Commonwealth of Australia v Goodfellow, F.W

Re: COMMONWEALTH OF AUSTRALIA
And: FREDERICK WILLIAM GOODFELLOW (1980) 43 FLR 63
FC No. 13 of 1979
Commonwealth Government Employees' Compensation - Administrative Law -
Statutes - High Court and Federal Judiciary

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.(1)

CATCHWORDS

Commonwealth Government Employees' Compensation - injury in course of employment - liability of Commonwealth to employee - Common law award of damages part satisfied - contributory negligence of employee - liability of employee to Commonwealth - P.A.Y.E. deductions - power of Compensation Commissioner and Tribunal to make and reconsider determinations of quantum of employee's liability - appeal on question of law to Federal Court exercising original jurisdiction.

Compensation (Commonwealth Government Employees) Act 1971 ss. 20, 54, 63, 76, 83, 84, 95, 97, 99, 119

Income Tax Assessment Act 1936, as amended, Part VI Division 2

Federal Court of Australia Act 1976 ss. 19, 20.

Administrative Law - Commonwealth employee - Injury in course of employment - Liability of Commonwealth to employee - Commonwealth negligent - Judgment for common law damages entered for employee - Statutory compensation paid by Commonwealth to employee prior to judgment - Employee's liability to Commonwealth - What amount employee liable to repay to Commonwealth - Determination of quantum made by Commissioner of Employees' Compensation and by Commonwealth Employees' Compensation Tribunal - Determination made purportedly under statutory power - Whether Commissioner had power to make determination - Whether Tribunal had power to make determination - Compensation (Commonwealth Employees) Act 1971 (Cth), ss. 20, 27 (1), 45, 84, 85, 95, 97, 99 (7) - Income Tax Assessment Act 1936 (Cth), Pt VI, Divn 2.

Administrative Law - Commonwealth employee - Injury in course of employment - Commissioner of Employees' Compensation - Powers of Commissioner to make determinations of his own motion - Powers of Commonwealth Employees' Compensation Tribunal to make determinations - Compensation (Commonwealth Employees) Act 1971 (Cth), ss. 20, 27 (1), 45, 84, 85, 95, 97, 99 (7).

Statutes - Interpretation - "Determination" - "Deemed" - "Recovery of damages" - "Matters or questions arising under" - "Paid" - Compensation (Commonwealth Employees) Act 1971 (Cth), ss. 20, 97 (b), 99 (7).

High Court and Federal Judiciary - Appeal from determination of Commonwealth Employees' Compensation Tribunal - Appeal on questions of law - Whether court had jurisdiction to hear appeal - Whether Tribunal had power to make determination - Federal Court of Australia Act 1976 (Cth), ss. 19, 20 - Compensation (Commonwealth Employees) Act 1971 (Cth), ss. 20, 27 (1), 45, 84, 85, 95, 97, 99 (7).

HEADNOTE

The resondent, then a Lieutenant Commander in the Royal Australian Navy, suffered injury in 1969 in the course of his employment by the appellant. The appellant paid amounts of compensation to the respondent pursuant at first to the Commonwealth Employees' Compensation Act 1930 and later to the Compensation (Commonwealth Employees) Act 1971 ("the Compensation Act"). In March 1978 the Supreme Court of New South Wales found the appellant liable in negligence and judgment was entered in the respondent's favour in the amount of $189,675. Some time later the respondent received from the appellant the sum of $157,034.36 in part satisfaction of that judgment and the appellant claimed to be entitled to retain the balance and did in fact retain it in satisfaction of the amount which the respondent was allegedly liable to pay the appellant pursuant to s. 99 (7) of the Compensation Act which provided: "If, before the recovery of the damages by . . . the employee . . . an amount of compensation under this Act was paid to the employee in respect of the injury, . . . the employee . . . is liable to pay to the Commonwealth so much of that amount as would not, by reason of the last two preceding sub-sections, have been paid if that amount had become payable immediately after the damages were recovered." In October 1978 and in February 1979 the Commissioner for Employees' Compensation by his delegate issued determinations purporting to have been made pursuant to the Compensation Act. These determinations were made by the Commissioner's delegate acting on his own motion and they purported to determine the amounts which the respondent was liable to pay to the appellant in accordance with s. 99 (7) of the Compensation Act. Shortly thereafter the respondent requested the Commissioner to refer the subject of the determination of February 1979 to a Commonwealth Employees' Compensation Tribunal ("the Tribunal") for reconsideration and in May 1979 the Tribunal made a determination in purported pursuance of the powers conferred upon it by the Compensation Act. The appellant then appealed on questions of law to the Federal Court of Australia in its original jurisdiction.

Held, allowing the appeal: The decision of the Commonwealth Employees' Compensation Tribunal should be set aside because: (1) The court had jurisdiction under s. 95 of the Compensation Act to hear an appeal when a decision of the Tribunal had in fact been made in purported exercise of powers conferred by the Compensation Act.

Committee of Direction of Fruit Marketing v. Delegate of the Australian Postal Commission (1979), 37 FLR 457; Collector of Customs (New South Wales) v. Brian Lawlor Automotive Pty. Ltd. (1979), 41 FLR 338; Deputy Commissioner of Patents v. Board of Control of Michigan Technological University (1979), 43 FLR 9, followed.

Wheelhouse v. Douglas, (1940) VLR 307, referred to.

(2) The meaning of the word "determination" as used in s. 20 of the Compensation Act included both the decision made by the Commissioner in determining a matter or question arising under the Act and the document on which the decision was written.

(3) The phrase "matters or questions arising under" in s. 20 (1) of the Compensation Act did not include matters or questions arising under the liabilities imposed by Pt VI of the Compensation Act.

Trade Practices Commission v. Ansett Transport Industries (Operations) Pty. Ltd. (1978), 32 FLR 305, referred to.

Brakespeare v. Northern Assurance Co. Ltd. (1959), 101 CLR 661, applied.

(4) The provisions of the Compensation Act made it clear that the Commissioner for Employees' Compensation ("the Commissioner") had no power to make a determination of his own motion apart from the power to reconsider a determination already made under s. 20 (4) of the Compensation Act.

(5) Similarly, the Commonwealth Employees' Compensation Tribunal has no power to make a determination of its own motion apart possibly from the power to reconsider a determination already made under s. 20 (4) of the Compensation Act.

(6) The word "deemed" in s. 97 (b) of the Compensation Act is not used for the purpose of creating a statutory fiction but states the meaning of the phrase "the recovery of damages". In other words, an employee first recovers damages when the amount of damages is paid to or for the benefit of the employee.

Hunter Douglas Australia Pty. Ltd. v. Perma Blinds (1969), 122 CLR 49, referred to.

(7) The word "paid" in s. 99 (7) of the Compensation Act meant amount of s. 45 compensation actually received by the respondent and included s. 45 compensation payments paid for the benefit or to the credit of the respondent.

Gonis v. Rootes (Australia) Ltd., (1960) VR 465; Commonwealth v. Edwards (1975), 26 FLR 122; on appeal (1976), 50 ALJR 438, referred to.

HEARING

Canberra, 1980, March 3-5; May 21. #DATE 21:5:1980

APPEAL.

Appeal to the Federal Court of Australia on questions of law arising from a determination made by the Commonwealth Employees' Compensation Tribunal. The determination was purportedly made under powers conferred upon the Tribunal by the Compensation (Commonwealth Employees) Act 1971.

M. D. Finlay Q.C. and R. E. Williams, for the appellant.

The respondent appeared in person.

Cur. adv. vult.

Solicitor for the appellant: B. J. O'Donovan (Commonwealth Crown Solicitor).

E. F. FROHLICH

ORDER

A. Appeal allowed. Decision of the Commonwealth Employees' Compensation Tribunal handed down on 7 May 1979 set aside.

B. The questions of law stated in the notice of appeal be answered as follows:

Question 1: Does the Commissioner or his delegate have power of his own motion to make a determination?

Answer: Apart from the making of a determination under s.20(4)(a) of the Compensation (Commonwealth Government Employees) Act 1971, No.

Question 2: Does the Commissioner or his delegate have power to make a determination under s.99(7) of the Act?

Answer: No.

Question 3: Does the Tribunal have power to reconsider a determination made by the Commissioner or his delegate under s.99(7) of the Act?

Answer: No.

Question 4: Does the Tribunal have power to affirm, vary or set aside a determination made by the Commissioner or his delegate under s.99(7) of the Act?

Answer: No.

Question 5: Does the Tribunal have power to determine whether it has jurisdiction to reconsider a matter referred to it by a party to a determination?

Answer: Yes.

Question 6: Was the Tribunal in error in deciding that it had jurisdiction to reconsider a matter referred to it by the respondent in this case?

Answer: Yes.

Question 7: Does the amount of compensation paid to the respondent that the respondent is liable to repay to the appellant pursuant to s.99(7) of the Act include the amount deducted by the appellant pursuant to Division 2 of Part VI of the Income Tax Assessment Act 1936?

Answer: Yes.

Question 8: Does the amount of compensation paid to the respondent that the respondent is liable to repay to the Commonwealth pursuant to s.99(7) of the Act equal the amount payable to the respondent under s.45 of the Act?

Answer: Yes.

Question 9: Has the respondent:

(a) in the period before 21 February 1974, and

(b) after 21 February 1974

been paid compensation by the Commonwealth in accordance with s.45 of the Act?

Answer: (a) Yes.

(b) Yes.

Appeal allowed.

JUDGE1

This is an appeal on questions of law brought by the Commonwealth pursuant to s.95 of the Compensation (Commonwealth Government Employees) Act 1971, as amended, hereinafter called "The Compensation Act", from a decision of the Commonwealth Employees Compensation Tribunal given on 7 May 1979. Although the proceedings are called an appeal, the Federal Court is exercising original jurisdiction, see s.19 and s.20 Federal Court of Australia Act 1976, as amended. The nature of the proceedings is similar to an appeal brought pursuant to s.44 Administrative Appeals Tribunal Act 1975, as amended, discussed in Committee of Direction of Fruit Marketing v. Delegate of Australian Postal Commission (1979) 25 A.L.R. 221 per Northrop J. at pp. 232-3.

In the present appeal, the questions of law arise from the facts found by the Tribunal, see s.84(2) of the Compensation Act, and it is not necessary to consider in any detail the evidence on which the Tribunal made its findings on the substantial questions of fact.

FACTS

The material facts can be stated shortly. On 15 May 1969 the respondent, Frederick William Goodfellow, who then was a Lieutenant Commander in the Royal Australian Navy, suffered injury arising out of or in the course of his employment by the Commonwealth. Under the provisions of the Commonwealth Employees Compensation Act 1930, as amended, then in force, and the Compensation Act the Commonwealth became liable to pay compensation to the respondent in respect of that injury and in accordance with those Acts. Pursuant to those Acts the Commonwealth was liable to pay an amount of compensation for medical treatment obtained by the respondent and an amount of compensation based on weekly payments on the basis that the respondent was and is totally incapacitated for work. Although the Tribunal made no findings on whether determinations pursuant to the Compensation Act had been made, I am prepared to infer that the appropriate determinations had been made by the Commissioner for Employees' Compensation or his Delegate and that the Commonwealth thereafter had paid amounts of compensation to the respondent.

On 20 March 1978 the Supreme Court of New South Wales found the Commonwealth liable in negligence for the injuries suffered by the respondent and awarded the respondent damages in the sum of $252,900.00 but reduced that amount by 25 per cent by reason of the contributory negligence of the respondent. In the result the amount of the judgment entered in favour of the respondent against the Commonwealth was $189,675.00. For reasons which are not relevant for the present purposes, the Commonwealth did not satisfy that judgment until 18 September 1978. On that date the Commonwealth paid to the respondent the sum of $156,973.10. The calculation made by the Commonwealth of the amount it claimed it was liable to pay to the respondent contained errors but these were subsequently corrected and the amount of the difference was paid. Accordingly, for the purposes of this judgment it can be assumed that the Commonwealth paid to the respondent and the respondent received from the Commonwealth the sum of $157,034.36 in part satisfaction of the judgment obtained by the respondent against the Commonwealth. As to the balance of the judgment, namely the sum of $32,640.64, the Commonwealth claimed to be entitled to retain and did in fact retain it, in satisfaction of the amount which the respondent was liable to pay to the Commonwealth pursuant to Part VI of the Compensation Act.

COMMONWEALTH'S LIABILITY TO PAY COMPENSATION TO RESPONDENT

On the facts which had happened, under the 1930 Act the Commonwealth was liable to pay compensation to the respondent. The 1930 Act was repealed by the Compensation Act but for the purposes of this judgment reference need be made to the Compensation Act only, see s.105 and s.107 of that Act. The Commonwealth was liable to pay to the respondent compensation of two kinds only, namely under s.37 and s.45 of the Compensation Act S.27(1) of the Compensation Act provides as follows:-
"27.(1) If personal injury arising out of or in the course of the employment of an employee by the Commonwealth is caused to the employee, the Commonwealth is, subject to this Act, liable to pay compensation in respect of that injury in accordance with this Act."
It is to be noted that this section imposes a liability upon the Commonwealth and does not, in express terms, confer a right upon an employee of the Commonwealth.

QUANTUM OF COMPENSATION

The methods of determining the amount of compensation which the Commonwealth was liable to pay are contained in Prt 111 of the Compensation Act. Included among those sections are s.37 and s.45. Section 37 provides that the Commonwealth is liable to pay the amount of the cost of medical expenses incurred by the employee with respect to the injury suffered. Section 45 makes provisions for the amount of compensation to be paid where the injury results in the employee being totally incapacitated for work. For present purposes the relevant provisions of s.45 are as follows:
"45.(1) Where an injury to an employee results in the employee being totally incapacitated for work, the succeeding provisions of this section have effect.

(2) Subject to this section compensation is payable to the employee, during the period of the incapacity, of an amount per week equal to . . . "
and the section then sets out detailed provisions by which the amount of compensation by way of weekly payments is to be determined.

In accordance with the provisions of those two sections and in accordance with the determinations made, between 20 May 1970 and 14 September 1978 the Commonwealth became liable to pay to the respondent $3,954.04 compensation by way of medical expenses under s.37 of the Compensation Act and $39,566.81 compensation by way of weekly payments under s.45 of that Act. Until February 1974 the Commonwealth paid the total amount of weekly payments directly to the respondent. Following the passing of the Income Tax Assessment Act (No. 5) 1973, the Commonwealth, for the purposes of enabling the collection by instalments from the respondent of income tax, was required to make deductions from payments of weekly compensation that the respondent received or was entitled to receive and to pay the amount of the deducations so made to the Commissioner of Taxation. A more detailed reference will be made later to the Income Tax Assessment Act 1936, as amended. In the result of the amount of $39,566.81 the Commonwealth was liable to pay to the respondent by way of weekly payments of compensation between 20 May 1970 and 14 September 1978, the Commonwealth paid $31,819.01 directly to the respondent and $7,747.80 to the Commissioner of Taxation. For some of the years ended 30 June 1970 to 30 June 1978 inclusive the respondent paid income tax. By a series of computations it was calculated by the respondent that if the tax so paid by him as a result of receiving payments of compensation by way of weekly payments is deducted from the gross payments of tax so made, the net amount of compensation received by the respondent for those years was $31,963.08. To this amount he adds the sum of $1,150.80, being the amount of weekly payments of compensation that the Commonwealth was liable to pay to the respondent from 1 July 1978 to 14 September 1978, viz. $1,692.00, less the amount of deductions paid by the Commonwealth to the Commissioner of Taxation, $541.20. The respondent then claims that the amount of compensation by way of weekly payments actually paid to him total $33,113.88. He then made a further calculation taking into account tax paid for the year ended 30 June 1979 but at the present time that calculation can be put to one side.

In the result, the respondent claims that the compensation by way of weekly payments actually received by him during the period 20 May 1970 to 14 September 1978 amounted to $33,113.88 or alternatively $31,819.01 and did not amount to $39,566.81, being the amount that the Commonwealth was liable to pay as compensation by way of weekly payments during that period.

LIABILITY OF RESPONDENT TO THE COMMONWEALTH

Part V1 of the Compensation Act, comprising sections 97 to 108 inclusive, is headed "Liabilities Arising Otherwise Than Under This Act". For the purposes of that Part, damages are deemed to have been recovered by an employee when the amount of the damages has been paid to or for the benefit of the employee, see s.97(b). Section 99(1) provides that if an employee recovers damages from the Commonwealth in respect of an injury to the employee, the succeeding provisions of that section have effect. The relevant parts of the succeeding provisions of s.99 are:-
"(2) Subject to this section, the compensation that is payable under this Act to the employee in respect of the injury . . . is so much (if any) of the compensation under this Act that, but for this section, would be so payable as exceeds the amount of the damages recovered by the employee . . .

(3) Subject to this section, if, before the recovery of the damages by . . . the employee . . . any compensation under this Act was paid to the employee in respect of the injury . . . the employee . . . is liable to pay to the Commonwealth the amount of the compensation so paid to him . . . or if the amount of the damages recovered by him . . . is less than the amount of that compensation, the amount of those damages.

(4) If the damages recoverable by the employee . . . were reduced by reason that the employee was partly responsible for the injury . . . the last two preceding sub-sections do not apply but the next three succeeding sub-sections have effect.

(5) Subject to the next succeeding sub-section, any amount of compensation under this Act that, but for this section, . . . would be payable to the employee in respect of the injury . . . shall be reduced by so much of that amount as bears to that amount the same proportion as the amount of the damages recovered by or for the benefit of the employee . . . bears to the amount of the damages that would have been recovered by or for the benefit of the employee . . . if the employee had not been partly responsible for the injury . . .

(6) The last preceding sub-section does not operate to reduce the total of the amounts of the compensation under this Act that, but for this "section, would be payable to the employee . . . by an amount exceeding the amount of the damages recovered by the employee . . .

(7) If, before the recovery of the damages by . . . the employee . . . an amount of compensation under this Act was paid to the employee in respect of the injury . . . . . . the employee . . . is liable to pay to the Commonwealth so much of that amount as would not, by reason of the last two preceding sub-sections, have been paid if that amount had become payable immediately after the damages were recovered."
Reference should be made also to s.116, s.118 and s.119 of the Compensation Act.

As stated earlier, on 18 September 1978 the Commonwealth paid to the respondent the amount of the judgment less the sum of $32,640.64, being the amount which the Commonwealth claimed the respondent was liable to pay to the Commonwealth pursuant to s.99(7) of the Compensation Act. The sum of $32,640.64 was arrived at by the following calculation:

Section 45 payments $39,566.81
less 25 per cent $9,891.70 $29,675.11

__________

Section 37 payments $3,954.04

less 25 per cent $988.51 $2,965.53

__________ __________

Total compensation repayable $32,640.64

__________

COMMISSIONER'S DETERMINATION OF QUANTUM OF RESPONDENT'S LIABILITY

Thereafter on 27 October 1978 the Deputy Chief Delegate of the Commissioner for Employees' Compensation, acting on his own motion, made a determination determining the amount which the respondent was liable to pay to the Commonwealth in accordance with s.99(7) of the Compensation Act. The relevant provision was contained in para. 1 of the determination. The relevant parts of the determination are set out but it is to be remembered that the actual amounts specified are incorrect.
"COMPENSATION (COMMONWEALTH GOVERNMENT EMPLOYEES) ACT 1971, AS AMENDED

Frederick William GOODFELLOW, formerly Lieutenant Commander, Department of Defence

----------------------------------------------------

In the matter of the claim of Frederick William GOODFELLOW for compensation in respect of paraplegia.

DETERMINATION

In pursuance of the provisions of the Compensation (Commonwealth Government Employees) Act 1971, as amended, including sections 97 and 107(2) of that Act, and further to the determinations previously made in this matter, I hereby determine:-

Having regard to the settlement of damages of $189,675.00 to the said Frederick William Goodfellow and to the fact that such damages were reduced from $252,900.00 by reason that he was 25 per cent responsible for the personal injury he sustained on 15 May 1969, the amount which the said Frederick William Goodfellow was liable to pay to the Department of Defence in accordance with sub-section 99(7) of the said Act was $32,701.90 or 75 per cent of the compensation of $43,602.53 which was paid to him by the Department of Defence until 18 September 1978, when the damages were paid to him or for his benefit."

On 14 February 1979 the Deputy Chief Delegate of the Commissioner for Employees Compensation issued a further determination as follows:
"COMPENSATION (COMMONWEALTH GOVERNMENT EMPLOYEES) ACT 1971, AS AMENDED

Frederick William GOODFELLOW, formerly Lieutenant Commander, Department of Defence

----------------------------------------------------

In the matter of the claim of Frederick William GOODFELLOW for compensation in respect of paraplegia

DETERMINATION

In pursuance of the provisions of the Compensation (Commonwealth Government Employees) Act 1971, as amended, and further to the determinations previously made in this matter, I hereby determine:-

In accordance with the provisions of section 20(4)(a) of the said Act, the determination of 27 October 1978 is hereby amended by deleting paragraph 1 of that determination in its entirety and inserting in lieu thereof the following paragraph:-

'1. Having regard to the settlement of damages of $189675.00 to the said Frederick William Goodfellow and to the fact that such damages were reduced from $252,900.00 by reason that he was 25 per cent responsible for the personal injury he sustained on 15 May 1969, the amount which the said Frederick William Goodfellow was liable to pay to the Department of Defence in accordance with sub-section 99(7) of the said Act was $32,640.64

(comprised of the following:-

Section 45 payments - $39,566.81

less 25 per cent $9,891.70 $29,675.11

----------

Section 37 payments - $3,954.04

less 25 per cent - 988.51

---------- $2,965.53

----------

Total compensation repayable $32,640.64)

or 75 per cent of the compensation of $43,520.85 which was paid to him by the Department of Defence until 18 September 1978, when the damages were paid to him or for his benefit.'"

TRIBUNAL'S RECONSIDERATION OF DETERMINATION

The respondent, pursuant to s.63 of the Compensation Act, requested the Commissioner for Employees' Compensation to refer the matters to which the determination of 14 February 1979 relate to a Commonwealth Employees' Compensation Tribunal for re-consideration. On 7 May 1979 the Compensation Tribunal, in the exercise of the powers conferred by s.84 and s.85 of the Compensation Act, made a determination which, as corrected, was as follows:
"COMPENSATION (COMMONWEALTH GOVERNMENT EMPLOYEES) ACT 1971

In the matter of reference to the Commonwealth Employees' Compensation Tribunal by FREDERICK WILLIAM GOODFELLOW (78/110)

Having published my decision in this matter to the parties pursuant to paragraph 84(1)(b) I vary the determination in this matter dated 19 February 1974 by:-

(a) deleting the symbols and figures '32,640.64' where it appears in the tenth line of paragraph 1 and substituting therefor the symbols and figures '27,800.94';

(b) deleting all that occurs thereafter and substituting the following:-

(comprised of the following:-

Section 45 payments $33,113.88
less 25 per cent $8,278.47

----------

$24,835.41

Section 37 payments $3,954.04

less 25 per cent $988.51

---------- $2,965.53

----------

Total compensation repayable $27,800.94

----------

I order that the claimant's costs in the proceedings before the Tribunal be borne by the Commonwealth as agreed with liberty to apply pursuant to subsection 85(c) in the absence of agreement."

It can be seen that the Tribunal accepted the contentions of the respondent and calculated the s.45 payments on the basis of deducting from the total amount of compensation payable by the Commonwealth to the respondent by way of weekly payments under s.45, the amount of tax paid by the respondent to the Commissioner of Taxation as a result of receiving the s.45 payments for the nine years ending 30 June 1970 to 30 June 1978 respectively and adding the amount of compensation payable by the Commonwealth to the respondent by way of weekly payments under s.45 for the period 1 July 1978 to 14 September 1978 less the amounts deducted by the Commonwealth and paid to the Commissioner of Taxation pursuant to Division 2 of Part V1 of the Income Tax Assessment Act.

ENTITLEMENT OF COMMONWEALTH TO MAKE A DEDUCTION FROM DAMAGES

Before considering the questions of law, reference should be made to one aspect of the appeal. The parties before the Court assumed that under s.99 of the Compensation Act the Commonwealth was entitled to deduct from the amount of the judgment entered against it the amount the respondent was liable to pay to the Commonwealth under s.99(7). The parties argued the appeal on the assumption that the judgment could be satisfied by the Commonwealth deducting from that judgment the amount the respondent was liable to pay to the Commonwealth under s.99(7) of the Compensation Act and paying the balance of the judgment debt to the respondent. Nothing in this judgment is intended to express an opinion on whether that assumption is valid or not, or whether the Commonwealth has discharged the whole of the judgment debt or not. Section 99(8) of the Compensation Act imposes an obligation on certain persons to make appropriate payments to the Commonwealth and such payments constitute "a discharge of the liability" of the person liable to pay the amount to the Commonwealth under s.99. The relevant parts of s.99(8) are as follows:
"(8) Where -

(a) a person is liable to pay an amount to the Commonwealth under this section; and

(b) the Commissioner or any other person holds on behalf of the first-mentioned person -

(i) monies being . . . damages awarded to the first-mentioned person . . .

the Commissioner or other persons shall deduct from the monies held by him . . . an amount not exceeding the amount that the first-mentioned person is liable to pay to the Commonwealth under this section and shall pay the amount so deducted to the Commonwealth, and the payment of that amount is to the extent of the amount paid, a discharge of the liability of the first-mentioned person to the Commonwealth and of the Commissioner or other person to the first mentioned person."

The Commonwealth did not argue that in substance the Commonwealth was an "other person" holding on behalf of the respondent monies being damages awarded to the respondent, thereby enabling the Commonwealth to deduct from those monies the amount the respondent is liable to pay to the Commonwealth under s.99(7) and directing the Commonwealth to pay the amount so deducted to the Commonwealth, thereby constituting that payment a discharge of the liability of the respondent to the Commonwealth and of the Commonwealth of that part of the judgment debt due to the respondent. The court expresses no opinion on this matter or on whether the section permits a deduction to be made when the quantum of the amount of the liability to pay to the Commonwealth is disputed or on whether the respondent had recovered damages before they had been paid to him or for his benefit, cf s.97(b) of the Compensation Act.

Section 119(1)(c) of the Compensation Act provides as follows:
"119.(1) Where -

(a) . . .

(c) a person is liable to pay an amount to the Commonwealth under this Act

the amount concerned is recoverable by the Commonwealth from the person as a debt due to the Commonwealth by action in a court of competent jurisdiction."

A court before which the Commonwealth sought to recover such an amount would have power to determine the quantum of the debt due. Section 119(2), which enables the Commonwealth to satisfy the amount recoverable by deducting that amount from future amounts payable under the Compensation Act, has no application to the present appeal. The Commonwealth has not sought to recover by action in a court of competent jurisdiction the amount the respondent is liable to pay to the Commonwealth under s.119(1) of the Compensation Act. As a result, no court has determined the quantum of that amount. Nevertheless, the Commonwealth has purported to set off in part satisfaction of its liability for the judgment debt the amount which it claims the respondent is liable to pay to the Commonwealth under s.99(7).

QUESTIONS OF LAW

The questions of law on which the Commonwealth brings the appeal are, as a result of leave granted at the hearing, as follows:
"1. Does the Commissioner or his delegate have power of his own motion to make a determination?

2. Does the Commissioner or his delegate have power to make a determination under s.99(7) of the Act?

3. Does the Tribunal have power to reconsider a determination made by the Commissioner or his delegate under s.99(7) of the Act?

4. Does the Tribunal have power to affirm, vary or set aside a determination made by the Commissioner or his delegate under s.99(7) of the Act?

5. Does the Tribunal have power to determine whether it has jurisdiction to reconsider a matter referred to it by a party to a determination?

6. Was the Tribunal in error in deciding that it had jurisdiction to reconsider a matter referred to it by the respondent in this case?

"7. Does the amount of compensation paid to the respondent that the respondent is liable to repay to the appellant pursuant to s.99(7) of the Act include the amount deducted by the appellant pursuant to Division 2 of Part VI of the Income Tax Assessment Act 1936?

8. Does the amount of compensation paid to the respondent that the respondent is liable to repay to the Commonwealth pursuant to s.99(7) of the Act equal the amount payable to the respondent under s.45 of the Act?

9. Has the respondent:

(a) in the period before 21 February 1974, and

(b) after 21 February 1974

been paid compensation by the Commonwealth in accordance with s.45 of the Act?"
CONSIDERATION OF QUESTIONS NUMBERED 1 - 4

The questions of law numbered 1 - 4 inclusive raise related matters and can be considered together. The Commonwealth contends that the Commissioner for Employees' Compensation has no power of his own motion to make an originating determination under the Compensation Act. In any event it was further contended that the Commissioner has no power to make a determination under s.99(7) of the Act determining the amount an employee is liable to pay to the Commonwealth under that sub-section. It was then contended that since the Commissioner had no power to make a determination under s.99(7), the Tribunal did not have power to reconsider such a determination.

The questions raise the issue of whether the Tribunal had jurisdiction to make the determination which gives rise to this appeal. Section 95(1) of the Compensation Act provides that a party to a proceeding before the Tribunal may appeal on a question of law only from any decision of the Tribunal in that proceeding. In the present case if, in fact, neither the Commissioner nor the Tribunal had power to make a determination, see s.5(9) of the Compensation Act, the decision from which this appeal is taken is totally ineffective. For reasons analagous to those expressed by Bowen C.J. in Collector of Customs (N.S.W.) v. Brian Lawlor Automotive Pty. Ltd. (1979) 24 A.L.R. 307 at pp.314-5, an appeal lies to this court under s.95 of the Compensation Act when the decision of the Tribunal was made in purported exercise of powers conferred by the Compensation Act. By adoption of the statement by Bowen C.J. at p.315 the Court has:
". . . jurisdiction to entertain an appeal from a decision in fact made, which purported to be made in the exercise of powers under an enactment. It could then proceed to determine whether the decision was properly made in fact and in law. There is nothing unusual in holding that an administrative decision which is legally ineffective or void is susceptible of appeal: see Calvin v. Carr (1979) 22 ALR 417."
See also Deputy Commissioner of Patents v. Board of Control of Michigan Technological University, unreported, Full Court, Federal Court of Australia, 7 December 1979.

In the present case a decision in fact has been made by the Tribunal being a decision purporting to have been made in the exercise of powers under the Compensation Act. In these circumstances the Court is entitled to consider whether in fact and in law the Tribunal had power to make that decision.

Commissioner's power to make determinations of his own motion

An examination of Part 11 "Commissioner for Employees' Compensation"; Part 111 "Compensation"; Part 1V "Making and Determination of Claims", illustrates the structural basis upon which the Commonwealth becomes liable to pay compensation to employees of the Commonwealth.

Part 11 of the Compensation Act is headed "Commissioner for Employees' Compensation". Section 9 constitutes the Commissioner as a corporation sole. Section 20 is as follows:
"20. (1) Subject to this Act, the function of the Commissioner under this Act is to determine all matters and questions arising under this Act and the Commissioner is empowered to do all things necessary for the carrying out of that function.

(2) In determining any matter or question under this Act, the Commissioner -

(a) shall be guided by equity, good conscience and the substantial merits of the case without regard to technicalities; and

(b) is not required to hold a formal or oral hearing and is not bound by the rules of evidence but shall give to any person who will be directly affected by the determination a fair opportunity of presenting his case.

"(3) A determination by the Commissioner shall be in writing.

(4) Where a determination has been made under this Act -

(a) the Commissioner may, of his own motion, whether or not a proceeding has been instituted or completed under Part V in respect of the determination, reconsider the determination and may, if he thinks fit, make a determination varying or revoking the first-mentioned determination; and

(b) the Commissioner shall, at the request of the Commonwealth or of the claimant or, where there is more than one claimant whose claim was dealt with by the determination, of any of the claimants, if a proceeding has not been instituted under Part V in respect of the determination, reconsider the determination and may, if he thinks fit, make a determination varying or revoking the first-mentioned determination.

(5) Where -

(a) a proceeding has been instituted under Part V in respect of a determination by the Commissioner;

(b) before the completion of the proceeding, the Commissioner makes, under paragraph (a) of the last preceding sub-section, a determination varying or revoking the first mentioned determination; and

(c) the proceeding is rendered abortive by reason of the later determination,

the Commonwealth is liable to reimburse the claimant, or, if there is more than one claimant whose claim was dealt with by the determination, to reimburse each of the claimants, for any costs reasonably incurred by him in connexion with that proceeding."
Under s.24 the Commissioner has power to delegate all or any of his powers under the Act except the power of delegation. The person to whom the Commissioner delegates a power or function is known as a delegate.

The word "determination" is not defined in the Compensation Act, but in s.20 and in other sections of the Act the meaning of the word "determination" includes both the decision made by the Commissioner in determining a matter or question arising under the Act and the document on which that decision is written. The Compensation Act does not, in express terms, confer a power on the Commissioner to make an originating determination on his own motion. The power conferred by s.20(4)(a) and (b) to reconsider a determination is limited to where a determination has been made under the Act and the power is limited to reconsidering the determination already made and to making a determination varying or revoking that determination.

Part 111 of the Compensation Act is headed "Compensation" and contains provisions imposing a liability upon the Commonwealth to pay compensation to employees as defined in s.5 of the Act, the circumstances in which that liability arises, the persons to whom compensation is payable, the nature of the compensation to be paid and the method by which the amount of compensation is to be determined. Section 27(1) has been quoted already and two types of compensation have been referred to, namely those referred to in s.37 and s.45. For the purposes of this judgment it is not necessary to make any detailed reference to the other sections contained in Part 111.

Part IV of the Compensation Act is headed, "Making and Determination of Claims". Section 53 provides that the Act does not apply in relation to an injury caused to an employee unless notice in writing of the injury was served, as prescribed, on the Commonwealth as soon as practicable after the occurrence of the injury or other compensable event. Section 54 provides that compensation in relation to an employee is not payable unless a claim in writing for the compensation was served, as prescribed, on the Commissioner within a prescribed period. The Part contains other provisions, but these need not be referred to for present purposes. It is sufficient to say, that before the Commonwealth becomes liable to pay compensation under the Compensation Act, notice of the injury must have been served on the Commonwealth and a claim for compensation served on the Commissioner. Regulation 15 of the Compensation (Commonwealth Employees) Regulations, Statutory Rules 1971 No. 112, prescribes the matters to be contained in the notice to be served on the Commonwealth and the method of serving that notice. Regulation 22 prescribes the method of serving documents on the Commissioner, while s.54 prescribes the period within which the claim for compensation is to be served on the Commissioner.

Accordingly, in order for the liability to be imposed on the Commonwealth, notice in writing of the injury must be served on the Commonwealth and a claim in writing for compensation must be served on the Commissioner. When this has been done, the Commissioner, or a delegate, is required by s.20 of the Act "to determine all matters and questions arising under this Act". The Commissioner is required to determine whether the Commonwealth is liable to pay compensation, the person to whom compensation is to be paid, the nature of the compensation to be paid, and the quantum of the amount of compensation to be paid. In my opinion the provisions of the Act make it clear that apart from the power under s.20(4) of the Act to reconsider a determination already made, the Commissioner has no power to make a determination of his own motion.

Tribunal's powers to make a determination of its own motion -----------------------------------------------------------

Similarly, the Commonwealth Employees' Compensation Tribunal has no power to make a determination of its own motion. Part V of the Act is headed "References to Compensation Tribunals and Applications to Prescribed Courts". Division 2 of this Part authorises the Governor-General to establish one or more Commonwealth Employees' Compensation Tribunals. Under s.63, where a determination has been made under the Act, a party to the determination may request the Commissioner to refer all or any of the matters or questions to which the determination relates to a Tribunal for reconsideration. The section contains an alternative procedure for judicial review by prescribed courts, but no further references need be made to that procedure. Under s.62 a reference to a party to a determination is to be read as a reference to the Commonwealth or to the claimant or, if there is more than one claimant whose claim was dealt with by the determination, to any of those claimants. The word "claimant" is not defined in the Act. Division 3 of Part V contains provisions relating to references to a Tribunal. Under s.76 the request shall be in writing, shall set out the grounds of the request, and shall be served on the Commissioner and a copy shall be served on any other party to the determination. The Dvision contains provisions by which the request is to be brought on for hearing before the Tribunal. Sections 80 - 83 make provision for the procedures to be adopted by the Tribunal. Section 83(1) proceeds:
"83.(1) For the purpose of reconsidering a matter or question, a Compensation Tribunal may exercise all the powers that are conferred on the Commissioner by this Act in relation to the determination of matters and questions."
It is necessary to set out the provisions of s.84(1) and (2), namely:
"84.(1) A Compensation Tribunal that reconsiders a matter or question shall, after due consideration of the matter or question, give a decision in writing -

(a) affirming the determination made by the Commissioner in respect of that matter in question;

(b) varying that determination; or

(c) setting aside that determination and -

(i) making a determination in substitution for the determination so set aside; or

(ii) remitting the case for re-determination by the Commissioner in accordance with the directions of the Tribunal.

(2) A Compensation Tribunal shall give reasons in writing for its decision and those reasons shall include its findings on material questions of fact."

Finally, Division 5 of Part V makes provision for appeals from the Tribunal to the Federal Court. Reference has been made already to s.95.

In my opinion, these provisions of the Act make it clear that unless expressly conferred, the powers to be exercised by the Tribunal are no greater than the powers to be conferred on the Tribunal. In particular, the Tribunal has no power, apart possibly from the power under s.20(4) to reconsider a determination already made, to make a determination of its own motion. Further, in my opinion, the provisions of the Act, and in particular s.63(1)(a), s.76 s.84, make it clear that the power of the Tribunal to give a decision depends upon the existence of a determination made by the Commissioner or his delegate and a reference to the Tribunal for reconsideration of all or any of the matters or questions to which that determination relates. The Tribunal then is able to exercise any of the powers conferred by s.84 or any other specific powers conferred by the Compensation Act.

Commissioner's power to make a Section 99(7) determination

The Compensation Act does not contain provisions which are common in the workers' compensation acts in the various States and which impose a liability on employers to pay, or entitle employees to receive, compensation for injuries suffered by employees and which require employers to enter into specific types of contracts of insurance and the method by which awards of compensation can be enforced. See Workers' Compensation Act 1958 (Vic.) s.64, s.72 and s.54, and Workers' Compensation Act 1926 (N.S.W.), as amended, s.18 and s.36.

Part VI of the Compensation Act is headed "Liabilities Arising Otherwise Than Under This Act". Section 99(7) provides:
"(7) If, before the recovery of the damages by . . . the employee . . . an amount of compensation under this Act was paid to the employee in respect of the injury . . . the employee . . . is liable to pay to the Commonwealth so much of that amount as would not, by reason of the last two preceding sub-sections, have been paid if that amount had become payable immediately after the damages were recovered."

Section 97 contains definitions applicable to Part VI only. Reference has been made already to s.97(b) which provides as follows:
"97. For the purpose of this Part . . .

(b) damages shall be deemed to have been recovered by an employee or by or for the benefit of a dependant of a deceased employee when the amount of the damages was paid to or for the benefit of the employee or dependant, as the case may be."

In this paragraph the word "deemed" is not used for the purpose of creating a statutory fiction but is used in the sense of stating the effect or meaning of the phrase "the recovery of damages" by or for the benefit of an employee, generally see Hunter Douglas Australia Pty. Ltd. v. Perma Blinds (1968) 122 C.L.R. 49 per Windeyer J. at pp.64-70. An employee who has obtained a judgment for damages, which judgment has not been satisfied, has not recovered damages within the meaning of that phrase as used in Part VI of the Compensation Act. In other words, an employee first recovers damages when the amount of the damages is paid to or for the benefit of the employee.

Further, Section 98 contains provisions under which compensation is not payable to employees and s.98(4) empowers the Commissioner to refuse to determine a claim for compensation pending the settlement of the disentitling questions. The relevant provisions of s.99 have been set out already. The other sections contained in Part VI are complementary to s.98 and s.99 and at present need not be referred to.

Transition provisions are contained in Part VII, and Part VIII, which contained amendments to the 1930 Act, has been repealed. Part IX contains miscellaneous provisions. Section 118 provides that an amount payable by an employee to the Commonwealth shall not be set off against the amount of any compensation payable under the Act to the employee, but is qualified by "except as provided by this Act". Section 119(2) makes such a provision:
"119.(1) Where -

(a) an amount of compensation under this Act has been paid to a person in consequence of a false or misleading statement or representation or in consequence of a failure or omission to comply with a provision of this Act;

(b) an amount of compensation that has been paid to a person under this Act should not have been paid; or

(c) a person is liable to pay an amount to the Commonwealth under this Act,

the amount concerned is recoverable by the Commonwealth from the person as a debt due to the Commonwealth by action in a court of competent jurisdiction.

(2) Where an amount is recoverable by the Commonwealth from a person in pursuance of the last preceding sub-section and an amount is payable under this Act to or for the benefit of that person, the first-mentioned amount may be deducted from the second-mentioned amount."

Neither of the determinations made by the Deputy Chief Delegate on 27 October 1978 and on 14 February 1979, insofar as each related to a matter or question arising under s.99(7) of the Compensation Act, was a determination varying or revoking under s.20(4)(a) an existing determination. The determination dated 14 February 1979 insofar as it related to a matter or question arising under s.99(7) was referred to the Compensation Tribunal for reconsideration by the Tribunal. The matter or question raised for decision before the Tribunal was the amount the respondent was liable to pay to the Commonwealth under s.99(7). The Tribunal had jurisdiction to decide that matter or question if, and only if, the Deputy Chief Delegate had power to determine that matter or question. For reasons already expressed, s.20(4) did not confer that power.

The issue to be decided now is whether s.20(1) conferred power on the Deputy Chief Delegate to determine the question of the amount the respondent was liable to the Commonwealth under s.99(7). The jurisdiction conferred by s.20(1) is expressed in very wide terms, namely "the function . . . to determine all matters and questions arising under this Act and the Commissioner is empowered to do all things necessary for the carrying out of that function".

The power to determine all matters and questions arising under the Compensation Act is similar to the powers conferred upon administrative tribunals by the workers' compensation acts of the various States. The Workers' Compensation Act 1912 - 1956 (W.A.) s.29(7) provided that "subject to the provisions of this Act, the Board shall have exclusive jurisdiction to examine into, hear, and determine all questions and matters arising under this Act". In Brakespeare v. Northern Assurance Co. Ltd. (1959) 101 C.L.R. 661, a case concerning the extent of the power conferred by s.29, the High Court expressed the opinion that provisions derogating from the jurisdiction of ordinary courts of justice should not be construed as going beyond the fair understanding of the language in which they are expressed.

The policy of the Compensation Act is to impose liabilities upon the Commonwealth to make payments of compensation to its employees or their dependants in the circumstances specified in the Act. The Act constitutes the Commissioner and empowers him to give effect to that policy by conferring upon him functions and powers. As a result of exercising those functions and powers, the Commissioner may make a determination which imposes a liability on the Commonwealth to make payments of compensation, or which may not impose a liability on the Commonwealth to make payments of compensation, or which may vary or revoke an existing determination.

Section 99 is contained in that part of the Act headed "Liabilities Arising Otherwise Than Under This Act". Limited use may be made of that heading as an aid to resolving the present issue, Trade Practices Commission v. Ansett Transport Industries (Operations) Pty. Ltd. (1978) 32 F.L.R. 305 per Northrop J. at 318-9 and the cases referred to therein. A logical difficulty arises from the use of the word "Liability" in the heading, since in one sense liabilities do arise under some of the sections within that Part of the Act. In particular, under s.99 an employee may become liable to pay an amount to the Commonwealth, and under s.100 a dependant of an employee may become liable to pay an amount to the Commonwealth. Under s.102 a person, not being an employee or a dependant of an employee, may be required to pay an amount to the Commonwealth which amount may be recovered as a debt due to the Commonwealth by action in a court of competent jurisdiction and the payment of that amount constitutes a discharge of the liability of that third person to the employee or the dependant and of the liability of the employee or the dependant to the Commonwealth under s.99 or s.100. Although in truth it can be said that the liabilities arising under Part VI are liabilities arising under the Compensation Act, they are not liabilities imposed on the Commonwealth qua an employer. In the heading of Part VI the word "Liabilities" may be used to refer to a liability to pay damages imposed upon the Commonwealth or some other person otherwise than the liability imposed upon the Commonwealth to pay compensation. In any event, s.99 and s.100 impose liabilities upon persons who have recovered damages and s.102 imposes liabilities upon persons who have agreed to pay damages or against whom damages have been awarded. Further, the amount of the liabilities so arising can be recovered by the Commonwealth either under s.102(4), or under s.119(1), in the latter case against the person who has been paid compensation. In those sections the word "recover" and "recoverable" respectively, from the context in which they are used, have the technical meaning in law of recovering by action and by judgment of the Court. In addition, s.99(8) provides for a type of statutory garnishee by which the Commonwealth may enforce payment of an amount that an employee is under a liability to pay to the Commonwealth but in this respect a limitation is placed upon the manner in which the Commonwealth may enforce such a payment against future payments of compensation, see s.118 and s.119. The fact that the amount of the liability concerned is recoverable by the Commonwealth as a debt due to the Commonwealth by action in a court of competent jurisdiction highlights the difference between the liabilities arising under Part VI and the liability of the Commonwealth to pay compensation under other parts of the Act.

In my opinion "matters or questions arising under" s.20, Compensation Act, do not include matters or questions arising under the liabilities imposed by Part VI. The Act provides procedures by which those liabilities may be enforced, namely in courts of competent jurisdiction. The Act contains no provisions by which a determination by the Commissioner determining matters and questions can be obtained. No notice of injury and no claim in writing for compensation under s.53 and s.54 respectively can be given by the Commonwealth, and no reconsideration of an existing determination is appropriate. Enforcement procedures are dependent upon a judgment being obtained in a court of competent jurisdiction. The action by which judgment is obtained does not depend upon a determination by the Commissioner. Any judgment depends upon proof of the matters giving rise to the liability including proof of the amount of that liability. In my opinion all these factors support the view that the Commissioner has no power to determine the amount the respondent is liable to pay to the Commonwealth under s.99(7) of the Compensation Act. It follows, in my opinion, that the Commissioner had no power to refer any of the matters or questions to which the determination of 14 February 1979 relates to the Compensation Tribunal for reconsideration, and that the Tribunal had no power to make the determination made on 7 May 1979. It follows that questions numbered 1 - 4 should be answered as follows:

1. Apart from the making of a determination under s.20(4) (a) of the Compensation Act, No.

2. No.

3. No.

4. No.

CONSIDERATION OF QUESTIONS NUMBERED 5 AND 6

From what has been said, the answers to questions numbered 5 and 6 should be as follows:

5. Yes.

6. Yes.

A reference to the opinions expressed in Collector of Customs (N.S.W.) v. Brian Lawlor Automative Pty. Ltd. supra, and The Deputy Commissioner of Patents v. Board of Control of Michigan Technological University supra, make it clear that the answer to question 5 must be in the affirmative, but that on an appeal on a question of law this court is entitled to determine whether the Tribunal to which the appeal is brought came to the correct conclusion on the question of jurisdiction. See also Wheelhouse v. Douglas (1940) V.L.R. 307.

CONSIDERATION OF QUESTIONS NUMBERED 7 TO 9

The answers given to questions 1 - 6 are sufficient to dispose of the appeal, but because of the submissions made by Counsel for the Commonwealth and by the respondent in person on the substantive issues, and in the event that the matter is taken further, it is desirable that the Court should express an opinion on the questions numbered 7, 8 and 9.

Logically, question 9 should be considered first.

From what has been said, under s.45 Compensation Act and the determinations made by the Commissioner, the Commonwealth was liable to pay compensation to the respondent on the basis that the reasondent was totally incapacitated for work. Question 9 is based on the wording of the early part of s.99(7) viz, "if an amount of compensation was paid to the respondent, the respondent is liable to pay to the Commonwealth so much of that amount as would not have been paid if that amount had become payable immediately after the damages were recovered". There is no doubt that the Commonwealth was liable to pay in full the amount of the s.45 compensation to the respondent from 20 May 1970. Until the week ending 21 February 1974, the total amount of that compensation was paid directly by the Commonwealth to the respondent. Following the coming into operation of the Income Tax Assessment Act (No. 5) 1973, the Commonwealth, pursuant to Division 2 of Part V1 of the Income Tax Assessment Act 1936 as amended, was required to make deductions from the payments of the s.45 compensation, to pay the amounts so deducted to the Commissioner of Taxation and to issue to the respondent a group certificate setting out the total of the amounts so deducted. The 1973 Assessment Act by s.32 amended s.221A(1) of the principal Assessment Act by including in the definition of the phrase "salary or wages" any payments made by way of compensation in respect of incapacity for work being payments calculated at a weekly or other periodical rate. As a result, and having regard to the other definitions contained in s.221A(1), the Commonwealth became bound to make what are known as P.A.Y.E. deductions from the s.45 compensation payments payable to the respondent. Counsel for the Commonwealth was unable to refer me to any provision in the Income Tax Assessment Act to the effect that payments to the Commissioner of Taxation of the amounts of the deductions so made under Division 2 are to the extent of the amount so paid a discharge of the liability of the Commonwealth or other employer to pay salary or wages, including s.45 compensation, to an employee otherwise entitled to the total amount of salary or wages, including s.45 compensation, which by law the Commonwealth or other employer is liable to pay to the employee, cf s.99(8)(b) and s.102(5) of the Compensation Act.

One of the submissions made by the respondent and accepted by the Tribunal was that the amounts deducted by the Commonwealth from the s.45 compensation payments and paid by the Commonwealth to the Commissioner of Taxation under the provisions of Division 2, Part V1 of the Income Tax Assessment Act did not constitute amounts of Compensation paid to the respondent. The submission, in reality, goes to the question of what amount of s.45 compensation was paid by the Commonwealth to the respondent, but impliedly the submission is based on treating the word "paid" when first used in s.99(7) of the Compensation Act as meaning amounts of s.45 compensation actually received by the respondent and not including s.45 compensation payments paid for the benefit or to the credit of the respondent. The submission is rejected.

Division 2 of Part V1 of the Income Tax Assessment Act is binding upon all employers, including the Commonwealth qua an employer, but the Commonwealth is not made subject to a penalty for non-observance of the provisions of that Division. The deductions are made for the purpose of enabling the collection by instalments from employees of income tax, s.221C(1), and the obligation is imposed on the employer by s.221C(1A). Employers who ordinarily employ more than ten employees become group employers and are required to pay the deductions so made to the Commissioner of Taxation and to give each employee a group certificate setting out the total of the deductions made, s.221F. Other employers are required to keep tax deduction sheets and to purchase tax stamps to the value of the deductions made and to affix those stamps to the tax deduction sheets, s.221G. Employees are required to forward any tax stamp sheets or group certificate with the return of income tax required to be furnished under s.161, and the employee receives a credit for the total of the deductions made against his liability to pay tax. If the total of the deductions is greater than the tax payable, the employee receives payment of the surplus, s.221H. In the present case a consideration of the amounts involved shows that during the relevant period the respondent received from the Commissioner of Taxation payment of part of the total deductions made by the Commonwealth and paid to the Commissioner of Taxation under the Income Tax Assessment Act.

In my opinion, in calculating the amount of s.45 compensation paid to the respondent within the meaning of s.99(7) of the Compensation Act, it is necessary to add the amounts actually paid by the Commonwealth to the respondent to the amounts deducted by the Commonwealth and paid to the Commissioner of Taxation for the credit of the respondent. In the absence of express statutory provisions, the general principle is that a person who has under compulsion of law made a payment whereby he has discharged the primary liability of the other, is entitled to be reimbursed by that other. Generally, see Goff and Jones, The Law of Restitution, 2nd Ed., Chapter 14. In making the deductions and paying the amounts so deducted to the Commissioner of Taxation, the Commonwealth discharged its liability to pay s.45 compensation to the respondent. Clearly that liability was thereby discharged and the compensation was paid to the respondent. The respondent received the benefit of that payment. The amount paid was credited against his future liability to pay and in fact part of the amounts so paid was subsequently paid by the Commissioner of Taxation to the respondent. For the purpose of calculating the amounts of compensation paid by the Commonwealth to the respondent, it is irrelevant to have regard to the date 21 February 1974. Accordingly, the answer to question 9 is as follows:

9. (a) Yes.

(b) Yes.

Questions 7 and 8 can be considered together. Question 7 does not raise directly a question of law arising from the decision of the Tribunal and sought to be answered by this appeal. It will be recalled that in calculating the amount of s.45 compensation paid to the respondent within the meaning of s.99(7) of the Compensation Act, the Tribunal deducted from the total amount of s.45 compensation the Commonwealth was liable to pay to the respondent the sum of the amounts of income tax the respondent paid as a result of receiving s.45 compensation payments during the nine years of income ending 30 June 1970 to 30 June 1978 respectively. The sum of the amounts of income tax so paid by the respondent was less than the sum of the amounts deducted by the Commonwealth and paid to the Commissioner of Taxation between February 1974 and 30 June 1978 under Division 2 of Part V1 of the Income Tax Assessment Act. To complete the calculation the Tribunal then added the amount of the s.45 compensation payments, less the P.A.Y.E. deductions for the period 1 July 1978 to 14 September 1978. I have already expressed the opinion that the P.A.Y.E. deductions are to be included in calculating the amount of s.45 compensation paid to the respondent within the meaning of s.99(7). For similar reasons I am of the opinion that the Tribunal was in error in making the calculation by taking into account the income tax paid by the respondent.

Section 99 comprises a code to give effect to a general principle that an employee should not receive both compensation under the Compensation Act and damages outside the Compensation Act as a result of the same injury, but at the same time the employee should not be permitted to suffer any disadvantage by recovering damages. As will be seen later, the appellant relied strongly on the last part of the general principle and submitted that on a literal application of the section he did suffer a financial disadvantage in that he was required or liable to pay to the Commonwealth sums of money which he had been required to pay to the Commonwealth by way of income tax. In the result, the respondent contended that a special meaning should be given to the word "paid" when first appearing in s.99(7) and should be treated as meaning "actually received by".

Section 99 applies to all forms of compensation payable under the Compensation Act. Section 99(2) applies to cases where compensation is payable by the Commonwealth but where the compensation in fact has not been paid, while s.99(3) applies to cases where compensation in fact has been paid. The meaning of the word "paid" where first appearing in that sub-section has a meaning similar to that given to the word "paid" where first appearing in s.99(7). In each of s.99(2) and s.99(3), the employee is not to be financially disadvantaged by the recovery of damages, but is entitled to the benefit of any amount by which the compensation paid or payable exceeds the amount of damages recovered. There may be difficulties in the application of those sub-sections, particularly having regard to the method by which the damages may have been assessed, cf Gonis v. Rootes (Australia) Ltd. (1960) VR 465; Commonwealth of Australia v. Edwards (1976) V.R.371, and on appeal (1976) 50 A.L.J.R. 438. The latter case was brought by the Commonwealth under s.119 of the Compensation Act.

Section 99(4) makes provision for the case where the damages recoverable are reduced by reason of the person otherwise entitled to be paid or has been paid compensation was partly responsible for the injuries received. Section 99(5) and (6) apply where an amount of compensation is payable but in fact has not been paid, and again protection is given to the employee to ensure that he receives an amount at least equal to the total of the amount payable under the Compensation Act. Section 99(7) is the counterpart of s.99(3). The essential parts of s.99(7) are:
"If, before the recovery of the damages by the employee, an amount of compensation was paid to the employee, the employee is liable to pay to the Commonwealth so much of that amount as would not, by reason of the last two preceding sub-sections, have been paid if that amount had become payable immediately after the damages were recovered".

In this sub-section the words "that amount" as emphasised by me, refer back to mean the amount referred to in the phrase "an amount of compensation was paid to the employer". It is that amount which is to be considered. It is an amount which is to be calculated, insofar as s.45 compensation is concerned, by reference to the amounts liable to paid by the Commonwealth and, in fact, paid to or to the credit of the employee. That part of the section is not concerned with substantive questions of liability to pay compensation, but is directed to describing a method of calculation by which an amount of money is to be determined. Accordingly, in making that calculation it is not permissable to consider "that amount", as emphasised by me, as referring to some amount different from the amount of compensation paid to the employee. Accordingly, the answers to questions 7 and 8 are as follows:

7. Yes.

8. Yes.

GENERAL

In preparation for the hearing on the appeal, the respondent had prepared lengthy submissions. The Court permitted him to deliver a copy of those submissions. Most of the matters contained therein have been dealt with by the reasons already given. A number of the submissions involved matters arising under the Constitution or involving its interpretation, but since the Commonwealth is a party to the appeal, notice under s.78B Judiciary Act 1903 as amended, was not required to be given, see s.78B(3)(b).

The respondent made submissions based on contentions made that, having regard to the delay from March 1978 when the judgment for damages was obtained, to September 1978 when the judgment was satisfied in part, the amount he was liable to pay to the Commonwealth under s.99(7) Compensation Act should be reduced further. I have expressed the opinion that the P.A.Y.E. deductions do not affect liability of the respondent, and accordingly it is neither necessary nor desirable that any further opinion be expressed on this further submission.

Other submissions were directed to support the contention that on the interpretation of s.99(7) Compensation Act accepted by the Court, the section exacted a tax, was in breach of the Constitution, and was therefore void. It was contended further that the Commonwealth was a single, indivisable juristic person and that payments of income tax on the s.45 compensation constituted payment to the Commonwealth and therefore the amount the respondent was liable to pay to the Commonwealth under s.99(7) should be reduced by the amount of income tax paid by the respondent as a result of receiving s.45 compensation. If this latter contention is correct, the contention that s.99(7) exacts a tax is no longer applicable.

In my opinion it is neither necessary nor desirable that in these proceedings the Court should comment on these further contentions. The proceedings before the Court are not appropriate for the purpose of determining the issues raised by these contentions. This is an appeal on questions of law. The Court has expressed the opinion that neither the Commissioner for Employees' Compensation nor the Commonwealth Employees' Compensation Tribunal had jurisdiction to make a determination determining the amount the respondent was liable to pay the Commonwealth under s.99(7). The powers of the Court in hearing and determining the appeal are set out in s.95 of the Compensation Act aided, if necessary, by the powers contained in the Federal Court of Australia Act 1976 as amended. Apart from giving answers to the questions of law on which the appeal is sought, the Court should set aside the decision of the Tribunal. The issues raised by the respondent could become relevant if other legal proceedings are commenced to determine the issues unresolved by this appeal.

The Commonwealth expressly stated that in the event of it succeeding in the appeal, it did not seek any orders for costs. The Commonwealth has succeeded but no order for costs is made.

Orders accordingly.

[1980] FCA 71

21 MAY 1980