Cahill v Victorian WorkCover Authority
[1999] VSC 440
•18 November 1999
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION Do not Send for Reporting Not Restricted
No. 4426 of 1999
| PAUL VINCENT CAHILL | Plaintiff |
| v. | |
| ANDREW LINDBERG (Chief Executive of the Board of Victorian Workcover Authority) And | First Defendant |
| VICTORIAN WORKCOVER AUTHORITY | Second Defendant |
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JUDGE: | O'BRYAN, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 10 NOVEMBER 1999 | |
DATE OF JUDGMENT: | 18 NOVEMBER 1999 | |
CASE MAY BE CITED AS: | CAHILL V. VICTORIAN WORKCOVER AUTHORITY | |
MEDIA NEUTRAL CITATION: | [1999] VSC 440 | |
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CATCHWORDS:
Order 56 Supreme Court Rules of Procedure – Review determination of Board of Victorian Workcover Authority.
Procedural Fairness – Need for – Section 115, Accident Compensation Act 1985 application for settlement of his entitlement.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr S. Hurd | Harris Lieberman Boyd |
| For the Defendant | Mr M. Fleming | Purves Clarke Richards |
HIS HONOUR:
Pursuant to Rule 56 of the Supreme Court Rules of Civil Procedure the plaintiff applied to review the determination of the Board of Management of Victorian Workcover Authority, on 15 December 1998, not to approve an Application for settlement of his entitlement under the Accident Compensation Act 1985, s.115 (the Act).
The plaintiff sustained an injury to his back in July 1991 during the course of his employment as an orchard worker and has not been engaged in gainful employment since. He underwent a double level spinal fusion in November 1993, is "seriously injured" within the meaning of s.93 of the Act and has been receiving weekly payments since 1991, a period well in excess of 104 weeks.
The narrative provided in the plaintiff's affidavit sworn 22 April 1999 and filed in support of this proceeding tells a sorry story of problems between the insurer and officers of the Workcover Authority with himself in relation to his entitlements under the Act. It is unnecessary to determine who is in the right since the points at issue in this proceeding only relate to the determination made by the Board in December 1998 not to approve an Application for settlement of his entitlement under the Act.
It is common ground between the plaintiff and the second defendant that before the Board met to determine the plaintiff's application the plaintiff provided to the Authority an Application in an approved form supported by a number of documents and that officers of the Authority provided to the Authority a "Decision Paper" and attachments which included medical reports, surveillance evidence, including video films. It is also common ground that the Board did not offer the plaintiff an opportunity to respond to evidence calculated to affect his credibility and touching an issue whether he was totally and permanently incapacitated.
Pursuant to s.115(1) of the Act a worker who is receiving or is entitled to compensation under the Act may apply for settlement of his entitlement under the Act –
"(a) if the worker –
(i) is over the age of 55 years; and
(ii)has no current work capacity and is likely to continue indefinitely to have no current work capacity;
(iii)has been receiving weekly payments for at least 104 weeks; or
(b) in such other circumstances as are prescribed."
The plaintiff is aged 38 years and ineligible to apply under s.115(1)(a) for many years. The word "prescribed" in sub-clause (b) means prescribed by the regulations (made under the Act). The relevant Statutory Regulation is Regulation 25 made in 1992 (SR 1992 No. 318, r.11, commenced 1 December 1992; amended by SR 1993, No. 122, r.9, commenced 1 July 1993).
Regulation 25 provides:
"(1)(Where seriously injured) A worker who is receiving or is entitled to compensation under the Act may apply to the Authority or self-insurer for settlement of his or her entitlement under the Act as provided in Section 115 of the Act if the worker -
(a)is seriously injured within the meaning of section 93B of the Act; and
(b)has been receiving weekly payments for at least 104 weeks; and
(c)requires the settlement for the purpose of an income-producing project."
For reasons which will become apparent later, reference should be made to Regulation 25(2) which provides:
"(2)(Where not seriously injured) A worker who is receiving or is entitled to compensation under the Act may apply to the Authority, authorised insurer or self-insurer for settlement of his or her entitlement under the Act as provided in Section 115 of the Act if the worker -
(a)is not totally and permanently incapacitated and is not seriously injured within the meaning of Section 93B of the Act; and
(b)has been incapacitated for at least 104 weeks."
The Board has a discretion to approve or not to approve a settlement under s.115. I make it clear at the outset that this proceeding is not an appeal on the merits. Section 115(5) precludes an appeal to any court or Tribunal from a decision of the Authority to determine not to make a settlement under s.115.
Judicial Review is a proceeding commenced by originating motion enabling the Court to grant relief or remedy in the nature of certiorari, mandamus, prohibition or quo warranto by way of judgment or order. The Court reviews the decision to ascertain whether there were errors of law and, if there were, whether the decision should be set aside and the Application referred back to the decision-making body to determine according to law. It is not open to this Court to decide for itself whether the plaintiff's application should be approved because the legislature has conferred jurisdiction to do so upon the Board of Management of the second defendant.
The Act established the Victorian Workcover Authority and the Board of Management of the Authority (see ss.18 and 24). The Board consists of a Director and not more than seven part-time Directors. The Board may meet at any time and must meet at least ten times in each calendar year. By s.28(8), the Board may regulate its own procedure. It may, and usually does, act in private and it determines applications under s.115 on the submissions it receives from the applicant and officers representing the Authority. It is not bound by the rules of evidence.
The first ground of attack made upon the determination of the Board on 15 December 1998 is that it denied natural justice to the plaintiff.
The threshold question is whether the Board is required to comply with the rules of natural justice. There is considerable judicial authority upon the question when administrative bodies are required to observe the rules of natural justice.
It is a rule of the common law that when an administrative decision making body has power to make an order which will deprive a person of some right or interest or the legitimate expectation of a benefit, unless Parliament evinces an intention that the decision making body is not required to observe the rules of natural justice, the rules of natural justice apply and the body must act fairly and accord procedural fairness. See Kioa v. West (1985) 159 C.L.R. 550.
Clear statutory words can take away the obligation of a decision making body to accord procedural fairness.
In Kioa the High Court held, by a majority, that the requirements of natural justice or procedural fairness need not be observed in relation to making a deportation order by the Minister's delegate under the relevant legislation. However, Mason, J. (as he then was) formulated the fundamental rule of the common law doctrine of natural justice –
"that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it". (at 582)
His Honour added:
"The reference to 'right or interest' in this formulation must be understood as relating to personal liberty, status, preservation of livelihood and reputation, as well as to proprietary rights and interests."
In Masters v. McCubbery (1996) 1 V.R. 635 the Court of Appeal held that a "Medical Panel" created for the purposes of the Act to form opinions on "medical questions" referred to it by a court determined issues which interfered with the rights of individuals and must accord procedural fairness. The Court of Appeal held the Accident Compensation Act did not evince an intention of Parliament that a medical panel not accord procedural fairness.
The Act confers upon the Board substantial decision-making power. A determination to disapprove an application by an injured worker for settlement of his entitlement under the Act by the payment of a lump sum deprives the worker of some interest of a proprietary nature.
It is unnecessary to consider the matter in depth because Mr Fleming of counsel for the Authority did not argue that a determination by the Board not to approve an application under s.115 interfered prejudicially with some interest of the plaintiff. Mr Fleming did not argue that the Act did not evince an intention of Parliament that the Board not accord procedural fairness to an applicant for a benefit or entitlement under the Act. Accordingly, I conclude that the Board was required to act fairly and accord procedural fairness. Natural justice and fairness "are to be equated", according to Mason, J. in Kioa at 583.
The expression "procedural fairness" is the modern term used to describe the rules of natural justice. The two main rules of natural justice are, the rule against bias and the rule requiring a fair hearing. Callaway, J.A., in McCubbery, observed: "Each rule has several applications and that the content of natural justice, or to use the modern term procedural fairness, is variable. It is affected by the identity of the decision-maker, the nature of the relevant power and the circumstances in which it is exercised." (653/654)
The rule against acquiring information in the absence of a party without giving that party an opportunity to comment on it (McCubbery at 654) is invoked by the plaintiff in the present case. In Kioa, Mason, J. stated the rule in similar terms in the passage cited above: "He is entitled to know the case sought to be made against him and to be given an opportunity of replying to it."
The vice of the procedure adopted by the Board lay not in determining the application in private, it was entitled to do so, but in failing to give the plaintiff an opportunity to read the medical evidence and see the surveillance evidence, including video film, and to comment upon both and, if necessary, to be allowed to provide answering medical and other evidence.
The medical and surveillance evidence was deemed relevant by officers of the Authority who prepared the Decision Paper and also by the Board. The evidence was unfairly placed before the Board because the plaintiff was denied an opportunity to read and answer the medical evidence and to see the surveillance and video and to explain what he was doing and whether he was the person filmed. Covert evidence is a powerful tool in the hands of an insurer or an authority such as the defendant. The Board was obliged to observe the rules of procedural fairness and it did not do so.
For reasons which I shall provide shortly I consider the medical and surveillance evidence was irrelevant to the issues raised in the Application and should not have been placed before the Board.
Because the Board did not accord natural justice to the plaintiff the determination is flawed and must be set aside. The application will have to be re-heard.
The plaintiff, through his counsel, expressed concern at the hearing that the Board should be reconstituted because he fears that the same Board may hold a preconceived view amounting to prejudgment of the application. There is some merit in the argument for the rule concerned with bias gives rise to the pre-judgment rule mentioned above. (Callaway, J.A. in McCubbery at 654). Not only must the Board that re-hears the application not be biased in the way of not holding a preconceived view amounting to prejudgment, there must be no perception of bias.
The second main ground of attack upon the Board's determination concerned the matters which were taken into account by the Board. Mr Hurd of counsel for the plaintiff submitted that the Board fell into legal error by taking into account one irrelevant matter and in determining that the plaintiff's application was not for an "income producing project".
The Board provided brief reasons for not approving the plaintiff's application. Indeed, Mr. Hurd submitted that the Board simply adopted the reasons offered by the officers of the Authority in the Decision Paper in paragraph 10 in not recommending a s.115 settlement.
The Board stated its reasons as follows:
". the possibility of a gainful return to employment has not been thoroughly explored and attempted;
.your application is not for an income producing project, and the monies were to be invested in funds that could be accessed by you at any time; and
.there is no evidence that you have sufficient financial acumen to ensure that any settlement monies will be appropriately managed to protect your future income."
In my opinion, it was not open to the Board to revisit the current medical situation of the plaintiff and to consider whether he might return to gainful employment, as it appears to have done. My reasons for so holding are that s.115(1)(b) of the Act and Regulation 25(1) make no reference to the current and future work capacity of a "seriously injured worker". If a worker is over the age of 55 years, s.s.(1)(a)(ii) requires the Board to consider current work capacity and future work capacity. Regulation 25(1) which is applicable only to "seriously injured workers" does not include as a condition current work capacity, or whether current incapacity is likely to continue indefinitely. It would have been a simple matter to include in Regulation 25(1) the words used in s.115(1)(a)(ii) and Regulation 25(2)(a). Their absence is an indication that the legislature intended to exclude them. In Regulation 25(2), where a worker is not "seriously injured" total and permanent incapacity is expressly a relevant circumstance.
I conclude, therefore, that the Board was provided a considerable amount of irrelevant and inadmissible evidence which, if read by the Board, as I assume happened, was prejudicial to his application.
Regulation 25(1) allows a worker who is receiving or is entitled to compensation under the Act to apply for settlement of their entitlement under the Act provided they satisfy the three conditions specified –
(a) be seriously injured; and
(b) be in receipt of weekly payments for at least 104 weeks; and(c)require the settlement for the purpose of an income-producing project.
Curiously, the age requirement specified in sub-clause (a)(i) of s.115 is not a requirement in Regulation 25. It is quite understandable Parliament intended that a worker who satisfies the "seriously injured" test should not have to prove that he is unlikely to ever be gainfully employed when he applies for settlement of his entitlement.
Therefore, the Board erred in receiving and using much of the evidence placed before it in the Decision Paper.
The plaintiff set out in his application a financial plan devised by financial planners to suit his needs. The plan was premised on a settlement of $405,000, an amount calculated by the Authority as appropriate should the application be successful. The settlement amount will not be taxable or a capital gain in the hands of the plaintiff.
The essential elements of the financial plan are, some readily accessible cash in a bank account ($15,000), investment in a superannuation fund ($185,000) and an allocated pension ($85,000): total $285,000. The plan will allow access to the invested funds at short notice. The balance of the settlement will be used to discharge debts.
The writer of the Discussion Paper commented: "Mr Cahill has not provided any evidence of financial acumen." Little evidence was provided to support this comment, nor was the plaintiff offered an opportunity to respond to it. It should be noted that since being injured the plaintiff has completed one year of a Bachelor of Arts (Business Studies) degree and completed most of a Bachelor of Science (Psychology) degree and he has been employed as a clerk from time to time. He is obviously above average intelligence, and possesses literacy and numeracy skills.
The writer of the Discussion Paper stated (in para.8):
"Mr Cahill's application for a s.115 redemption is not for an income producing project. The application is basically to discharge an outstanding mortgage and invest the balance."
The latter portion of the statement is factually correct, the first portion is arguably wrong. The payment of debt will increase disposable income and make any income producing project more viable.
The Victorian Workcover Authority has published s.115 Settlement guidelines for workers who are considering making an application for a s.115 settlement. It is only necessary for the Court to consider paragraph 4.4.4 under the heading: Financial Planning. The guidelines suggest that evidence supporting an "Income Producing Project" should show that the worker has financial acumen and "that the proposed business venture is a proven and viable income-producing project which would enable the worker to match or exceed the level of weekly benefit". The guidelines assume that the worker will buy a business and have enough financial acumen to manage it profitably.
None of these requirements are found in the legislation. Indeed the word "project" in its ordinary meaning does not mean "business". An "income producing project" may include an income producing investment managed by a financial adviser or stockbroker or lawyer. A worker's disabilities may preclude the worker ever managing a business.
I am of the opinion that the guidelines provide too narrow a meaning of the words "income producing project". I infer that the Board had regard to the guidelines when it determined the Application. In doing so, I consider the Board fell into error.
It is not for the Court to decide whether the proposed project or any other project is within the meaning of the words income producing project, that is the function of the Board. I simply caution the Board against giving the words too narrow a meaning.
In my opinion, errors of law made by the Board require the Court to make the following orders against the second-named defendant. The first-named defendant was unnecessarily joined as a party and no order will be made against him.
The Court orders and declares:
1.That the determination of the plaintiff's application pursuant to s.115 of the Accident Compensation Act 1985 on 15 December 1985 was wrong in law and is set aside.
2.That the Board of Management, differently constituted, is to hear and determine the plaintiff's application for a settlement pursuant to s.115 of the Accident Compensation Act 1985 according to law.
3.That the costs of the plaintiff are to be taxed and paid by the second-named defendant.
4.That liberty to apply be reserved.
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