Brett Jarvis v The Salvation Army Southern Territory
[2016] VSCA 175
•26 July 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0026
| BRETT JARVIS | Applicant |
| v | |
| THE SALVATION ARMY SOUTHERN TERRITORY | Respondent |
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| JUDGES: | WHELAN, BEACH and FERGUSON JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 20 July 2016 |
| DATE OF JUDGMENT: | 26 July 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 175 |
| JUDGMENT APPEALED FROM: | [2016] VSC 34 (Riordan J) |
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ACCIDENT COMPENSATION – Appeal – Weekly payments – Compensation in the form of weekly payments – Misconduct – Worker’s employment terminated because of worker’s misconduct – Determination not to pay compensation – Determination not to pay compensation in form of weekly payments as a result of worker’s current weekly earnings being reduced because worker’s employment terminated for misconduct – Discretion – Discretion to be exercised in accordance with object and purpose of Statute – Accident Compensation Act 1985, s 114(2A).
ACCIDENT COMPENSATION – Appeal – Decision not to reinstate worker’s weekly payments – Application by worker to Magistrates’ Court seeking reinstatement of weekly payments - Jurisdiction of Magistrates’ Court – Jurisdiction to inquire into, hear and determine any question or matter under the Accident Compensation Act 1985 – Extent of jurisdiction – Court to determine matter for itself – Court to determine afresh worker’s claim for compensation in the form of weekly payments – Accident Compensation Act 1985, ss 39 and 43.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A J Moulds QC with Mr N D Horner | Shine Lawyers |
| For the Respondent | Mr M F Fleming QC with Mr D Churilov | Hall & Wilcox Lawyers |
WHELAN JA
BEACH JA
FERGUSON JA:
Introduction
The applicant (Mr Brett Jarvis) was employed by the respondent (The Salvation Army Southern Territory) as a driver collecting donated goods for resale by the respondent. On 19 April 2011, the applicant suffered an injury to his left knee in the course of this employment. A claim for weekly payments pursuant to the provisions of the Accident Compensation Act 1985 (‘the Act’) was subsequently accepted by an agent of the Victorian WorkCover Authority (Allianz).
The applicant’s injury to his left knee required surgery. Sometime after the surgery, the applicant returned to work for the respondent. The applicant resumed employment on a full-time modified duties basis, while being certified by his treating medical practitioners as being incapacitated for his full pre-injury duties.
On 21 May 2012, the respondent terminated the applicant’s employment with it for what it described as ‘serious misconduct’. Subsequently, the applicant (who had not been on weekly payments because he had been working full hours, but on modified duties) sought the reinstatement of weekly payments pursuant to the provisions of the Act.
By a notice dated 9 August 2012, Allianz rejected the applicant’s claim for the reinstatement of his weekly payments. In rejecting the claim, Allianz noted that the applicant’s employment with the respondent had been terminated ‘due to serious misconduct’. Allianz relied upon s 114(2A) of the Act as the basis for not reinstating the applicant’s weekly payments.
In November 2012, the applicant commenced a proceeding, in the Magistrates’ Court, against the respondent, seeking an order for weekly payments to be paid to him pursuant to the provisions of the Act. On 27 February 2015, following a two-day hearing, a magistrate set aside Allianz’s written notice dated 9 August 2012.
In March 2015, the respondent commenced a proceeding in the Trial Division in which it appealed against the order of the magistrate. On 10 February 2016, a judge of the Trial Division allowed the respondent’s appeal; set aside the order of the magistrate; and, in lieu of the magistrate’s order, ordered that the Magistrates’ Court proceeding be dismissed.[1]
[1]The Salvation Army v Jarvis [2016] VSC 34 (‘Reasons’).
The applicant seeks leave to appeal and (if leave is granted) to appeal against the orders made by the judge. The application for leave to appeal, which was heard at the same time as the appeal, concerns the proper construction of s 114(2A) of the Act, and the extent and nature of the jurisdiction given to the Magistrates’ Court by ss 39 and 43 of the Act to ‘enquire into, hear and determine any question or matter under [the] Act’. Before setting out the relevant statutory provisions, it is necessary to briefly describe the circumstances of the termination of the applicant’s employment with the respondent.
The termination of the applicant’s employment
On 18 May 2012, the applicant attended at a home to collect a number of items that were to be donated to the respondent. One of the items was a punching bag stand. The applicant advised the donor that the item could not be collected on behalf of the respondent. At trial, there does not appear to have been any issue between the parties about the correctness of this advice. The applicant’s evidence at trial was that the donor told him that he (the applicant) could take the stand for himself because the donor wanted to get rid of it. The applicant then arranged with the donor to collect the item for personal use later that day.
Later that day (and during his lunch break), the applicant, driving a vehicle owned by the respondent, returned to the donor’s property. The applicant then collected the stand and delivered it to his own home.
On 21 May 2012, the applicant was interviewed by two employees of the respondent. Following the interview, the applicant’s employment was terminated. The letter of termination (dated 22 May 2012) stated:
During [the] interview … you admitted that you had indeed taken the refused stock (two punching bags and a punching bag stand) and delivered these items to your home, in the company truck. At no time did you purchase these goods, or advise staff of your actions.
As explained to you, this action is theft of Salvos stores property and as such constitutes serious misconduct, therefore your employment was terminated, effective immediately.
The relevant statutory provisions
Having suffered his injury before 1 July 2014, the applicant’s WorkCover claim is governed by the provisions of the Act.[2] Section 114(2A) of the Act provides:
[2]The entitlements of workers who suffer workplace injuries on or after 1 July 2014 are governed by the provisions of the Workplace Injury Rehabilitation and Compensation Act 2013 (‘the new Act’): see s 5 of the new Act.
(2A) If the current weekly earnings of a worker who—
(a) has an incapacity for work resulting from, or materially contributed to by, an injury; and
(b)is receiving, or but for the worker's current weekly earnings, would have been entitled to receive, compensation in the form of weekly payments—
are reduced because—
(c) the worker no longer resides in Victoria; or
(d) the worker’s employment was terminated because of the worker's misconduct; or
(e) the worker—
(i)has resigned; or
(ii) reduced the hours worked otherwise than in the circumstances referred in section 93CDA—
for reasons unrelated to the worker's incapacity—
the Authority or a self-insurer may determine—
(f) not to alter the amount of compensation in the form of weekly payments paid to the worker; or
(g) not to pay compensation in the form of weekly payments.
In the present case it is paragraph (d) of s 114(2A) that is of particular relevance — the respondent contending that the applicant’s weekly earnings had been reduced as a result of the applicant’s employment being terminated because of the applicant’s misconduct. Further, as was noted by both parties, neither the word ‘misconduct’, nor the expression ‘the worker’s misconduct’, as used in paragraph (d), is defined in the Act.
While s 114(1A) of the Act provides that sub-ss (2) to (13) of s 114 ‘only apply if the worker is currently receiving weekly payments as at the date of the change in the entitlement of the worker to weekly payments’, the parties accepted that, notwithstanding that the applicant was not ‘receiving weekly payments’ at the time his claim for reinstatement was rejected, sub-s (2A) was capable of application in the present case. In adopting this position, both sides accepted the correctness of John Dixon J’s decision in Cetel Communications v Parker,[3] where his Honour, after analysing the relevant legislative history, held that s 114(1A) did not limit the operative effect of the text of the subsequently enacted s 114(2A).[4]
[3][2014] VSC 318 (‘Cetel Communications’).
[4]Ibid [29]. We should say for the sake of completeness that the apparent tension between the terms of s 114(1A) and s 114(2A)(b) is not replicated in the corresponding provisions of the new Act (see ss 180 and 185 of the new Act).
Sections 39 and 43 of the Act give the County Court and, in appropriate circumstances, the Magistrates’ Court, the jurisdiction to enquire into and to determine questions or matters under the Act. Those sections relevantly provide:
39 Jurisdiction—general
(1) Subject to the County Court Act 1958, the County Court has exclusive jurisdiction to inquire into, hear and determine any question or matter under this Act arising after the commencement of section 10 of the Accident Compensation (WorkCover) Act 1992, out of—
(a) any decision of the Authority, employer or a self-insurer; …
(1AA)If the County Court is exercising the jurisdiction conferred by sub-section (1) in a proceeding relating to the entitlement of a worker to weekly payments, the County Court has the jurisdiction in the proceeding to inquire into, hear and determine any question or matter under this Act relating to any termination or alteration of any entitlement to weekly payments by virtue of this Act.
…
43Jurisdiction of Magistrates’ Court
(1) If—
(a) the County Court would have had jurisdiction under this Act or the Workers Compensation Act 1958 to inquire into, hear and determine any question or matter; and
(b) the question or matter is in respect of a decision, recommendation or direction for or in respect of a sum or matter the amount or value of which does not exceed $40 000 or is in respect of the payment of weekly payments—
the Magistrates’ Court has a like jurisdiction.
The proceeding in the Magistrates’ Court
Evidence was called before the magistrate as to the circumstances of the applicant’s employment, and also as to the termination of his employment. The question of whether there was a written policy, or any written acknowledgement from the applicant that he understood the respondent’s policy concerning the taking of goods proffered for donation, was canvassed in the evidence. As part of this evidence, the applicant said that a co-worker had acquiesced to the conduct for which the applicant’s employment was terminated.
Having heard all of the evidence and the submissions of the parties, the magistrate concluded that s 114(2A) gave the insurer (Allianz) a discretion not to pay weekly payments when one of the preconditions referred to in paragraphs (c) to (e) of the sub-section is established.
The magistrate accepted that the applicant’s weekly earnings had been reduced (eliminated) because the applicant’s employment had been terminated for misconduct. The magistrate then determined that the insurer’s discretion had miscarried in the present case because it had taken into account an allegation of theft which had not been established. Having wrongly taken that matter into account, the magistrate determined that Allianz’s written notice had to be set aside. However, the magistrate did not go on to make any decision that weekly payments should, as a consequence of the setting aside of the notice, be paid to the applicant.
The proceeding in the Trial Division
On appeal, the respondent contended that the magistrate was wrong to set aside Allianz’s notice. It contended that once one of the preconditions of s 114(2A) was established, then the Authority (or, more particularly, Allianz as agent for the Authority) was entitled to refuse to pay weekly payments. The respondent submitted that no issue of residual discretion arose once a relevant precondition in s 114(2A) was established.
The judge did not accept this submission. The judge concluded that, once a necessary precondition was established, there remained a discretion to be exercised by the insurer to determine whether or not to pay weekly payments. However, the judge went on to say that if one of the preconditions was established and the Authority decided not to resume weekly payments ‘usually the court enquiring into the matter would only be able to properly exercise its discretion in the same manner as the Authority’.[5]
[5]Reasons [82].
The judge concluded that the magistrate erred in approaching his task as if it was in the nature of a judicial review. The judge concluded that ss 39 and 43 of the Act required the magistrate to determine for himself whether a relevant precondition contained in s 114(2A) had been established. In this Court, both sides accepted the correctness of that proposition. The difference between the parties in this Court concerned whether there was any residual discretion, in either the insurer (Authority) or the Court, once a necessary precondition in s 114(2A) had been established.
The judge found that there was a residual discretion. He then addressed the nature of that discretion. He initially observed that where the context of an enactment provides no positive indication of the considerations by reference to which a decision is to be made, a general discretion will ordinarily be implied confined only by the scope and purposes of the legislation.[6] Relying in particular upon the High Court decision in Neat Domestic Trading Pty Ltd v AWB Limited (‘Neat’)[7] the judge then observed that a statute might confer a power as ‘a private right that entitles the entity or body on which the power is conferred to exercise the power in its own interests’.[8] The judge described the decision provided for by s 114(2A) of the Act as an ‘entitlement’ conferred on the Authority or a self-insurer[9] which, in the judge’s view, was not intended to be exercised by reference to the public interest or by balancing the interests of the worker and the insurer.[10] The judge concluded, relying on Finance Facilities Pty Ltd v Federal Commissioner of Taxation,[11] that once the relevant provisions were identified as an ‘entitlement’, the ‘beneficiary’ of which was the Authority or self-insurer who was empowered by the section to exercise the discretion, then ‘the court on appeal cannot properly re-exercise the “discretion” other than for the benefit of the insurer’.[12]
[6]Ibid [64].
[7](2003) 216 CLR 277.
[8]Reasons [70].
[9]Ibid [71], [73], [74] and [75].
[10]Ibid [72].
[11](1971) 127 CLR 106 (‘Finance Facilities’).
[12]Reasons [78].
The judge concluded his reasons as follows:
Although I have decided that s 114(2A) of the Act confers an entitlement, I do not exclude the possibility that the discretion may be re-exercised by the court in limited circumstances. For example, intervention by the court may be appropriate where the decision not to resume weekly payments is capricious and is inconsistent with the objects and purpose of the Act. An example may be where the worker is terminated for conduct which incidentally constitutes misconduct under employment terms. Or, if the worker’s employment would have been terminated regardless of the ‘contractual misconduct’, it may be arguable that not resuming weekly payments is not consistent with the object and purposes of s 114(2A). I express no concluded view because in this case the sole cause of the termination of the worker’s employment was found to be his misconduct.
My conclusion that the Magistrate erred would normally require that the matter be sent back for reconsideration. However, as there was no issue between the parties that the preconditions of s 114(2A) of the Act had been satisfied, and the insurer has sought to exercise its entitlement, in my opinion there could be no basis for the court coming to any other conclusion but that the insurer was entitled not resume weekly payments. I will hear the parties on this question.[13]
[13]Ibid [83]–[84] (footnotes omitted).
Before us, the respondent did not support the judge’s characterisation of the nature of the discretion. The respondent accepted that the Authority or a self-insurer did not have ‘private interests’ which were relevant. The only relevant ‘interest’ is the payment of compensation in accordance with the Act. The respondent submitted that the decision in Neat was not relevantly applicable to s 114(2A) and the position of the Authority or a self-insurer. The respondent also did not adopt the judge’s analysis concerning the ‘limited circumstances’ in which the discretion might be re-exercised by a court. The respondent’s position was that there was no residual discretion.
Analysis
In this Court, as we have already noted, both sides conceded that the magistrate erred in law when he approached his task as if it was an application in the nature of a judicial review of Allianz’s decision not to reinstate weekly payments. Sections 39 and 43 of the Act required the magistrate to enquire into, hear and determine the question of the applicant’s entitlement to the reinstatement of his weekly payments. The magistrate was required, after hearing evidence in submissions, to remake the decision that had been made by Allianz.[14]
[14]Peter Isaacson Publications Pty Ltd v Victorian Workcover Authority [1996] 1 VR 49, 61–62 (Smith J, with whom Brooking and Ashley JJ agreed).
As to the issue of whether there was a ‘residual discretion’, the respondent submitted that the use of the word ‘may’ in s 114(2A) did not involve the existence of any discretion once a necessary precondition of the section[15] has been established. In substance, the respondent contended that, once a necessary precondition has been established, the Authority is empowered to refuse to make weekly payments, and any such decision is not relevantly reviewable. In support of that contention, the respondent noted the use of the word ‘may’ in s 114(2) of the Act. For example, s 114(2)(b) provides that the Authority ‘may terminate weekly payments on the ground that … the worker is not … entitled to weekly payments’.
[15]That is, that the applicant’s earnings had been reduced because of the existence of one of the circumstances set out in paragraphs (c), (d) or (e) of s 114(2A).
We do not find the comparison of language in ss 114(2) and 114(2A) to be of great assistance in this case. Section 114(2A) was enacted more than 10 years after s 114(2), and five years after s 114(1A). As we have already observed, there is a significant tension, if not inconsistency, between the text in s 114(1A) and the text in s 114(2A).[16] This tension leads us to be wary about drawing too much from the language of one sub-section in s 114 enacted at a different time from the language of another sub-section of that section.
[16]Cf Cetel Communications [2014] VSC 318 [33].
In submitting that there was a residual discretion to determine whether or not weekly payments should be made, in circumstances where the worker’s weekly earnings were reduced because the worker’s employment had been terminated for misconduct, the applicant pointed to the myriad of different factual scenarios that might exist in relation to the seriousness of the misconduct and also the range of severity of injury or resultant incapacity that might exist in relation to potential workplace injuries. It was submitted that it could not have been the intention of the Parliament to disentitle a worker with a high level of incapacity from receiving weekly payments if the worker’s employment was terminated for misconduct that was at the lower end of the spectrum. Reference was made by the applicant to the possibility of a quadriplegic worker, who was unfit for any employment that was not ‘protected’ or ‘sheltered’ being dismissed for misconduct of a relatively insignificant kind. The applicant asked rhetorically whether it could have been the intention of the Parliament that such a worker be automatically disentitled to weekly payments on the mere proof of termination for misconduct.
The respondent accepted some of the force of this argument, but contended that it was open to the Authority (and, by extension, the Court) to determine that misconduct at the lower end of the spectrum was not misconduct within the meaning of the Act. We do not think that this concession fully answers the applicant’s contentions. Moreover, it does not permit the Authority or a court to consider the significance of the extent of a worker’s incapacity as that might relate to a worker’s capacity to actually engage in real employment.
Rather than attempt to artificially confine the expression ‘the worker’s misconduct’ in paragraph (d) of s 114(2A) so as to hold that that expression does not encompass misconduct that is not sufficiently serious or significant for the purposes of the Act, as was contended for by the respondent, we think the better view is that the relevance of the misconduct, and the weight to be attached to it, falls to be considered when the Authority (or a court) comes to ‘determine’ whether or not to pay (or alter the amount of) compensation in the form of weekly payments as referred to in, and required by, paragraphs (f) and (g) of s 114(2A) of the Act.
As the High Court has said many times, the task of statutory construction must begin and end with a consideration of the statutory text.[17] Section 114(2A) of the Act sets out the preconditions for the operation of that section, before providing that ‘the Authority or a self-insurer may determine … not to pay compensation in the form of weekly payments’. The very text of the section says that there is a determination to be made once one of the preconditions has been established. If, as the respondent submitted, there was no question of any determination being made once a precondition was established, one might have expected the Parliament to use language that conveyed that there was to be no entitlement to compensation in the relevant circumstance, such as that found in, for example, s 82(4) of the Act. Indeed, if the respondent’s construction were correct, there would be no need to refer to the Authority or self-insurer in the section because they would have no role to play.
[17]See, eg, Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39]; Commissioner of Taxation of the Commonwealth of Australia v Unit Trend Services Pty Ltd (2013) 250 CLR 523, 539 [47]; Thiess v Collector of Customs (2014) 250 CLR 664, 671 [22].
In further support for its submission that the use of the word ‘may’ in s 114(2A) of the Act does not involve the existence of any residual discretion once a necessary precondition has been established, the respondent pointed to the fact that there are no specific provisions in the Act dealing with the question of how the discretion is to be exercised and what matters are to be taken into account in making the determination permitted by the section. The short answer to this point is that the determination falls to be made by reference to the object and the purpose of the Act.[18]
[18]Cf Finance Facilities (1971) 127 CLR 106, 134 (Windeyer J).
As the respondent itself submitted, the judge’s analysis of the nature of the discretion cannot be accepted, essentially for the reasons the respondent itself submitted. The discretion conferred by the section is not properly to be seen as an ‘entitlement’ of the Authority or a self-insurer, and the Authority or self-insurer does not relevantly have private interests by reference to which it is entitled to exercise the discretion. This is not to say, of course, that the establishment of one of the preconditions (such as termination for misconduct or resignation for reasons unrelated to incapacity) might not themselves be relevant or even critical factors in the determination provided for by the section.
The task of the magistrate in the present case was to hear all of the relevant evidence called and tendered by the parties and, after receiving any relevant submissions, to determine afresh the applicant’s application for the reinstatement of his weekly payments. Consistently with ss 39 and 43 of the Act, the magistrate was required to determine for himself whether or not a relevant precondition was established and then whether or not compensation in the form of weekly payments should be paid to the applicant having regard to the object and purpose of the Act. This the magistrate did not do. The judge was, therefore correct to allow the appeal. However, the judge erred when he concluded that, once the magistrate found that a necessary precondition existed, the magistrate’s decision was fettered by the insurer’s (Allianz) original decision. It follows that the application for leave to appeal should be granted; the appeal should be allowed; and consequential orders should be made remitting the proceeding for rehearing and determination in the Magistrates’ Court.
The respondent submitted that if this Court was minded to make orders that would result in the proceeding being remitted to the Magistrates’ Court for rehearing then the remittal should be on the limited basis that the original finding by the magistrate that the applicant’s employment was terminated because of the applicant’s misconduct should be preserved, and that the retrial should proceed only on the question of discretion. We reject that submission. In our view, the interests of justice require the whole of the proceeding to be reheard and redetermined in the Magistrates’ Court. Both sides accepted that, if we determined that the proceeding should be reheard, then it should be reheard by a differently constituted court from the one that originally heard the matter. To fetter the magistrate who rehears this proceeding with a finding of misconduct in respect of circumstances that will need to be evaluated again in the appropriate exercise of the discretion conferred by s 114(2A) would, in our view, make the rehearing of this proceeding unduly complex.
Conclusion
We will make orders granting the applicant leave to appeal and allowing the appeal. The proceeding will be remitted to the Magistrates’ Court for rehearing and determination in accordance with these reasons.
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