Accident Compensation Commission v Commonwealth of Australia

[1992] HCATrans 75

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M57 of 1991

B e t w e e n -

ACCIDENT COMPENSATION

COMMISSION

Applicant

and

COMMONWEALTH OF AUSTRALIA

Respondent

Application for special

leave to appeal

MASON CJ
DEANE J

GAUDRON J

Accident 1 13/3/92

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 13 MARCH 1992, AT 11.18 AM

Copyright in the High Court of Australia

MR J.E. MIDDLETON, QC:  If the Court pleases, I appear with

my learned friend, MR C.F. McMILLAN, on behalf of

the applicant in this matter. (instructed by

P.W. Tipping, Accident Compensation Commission)

MR o. GRAHAM, OC:  May it please the Court, I appear with my

learned friend, MR K. BELL, for the respondent.

(instructed by the Australian Government Solicitor)

MASON CJ: Yes, Mr Middleton.

MR MIDDLETON:  If the Court pleases, we have prepared a

summary of argument which I understand the Court is

now in possession of.

MASON CJ:  We have it.

MR MIDDLETON: This is a matter which raises two arguments:

the first arises as a construction argument on the

basis of the interpretation of section 162 of the

Social Security Act and its interrelationship with the Accident Compensation Act, more particularly

section 97(5). The argument is put that the Social

Security Act must be read having regard to the

background of statutory and, we would say, common

law features of workers compensation, the most

important feature being the inalienability of

workers compensation payments, a feature which not

only, we should say at the outset, arises in

relation to Victorian workers compensation
legislation but arises in workers compensation

legislation in other States.

We have set out the relevant provisions in

paragraph 3 on page 2 of the summary of argument

where one will see there that inalienability of

workers compensation payments is a feature of
workers compensation payment in Victoria, New South

Wales, Queensland, South Australia, Western

Australia and Tasmania.

The argument, on this basis, rests upon the

comments made in Clyne v Deputy Commissioner of

Taxation, (1981) 150 CLR 1. I believe Your Honours

will have a copy of that case which is attached to

the summary of argument. The principle which we

call in aid is that if, as we say is the case, the

notice operates as an assignment - that is the notice under the Social Security Act - then it takes, subject to all the infinities and defects in

title of the relevant person which the notice

affects, in this particular case, the worker.

The worker in this particular case cannot

alienate payments made to him or her under the

Accident Compensation Act or the Workers

Accident 13/3/92

Compensation Act. At pages 19 and 20 His Honour,

Your Honour the presiding judge, at page 19, in the third full paragraph - before that, regarding the effect of a notice under the Income Tax Assessment Act, which is in similar terms, that is a notice

under section 218:

I regard the effect of the notice as similar to that of a garnishee order. Indeed, the

similarity between s.218 and the provisions

for garnishee orders in Rules of Court is

quite striking.

This effect may be seen as the end result

of the principle that an assignee of a chose

in action takes it subject to all the equities

that the debtor or fund-holder has against the

assignor, as at the time of the notice of the
assignment, and subject also to all the
infirmities and defects in title of the

assignor.

Going over the page, if I may, to page 20, in the

last paragraph on page 20:

The word "equities" is not used in its

technical sense as meaning an equitable
interest or something in the nature of an
equitable interest. It is a general

expression calculated to comprehend defences

which would have been available to the debtor

in an action brought against him by the

assignor as well as set-off and counter-

claims. The assignee takes subject to any

defence or set-off available to the debtor at
the time when notice of assignment is given,

unless the right of set-off is excluded by the

contract between the assignee and the debtor.

They are the principles which we seek, by

analogy to this particular set of legislation, to
call in play here.	We say that if those principles

are adopted, then because of the existence of what we regard the infirmity, that is section 97(5) of the State Act, then no assignment can operate in

the terms there set out. That is the first

argument.

If that is not successful, then there is a

second argument. That is that if the Social

Security Act can only properly be interpreted so as

to require, in this case, the Accident Compensation

Commission to make payment - and can I just

interrupt myself there for one moment. When we say

"can only properly be interpreted", one would

normally interpret the Commonwealth Act in a way

such as to make it within power, and that is false

Accident 3 13/3/92

to our first argument, that one seeks to see

whether or not it can be read in the way in which

we suggest. But if it cannot be, on any reasonable
reading or having regard to the application of

Clyne's case, then we say that section 162 is

beyond power.

The argument there again rests upon the nature

of workers compensation being in the State domain,
but more importantly, the important feature of

inalienability of workers compensation which is a

common thread throughout workers compensation

schemes in this particular country. That is

relevant, in our submission, to the question of

power because we say this, that the power to have a

scheme such as section 162, which is similar to

section 218 of the Income Tax Assessment Act, is

not one which comes directly within the

paragraph (xxiiiA) of section 51. It is an

incidental power, if anything, to that particular

power set out in the Constitution to make provision

for certain allowances and pensions, just in the

same way as it would be argued that penal

provisions or tax evasion provisions are an

incidental power in a tax Act to the tax power.

Now, if that is the correct analysis, which we

say it is, then the question of the history and

long usage and association and importance of

workers compensation as a State domain - - -

GAUDRON J: Are you putting this forward as a limitation on

the incidental power but not on the main head of

power?

MR MIDDLETON:  Yes, exactly. We feel constrained not to be

able to put it as a basis - - -

GAUDRON J:  And it is the implied limitation?

MR MIDDLETON: - - - of a limitation on a substantive power,

but it is relevant to determining - and it is a

matter of degree - - -

GAUDRON J:  You accept, or your argument seems to accept

that it is incidental.

MR MIDDLETON:  No, it is based on the premise that when one

is looking to see - if anything, it is an

incidental power. I should make that clear.

GAUDRON J:  If anything. And you say it is nothing.

MR MIDDLETON:  We say it is not. To determine whether it is

an incidental power or not, one has to determine a

number of matters, because it is a matter of degree

and a matter of looking at the facts of the

Accident 13/3/92

situation and, we would say, the history of the

situation. Perhaps Sir Ninian Stephen made it the

clearest in a statement in Gazzo v Comptroller of

Stamps - this is a case which I have provided

copies to the Court; I believe you may have it - at

page 244 in the second paragraph:

The extent of implied incidental power

will depend upon the particular head of power

which is in question; matters of history and

of long usage play their part in the case of

some powers, as with the forfeiture and

seizure provisions of customs legislation

and if I can go down to the next paragraph:

Again, the fact that the operation of

s.90 -

the relevant provision in this case -

"reaches into the exercise of the

constitutional powers of the States" is of

itself sufficient to require that its validity

be carefully scrutinized -

Now, we pick up, in this case, the fact there is an

intrusion upon a very important aspect of workers

compensation. Not just workers compensation,

dealing with State workers, but a very important
aspect of it is an intrusion of the type that
requires the careful scrutiny of this particular
legislation, the Social Security Act. We say to

the extent it intrudes in that way, it is invalid.

MASON CJ:  You can hardly liken workers compensation to the

power to raise revenue, can you?

MR MIDDLETON:  No. We are not relying, if I may say with

the greatest respect, upon Gazzo's case as far as

the result in that particular case. We are relying

upon it for the principle as set out that when one

looks at whether or not there is an incidental

power, one looks at a number of factors. I have

identified the one which we, for the purposes of

this special leave application, regard as the most

significant.

We say, and it is set out in paragraph 4 of

the outline of argument, that the application

should be granted because, for the reasons we have

attempted to articulate, the Full Court was in

error.	We say the case represents, as the
affidavit in support shows, a test case.	We are

not just dealing with the $400 or $600 that was the
subject of the claim; we are dealing with a great

deal of money, having regard to the fact that

Accident 13/3/92

notices have been issued over a long period of time against the Accident Compensation Commission by the

Commonwealth.	So it is a test case of some
magnitude.

Thirdly, the issue raised is of importance

throughout Australia because of the notion of

inalienability in workers compensation payments in

the States in which I have already mentioned to

Your Honours.

It is for those reasons that, in our

submission, special leave should be granted to the

applicant in this particular case.

MASON CJ:  Mr Graham, we need not trouble you.

The Court is of opinion that the actual

decision of the Full Court of the Supreme Court is

not attended with sufficient doubt to justify the

grant of special leave to appeal.	The application
is therefore refused.

MR GRAHAM:	We would seek an order for costs.
MASON CJ:	You do not oppose an order for costs?
MR MIDDLETON:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 11.30 AM THE MATTER WAS ADJOURNED SINE DIE

Accident 6 13/3/92