Galstyan and Markaryan t/as Rite Price Hair Care v WorkCover Authority of NSW
[2006] NSWWCCPD 130
•26 June 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Galstyan and Markaryan t/as Rite Price Hair Care v WorkCover Authority of NSW [2006] NSWWCCPD 130
APPELLANTS: Vahagn Galstyan and Ruzan Markaryan
RESPONDENT: WorkCover Authority of NSW
INSURER:Not insured
FILE NUMBER: WCC5920-04
DATE OF ARBITRATOR’S DECISION: 1 November 2004
DATE OF APPEAL DECISION: 26 June 2006
SUBJECT MATTER OF DECISION: Uninsured Liability and Indemnity Scheme; section 145 Workers Compensation Act 1987
PRESIDENTIAL MEMBER: Acting Deputy President Lansdowne
HEARING:On the papers
REPRESENTATION: Appellant: Eugene Lepore & Associates
Respondent: Turks Legal
ORDERS MADE ON APPEAL:
1. The decision of the Arbitrator dated 1 November 2004 is revoked and the matter is remitted to an arbitrator for determination in accordance with this decision.
2. The Respondent to pay the Appellants’ costs of the appeal.
BACKGROUND TO THE APPEAL
This appeal arises from a claim made by Ms Lorelle Birchley on the Uninsured Liability and Indemnity Scheme (‘ULIS’) in April 2003 in respect of an injury to her lower back. Ms Birchley (‘the Worker’) asserted she suffered the injury on 30 January 2003 while cleaning shelves in the course of her employment for Rite Price Hair Care, a business registered in the names of Mr Vahagn Galstyan and Ms Ruzan Markaryan (‘the Appellants’). The business did not have workers compensation insurance at the time of the injury. ULIS is administered by the WorkCover Authority of New South Wales (‘the Authority’ and ‘the Respondent’). The Authority paid compensation to Ms Birchley and subsequently sought reimbursement from the Appellants by the issue of a notice pursuant to section 145(1) of the Workers Compensation Act 1987 (‘the 1987 Act’). The Appellants made application to the Workers Compensation Commission (‘the Commission’) pursuant to section 145(3) of the 1987 Act for a determination as to their liability. The application was heard by an arbitrator (‘the Arbitrator’) who issued a written decision on 1 November 2004 ordering reimbursement of the Authority by the Appellants. The Appellants have now sought leave to appeal that determination.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 1 November 2004 records the Arbitrator’s orders as follows:
“1. That Vahagn Galstyan and Ruzan Markaryan pay the Workcover Authority of NSW the sum of $36,909.37 within 28 days of the date of determination.
2. That each party pay its own costs.”
In her written decision the Arbitrator identified the issues in dispute as follows:
·Is Mrs Markaryan a partner/ owner of the business and employer of Mrs Birchley?
·Did Mrs Birchley suffer a compensable injury and incapacity (sections 4, 9A and 33)?
·Did WorkCover manage the matter reasonably? Was the treatment she received reasonably necessary (section 60)?
·Is the WorkCover decision not to waive payment reviewable and should WCC exercise an additional discretion (section 145)? (“Issues in Dispute” in Reasons)?
In relation to the first issue, the Appellants had argued that, despite the fact that Ms Markaryan was registered as a co-owner of the business and had signed financial returns which were to the effect that she was a partner, she was not in fact a partner, and nor was she an employer of the Worker because she did not exercise any control over the Worker. The Arbitrator held against the Appellants on each aspect of this issue.
The Arbitrator dealt with the second issue in three paragraphs in her Reasons. In the first paragraph she summarised Ms Birchley’s evidence and said that “Mrs Birchley, although an anxious witness, gave every appearance of giving her evidence as clearly and truthfully as possible”. The Arbitrator’s findings were expressed in the next two paragraphs as follows:
“18. I had no difficulty in accepting that she injured herself at work, in the way she said and the result was that something ‘different’ happened to her back beyond the pain she had had previously. The medical evidence supplied by both the Applicant (the Appellants) and Respondent (Workcover) supports this view.
19. I therefore find that the Respondent Workcover was reasonable in accepting that Lorelle Birchley sustained a compensable injury whilst she was a (sic) work.”
In relation to the third issue the Arbitrator dealt with an argument advanced by the Appellants, that the Authority should have declined the Worker’s claim so as to require the Worker to take proceedings under section 143 of the 1987 Act, which would then have afforded the Appellants the opportunity to obtain their own medical opinion as to her claim. The Arbitrator did not accept this argument and held that “Workcover acted reasonably in the treatment and compensation given to the worker” (paragraph 24 of the Reasons).
In relation to the fourth issue, the Appellants argued that the Commission has the power pursuant to section 145(2) to waive their obligation to reimburse as well as the Authority, or alternatively, to review the refusal of the Authority to exercise that power. The Arbitrator appeared to hold that she did not have the jurisdiction to waive under section 145(2), although it is a little unclear whether her finding is that she had no jurisdiction to waive, or no jurisdiction to review the Authority’s refusal to waive (paragraphs 25-28 of the Reasons). The Appellants also urged the Arbitrator to exercise a “further” discretion not to make an order for reimbursement, despite liability being found, which it was asserted existed in section 145(4) of the 1987 Act. The Arbitrator did not comment on whether or not such a discretion exists, but stated that she saw “no reason to invoke a further discretion”.
ISSUES IN DISPUTE
In the appeal as first filed, the Appellants assert that the Arbitrator erred in the following respects:
1. in finding that Ruzan Markaryan was an employer of the Worker;
2. in failing to find that the Worker’s employment was not a substantial contributing factor to her injury;
3. in failing to compel the Authority to waive recovery pursuant to section 145(2)(a) of the 1987 Act, and
4. in failing to exercise a discretion under section 145(4) to decline to order reimbursement.
All these grounds are contested by the Respondent.
In supplementary submissions filed 19 June 2006 the Appellants submit that the Arbitrator erred in failing to make findings as to the Appellants’ liability to pay the Worker, as a pre-requisite to the order for reimbursement. The Appellants seek that their application be remitted to another arbitrator for re-determination. In its supplementary submissions the Respondent submits that the Arbitrator made findings as to injury, employment and substantial contributing factor, but concedes that “if the decision by (the Arbitrator) is found on appeal not to have involved a determination of the employer’s liability to the injured worker with regard to weekly compensation and treatment expenses, then the appropriate order on appeal is for the matter to be remitted…for determination of that issue”. The Respondent seeks that the application be remitted to the same arbitrator. As a practical matter this is no longer possible.
ON THE PAPERS REVIEW
Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the1998 Act’) provides:
“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
The Appellants sought in their appeal as first filed an oral hearing on the grounds that the matter is complicated, and that “there is no current binding authority” on the application of section 145 of the 1987 Act. Since the appeal was filed the Court of Appeal has issued its decision in Raniere Holdings Pty Ltd v Daley & Anor [2005] NSWCA 121(‘Raniere Holdings’) and there have been subsequent Presidential decisions of the Commission in relation to section 145. I have given the parties the opportunity to comment on these decisions by further submissions and both parties have filed supplementary submissions. Having regard to that opportunity, Practice Directions Numbers 1 and 6, the documents that are before me, and the lack of objection by the Respondent to the appeal being determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
LEAVE
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act. Section 352(1) provides that a party to a dispute may appeal the decision of an arbitrator “with leave of the Commission constituted by a Presidential member”. Section 352(2) provides that the Commission is not to grant leave unless the dispute relates to a minimum quantum, and section 352(4) provides a time limit for the making of an appeal.
There is no issue that the amount in dispute exceeds the minimum quantum specified in section 352(2). The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. In these circumstances, it has been the practice of the Commission to grant leave to appeal without further scrutiny on the leave point of the merits of the appeal. The Respondent submits that leave to appeal should not be granted “unless the judgment appealed against involves an error of principle and a substantial injustice” (paragraph 1.4 of the Submissions in Opposition to the Appeal). The Respondent cites authorities in support of this proposition. Without disputing those authorities, in this instance I propose to follow the usual practice of the Commission and grant leave to appeal as the statutory requirements have been met. I grant leave to appeal.
EVIDENCE AND SUBMISSIONS
Neither party seeks to rely on any fresh evidence. I have before me a transcript of the two arbitration hearings held, on 4 August 2004 and 28 September 2004, and the other documents before the Arbitrator. I also have the Certificate of Determination and the Arbitrator’s Statement of Reasons, the appeal, submissions in opposition, submissions in reply on the appeal and further submissions by each party on the more recent authorities.
DISCUSSION AND FINDINGS IN RELATION TO ERROR
Nature of an appeal under section 352 of the 1998 Act
Section 352(5) specifies that appeal is to be “by way of review of the decision appealed against”. In Allesch v Maunz [2000] HCA 40 and Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 the High Court discussed the different types of appeal. The Court held that, broadly there are three types: an appeal “in the strict sense”, where the issue is whether the decision was erroneous on the facts and the law as they then stood; a rehearing, where the appeal court may receive further evidence and if the appellant demonstrates error on the basis of all the evidence the appeal court may substitute its decision on the basis of the facts and law as they now stand; and a hearing de novo, where the appeal court hears the matter afresh. In Mayne Health Group t/as Nepean Private Hospital v Sandford [2002] NSWWCCPD 6 the Commission held that an appeal under section 352 was of the second type i.e the appellant must establish error of law, fact or discretion on the part of the Arbitrator before the Commission on appeal may disturb the Arbitrator’s findings and substitute a decision.
Section 145 of the 1987 Act
Section 145 of the 1987 Act provides a mechanism for the Authority to recover from an uninsured employer of an injured worker amounts of compensation paid to the worker. The general scheme of the section is as follows. Sub-section (1) provides for the service of a notice on the employer requiring reimbursement of the amount specified in the notice within a specified period of time. Sub-section (2) provides that the Authority may waive the liability of an employer under sub-section (1) on certain grounds. If the employer wishes to dispute his or her obligation to reimburse then he or she may apply to the Commission under sub-section (3); if he or she does not apply to the Commission within the necessary time frame then the amount specified in the notice is recoverable by virtue of sub-section (6) as a debt in a court of competent jurisdiction. If the employer does apply to the Commission then sub-section (4) sets out the powers of the Commission on such an application. Sub-section (5) provides that a certificate executed by the Authority is evidence of certain matters stated in the certificate in such proceedings. Where the Commission orders reimbursement the order may be enforced in the normal way under section 362 of the 1998 Act by virtue of sub-section (7).
Sub-sections (1)-(4) of section 145 are as follows:
“(1) The Authority may serve on a person who, in the opinion of the Authority, was:
(a) in respect of an injured worker to or in respect of whom a payment has been made under the Scheme, an employer at the relevant time, or
(b) an insurer under this Act of such an employer,a notice requiring that person, within a period specified in the notice, to reimburse the WorkCover Authority Fund an amount (not being an amount exceeding the amount of the payment made) specified in the notice.
(2) The Authority may, by instrument in writing, waive the liability of an employer under subsection (1) to reimburse the WorkCover Authority Fund an amount, if the Authority, in respect of the amount, is satisfied that:(a) the amount is beyond the capacity of the employer to pay,
(b) the employer could not reasonably have been expected to regard himself or herself as an employer at the relevant time,
(c) the employer, not being a corporation, is bankrupt and the liability under this section is not provable in the bankruptcy,
(d) the employer, being a corporation, is being wound up and the liability under this section is not provable in the winding up,
(e) the employer, being a corporation, has been dissolved, or
(f) it would not be commercially feasible for the Authority to attempt to recover the amount.(3) A person on whom a notice has been served under subsection (1) in respect of an injured worker may, within the period specified in the notice, apply to the Commission for a determination as to the person’s liability in respect of the payment concerned.
(4) The Commission may hear any such application and may:(a) make such determination in relation to the application, and
(b) make such awards or orders as to the payment of compensation under this Act to or in respect of the injured worker concerned,as the Commission thinks fit.”
An order may also be made by the Commission for reimbursement of the Authority under section 144 of the 1997 Act. This section applies where a worker has applied for compensation under the ULIS, the Authority has made a decision with which the worker does not agree, and the worker has applied to the Commission for a determination of the claim. Sub-section (3) of section 144 provides that “The Commission may hear and determine any such application and may make such orders in relation to the application as the Commission thinks fit”. Sub-section (5) provides that “An order under subsection (3) may provide for the reimbursement of the WorkCover Authority Fund under section 145”.
The Commission’s powers on an application under sub-section 145(3)
Before considering the specific grounds of appeal in this case it is necessary to determine the powers of the Commission in an application under section 145(3). The sub-section provides that the application is for the “determination as to (the employer’s) liability in respect of the payment concerned”. At the time the Arbitrator made her determination there was limited case authority as to the powers and obligations conferred on the Commission by this form of words. In GRE Workers’ Compensation Insurance (NSW) Ltd v Nohil Pty Ltd & Others (1996) 13 NSWCCR 74 (‘Nohil’) the Court of Appeal considered an appeal by an insurer against an order made against it by the Compensation Court under section 145(3) in proceedings commenced by the employer. The Authority had only served a notice under section 145(1) on the employer, not on the insurer who was ultimately held liable. The insurer was joined to the proceedings as a respondent by the employer. The appeal turned on whether the power to make orders under section 145(4) was limited to the making of orders as between parties served with the notice. Handley JA and Cole JA, with whom Clarke JA agreed, held that the reference to the employer’s “liability” in sub-section (3) included questions as to the availability of rights of indemnity against an insurer (Handley JA page 77; Cole JA page 81). In reaching this conclusion Cole JA said the following:
“Subsection (3) permits determination as to “the person’s liability”. A person’s liability includes not only any obligation to pay compensation, but also that person’s right to any indemnity in respect of that compensation, for instance, from its insurer. Subsection (4) confers a power on the hearing of such an application to make “orders as to the payment of compensation…in respect of the injured worker concerned.” That is a plenary power permitting the Court to make appropriate orders adjusting the rights of all persons or bodies who may have an existing or potential liability or entitlement to be relieved of liability because of insurance in respect of the compensation claimed by or awarded to the injured worker.” (page 81)
The Commission quoted from this passage in Chen v WorkCover Authority of New South Wales [2004] NSWWCCPD 13 (19 March 2004) (‘Chen’), which was determined before the arbitration before the Arbitrator and relied upon by the Respondent in its submissions. The Commission there held that:
“The decision that an Arbitrator may make under section 145(4) of the 1987 Act relates to the “existing or potential liability or entitlement to be relieved of liability” of the parties under the Workers Compensation Acts. The Arbitrator must be satisfied that the requirements of those Acts, in relation to worker’s entitlements, have been met, and that the worker is not precluded from an award of compensation by any provision of those Acts.” (paragraph 76)
Thus Nohil and Chen establish that an arbitrator must make findings as to liability as a pre-requisite to ordering reimbursement. What is less clear is whether the conferral of power in section 145(4) to make an order “as the Commission thinks fit” gives the Commission the discretion to decline to make an order, even where liability is found. The Commission in Chen took the view that the arbitrator did have such a discretion. Immediately after the passage quoted above the Commission continued: “The Arbitrator has a discretion in the making of a decision under section 145(4), and the factors relevant to that discretion must be considered in the circumstances of the particular case”. This was also the approach taken by the Commission in Mackley v WorkCover Authority of New South Wales [2005] NSWWCCPD 32 (‘Mackley’). In that case the Presidential Member relied on the reference to “plenary power” in Nohil to find that the Commission has power under section 145(4) to decline an order for reimbursement on discretionary grounds even where it is established that the employer is liable to pay compensation (paragraph 25).
Apparently unbeknownst to the Commission when Mackley was determined, however, the Court of Appeal had recently revisited section 145 in the decision of Raniere Holdings referred to earlier. In that case, a worker made a claim on ULIS which was initially rejected. The worker then made application to the Compensation Court under section 144, joining the Authority and her employer. The worker and the Authority settled the claim and the Authority sought an order under section 144(5) for reimbursement by the employer. The trial judge made the order, although the worker’s claim had not been determined on the merits and the employer was not a party to the settlement. Tobias JA, with whom Hodgson JA and Stein AJA agreed, held that this was an error. He held that the “liability in respect of the payment concerned” which is the subject of an application under section 145(3) “relates to that of the employer to pay compensation to the injured worker under the Act” and continued:
“Accordingly, subject to the provisions of s145(5), the fact that the Authority has made a payment to the injured worker under the Scheme, whether of its own motion pursuant to s143(1)(a) or pursuant to an order of the Compensation Court made under s144(3), is not conclusive of the employer’s liability to reimburse the Fund from which that payment is made. That liability, if not otherwise conceded by the employer, is to be determined by the Compensation Court pursuant to s145(4)” (paragraph 45)
The powers formerly exercisable by the Compensation Court under section 145(4) are now exercisable by the Commission. It follows that the Commission when considering an application made by an employer under section 145(3) is required to determine whether the employer is liable to pay compensation to the worker having regard to all relevant provisions of the 1987 and 1998 Acts. The Court in Raniere Holdings emphasised that in making this determination it is not sufficient to rely on the actions of the Authority. In that case the Authority argued that the Compensation Court could make an order for reimbursement without determining whether in fact the employer was liable provided that the settlement entered into by the Authority was reasonable. The Court held that “it is insufficient for the making of a provision for reimbursement pursuant to s144(5) that the Compensation Court determines that the settlement reached between the injured worker and the Authority was reasonable” (Tobias JA paragraph 50). The comment is equally applicable to section 145(4) because section 145 is the governing provision for the making of an order under section 144(5). It follows that the Commission is required in an application under section 145(3) to make findings as to all necessary elements of the employer’s liability before ordering reimbursement.
Raniere Holdings did not specifically address the issue of whether the Compensation Court, now the Commission, has power to go further under section 145(4) and decline to order reimbursement on discretionary grounds even when liability under the Acts is established. Nor did the Court discuss Nohil in the decision, although it was relied on by the Authority. There is one suggestion in the judgment of Tobias JA that there is no power or requirement to examine discretionary factors. The trial judge in Raniere Holdings had noted that the employer had given no explanation as to why it was uninsured. The comment made by Tobias JA in relation to that discussion was “What this had to do with the issue is somewhat difficult to fathom” (paragraph 35). In a recent presidential decision, Ballantyne v WorkCover Authority of New South Wales [2006] NSWWCCPD 94(‘Ballantyne’) the Commission has viewed Raniere Holdings as authority for the proposition that there is no discretion to decline to make orders for reimbursement where liability is established. It follows that there is now a difference of opinion amongst Presidential members of the Commission on this point. An appeal against Mackley was heard by the Court of Appeal on 20 June 2006 and judgment reserved.
I have given the parties the opportunity to make further submissions in relation to Raniere Holdings, Mackley and Ballantyne. Both parties have taken up that opportunity. The Authority submits that Mackley was wrongly decided and relies on Ballantyne. The Appellants say that in the absence of binding authority the view that there is a discretion should be preferred.
Whether or not the Commission has a discretion to decline to order reimbursement although liability is established is an issue in this appeal as well, and accordingly I have given consideration to whether determination of this appeal should be delayed until judgment in the appeal from Mackley. Potentially that could cause a further delay of some weeks or months, in a matter already long delayed. In my view, this further delay is not necessary or warranted. Even if such a discretion is found to exist, for the reasons set out in more detail below, I do not consider there are any grounds shown for exercising it in this case. Further, for the reasons set out below I propose to remit the application for fresh determination by an arbitrator. It may be that the Court of Appeal will have issued its decision in relation to Mackley by the time of the fresh arbitration and, if so, the arbitrator will be bound by that decision. I turn now to the specific grounds of appeal.
Did the Arbitrator err in finding that Ruzan Markaryan was an employer of the Worker?
The Appellants assert that the Arbitrator was in error in that she “failed to actually weigh up the indicia of the putative employment relationship rather than focusing on whether there was a partnership or not” and failed to give “due weight to the concept of the “silent partner” as militating against the employment relationship and as a factor of discretion when deciding whether to allow the respondent to recover from her the compensation it paid”. The Respondent says the Arbitrator made no error in considering the partnership issue as determinative, because Mr Galstyan had conceded he was an employer. In short “it was not necessary to weigh up the indicia of employment where employment was already admitted by Mr Galstyan. If Ms Markaryan was in partnership in the business of Rite Price Hair Care with Mr Galstyan, whether as silent or active partner, it followed that she was also an employer of the worker”. The Respondent says there was no error in the Arbitrator’s finding that Ms Markaryan was a partner.
I consider the Respondent to be correct on this ground. As a matter of law under the Partnership Act 1892 partners are liable for the acts of each other, and each can bind the other in relation to contracts. Nothing is advanced to put contracts of employment in any different category to other contracts in this regard. Mr Galstyan conceded throughout that he was Ms Birchley’s employer and there was ample evidence on the basis of which the Arbitrator could conclude that he and Ms Markaryan were in partnership. The Appellants asserted that if Ms Markaryan was a partner, she was a “silent partner” and so should not be held liable. The authorities relied on by the Respondent in its written submissions on this point establish that there is no different rule applied to partners who choose not to play an active role in the partnership business, or are not known to persons contracting with other partners to be partners. Accordingly, Ms Markaryan even if a “silent partner” was by virtue of the partnership an employer of the Worker. I will address the suggestion that the Arbitrator had a discretion in whether or not to order reimbursement by Ms Markaryan given her limited role in the business in relation to the discussion of discretion generally.
This ground of appeal is not established.
Did the Arbitrator err in relation to “substantial contributing factor”?
The Arbitrator was bound by the decision in Chen that she was required to determine the liability of the Appellants having regard to all relevant requirements of the 1987 and 1998 Acts. This has now been confirmed by the Court of Appeal in Raniere Holdings. The Appellants disputed amongst other things before the Arbitrator whether or not the Worker’s employment was a “substantial contributing factor” to her injury, as required by section 9A of the 1987 Act. I have set out earlier the Arbitrator’s findings in relation to liability, which are contained in paragraphs 18 and 19 of the Statement of Reasons. There is no reference to the requirements of section 9A in those paragraphs. The Arbitrator’s express finding is that “the Respondent Workcover was reasonable in accepting that Lorelle Birchley sustained a compensable injury whilst she was at work” (paragraph 19). Whether or not WorkCover was reasonable is not the test. This was made clear by Raniere Holdings where it was held insufficient to rely on a reasonable settlement by the Authority as a ground for ordering reimbursement.
I consider that the Arbitrator has failed to make a necessary finding as to “substantial contributing factor”. It is not necessary to consider the specific objections taken by the Appellants in relation to “substantial contributing factor” as it is sufficient to succeed on this ground of appeal that the Arbitrator failed to make any finding at all. This ground of appeal is established.
Alleged error in relation to section 145(2)
The Appellants submit that the Arbitrator erred in failing to “compel” the Authority to waive recovery under section 145(2). The Arbitrator found that she had no power to make an order under section 145(2) on the basis that the power to waive recovery was given solely to the Authority by that sub-section. She referred to the decision of Curtis J. in Petersen v Tansiri [2001] NSWCC 187 (Petersen) to the same effect. The Appellants submitted before the Arbitrator and again on this appeal that that decision was not binding on the Commission. Further, the Appellants asserted before the Arbitrator that it was inconsistent with section 145(4) to deny the Commission the power to effectively review a decision of the Authority made under section 145(2). The Respondent submitted before the Arbitrator that the Commission’s powers under section 145(4) are limited to the determination of the employer’s liability. In a passage reported at page 95 of the transcript for the second day of the arbitration (28 September 2004) counsel for the Authority said:
“the application (referred to s145(4)) is in respect of a determination of liability, not in respect of a waiver of the liability. It’s your job to establish whether or not there is a liability. The discretion that’s granted by section 145 subsection (4) does not extend to take into account whether or not that liability should be waived. It is only the extent of that liability. So, in other words, you look at injury, you look at employment, you look at substantial contributing factor, you look at the payments that are being made and whether or not they’re justified on all the objective evidence, and that’ it.”
Counsel for the Authority also relied on the structure of section 145 in support of this argument. He asserted that where the employer has made an application under section 145(3) liability is not established until the Commission determines it. Once that has occurred questions of waiver of that liability under subsection (2) may arise, but they cannot arise prior to the determination of liability. He submitted that the powers of the Commission under section 145(3) did not go beyond the determination of liability.
In my view the submissions for the Respondent Authority are correct. I do not consider that the Commission has any power under section 145(4) to waive the liability of the employer under section 145(2) or direct the Authority to do so. I base this conclusion on three considerations. First, the clear words of subsection (2). Section 145(2) clearly confers a power on the Authority, not on the Commission. Next, statutory construction of section 145 as a whole. I agree with the Respondent that, logically, waiver of liability must follow the establishment of liability. The effect of the section is that liability may be established in two ways. Where the person served with the section 145(1) notice does not make application to the Commission within the necessary time frame, then the amount claimed may be recovered as a debt (section 145(6)). The Authority could waive its right to recover pursuant to section 145(2). Waiver of a debt is the right of any creditor, but it is appropriate in the case of a debt to the Crown and a statutory authority that there be a statutory basis and stipulated grounds on which the Authority may do so. Where the person served makes application to the Commission, then there is no liability until the Commission determines it. Once determined, the Authority may exercise its powers under section 145(2) to waive the liability.
My third reason is conformity with the case law. Although the question of a power to waive under section 145(2) was not litigated in Raniere Holdings, the decision in that case supports the view that the Commission’s role under section 145(4) is the determination of liability on the usual grounds, not some other task. Prior decisions of the Compensation Court have also taken the view that the Court did not have the power to waive under section 145(2) (Petersen and Hadchiti v Llandilo Staircases Pty Ltd and WorkCover Authority of New South Wales [2002] NSWCC 10 per Wright C at paragraph 86). These decisions are not binding on the Commission in this appeal, but they are persuasive and I consider them correct. The same view has recently been taken by other Presidential members in Mackley and Ballantyne.
For these reasons I consider that the Arbitrator was correct in her view that the Commission has no power to waive liability under section 145(2). This ground of appeal is not established.
Alleged error in relation to discretion under section 145(4)
The Appellants submitted before the Arbitrator and again on this appeal that the Commission has an overriding discretion under section 145(4) to make such orders as “the Commission thinks fit”, which includes the power to decline to order reimbursement even where liability is established. They assert the Arbitrator was in error in failing to exercise this discretion in favour of the Appellants. In its initial submissions in opposition to the appeal the Respondent did not disagree that such a discretion exists, but said that the Arbitrator made no error in declining to exercise it. The Arbitrator did not clearly state in her Reasons whether or not she considered such a discretion to exist, but stated that she saw no reason to exercise it in favour of the Appellants. In its further submissions the Respondent asserts that there is no discretion under section 145(4).
As set out earlier, there is currently a difference of opinion between Presidential members as to whether such a discretion exists. In Mackley the Commission found that such a discretion exists and exercised it in favour of the employer. This is consistent with the earlier, pre Raniere Holdings, decision in Chen. In Ballantyne the Commission held it flowed from Raniere Holdings that the Commission did not have “any power to make a determination of liability which is other than that of the employers to the worker” (paragraph 37).
I do not consider it necessary to reach a decision in this case whether or not the Commission has the power under section 145(4) to decline to order reimbursement to the Authority despite a determination that the employer is liable to the worker. Even if such a discretion exists, I do not consider that the Arbitrator was in error in failing to invoke it. There were no mitigating factors in this case in relation to the failure to insure as in Mackley. The Appellants rely on the following matters to support their contention that the discretion should have been exercised in their favour: the “passive involvement of Mrs Markarian”; the “Respondent’s failure (at any stage) to dispute the workers claim”; the “Respondent’s failure to properly manage the claim”; and “the impecuniousness of Mr Galstyan” (appeal submissions). The Arbitrator discussed these matters in various portions of her Reasons and I do not consider she was in error in failing to consider them sufficient to decline to order reimbursement. This ground of appeal is not established.
Summary in relation to error
In summary, the Appellants have not established an error in relation to three of the grounds on which they rely. They have, however, established an error in relation to the determination as to whether or not the Worker’s employment was a “substantial contributing factor” to her injury under section 9A of the 1987 Act. I revoke the decision of the Arbitrator on that ground.
The Appellants submit in their further submissions that the Arbitrator also failed to make findings as to injury, current and average weekly earnings, ability to earn, incapacity, and the reasonableness of the medical expenses. It is not necessary to examine the Arbitrator’s decision in detail in relation to these alleged errors because error has been established in relation to substantial contributing factor, and that in itself requires that the decision be revoked. I do consider the Appellants correct, however, at least in relation to findings as to earnings, ability to earn, incapacity and the reasonableness of the medical expenses. The Arbitrator’s decision appears to reflect her view (as shown in her list of issues) that the central issue was whether the actions of the Authority had been “reasonable”, not whether liability on the usual grounds had been shown. In fairness to her, the parties themselves may have contributed to this view by the emphasis placed by them in their evidence and submissions on issues of management of the claim by the Authority, rather than proof of liability.
Remit or substitute?
I have considered whether there is sufficient evidence in relation to the pre-requisites of liability for me to make a substituted decision. I have decided that there is not. Section 145(3) requires the Commission to determine the employer’s liability “in respect of the payment concerned” i.e. the payment specified in the section 145(1) notice. Thus the Commission must be in a position to determine what was paid by the Authority, and on what basis, and compare this to findings as to the employer’s actual liability, as established on the evidence and not just on the view of the Authority. There is evidence filed as to what was paid by the Authority, in the form of the section 145(1) notice dated 8 March 2004, but there is no clear evidence or submissions from the Authority as to the basis on which these payments were made. The notice seeks reimbursement of $36,909.37 which is said in the certificate to be comprised of $24,652.39 compensation and $12,256.98 medical expenses. The compensation is only itemised by date of payment, amount, and payee, the dates of payment being from 28 May 2003 to 18 February 2004. The nature of the compensation (whether weekly or some other basis) is not identified, although the periodic nature of the payments may suggest that they were made by way of weekly compensation. Further, if the compensation paid was weekly, there is no itemisation in the evidence as to whether payment was made for partial or total incapacity, and for what periods.
There are also deficiencies in the presentation of the evidence on the basis of which the Commission is required to make findings of actual liability, particularly in relation to incapacity, ability to earn, and prior earnings. The written evidence on these points consists of various documents including wages information, the Worker’s claim, medical certificates, vocational assessments and rehabilitation reports attached by the Authority to the reply, and further documents filed by the Authority on 24 September 2004 and apparently admitted without objection, which were described as relating to “the management of ULIS claim by WorkCover over the period 18 March 2004 to 20 August 2004”. These documents consist of further reports to the Authority from rehabilitation providers and medical certificates. The Authority did not, however, make any submissions as the findings the Arbitrator should make in relation to earnings, incapacity and ability to earn from these various documents.
Similar difficulties apply in relation to the medical expenses claimed. The medical expenses are itemised by date, amount and payee but not by nature of expense. It is unclear whether, for example, all are properly claimable under section 60 of the 1987 Act.
For these reasons I will remit the application for re-determination by an arbitrator. The Appellants submit that this should be a different arbitrator because of denial of procedural fairness by the Arbitrator. I do not consider that such denial is established. As a practical matter, however, it is no longer possible to remit the matter to the same arbitrator, and accordingly it will be re-determined by a different arbitrator. That arbitrator will need to determine whether leave should be granted for the filing of further evidence on the aspects of liability that are in dispute. The parties and arbitrator may also care to give consideration to which party bears the onus of proof of liability in an application under section 145(3). It appears to me from the submissions before the Arbitrator that there was a difference of opinion between counsel for the Appellants and for the Authority on this point, but this was not explored before the Arbitrator. The issue has not been canvassed on the appeal and I express no concluded view. However, as the Commission must be satisfied of liability and it is the Authority which has made the payments and seeks reimbursement it is obviously in the interests of the Authority to provide clear evidence as to the nature of the payments, the basis on which they were made, and the disputed issues of liability.
DECISION
The decision of the Arbitrator is revoked for error of law. I remit the application to the Registrar for allocation to an arbitrator for determination in accordance with this decision.
COSTS
The Commission has a discretion as to the award of costs (sections 341 and 345 of the 1998 Act). The Appellants have been successful in establishing error. I consider that the Respondent, the Authority, should pay the Appellants’ costs of the appeal.
Robyn Lansdowne
Acting Deputy President
26 June 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBYN LANSDOWNE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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