of existing authority, held that the arbitrator had been correct in concluding that there was no power to review a refusal to waive a claim for reimbursement. Deputy President Candy also considered a submission that, even if there were no power to review the refusal or failure to grant a waiver application, nevertheless there was a “broad discretion” conferred on the Commission by s 145(4) which permitted the Commission to determine that the employer’s liability of reimbursement was “nil”. Deputy President Candy held at [37]:

“I do not consider that the Commission has any power to make a determination of liability which is other than that of the employers to the worker. In this case the employers on 9 April 2003 agreed to the worker’s entitlement to lump sum compensation and also agreed to an order for reimbursement. The employers cannot now seek from the Commission a fresh determination of that liability.”

51 In reaching that conclusion in his determination of 22 May 2006, the Deputy President relied in part on the decision of this Court in Raniere Nominees Pty Ltd v Daley (2005) 66 NSWLR 594 (“Raniere Nominees (No. 1)”).

52 In his award of 22 May 2006, Deputy President Candy “confirmed” the decision of the arbitrator dated 15 March 2005. However, on 27 July 2006 this Court delivered judgment in WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305. In that case, the Commission had refused to make an order that the employer reimburse the Authority for payments made to an injured worker. An appeal by the Authority was unsuccessful, this Court concluding that the power conferred on the Commission under s 145(4) was wide enough to encompass such an order. This approach was inconsistent with that adopted by Deputy President Candy in his determination of 22 May 2006 and in consequence on 11 August 2006 the employer made an application to the Commission for reconsideration of its decision of 22 May 2006.

53 The matter was reconsidered by Deputy President Candy, a further decision being handed on 24 October 2006: Ballantyne v WorkCover Authority of New South Wales [2006] NSWWCCPD 94R. Having reconsidered the matter in the light of the decision of this Court in Mackley, he confirmed his earlier decision. It is from that decision of 24 October 2006 that the Appellants bring the present appeal.

Statutory scheme – uninsured employers

54 Before turning to the reasons for decision and the grounds upon which it is challenged, it is convenient to turn to the statutory provisions now contained in Part 4, Division 6 of the Workers Compensation Act, being ss 138-148A.

55 The operation of the provisions for reimbursement of the Authority under the Workers Compensation Act have been considered in three cases in this Court in recent years: see Raniere Nominees Pty Ltd v Daley (2005) 66 NSWLR 594 (“Raniere Nominees (No. 1)”); WorkCover Authority of New South Wales v Mackley [2006] NSWCA 204; (2006) 66 NSWLR 305 (“Mackley”) and Raniere Nominees Pty Ltd v Daley [2006] NSWCA 235 (“Raniere Nominees (No. 2)”). It will be necessary to consider aspects of the judgments in these cases relevant to the present matter in due course. However, it is convenient to consider first the statutory scheme, in its terms.

56 The statutory history of the relevant provisions of the Workers Compensation Act is convoluted, but no reference was made to that history in the course of argument in the appeal and nothing was said to turn upon it. Nevertheless, it should be noted that the scheme for compensation of workers injured while employed by an uninsured employer, which was originally contained in Part 4 of the Workers Compensation Act was removed to the 1998 Act: see Workers Compensation Legislation Amendment Act 1998 (“the 1998 Amendment Act”), Schedule 1 [63]. That provision was to commence on 1 August 1998. However, the equivalent provisions in the 1998 Act, to be found in Chapter 5, Part 9, were not to commence until 1 October 1999. To avoid a lacuna, the commencement of Schedule 1 [63] of the 1998 Amendment Act was delayed until 1 October 1999, when the equivalent provisions in the 1998 Act were to commence: see Statute Law (Miscellaneous Provisions) Act (No. 2) 1998 (NSW), Schedule 1 [1.47]. However, before that occurred, a further complication was introduced by the Workers Compensation Legislation Amendment Act 1999 (NSW) (“the 1999 Amendment Act”) which commenced on 1 September 1999. That Act made a number of amendments to the existing legislation including a further delay in the commencement of Schedule 1 [63] of the 1998 Amendment Act until 1 October 2000: see Schedules 1 [1] and 3 of the 1999 Amendment Act, inserting a definition of “private insurance start time” into the 1998 Act which, as it would appear, was to be 4pm on 1 October 2000. The 1998 Act was itself amended so that the commencement of relevant provisions in that Act was also identified by reference to the “private insurance start time”: see 1999 Amendment Act, Schedule 1 [3] and [4].

57 The temporal contortions by which this transfer of the Scheme from one Act to the other was achieved were reversed by the repeal of Chapter 5 of the 1998 Act and reinstatement of the Scheme in the Workers Compensation Act, by the Workers Compensation Legislation Further Amendment Act 2001 (NSW), as from 1 January 2002.

58 The result of this historical diversion was that both at the time of the accident, and at the time at which the worker made his first claim under New South Wales law, the liability of the Authority was ascertained by reference to Chapter 5, Part 9 of the 1998 Act. Whether the rights of the parties were properly to be assessed in accordance with those provisions, or the equivalent provisions in the Workers Compensation Act would depend upon the operation of the various savings and transitional provisions which accompanied the 1998 and 1999 Amendment Acts. However, because nothing is said to turn upon these matters, those provisions will be put to one side.

59 One further historical matter should be identified for the sake of clarity: on 1 January 2004 the Compensation Court, which heard the first claim made in New South Wales by the worker was abolished and its jurisdiction was conferred on the Commission: see Compensation Court Repeal Act 2002 (NSW) and Compensation Court Repeal (Transitional) Regulation 2003.

60 It should also be noted that the relevant provisions of the Workers Compensation Act have since been amended by the Workers Compensation Amendment (Insurance Reform) Act 2003 (NSW), the relevant provisions of which commenced on 1 July 2007. Those amendments established a “nominal insurer” and changed the name of the Division to one dealing with “uninsured liabilities”. The amendments are of no consequence for present purposes and the terms of the statutory provisions will be considered, as in force at the date of the issue of the relevant notice and the decisions of the Commission.

61 Section 139 of the Workers Compensation Act created a scheme called the “Uninsured Liability and Indemnity Scheme” which was to be administered by the Authority. Section 140 then provided:

“140 Persons eligible to make claims

(1) A claim under the Scheme may be made as provided by this section by any person who considers he or she has a claim against an employer for compensation under this Act or work injury damages in respect of an injury to a worker, if:

(a) the employer is uninsured, or

(b) the person claiming the compensation has been unable, after due search and inquiry, to identify the relevant employer.

(2) An employer is considered to be uninsured if the employer:

(a) had not obtained, or was not maintaining in force, a policy of insurance for the full amount of the employer’s liability under this Act in respect of the injured worker at the relevant time ... .”

62 No question arose in the present case otherwise than in relation to an “uninsured” employer: there was no issue that the Appellants were the relevant “employer” of Mr Crofton. It is also clear that to be an uninsured employer, a person must have a liability under the Workers Compensation Act in respect of an injured worker and not have had an insurance policy with a “licensed insurer” of a kind made compulsory by s 155 of the Act. Failure to maintain such a policy is, by that section, made an offence.

63 Pursuant to s 156, the Authority is entitled to recover from an employer who fails to obtain or maintain a relevant policy of insurance “a sum equal to twice the amount of the premium that would have been payable for the issue of a policy of insurance to the employer in respect of that period or such lesser amount as to the Authority may agree to accept in any particular case”: s 156(1).

64 Since 1 January 2006, the Act has contained provisions, which are noted below, which seek to define the relevant connection between employment and the State necessary to attract liability to pay compensation under the Workers Compensation Act. However, prior to that date, and thus relevantly for the purposes of the present proceedings, the principle of statutory construction as explained in Mynott v Barnard [1939] HCA 13; (1939) 62 CLR 68 applied. In that case, almost every possible connection bar the place of accident was with Victoria. Nevertheless, the Court unanimously applied the principle established in 1909 in Tomalin v S. Pearson & Son Ltd [1909] 2 KB 61, that the Act imposed liability upon the employer to pay compensation in respect of any injury suffered within the jurisdiction or “law area” of the statute in question. In Mynott even the fact that the worker died in Victoria did not engage the operation of the Victorian Act, the accident having occurred in New South Wales. As explained by Latham CJ at pp 73-74:

“As Fetcher Moulton LJ said in Tomalin v S. Pearson & Son Ltd, speaking of the corresponding provision in the English Act, ‘it clearly cannot apply universally all over the world’. It would be unreasonable to read the section as applying to all employers, all workers and all accidents everywhere. Some territorial limitation must be introduced in a construction of the section. The court has been offered an embarrassing choice of possible limitations. Each of the following elements (or some combination of them) has been suggested as possibly relevant – the Victorian domicile or residence of one or both parties: the fact that the contract of employment was made in Victoria: the fact that the work under the contract was to be done in Victoria, in whole or in part: the fact that the accident happened in Victoria: the fact that the governing law of the contract of employment was the law of Victoria: and, on the basis of a number of American decisions, the fact that the ‘status’ of the parties as employer and worker arose under Victorian law, or that the relationship of employment in a particular case has a real and substantial connection with Victoria, or a more real and substantial connection with Victoria than with any other country, or the fact of the localisation in Victoria of the employer’s enterprise.”

65 Each of these possible factors, other than the place where the accident occurred, was dismissed as inappropriate or irrelevant, whether alone or in combination with others. From that time, until 1 January 2006, the workers compensation legislation in this State made no express provision which was inconsistent with that principle. Accordingly, the basic premise upon which the Workers Compensation Act operated (until 1 January 2006) was that it might apply to any person employing a worker who might undertake work in New South Wales or who might, in the course of his or her employment, including no doubt the journey to and from the workplace, pass through New South Wales or part thereof, in the event of an accident there.

66 It is common ground that the Appellants did not hold an insurance policy with a “licensed insurer” for the purposes of s 155(1). Accordingly, to the extent that the Appellants were employers with liabilities arising under the Workers Compensation Act, they were “uninsured” as defined in s 140(2).

67 By way of contrast, in 2006 the Workers Compensation Legislation Amendment Act 2002 (NSW) introduced a new concept of connection with the State. Pursuant to that Act there is now a defence provided by s 155(3A) which reads as follows:

“(3A) It is a defence to a prosecution for an offence under this section concerning an employer’s liability in respect of a worker if the court is satisfied that at the time of the alleged offence:

(a) the employer believed on reasonable grounds that the employer could not be liable under this Act in respect of the worker because under section 9AA the worker’s employment was not connected with this State, and

(b) the employer had workers compensation cover in respect of the worker’s employment under the law of the State or Territory with which the employer believed on reasonable grounds the worker’s employment was connected under section 9AA.”

68 Liability to pay compensation is now relevantly defined, as s 155 envisages, by s 9AA which relevantly reads as follows:

“9AA Liability for compensation

(1) Compensation under this Act is only payable in respect of employment that is connected with this State.

(2) The fact that worker is outside this State when the injury happens does not prevent compensation being payable under this Act in respect of employment that is connected with this State.

(3) A worker’s employment is connected with:

(a) the State in which the worker usually works in that employment, or

(b) if no State or no one State is identified by paragraph (a), the State in which the worker is usually based for the purposes of that employment, or

(c) if no State or no one State is identified by paragraph (a) or (b), the State in which the employer’s principal place of business in Australia is located.

(4) In the case of a worker working on a ship, if no State or no one State is identified by subsection (3), a worker’s employment is, while working on a ship, connected with the State in which the ship is registered or (if the ship is registered in more than one State) the State in which the ship most recently became registered.

(5) If no State is identified by subsection (3) or (if applicable) (4), a worker’s employment is connected with this State if:

(a) the worker is in this State when the injury happens, and

(b) there is no place outside Australia under the legislation of which the worker may be entitled to compensation for the same matter.

(6) In deciding whether a worker usually works in a State, regard must be had to the worker’s work history with the employer and the intention of the worker and employer. However, regard must not be had to any temporary arrangement under which the worker works in a State for a period of not longer than 6 months.

...
(8) In this section:

ship means any kind of vessel used in navigation by water, however propelled or moved ... .”

69 These provisions may, however, be put aside for present purposes. It was common ground that the relevant date at which to determine the operation of the Workers Compensation Act was the date of Mr Crofton’s injury, which may conveniently be identified for present purposes as 6 February 2000. (Nothing turns on the prior injury in December 1999.)

70 The operative provisions of Part 4, Div 6 of the Workers Compensation Act commenced with s 140 which provided for a person to make a claim under the Scheme. Section 141 then provided for the making of claims under the Scheme. Section 143 dealt with their determination:

“143 Determination of claim by Authority

(1) From the WorkCover Authority Fund the Authority may, in respect of a claim under the Scheme:

(a) pay compensation in accordance with this Act or work injury damages, with or without admission of liability, or

(b) make ex gratia payments.

(2) The Authority may refuse to satisfy a claim under the Scheme.

(3) If the Authority does not, wholly or in part, satisfy a claim under the Scheme, it shall, within 14 days of making the relevant decision, advise the claimant of its decision and the reasons for its decision.”

71 Where, as occurred in the present case, the Authority refused initially to satisfy the claim, the claimant (in this case Mr Crofton) was entitled to “apply to the Commission for a determination of the claim”: s 144(1). That section continued:

“(3) The Commission may hear and determine any such application and may make such orders in relation to the application as the Commission thinks fit.”

72 An order of the Commission may specify an amount to be paid by the Authority and may also provide, pursuant to sub-s (5), “for the reimbursement of the WorkCover Authority Fund under section 145.” Of critical concern in the present case, are the provisions relating to a claim by the Authority for reimbursement from the employer. Thus, s 145 of the Workers Compensation Act provides:

“145 Employer or insurer to reimburse Authority

(1) The Authority may serve on a person who, in the opinion of the Authority, was:

(a) in respect of an injured worker to or in respect of whom a payment has been made under the Scheme, an employer at the relevant time, or

(b) an insurer under this Act of such an employer,

a notice requiring that person, within a period specified in the notice, to reimburse the WorkCover Authority Fund an amount (not being an amount exceeding the amount of the payment made) specified in the notice.

(2) The Authority may, by instrument in writing, waive the liability of an employer under subsection (1) to reimburse the WorkCover Authority Fund an amount, if the Authority, in respect of the amount, is satisfied that:

(a) the amount is beyond the capacity of the employer to pay,

(b) the employer could not reasonably have been expected to regard himself or herself as an employer at the relevant time,

(c) the employer, not being a corporation, is bankrupt and the liability under this section is not provable in the bankruptcy,

(d) the employer, being a corporation, is being wound up and the liability under this section is not provable in the winding up,

(e) the employer, being a corporation, has been dissolved, or

(f) it would not be commercially feasible for the Authority to attempt to recover the amount.

(3) A person on whom a notice has been served under subsection (1) in respect of an injured worker may, within the period specified in the notice, apply to the Commission for a determination as to the person’s liability in respect of the payment concerned.

(4) The Commission may hear any such application and may:

(a) make such determination in relation to the application, and

(b) make such awards or orders as to the payment of compensation under this Act to or in respect of the injured worker concerned,

as the Commission thinks fit.

(5) In any proceedings under subsection (4) a certificate executed by the Authority and certifying that:

(a) the payments specified in the certificate were paid to or in respect of an injured worker named in the certificate, and

(b) a person named in the certificate was, in the opinion of the Authority, liable at the relevant time to pay to or in respect of the injured worker compensation under this Act or work injury damages,

is (without proof of its execution by the Authority) admissible in evidence in any proceedings and is evidence of the matter stated in the certificate.

(6) The Authority may recover an amount specified in a notice served under subsection (1) (being a notice in respect of which an application has not been made under subsection (3)) from the person to whom the notice was given as a debt in a court of competent jurisdiction.

(7) An order by the Commission that the Authority is to be reimbursed by a person named in the determination concerned may be enforced under section 362 of the 1998 Act.”

73 Subsection (7) was not inserted into s 145 until 1 January 2002, when s 362 was inserted in the 1998 Act: see Workers Compensation Legislation Amendment Act 2001 (NSW), Schedule 6.1 [73] and Schedule 4.2 [17]. Nevertheless, the provision was in place at the time that each of the orders of the Commission was made in the present proceedings.

74 Where the Authority refuses to satisfy a claim and the claimant makes an application for a determination by the Commission, pursuant to s 144, the claimant worker is required, in such an application, to “name the employer by whom the applicant alleges compensation is payable” as well as the Authority, as a respondent to the proceedings: s 144(2)(a). Where the claim is made under the Scheme because the employer cannot be identified, that requirement may be difficult to comply with; however, that difficulty does not arise where the employer is known but uninsured, as in the present case. Where the Commission makes orders in relation to the application under s 144, it may “provide for the reimbursement of the WorkCover Authority Fund under section 145”: s 144(5). As explained above, when the first application was determined by the Commission on 9 April 2003, the Authority was required to pay Mr Crofton an amount of $35,000 and the employer was required to reimburse the Authority: at [42] above. The effect of the reimbursement order was impliedly stayed for a period to allow, pursuant to order 4, an application by the Appellants for waiver of the reimbursement liability.

75 The provisions of s 145 give rise to a number of questions, three of which are significant in the present case. The first concerns the scope of the entitlement conferred on the employers under sub-s 145(3) to make an application for a determination of their liability in respect of the payment made under the Scheme by the Authority, where the liability of the employer and the amount of compensation payable with respect to that liability have already been determined by the Commission pursuant to awards made under s 144, in relation to applications to which the employer was a party.

76 The second question is whether an application under sub-s (3) can include a review of a refusal or failure of the Authority to waive the liability of an employer under sub-s (2). As will be seen, there is authority in this Court for the proposition that no such review is available in the Commission, a conclusion which was accepted by the parties in the present proceedings. Thus, any relief available against a failure or refusal of the Authority to waive the liability of an employer could only be challenged in this Court, for example by seeking relief under s 69 of the Supreme Court Act 1970 (NSW).

77 The third question concerns the factors which may be taken into account by the Commission in making a determination in relation to the application and an award or order as to payment of compensation under the Act, pursuant to sub-s (4). The primary issue in the present appeal was whether Deputy Commissioner Candy had erred in point of law in applying the principles established by this Court in Mackley in relation to that discretionary decision.

78 Uninstructed by authority, one might derive the following propositions in relation to these questions, from the language, structure and context of s 145.

(1) The purpose of Part 4, Division 6 is to ensure that a worker’s statutory rights to compensation are not compromised in circumstances where his or her employer is uninsured (or unidentifiable).

(2) A payment made by the Authority, which may be the subject of a notice under sub-s (1), is, relevantly for present purposes, a payment of “compensation in accordance with this Act”, made pursuant to s 143(1)(a) or pursuant to an award or order by the Commission, made under s 144(3).

(3) The notice served under s 145(1) will give rise to a debt enforceable in a court of competent jurisdiction, pursuant to sub-s (6) subject to two qualifications.

(4) The first qualification is that, if satisfied of one of the matters identified in paragraphs (a)-(f) of sub-s (2), the liability to make such payment may be waived by the Authority by instrument in writing.

(5) The second qualification is that the person served with the notice may dispute his or her liability in respect of the payment concerned, by a timely application to the Commission for a determination of the liability.

(6) In determining an application under sub-s (3), pursuant to the power conferred by sub-s (4)(a), the function of the Commission is to determine whether the payment made by the Authority was in fact a payment of “compensation in accordance with this Act”, which would otherwise have been payable by the employer or its insurer, and also, if the matter were in issue, to determine whether the person served was indeed the relevant employer or insurer of such employer.

(7) If satisfied as to the amount of the payment concerned and the identity of the employer, the Commission would ordinarily make whatever order it thought appropriate to dispose of the application according to law. As now envisaged by sub-s (7), the appropriate order would be that the person served with the notice pay the amount to the Authority by way of reimbursement of the WorkCover Authority Fund, within a specified time.

Effect of decisions in this Court

79 Before turning to the authorities in this Court with respect to the operation of s 145, it may be noted that each of sub-ss (2) and (3) focuses on the “liability”, either of an employer (in the case of sub-s (2)) or of a person served with a notice (in the case of sub-s (3)). That term is so common in legal parlance that its purpose and meaning is often taken for granted without further elucidation. However, as noted by Windeyer J in considering the meaning of the phrase “liable to pay compensation”, as found in s 5(1) of the Workers Compensation Act 1958 (Vic) it is, using the phrase taken from Professor Hohfeld, “chameleon-hued”: Ogden Industries Pty Ltd v Lucas [1967] HCA 30; (1967) 116 CLR 537 at 584. Windeyer J continued:

“And it is necessary to be cautious in going from the word ‘liable’ as used in s 5(1) to the word ‘liability’ as used in other contexts. ‘Liability’ can be, and often is, used as synonym for ‘duty’ or ‘obligation’; but Sir George Paton in his book Jurisprudence, 3rd ed, (1964), by Professor Derham p 242, uses it in an opposed sense. ‘Obligation’, he says, ‘should be sharply distinguished from liability. Obligation relates to what a person ought to do because there is a duty laid upon him: liability to what he must do because he has failed to do what he ought’. The term ‘liabilities’ when used to describe unpaid debts reflects this meaning. For Salmond and Hohfeld ‘liability’ has still another meaning. It describes a person’s liability to be, by the power of someone else, made subject to a duty. In that sense it is the opposite of “immunity”. It seems to me that without descending to too much refinement there are at least three main senses in which lawyers speak of a liability or liabilities. The first, a legal obligation or duty: the second the consequence of a breach of such an obligation or duty: the third a situation in which a duty or obligation can arise as the result of the occurrence of some act or event. It is in the third sense that s 5(1) speaks of an employer as liable to pay compensation in accordance with the Act.”

80 In other circumstances, a distinction may need to be drawn between an existing liability and a contingent liability, as may be significant in cases where a statute imposes on one body liabilities of another: see, eg, Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1 at [8] (Gleeson CJ); [135]-[146] (McHugh J) and [190]-[194] (Kirby J); [252]-[253] (Hayne J, Gummow J agreeing) and [366]-[369] (Callinan J). Whether the sharp distinction between obligation and liability, referred to by Windeyer J in Ogden Industries, is helpful in all circumstances, there is little doubt that the term “liability”, as found in s 145, is to be understood as a legal liability, that is a liability enforceable by law. In each sub-section, the term is used in relation to an amount of money and thus refers to a legally enforceable liability to pay the relevant amount.

81 The earliest of the four cases said to bear on the construction of relevant provisions in the Workers Compensation Act discussed above was GRE Workers’ Compensation Insurance (NSW) Ltd v Nohil Pty Ltd (1996) 13 NSWCCR 74. It involved a dispute between an employer and its insurer as to whether the particular policy responded to the claim made by the worker. It appears to have been thought at some stage that it did not and initial payments of compensation were made by the Authority. The appeal was brought by the insurer from a decision of the Compensation Court holding that the appellant was the insurer of the respondent employer and was liable to indemnify it for its liability to pay compensation to or in respect of the injured worker. The short point with respect to the scope of the orders available under s 145(4) was a complaint by the insurer that the notice served by the Authority was served only on the employer, which duly made application for a determination under sub-s (3), in the course of which it sought an order that the insurer reimburse the Authority. The question was whether such an order was within power, in circumstances where no notice had been served on the insurer, but the application for a determination had been so served. Cole JA (with whom Clarke and Handley JJA agreed) noted at p 81:

“Subsection (3) permits determination as to ‘the person’s liability’. A person’s liability includes not only any obligation to pay compensation, but also that person’s right to any indemnity in respect of that compensation, for instance, from its insurer. Subsection (4) confers a power on the hearing of such an application to make ‘orders as to the payment of compensation ... in respect of the injured worker concerned’. That is a plenary power permitting the Court to make appropriate orders adjusting the rights of all persons or bodies who may have an existing or potential liability or entitlement to be relieved of liability because of insurance in respect of the compensation claimed by or awarded to the injured worker.”

82 As Handley JA noted in an additional comment (p 77) the liability of an insured employer under the Act “is different in both a legal and practical sense from the liability of an employer who is uninsured”. In failing to serve a notice on the insurer, the Authority in effect asserted a liability which was different from that determined by the Compensation Court. Accordingly, the order of that Court, held to be within power, may be understood as “adjusting” the rights or liability of the employer because of the applicable insurance. There is no hint of any broad power to disregard the appropriate legal principles applicable in determining liability for compensation under the Act.

83 Chronologically, the second case to be decided was Raniere Nominees (No. 1). That case involved a claim by a worker in relation to an injury suffered by her during her employment with the appellant, Raniere Nominees. The Authority initially resisted making payments, with the result that the worker filed an application with the Commission for a determination pursuant to s 144(1) of the Workers Compensation Act. Both the Authority and the employer were named in the application. The proceedings were settled as between the worker and the Authority and a consent award was made. However, the employer was not party to the consent award. When the Authority sought reimbursement from the employer, a dispute arose as to whether the employer was entitled to apply to the Compensation Court (the predecessor to the Commission) for determination of its liability. Tobias JA (with whom Hodgson JA and Stein AJA agreed) stated:

“45. In my opinion, these provisions make clear that an employer upon whom a notice is served is entitled to apply to the Compensation Court for a determination as to its liability in respect of any payment made by the Authority to an injured worker under the Scheme. It must follow that that liability relates to that of the employer to pay compensation to the injured worker under the Act. ... That liability, if not otherwise conceded by the employer, is to be determined by the Compensation Court pursuant to s 145(4).

46. That the employer’s liability to reimburse the Fund in respect of the amount of any payment made to the injured worker under the Scheme is a reference to its liability to pay the injured worker compensation under the Act is, in my opinion, confirmed by the terms of s 145(5).”

84 What was directly in issue in Raniere Nominees (No. 1) was the right of the employer to seek a determination from the Commission (then the Compensation Court) as to its liability, despite the existence of an award determining that liability as between the worker and the Authority, in circumstances where the employer, although it had notice of the application, was not party to the award made. Its relevance for present purposes was to be found in the assertion that the employer’s liability was to be fixed according to its liability to pay compensation to the injured worker under the Act. Consistently, it would appear that an application under s 145(3) of the Workers Compensation Act is to be determined by the Commission by reference to the appropriate award for payment of compensation under the Act, and not otherwise.

85 Chronologically, the third case decided in this Court was Mackley, but it was handed down one month before Raniere Nominees (No. 2) and was not referred to in the latter case. It is convenient to deal with Raniere Nominees (No. 2), before turning to Mackley.

86 Raniere Nominees (No. 2) involved a short point concerning the jurisdiction of the Commission under s 145(4). As explained by Giles JA (Spigelman CJ agreeing) the notice which was issued by the Authority under s 154(1) specified a period of 28 days within which the person served might apply to the Commission for a determination as to its liability. The employer failed to make an application under s 145(3) “within the period specified in the notice” as required by that provision. After noting that payments might be made under s 144 without any question of an order for reimbursement arising pursuant to s 144(5), Giles JA referred to the mechanism for reimbursement by way of notice under s 145(1) with a right to recover in a court of competent jurisdiction, pursuant to s 145(6), where no application had been made under s 145(3). His Honour remarked that the provisions provided “for expeditious and certain recovery of payments”, and that “application within the period specified in the notice is part of the expedition and certainty”: at [18]. His Honour continued at [19]:

“Section 145(3) is clear in its terms, entitling the person on whom the notice had been served to apply within the period specified in the notice and as a corollary denying any such entitlement outside the period specified in the notice. Section 145(4) then confines the application which the Commission may hear and determine to an application so made, by the clear words ‘any such application’ ... . The Commission’s power to determine the person’s liability in respect of the payments is enlivened only by the making of an application within the period specified in the notice.”

87 Santow JA (with whom Spigelman CJ also agreed) identified the need to make application within the period specified in the notice as “a jurisdictional fact or essential pre-condition for an application to be made, thus grounding the Commission’s jurisdiction to deal with it”: at [62]. After referring to the fact that the Commission exercised statutory jurisdiction and had only those powers which are incidental and necessary to the exercise of its statutory jurisdiction, continued, at [66]:

“It has no statutory power expressly permitting it to extend the time for the employer to make an application under s 145(3). I do not consider that the use of the word ‘may’ in s 145(3) does so impliedly; the section is an enabling one so that ‘may’ in effect means ‘must’.”

His Honour then referred to and adopted the analogous principles in relation to resistance of a statutory demand under the Corporations Law, which required compliance with a time limitation constituting a condition precedent to entitlement to relief, and the absence of a power to extend time unless conferred by statute: at [72]-[73].

88 There is one other aspect of s 145 discussed in both Raniere Nominees (No. 1) and in Raniere Nominees (No. 2) and that concerns the interrelationship of ss 144 and 145. Although, as Tobias JA explained in Raniere Nominees (No. 1) at [47] and [48], s 145 is the governing provision in relation to reimbursement, an order may be made for reimbursement of the Fund under s 145, by a determination of the Commission of an application by the worker under s 144(1). As Tobias JA explained at [48]:

“But what is engaged, in my view, is the implicit requirement of s 145(3) and (4) that the employer, either by agreement or by court determination, be liable to pay the injured worker compensation under the Act in an amount not exceeding that payable by the Authority to the worker pursuant to an order made against the Authority under s 144(3).”

As noted above, that amount will be determined by reference to the entitlement of the worker to compensation “in accordance with this Act”.

89 All of the authorities discussed so far approach the construction of s 145(3) and (4) on an entirely conventional basis and in accordance with established principles. Although, pursuant to s 354 of the 1998 Act, the Commission is required to act “according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms”, it is clear that it must exercise its powers according to law: were it otherwise, the conferral of a right of appeal to this Court “in point of law”, pursuant to s 353 of the 1998 Act, would be significantly diminished, if not rendered otiose. Of a similar provision in the Anti-Discrimination Act 1977 (NSW), s 108(1)(b), Gleeson CJ and Handley JA stated in Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 at 29-30:

“The precise effect of this section is not immediately clear. Section 118(1) provides that a party aggrieved by a decision of the tribunal may appeal to the Supreme Court on a question of law and subs (3) provides that the Court shall hear and determine the question of law arising on the appeal and may make such order in relation to the appeal as to it seems fit. It is apparent therefore that s 108(1)(b) does not release the tribunal from the obligation to apply rules of law in arriving at its decisions. If that had been the effect of s 108(1)(c) [sic] there would have been no point in conferring a right of appeal to the Supreme Court on a question of law. The apparently conflicting provisions must, as a matter of construction, be reconciled ... .”

Their Honours then noted that a similar approach had been adopted in relation to s 36(3) of the Workers’ Compensation Act 1926 in its original form by Sugerman J in Thomas v Airlines of NSW Pty Ltd (1964) 64 SR(NSW) 176 at 185.

90 Further, as noted by Santow JA in Raniere Nominees (No. 2) use of the term “may” does not necessarily identify a broad discretionary power. It may confer a power coupled with an obligation to exercise the power in circumstances where such an obligation is engaged by law. This accords with the principle established in Julius v Bishop of Oxford (1880) 5 App Cas 214. Of course, in present times general law principles must submit to statutory provisions and the Interpretation Act 1987 (NSW) provides that in any Act or instrument, the word “may” “if used to confer a power, indicates that the power may be exercised or not at discretion”: s 9(1). That principle must be applied, except in so far as the Act or instrument concerned indicates a contrary intention: Interpretation Act, s 5(2). Further, to speak in terms of “discretion” is not to imply that the discretion is unlimited. The power of this Court in dealing with the present appeal, is conferred by use of the word “may” and includes remittal to the Commission and provides that the Court “may make such other order in relation to the appeal as the Court thinks fit”: 1998 Act, s 353(2). Nevertheless, it would generally be a legally erroneous application of the power so expressed if this Court, having identified an error in point of law which was material to the outcome of the decision below, declined to grant relief. Nor should a statutory right to compensation for redress of a statutory duty be treated as subject to some broad discretionary limitation. Thus conferral of power on the Human Rights and Equal Opportunity Commission by the word “may” in the Sex Discrimination Act 1984 (Cth), s 81 did not entitle the Commission to refuse to make a declaration that the respondents pay to each applicant compensation for loss or damage suffered by them and, the power being engaged, the failure of the Commission to make such a declaration constituted an error in law: see Hall v A and A Sheiban Pty Ltd [1989] FCA 72; (1989) 20 FCR 217 at 241-243 (Lockhart J); 262 (Wilcox J) and 281-286 (French J).

91 The circumstances in which the conferral of a power by the word “may” should properly be understood as limited by an obligation to make an order in an appropriate case has been considered in a number of authorities including Ward v Williams [1955] HCA 4; (1955) 92 CLR 496, Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] HCA 12; (1971) 127 CLR 106, Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51 and, more recently, Samad v District Court of New South Wales [2002] HCA 24; (2002) 209 CLR 140 at [31]- [36] (Gleeson CJ and McHugh J); [66]-[68] (Gaudron, Gummow and Callinan JJ). However, it should be not be understood that there is a bright line to be drawn between two entirely discrete concepts. As explained by Gleeson CJ and McHugh J in Samad at [35] the distinction is to be understood in the following terms:

“Whether a statute, which confers a power, on its true construction also imposes a duty to exercise the power in certain circumstances, may also affect the form of relief that is appropriate where there has been a failure to exercise the power; it may affect the question whether the appropriate order is an order to make a certain decision, or to do a certain act, or merely to consider the matter according to law. And even if a statute does not impose a duty to exercise the power, it may circumscribed the considerations that are relevant to the exercise of a discretion. In every case the task is to construe and apply the statute.”

92 Their Honours continued at [36]:

“The statutory context may be crucial. Where a statute confers rights or entitlements, as in Finance Facilities, it may be easy to conclude that the legislature did not intend that they could be taken away by the exercise of a discretion reposed in an administrative authority.”

93 In the context of the Workers Compensation Act, it might be thought that the power conferred on the Commission to make orders in relation to a worker’s claim for compensation under s 144(3) invoked a power coupled with an obligation in circumstances where the Commission was satisfied that compensation was payable “in accordance with this Act”, in the language of s 143(1)(a). Different considerations would no doubt apply where a claimant had invited the Authority to make an ex gratia payment.

94 Some weight must also be given to the comparison between the use of the term “may”, in relation to the Authority, in s 143 and the language of entitlement in s 9 which states that a worker who has received an injury “shall receive compensation from the worker’s employer in accordance with this Act” and further provides that compensation “is payable” in prescribed circumstances. On the other hand, Part 4, Division 6 may be seen as a mechanism by which that primary entitlement is effected, in relation to an uninsured or unidentified employer. Nor is the mandatory form of s 9 to be understood as removing or qualifying the right of the employer (and the insurer) to resist payment and dispute liability: see the 1998 Act, s 74. However, once a dispute comes to the Commission, power is generally conferred by the use of the term “may”: see, eg, ss 22(5), 22B, 29(1) and 58.

95 By contrast, the power conferred on the Authority to waive a liability of an employer, pursuant to s 145(2), if satisfied of one or more of a number of specified criteria, may not engage any obligation, even if a relevant criterion is established to the satisfaction of the Authority. In relation to the operation of s 145(1), (3) and (4), it is, at the very least, highly implausible that the Commission has a discretion which would allow it properly to make an order against an employer for reimbursement of the Fund, in circumstances where it was not satisfied that the employer had any liability to pay compensation under the Act. Similarly, it would be highly implausible that the Commission would have a power to make an order for reimbursement in an amount exceeding that which it was satisfied was the proper amount of compensation payable by the employer under the Act. What may be less clear is whether, once satisfied that the person served with the notice had a liability to pay its employee compensation under the Act, and was satisfied that such compensation had in fact been paid by the Authority, the Commission could then decline to make an order for reimbursement of the Fund by the employer.

96 It was this last matter which was the subject of consideration by this Court in Mackley. In that case, the employer, Mr Mackley, carried on business as a carpenter but claimed that he did not ever employ anyone in his business: at [10]. However, he did obtain assistance from a Mr McLeod in carrying out some work in a house, for which he was paid. He suggested that “the two men helped each other out with assistance in work projects by way of favours”. There was a dispute as to whether Mr Mackley did employ Mr McLeod, but that was resolved against Mr Mackley. On the other hand, the Commission also concluded on the facts that, in language reflective of s 145(2)(b), Mr Mackley could not reasonably have been expected to regard himself as an employer at the relevant time. A Deputy President of the Commission, having found liability was established, declined to make an order that Mr Mackley reimburse the Fund, as sought by the Authority: at [17].

97 The leading judgment in Mackley was that of Bryson JA, with whom Hodgson and McColl JJA agreed, Hodgson JA giving some further additional reasons. As, in the present case, the complaint is that the Commission did not apply the principles established in Mackley, so as to relieve the employers of their liability, it is necessary to understand what those principles were.

98 First, as Bryson JA noted at [16]:

“The Presidential Member expressed the view that the Commission’s power does not extend to the review of the exercise of WorkCover’s discretion pursuant to s 145(2) or to exercise by the Commission of the power of waiver thereunder: this is clearly correct.”

99 However, his Honour held that, applying the same criteria, the Commission could properly decline to make an order requiring the employer to reimburse the Fund. It then becomes necessary to consider how the criteria which govern the power of the Authority to waive a liability under sub-s (2) came to be incorporated into the power of the Commission under sub-s (4). There appear to be three steps in the reasoning of Bryson JA which lead to the conclusion that the Commission exercised its power properly. The first may be found in the proposition that there are no rights conferred on any party by Part 4, Div 6 of the Workers Compensation Act. Thus, after referring to ss 140 and 143, his Honour stated at [22]:

“Division 6 does not confer a legal right on the person making a claim to have payment out of the WorkCover Authority Fund in any circumstances; there is discretion.”

100 That statement was, in a sense obiter, because that issue simply did not arise. On the other hand, it appears to have been a step in the course of reasoning to the ultimate conclusion. That is because it formed part of a review of Division 6 and the various circumstances in which the word “may” is used. However, because the question of the worker’s rights was not directly in issue, the conclusion expressed above may fall short of a full exposition of the position of the worker making a claim under the Scheme. If the Authority were satisfied that the claimant had established the necessary elements to satisfy an entitlement to compensation under the Act, it is at least arguable that he or she could obtain mandamus from this Court (disregarding his or her right to apply to the Commission) requiring the Authority to satisfy his claim. In any event, that matter need not be decided for present purposes.

101 The second step in the reasoning was concerned with the combined operation of a notice under sub-s (1) and the power of recovery in a court of competent jurisdiction provided by sub-s (6). His Honour stated at [28]:

“Section 145(6) creates an obligation enforceable as a debt where a notice is given and no application has been made under subs (3). The terms of s 145(6) can support an implication that in other circumstances the facts referred to in s 145 do not create a debt.”

102 Perhaps not much store was intended to be placed upon that observation, but it is clear that, since the introduction of sub-s (7), an award or order of the Commission involving payment of an amount of money does create a legal obligation enforceable by registration of a certificate of the registrar in a court of competent of jurisdiction, as a debt, pursuant to s 362 of the 1998 Act.

103 The third step in this line of reasoning is set out after consideration of these various factors in Division 6, his Honour concluding:

“31. Part 4 Div 6 speaks at some places in terms which create enforceable rights to payments, but at other places, significant for the issues now under consideration, the language used creates discretions and never reaches the point of creating an obligation to make a payment without interposing a discretion. The contrast enhances the ordinary reading in which obligations depending upon discretion are not absolute obligations.

32. These considerations to my mind support the view that the discretion conferred by s 145(4) is a wide one and is not simply confined to formulation of appropriate terms of a determination, award or order to give effect to some right which is the subject of the application.”

104 If, as appears to be accepted, Division 6 does create enforceable rights, but in other places allows for the interposition of a determination by the Commission, it is difficult to understand why the fact of that interposition, for the purpose of resolving disputes, assists in understanding the breadth of the discretionary powers conferred on the Commission.

105 The second limb of the argument properly seeks to construe the scope of the power conferred by sub-s (4) on the Commission by reference to its subject matter, language and apparent purpose. Although it may be said that the Commission is exercising judicial power – see Mackley at [26] – the approach to identification of constraints on the exercise of a discretionary power, whether administrative or judicial, may properly be derived by implication from the subject matter, scope and purpose of the Act: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1985-86) 162 CLR 24 at 39-40 (Mason J). However, at [50]-[51] his Honour adopted an approach to the analysis of the legislation which is revealed in the following passages:

“The purposes of the legislation are very wide and the relevant considerations made available by having regard to those purposes are also very wide.
...
If s 145(4) is rightly understood as conferring a broad discretion, that discretion is limited in a way which can only be stated in general terms, to the effect that it must be exercised in good faith for some sound ground or good reason relevant to the purposes of the legislation.”

106 To understand the reason for the final conclusion, it is necessary to read the whole of the statement of the purposes of the legislation set out in [50] and not repeated above. However, it is fair to say that no precise purpose was identified which assisted greatly in the understanding of s 145(4). A different view may be open as to the scope and purpose of sub-s (4). Consistently with Raniere Nominees (No. 2) the powers of the Commission are conferred for the sole purpose of determining an application made under sub-s (3), as it is “any such application” which the Commission is empowered to hear and determine, and no other. That application must be one as to the “liability in respect of the payment concerned”, being a liability of the person served with a notice under sub-s (1) in respect of a payment identified as having been made by the Authority to or in respect of an injured worker. As already discussed, the person’s “liability” will depend, in broad terms, on the following factors:

(a) was the person properly served with a notice under sub-s (1);

(b) did the notice require payment of an amount not exceeding the payment made by the Authority;

(c) was the person served the employer or an insurer of the employer of the injured worker;

(d) was the payment made by the Authority a payment of “compensation in accordance with this Act”.

107 In neither Mackley nor in the present case, was any one or more of these factors in dispute. There is no support in GRE Workers’ Compensation Insurance, Raniere Nominees (No. 1), or Raniere Nominees (No. 2), for any greater statutory role for the Commission under s 145(4) than determining a dispute as to these matters. Of course, the Commission could have been invested with a power similar to that of the Authority under sub-s (2): one way of doing that would have been to confer on the Commission a power, where liability was established, to consider whether the employer or insurer “ought reasonably to be excused” from reimbursing, in part or in whole, the Fund. No such power was conferred expressly. Whether it was conferred by implication in relation to an insurer did not arise in Mackley, although the Authority may not have had power to waive the liability of an insurer under sub-s (2). In any event, the sentence last set out at [105] above, taken from [51] of the judgment in Mackley, leaves open the question of what are in fact sound grounds, and what may be good reason relevant to the purposes of the legislation, which would justify the refusal to make an order that an employer reimburse the Fund, in circumstances where the Commission was satisfied that liability was established, or where liability was not disputed.

108 There is, however, a more fundamental difficulty with the approach taken in Mackley as appears from the following passage. At [52] Bryson JA stated:

“Although s 145(2) confers the waiver power on the Authority and not on the Commission, the six subjects listed in s 145(2) are relevant considerations when exercising a discretion within the limits of a discretion which may be exercised for the purposes of s 145(4).”

109 To understand this passage, it is necessary to make certain assumptions. That is because, in its terms, the conclusion appears to be assumed rather than articulated. To state that certain factors are “relevant considerations” with respect to the exercise of a power assumes a certain scope of the power. If one identifies the power as extending to a determination that, despite liability, the employer ought reasonably be excused from making reimbursement of the Fund, at least the potential legitimacy of the particular considerations may be conceded. However, as already noted, sub-s (4) is not expressed in those terms. It is a standard conferral of power to deal with an application, such as may be found in almost any statute conferring jurisdiction on a court or tribunal. The statutory jurisdiction, as noted by Santow JA in Raniere Nominees (No. 2), involves no inherent jurisdiction and must be found in the terms of the statute or by reference to any necessary implications arising from it. The powers conferred under sub-s (4) are to hear and determine any such application, and to make awards or orders as to the payment of compensation under the Act. Consistently with the reasons of Giles JA in Raniere Nominees (No. 2), the statutory jurisdiction of the Commission is confined by the scope of an application which may be made under sub-s (3), which is to determine the liability in respect of the payment concerned. Once it is conceded that there is no power conferred on the Commission to waive the liability, the legitimacy of considering, for example, the capacity of the employer to pay, becomes obscure. Furthermore, if, as was the case in Mackley and appears to be the case here, the liability of the employer had already been determined in other proceedings, and no further issue concerning service of the notice was raised, it is doubtful whether the jurisdiction of the Commission was properly invoked, because there was nothing relevant in dispute which could be the subject of an application under sub-s (3). (No application in this respect was made to reconsider the earlier decisions with respect to the liability of the employer.)

110 It was put in this Court that the ratio of Mackley was to be found in the following passage at [53]:

“In relation to WorkCover Authority’s claim against Mr Mackley I am unable to see a clear source, that is, a conferral on WorkCover Authority of a legal right to reimbursement. Section 145 does seem to convey in a formless way an understanding that reimbursement by an uninsured employer will be enforced unless there is a decision to do otherwise: but this falls short of conferral of a right to its enforcement. The discretion works both ways: it is a discretion whether to order a reimbursement or not to do so. Section 145 does not create a prima facie outcome.”

111 If that be the ratio, Mackley is distinguishable. In Mackley, the challenge was to the refusal of the Commission to order payment by the employer to the Fund, by way of reimbursement of payments made by the Authority. In the present case, an order for payment to the Fund has been made and error must be found in point of law on the part of the Commission in making that order. On the other hand, despite the language of [53] the circumstances of Mackley are not so readily distinguishable. In that case, liability had already been established by orders of the Commission so that it was an essential element of the jurisdiction conferred on the Commission that it extended to a discretion not to order payment by way of reimbursement in circumstances where liability existed. Secondly, and consistently with that conclusion, it was an essential part of the reasoning in this Court that the Commission did not err in law in having regard to circumstances set out in s 145(2) in exercising that residual discretion.

112 There is, however, a somewhat different distinction which can be drawn between Mackley and the present case. It concerns the process of osmosis by which the factors identified in sub-s (2) are brought into consideration for the purposes of sub-s (4). Bryson JA described them as “relevant considerations” for the purposes of sub-s (4). However, there is no suggestion that his Honour was adopting the terminology of judicial review, nor did he need to do so for the purposes of Mackley.

113 In the language of judicial review, “relevant considerations” are mandatory considerations in the sense that any failure to take them into account, in circumstances where they are engaged, will be an error in point of law. A similar principle is reflected in the concept of “irrelevant considerations”. These are factors which are extraneous to the proper exercise of the power, so that to take them into account will also reveal legal error. These two categories do not, however, constitute an exclusive description of matters which may be considered. There will, in very many cases, be a category of legitimate factors, consideration of which is neither mandated or precluded. It was sufficient for the purposes of Mackley that consideration of matters set out in sub-s (2) was not precluded as a matter of law. Accordingly, I do not read Bryson JA at [52] as saying any more than that such matters were factors which could legitimately be taken into account by the Commission in declining to make an order.

114 That being so, any legal error on the part of the Commission in the present case must be somewhat differently formulated. Before turning to the reasons given by the Commission, it may be noted, as a matter of principle, that a failure to take into account matters of fact which are not in dispute, or were established to the satisfaction of the Commission, and were material to the outcome of the application, could constitute a failure to exercise the power or jurisdiction conferred on the Commission, and hence may involve an error in point of law: compare, in relation to an administrative decision, Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24] (Gummow and Callinan JJ) and [86]-[88] (Kirby J). Although this alternative approach was not considered in argument in this Court, the distinction is important. That is because what may be relevant or irrelevant considerations depends upon a question of statutory construction; a failure to exercise jurisdiction, on the other hand, may depend on an analysis on the material put before the decision-maker and the reasons given for decision.

Reasoning of Commission

115 It is necessary to turn to the reasons for decision given by Deputy President Candy in reconsidering the application of the Appellants. First, it may be noted that there was a challenge before the Deputy President to the proposed reconsideration pursuant to s 350(3) of the 1998 Act. However, he held that he had power to reconsider his decision and no further challenge has been taken to that conclusion.

116 Given the requirement that the Commission act with as little formality and technicality as possible, pursuant to s 354 of the 1998 Act, it was appropriate that the matter not be resolved purely by reference to the pleadings in the application, or the orders sought in the submissions. Nevertheless, there was some imprecision in the identification of the relief sought. The application of 21 October 2004 sought an order that the Authority “waive reimbursement of amounts paid” by it to the worker. The submissions in support of the application requested “the waiving of reimbursement of the award and costs with respect to this matter”. In further submissions dated 15 February 2005, the Appellants submitted that “the employer’s liability should be reduced pursuant to s 145(2)”. The “most important factor” in support of that order was said to involve some question of constitutional rights, which was not articulated. However, there was a further submission expressed in the following terms:

“It is submitted that the carrying of Victorian insurance by the Ballantynes clearly brings the Ballantynes within s 145(2)(c). An employer as it is referred to in that paragraph must be an employer who under the Act is required to have workers compensation coverage in New South Wales (that is a New South Wales employer).

The Ballantynes operating out of Victoria and carrying Victorian workers compensation insurance would, from a layman’s point of view (uninstructed in the law), not regard themselves as a (NSW) employer at the relevant time.

It is submitted that the reasonableness must be a ‘reasonable man test’ and that the employer referred to there in (it being a New South Wales statute) must be a New South Wales employer.”

(It may be accepted that the reference to s 145(2)(c) was an error and that reference was intended to paragraph (b).)

117 Although that submission was made before the decision of this Court in Mackley, the application for reconsideration was not accompanied by any further submissions but merely a request for reconsideration on the basis that the first decision of the Deputy President was based on the premise that “the discretionary powers of the Workers Compensation Commission were not sufficiently wide enough [sic] to make a determination to relieve the uninsured employer from liability”.

118 The Deputy President identified what was sought as “a determination of liability but that determination was sought to be nil”: at [23]. He referred to his earlier determination where he had expressed the view that the difference between a waiver and a determination of liability as nil appeared to be “illusory”.

119 With respect, the result may be the same but the distinction is arguably important. The assessment of liability, as discussed above, is quite different from the assessment of whether a liability should be waived. Indeed, no question of waiver will arise until the existence of a liability has been established. The distinction drawn in Mackley might better be described as illusory, because it does not appear to envisage a determination of nil liability, but rather a decision that, despite the existence of a particular liability, no order for payment of that “liability” should be made. The distinction sought to be drawn is between a liability which exists, but cannot be waived and a liability which exists, but will not be enforced.

120 In any event, the Deputy President continued by noting the matters relied upon by the Appellants in their original application, which he summarised as follows at [25]:

“The business of the Appellant was situated in Victoria.

The Appellant had appropriate workers compensation insurance under the laws of the State of Victoria.

The Certificate of Survey in respect of the vessel concerned was obtained from the Marine Board of Victoria. The appellant believed that there was appropriate workers compensation insurance in place with respect to its employees.

The Appellant would not reasonably regard itself as being a New South Wales employer.”

121 At [26], the reasons set out the matters identified in paragraphs (a)-(f) of s 145(2), being the matters which he was required to take into account. He continued:

“27. In relation to these matters there is no evidence that the amount sought is beyond the capacity of the employer to pay; the employer could not reasonably have been expected to regard itself as not being an employer at the relevant time; there is no evidence that the employer is bankrupt; and, there is no evidence that it would not be commercially feasible for the Authority to attempt to recover the amount. The connection of the employer with the state of Victoria and the workers compensation insurance in that state are, I think, irrelevant considerations.

28. Having regard to all of these submissions as to why liability to reimbursement the Respondent ought to be waived I am of opinion that such a determination ought not be made. I am mindful of the fact that the worker involved was a resident of New South Wales at the time of his injury, although there is no evidence as to where he entered into a contract of employment with the Appellant. The places of injury were in New South Wales. In my view the misunderstanding of the Appellant as to whether it was or was not a New South Wales employer is not sufficient to warrant making a determination pursuant to section 145(4) that the Appellant is not liable to reimburse any sum to the Respondent.”

122 No reference is made to paragraphs (d) and (e), the employer in the present case not being a corporation. Complaint is made as to the statement that there was “no evidence” that the amount sought is beyond the capacity of the employer to pay, and this is a matter to which further reference will be made below. The primary complaint made is that the connection of the employer with Victoria and the holding of workers compensation insurance in that State were said to be matters which could properly have been taken into account in considering the test in paragraph (b) and were discarded by the Deputy President out of hand as “irrelevant considerations”.

123 The Appellants sought to rely upon the use of the phrase ”irrelevant considerations” as having the meaning generally ascribed to it under principles of judicial review, namely that these were factors which the Commission was precluded from taking into account. However, it is doubtful that the Deputy President intended to use the language in that way and, for reasons already expressed, it would have been inappropriate for him to do so. The consideration which was, on the hypothesis that Mackley is correct, required by law to be taken into account was whether the employer could not reasonably have been expected to regard himself or herself as an “employer” at the relevant time. That was a matter which required reference to primary facts which identified the circumstances in which the consideration arose. As explained above, the identification of relevant considerations and irrelevant considerations involves a question of statutory construction: whether in a particular case primary facts should be found and taken into account or disregarded involves quite a different exercise.

124 Although the reasoning was elliptical, the point being made by the Commission was reasonably clear. As explained above, the question of connection with New South Wales, as determined in accordance with Mynott v Barnard, depended entirely upon the place where the accident occurred. As a matter of law, those factors which demonstrated a connection between the Appellants and the State of Victoria were irrelevant to the question whether the Appellants were an employer for the purposes of obligations imposed under the Workers Compensation Act in this State. Assuming relevant knowledge of the law, the kinds of case in which an employer might fall within the terms of par (b) would be those where the employer did not think that he or she, as a sole trader, had any employees or where, having employees, there was no reasonable expectation that they would enter New South Wales or be at risk of injury in New South Wales. The missing link in the reasoning of the Deputy President is perhaps, although it was not articulated in this Court, a failure to consider whether ignorance of the law in the respects just noted was a basis on which it should be concluded that the Appellants “could not reasonably have been expected” to regard themselves as an employer at the relevant time. To say that an employer made a reasonable mistake in that regard is not sufficient. If the Appellants were ignorant of their obligations with respect to workers compensation insurance, arguably they should have sought appropriate advice. The test to be applied was not complex, difficult to understand, subject of legal doubt or novel. The same test applied in Victoria as in New South Wales; there was no doubt that they had employees who operated in New South Wales and who were at risk of injury there. There was simply no articulated basis put to the Commission on which it can be said that the test in paragraph (b), which sets a high hurdle, should have been held to be satisfied. All that Deputy President Candy was saying was that a misunderstanding based upon irrelevant connections with another State fell far short of justifying a conclusion that the Appellants “could not reasonably have been expected” to regard themselves as an employer under New South Wales law at the relevant time. That statement reveals no error in point of law.

125 For completeness, it should be noted that the alternative approach relied upon on behalf of the Appellants was that they believed they had insurance cover in New South Wales. However, that was a consideration which was inconsistent with reliance on paragraph (b), because, far from suggesting that they had no reason to think they were an employer in New South Wales, reliance on such a belief suggests that they regarded themselves as an employer, but an employer which had satisfied its duties under New South Wales law. They were mistaken and their mistake was arguably not unreasonable, but that does not engage any of the criteria set out in pars (a)-(f), as putatively relevant.

126 There remains a question as to whether the Deputy President erred in point of law in saying that there was “no evidence” that the amount sought was beyond the capacity of the Appellants to pay.

127 In considering this ground, three points should be made at the outset. The first is that paragraph (a) involves an evaluative judgment which is not susceptible in a particular case to precise statement, except to the extent that the amount to be paid is known. To say that there is no evidence to demonstrate that the amount exceeds the capacity of the Appellants may mean no more than that such evidence as there is is simply inadequate to bear the burden sought to be placed upon it. Secondly, care must be taken lest over-emphatic statements are used as a basis for reassessing the merits of the particular case under the guise of identifying a point of law. Thirdly, it is a common fallacy that a claim of “no evidence” is a statement of law. If there is no evidence to support a particular finding, that may involve an error of law: an error of law on the part of the decision-maker in asserting that there is “no evidence” will only demonstrate legal error if it indicates a constructive failure to exercise jurisdiction, because material and uncontested facts have been ignored: see Haider v JP Morgan Holdings Ltd [2007] NSWCA 158 at [33]- [34].

128 In the circumstances of the case, the Deputy President was entitled to deal with this matter peremptorily. There was no statement or submission on the part of the Appellants which expressly sought to invoke one or other of the various paragraphs of s 145(2) now relied upon. The Deputy President had to glean from the material before him what might be thought to constitute a basis engaging a particular paragraph. The two submissions filed on behalf of the Appellants failed to assert a relevant lack of capacity. Indeed, had they done so, the authors might have realised that it would be necessary to identify by reference to assets and income, and possibly by submission of tax returns, what capacity the Appellants had. Two facts were selected by counsel for the purpose of demonstrating legal error. The first was a statement by the solicitor in the submissions dated 26 May 2003 that it “would not have been economically viable for the business to provide work cover insurance in both Victoria and New South Wales”. That was a statement made in the course of demonstrating that the Appellants had always sought to act honestly and reasonably. The second statement relied upon was to the effect that the fishing boat was subject to a mortgage. Again, it was not expressly put to the Commission that this demonstrated evidence of incapacity to pay, nor how it could demonstrate such incapacity, without any evidence as to the amount of the mortgage or the payments due under it. The closest the Appellants came to providing evidence to support a lack of capacity was a statement by their solicitor in a submission dated 15 February 2005 that they were “individuals with little assets carrying out a small fishing business”. This statement was apparently made in support of the proposition that the Authority had not acted equitably in the current dispute.

129 Accordingly, no error in point of law has been demonstrated in the reasons of the Deputy President; the appeal should be dismissed with costs.

Other matters

130 In these circumstances, it is not necessary to deal with the notice of contention filed on behalf of the Authority, based on the fact that the liability of the employers had already been established by decisions of the Commission and that there was, in effect, no dispute as to liability raised by the application of 21 October 2004. There is merit in that contention, but it would appear to fly in the face of the approach adopted in Mackley, which the Authority declined to challenge.

131 Secondly, for the reasons explained above, there appear to be significant disparities between the approach adopted by this Court in Mackley and that which underlies three other decisions of this Court dealing with substantially the same provisions, though raising different issues. The Authority’s submission that no error in point of law has been demonstrated in the decision of the Commission under appeal has been upheld: nevertheless, it is surprising that a statutory authority should eschew an opportunity to clarify matters of doubt which caused difficulty for the Commission in the case under appeal and which must cause difficulty for employers, and workers, and possibly insurers and the Authority, in the administration of legislation having social and financial significance for every accident occurring in the course of employment, where the accident occurs within the State.

Orders

132 The orders of the Court are:

(1) Appeal dismissed.

(2) Appellants to pay the Respondent’s costs of the appeal.

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LAST UPDATED: 11 September 2007

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