Aqua Distributors Pty Ltd v Roff
[2002] TASSC 84
•17 October 2002
[2002] TASSC 84
CITATION: Aqua Distributors Pty Ltd v Roff [2002] TASSC 84
PARTIES: AQUA DISTRIBUTORS PTY LTD
v
ROFF, Richard
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: LCA 54/2002
DELIVERED ON: 17 October 2002
DELIVERED AT: Hobart
HEARING DATES: 10 September 2002
JUDGMENT OF: Underwood J
CATCHWORDS:
Workers Compensation - Proceedings to obtain compensation - Determination of claims - Appeals and stated cases - Other matters - Tasmania - No power to receive evidence upon hearing of an appeal.
Workers Rehabilitation and Compensation Act 1988 (Tas), s63.
Aust Dig Workers Compensation [170]
Workers Compensation - Proceedings to obtain compensation - Determination of claims - Procedure before hearing - Whether insurer has authority to decide to dispute claim and give statutory notices - Subrogation - Terms of subrogation governed by policy.
Workers Rehabilitation and Compensation Act 1988 (Tas), s81A.
FAI General Insurance Co Ltd v MMI-CMI Insurance Ltd & Ors A14/1992; Freemasons Homes of Tasmania v Price A2/1994; Tasmanian Government Insurance Board & Ors v Priest A57/1993 (noted at (1993) 2 Tas R 493); Griffiths v Devonport Youth Accommodation Services Inc A39/1996, followed.
Aust Dig Workers Compensation [146]
REPRESENTATION:
Counsel:
Appellant: A M Quinn
Respondent: C N Dockray
Solicitors:
Appellant: Dobson Mitchell & Allport
Respondent: C N Dockray
Judgment Number: [2002] TASSC 84
Number of Paragraphs: 22
Serial No 84/2002
File No LCA 54/2002
AQUA DISTRIBUTORS PTY LTD v RICHARD ROFF
REASONS FOR JUDGMENT UNDERWOOD J
17 October 2002
The issue in this appeal from a determination of the Workers Rehabilitation and Compensation Tribunal ("the Tribunal") is whether there has been compliance with the provisions of the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s81A, to ground the Tribunal's jurisdiction to determine whether a genuine dispute existed with respect to the respondent's claim for compensation.
The respondent was a director, part owner and employee of the appellant. In July 1998, the respondent delivered a claim for compensation to the Tasmanian Government Insurance Office, then the appellant's licensed insurer. No medical certificate accompanied the claim. The claim asserted that the respondent suffered back pain about 12pm on 28 April 1998 when lifting a bag of fertiliser off the back of a truck.
On 25 March 2002, a medical practitioner issued a medical certificate which diagnosed a lumbar spine injury. The certificate also provided that the respondent stated that the injury was caused by an incident that occurred on 23 March 1998 when lifting a 50 kilogram bag of fertiliser. The certificate further stated that the respondent would be partially incapacitated for work from the date of the certificate until 25 June 2002. This certificate was submitted to GIO General Limited, the successor to the appellant's former licensed insurer. As is provided by the Act, s34(2), the claim for compensation was thereupon deemed to have been made.
Mr Rodney Bellette, the claims team leader employed by the licensed insurer, received the medical certificate the day it was issued. He thereupon prepared a letter dated 12 April 2002 and a referral. At no stage did Mr Bellette consult with or receive any instructions from the appellant or any person acting with the authority of the appellant. He claimed that the licensed insurer was entitled to act as it did by virtue of its rights of subrogation arising from the policy of insurance. The letter was in the following terms:
"Dear Mr Roff,
GIO General Limited is the workers compensation insurer of your employer, Aqua Distributors Pty Ltd, in respect of your injury occurring on 23 March 1998, and/or 28 April 1998. We refer to your recent claim for compensation constituted by your presentation to your employer of a workers' compensation medical certificate, signed and dated by Dr John Saul on the 25th March 2002 in this regard.
For the purposes of matters associated with your workers compensation claim GIO General Limited acts as agent of your employer.
By this letter we provide you with notice that your employer disputes liability to pay compensation by way of weekly payments, or any benefits payable under Division 2 of Part VI of the Workers' Rehabilitation & Compensation Act 1988 in respect of your injury.
Your employer's reasons for disputing liability are as follows:-
(1)Your current incapacity does not result from a previous work injury sustained on or about 23 March 1998, and/or 28 April 1998.
For your information we enclose a copy of a reference which is being lodged with the Workers' Rehabilitation & Compensation Tribunal in respect of your claim.
In due course you will receive advice from the Tribunal as to a date upon which your employer's application will be heard.
If in the meantime we receive further information, which supports your claim, we may withdraw our dispute referral and accept your claim.
If the dispute goes ahead, one of two outcomes will occur:-
1) The dispute will be upheld as being 'genuine'; or alternatively,
2) The dispute will not be found as genuine and the Tribunal will order that your claim be accepted and that payments be made.
In the event of 1 above, you will be advised of your right to apply to the Tribunal to enable your case to be formally determined.
Yours faithfully
Rodney Bellette
claims team leaderworkers' compensation - hobart"
The referral provided:
"referral to tribunal (S81A)
To the Registrar, Workers Rehabilitation and Compensation Tribunal
Employer Aqua Distributors Pty Ltd
Unit 23/4 Clifford Court, Howrah, Tas 7018
Worker Mr Richard Roff
Unit 23/4 Clifford Court, Howrah, Tas 7018
Insurer GIO General Limited of 111 Macquarie Street, Hobart, Tasmania, 7000
1GIO General Limited, being the authorised agent through rights of subrogation of the employer of Richard Roff who has made a claim for compensation (such claim constituted by the worker's presentation to his employer of a workers' compensation medical certificate, signed and dated by Dr John Saul on the 25th March 2002) under the Act in relation to an injury, dispute any liability to pay compensation by way of weekly payments and/or the cost of benefits payable under Division 2 of Part VI in respect of the injury.
2I hereby refer the matter to the Tribunal under Section 81A.
3I have notified the worker in writing that I dispute liability to pay compensation and have informed the worker of my reasons for disputing liability.
4Weekly Payments are not being made to the worker.
5I enclose the required documents with this referral.
My reasons for disputing liability to pay compensation are as follows: (Specify exact reasons)
(1)The worker's current incapacity does not result from a previous work injury sustained on or about 23 March 1998, and/or 28 April 1998.
note
The following documents must be lodged with the referral:-
þClaim form and medical certificate
þLetter to worker under Section 81A(1)
¨Names of Medical Practitioners who have or are schedule to examine the worker and date of any future appointments TBA
3 copies of all required documents including this referral must be lodged
Dated:12 April 2002 GIO General Limited
Per: R Bellette
As Agents for and on behalf of
Aqua Distributors Pty Ltd"
The Tribunal determined:
(1)that the employer did not form an intention to dispute liability to pay compensation;
(2)that the notice disputing liability did not comply with the requirements of the Act, s81A(1)(a);
(3)that the Tribunal does not have jurisdiction upon this reference.
From those determinations this appeal is brought upon the following grounds:
"1The Commissioner erred in law in failing to determine that as a consequence of the rights of the appellant being subrogated to its insurer, the insurer could not use those subrogated rights to dispute liability pursuant to the provisions of s81A of the Workers Rehabilitation & Compensation Act 1988.
2The Commissioner erred in law in determining that for a notice of dispute given under s81A(1)(a) to be valid it is not sufficient for the employer's insurer to form the intention to dispute on the employer's benefit pursuant to its right of subrogation.
3The Commissioner erred in law in determining that s81A(1)(a) of the Act required the employer alone to have formed the requisite intent in order for a notice given under that section to be valid despite the fact that the appellant's rights were subrogated to its insurer under the policy of insurance and that the notice was given in exercise of those subrogated rights.
4The Commissioner erred in law in determining that s81A(1)(a) of the Act required the employer alone to have formed the requisite intent in order for a notice given under that section to be valid despite the fact that the notice given by the appellant's insurer was within the scope of its authority as the appellant's agent.
5The Commissioner erred in law in determining that there was no evidence to show that the employer had formed the necessary intention to dispute the claim."
In FAI General Insurance Co Ltd v MMI-CMI Insurance Ltd & Ors A14/1992, Zeeman J said, at 7, with respect to the phrase "an employer who disputes his liability to pay compensation …", then enacted in the Act, s81(2):
· "there is no authority for a licensed insurer to proceed under s81(2)";
· a licensed insurer "may exercise its rights under a policy of insurance to take over the conduct of a matter in the name of and on behalf of the employer".
In FAI General Insurance Company Limited v De Saye A23/1992, I held to the same effect, namely, that although a licensed insurer may have rights pursuant to the terms of a policy of insurance, the statutory right to dispute liability, then enacted by s81(2), was conferred upon the employer and not the insurer.
This proposition was adopted in Freemasons Homes of Tasmania v Price A2/1994 and accepted as correct by the learned Chief Justice in State of Tasmania v Wylie [2000] TASSC 128. Formulation by the employer of the requisite state of mind is a condition precedent to the exercise of the rights conferred upon that employer by the Act, s81A. See Caterpillar Elphinstone Pty Ltd v Heazlewood 34/1997; GIO Australia Limited v Lovell [2000] TASSC 75.
In Price, I held that provided the employer had formed the requisite state of mind, the employer's agent, if properly authorised, could give the requisite notices for the employer.
Evidence is admissible to determine the necessary facts if an issue arises with respect to compliance with the provisions of s81A. See Tasmanian Government Insurance Board & Ors v Priest A57/1993 (noted at (1993) 2 Tas R 493); Griffiths v Devonport Youth Accommodation Services Inc A39/1996. Of course, it is not necessary in every case to adduce evidence to establish that it was the employer who formed the requisite state of mind and, either himself or by his authorised agent, acted in accordance with the provisions of s81A. See Keleher v Sherrin Hire Pty Ltd 138/1997. However, there are cases, and this is one, where the worker puts the matter in issue.
The Tribunal correctly held that compliance with s81A requires the employer to decide to dispute liability. It may be noted that the expression "an employer who disputes liability to pay compensation …" has, apart from the deletion of the word "his", remained unaltered since its first enactment in 1988. This is so, despite the expression being moved from s81(2) into s81A, and despite the latter section having been amended three times since its enactment in 1992. Parliament may be presumed to have been aware of the decisions of this Court to which I have just referred and the inescapable inference is that had Parliament intended to empower a licensed insurer as well as an employer to form the requisite state of mind, it had ample opportunity to do so.
Miss Quinn, who appeared for the appellant, submitted that the licensed insurer was entitled to exercise the rights conferred on an employer by the Act, s81A, in the name of the employer, by virtue of the doctrine of subrogation. At common law, the right of an insurer to an indemnity policy to exercise the rights of the insured in the name of the insured, does not arise until the insurer has paid the loss. See Catstellain v Preston (1883) 11 QBD 380. Miss Quinn accepted that this was the position at common law, but relied upon the terms of the contract of insurance to spell out the insurer's rights of subrogation. As James LJ said in Morris v Ford Motor Co Ltd [1973] 1 QB 792 at 812, "it is open to the parties to a contract of indemnity to contract on the terms of their choice …". See also Halliday v High Performance Personnel Pty Ltd (in liq) (1993) 113 ALR 637 at 640; Subrogation in Insurance Law, Derham, Ch13.
The clauses in the appellant's insurance policy with GIO General Limited upon which Miss Quinn relied provide:
"7 Subrogation. We shall be entitled to use your name and any of your Employees' names in respect of anything indemnified under this Section including the bringing, defending, enforcing or settling of legal proceedings for our benefit. You and any employee shall give all necessary information and assistance and forward all documents to enable us to settle or resist any claim as we may think fit. We shall be entitled to use your name and any Employee's name in any proceedings to enforce for our benefit, any order made for costs or otherwise we shall have the right of subrogation in respect of all rights which you and any Employee may have against any person or persons who may be responsible to you or otherwise in respect of any claim covered by this Section and you and any Employee shall as and when required execute any necessary documents for the purpose of vesting in us such rights.
…8 Conduct of Defence and Recovery Actions
Subject to the Insurance Contracts Act 1984 we shall be entitled to take over and conduct in your name or the name of any other party covered by the policy, the defence or settlement of any claim and to take recovery action or prosecute for our benefit, any claim for indemnity or damage or otherwise and we shall have full discretion in the manner in which any proceedings or settlements are conducted. If you or any other party covered by the policy wish to join with us in any action legal costs will be proportionately shared."
Clause 7 forms part of the specific conditions of the workers compensation policy and cl 8 forms part of the general conditions of a number of policies, including the workers compensation policies issued by the insurer. There appears to be nothing in the provisions of cl 7 of the specific conditions of the policy of insurance to subrogate to the insurer the right to make a decision to dispute the claim. Clause 7 obliges the insured to (inter alia) give all necessary assistance to enable the insurer to resist any claim it thinks fit. This may well include an obligation to make a decision to dispute a claim and authorise the insurer to act as the agent of the insured to give all necessary notices and so on. Of course, this did not happen in the present matter. In the event of an insurer requiring an insured to dispute the claim, pursuant to this clause, the employer is at least given an opportunity to provide some input into a decision-making process that may adversely affect an employee.
The special situation of the Act, ss81 and 81A, is recognised by specific condition 6, which provides:
"6 Employer not to make Admissions. You shall not incur any expense, litigate or otherwise or make any payment settlement or admission of liability in respect of any injury or claim for which we may be liable under this Section without our written authority. This Condition does not apply to your obligation to pay weekly payments under Section 81 of the Act provided that you have complied with Condition 5 above." [Giving notice of claims as soon as practicable after receipt.]
With respect to cl 8 of the general conditions, the opening words are immaterial, as the Insurance Contracts Act 1984 (Cth), s9(1), excludes workers compensation policies from the operation of the Act. The notice to the respondent and the referral to the Tribunal show that the author confused the concept of agency with the concept of subrogation. In his evidence, Mr Bellette claimed that he was exercising the right of subrogation and made it perfectly clear that he, not the employer, formed the intention to dispute liability to pay compensation and issued the appropriate notices. With respect to cl 8 of the policy, the question arises whether the words "conduct in your name … the defence … of any claim", are sufficiently wide to authorise the insurer to decide to dispute the claim and give all necessary notices in the name of the appellant? Prima facie it seems to me that this would appear to be so, as these are the first steps that are taken in the case of defending any claim.
These conditions and their construction are not referred to in the reasons for judgment of the learned Commissioner. This is not surprising. They did not form part of the evidence in the Tribunal. Mr Bellette was asked in evidence-in-chief if he acted in the exercise of his [sic] "rights of subrogation under the relevant policy of insurance". Mr D Gunson SC, who appeared for the respondent in the Tribunal, objected to the question as the policy was not in evidence. Miss Quinn said that she did not have the policy there that day. Mr Gunson said that he conceded that GIO Australia Limited was the licensed insurer and the question was not pursued. Submissions were put to the Tribunal about subrogation. During closing addresses, the learned Commissioner raised with counsel the issue of evidence of the rights of subrogation. He then asked, "Are you relying on the fact that it follows as a matter of law that rights of subrogation automatically entitle the claim to be taken over?" Counsel said that she was. There the matter rested.
At the beginning of the hearing of this appeal, I was handed the terms of the policy, or rather, was handed what was said to be the relevant terms of that policy. Counsel said that this was done by consent. In due course, submissions were made to me about the meaning of the relevant clauses and the terms of the right of subrogation. I have come to the conclusion that I should have refused to receive the terms of the policy and declined to hear submissions with respect to its terms.
This Court's jurisdiction is confined by the Act, s63. That jurisdiction is to determine whether there has been an error of law in the Tribunal. There was no error. There was no evidence of any contractual right of subrogation. No loss had been paid and, accordingly, no right of subrogation, either at common law or equity (depending upon one's point of view about the origins of the doctrine) had arisen. The finding of fact that the employer had not formed the requisite state of mind as is required by the Act, s81A, necessary to enable the Tribunal to determine if a genuine dispute existed, was the only reasonable finding open to the Tribunal on the evidence. The learned Commissioner applied the decisions of this Court to which I have referred. He was right to do so. So far as I am aware, in none of those cases was there any evidence of the terms of any contract of insurance.
Upon the hearing of an appeal authorised by the Act, s63, there is no power to take evidence. Counsel cannot confer a power on this Court to receive evidence by agreeing to tender a document that was not tendered in the Tribunal. Accordingly, the appeal is dismissed.
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