Heise v Employers Mutual Limited

[2022] NSWCA 283

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Heise v Employers Mutual Limited [2022] NSWCA 283

Hearing dates:

21 November 2022

Date of orders:

21 December 2022

Decision date:

21 December 2022

Before:

Mitchelmore JA at [1]
Kirk JA at [2]
Griffiths AJA at [80]

Decision:

(1) Leave to appeal is granted.

(2) The appellant is to file a notice of appeal within 28 days in terms consistent with the draft amended notice of appeal.

(3) The appeal is dismissed with costs.

Catchwords:

WORKERS COMPENSATION — Claim for compensation — Claim made by former police officer — Claim made on company engaged by Self Insurance Corporation as claims manager to assess claims under Government managed fund schemes — Claim not determined within relevant period — Private prosecution of company by claimant — Whether criminal liability extends to parties engaged to manage and assess claims under Government managed fund schemes

Legislation Cited:

Interpretation Act 1987 (NSW), s 21(1)

NSW Self Insurance Corporation Act 2004 (NSW), ss 7(2), 8(1)

Workers Compensation Act 1987 (NSW), ss 2A, 3, 140, 155, 211B

Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 4(1), 7(1), 60, 61(2)(a), 61(2)(c), 108(2)(c), 154G-M, 234, 235D(6), 250, 254, 260, 264, 274, 279, 281, 283, 288, 311, 376

Cases Cited:

Ballas v Dept of Education (State of NSW) (2020) 102 NSWLR 783; [2020] NSWCA 86

Bropho v Western Australia (1990) 171 CLR 1; [1990] HCA 24

CFMEU v Mammoet Australia Pty Ltd (2013) 248 CLR 619; [2013] HCA 36

Commissioner of Police (NSW) v Cottle (2022) 96 ALJR 304; [2022] HCA 7

Employers Mutual Limited v Heise [2018] NSWSC 1842

Employers Mutual Limited v Heise [2022] NSWSC 465

Fletcher International Exports Pty Ltd v Barrow [2007] NSWCA 244

Kempe v Complete Community Services Pty Ltd [2022] NSWSC 1095

Northern Land Council v Quall (2020) 271 CLR 394; [2020] HCA 33

State Authorities Superannuation Board v Commissioner of State Taxation for Western Australia (1996) 189 CLR 253; [1996] HCA

Tan v National Australia Bank Ltd (2008) 6 DDCR 363; [2008] NSWCA 198

Telstra v Worthing (1999) 197 CLR 61; [1999] HCA 12

Texts Cited:

NSW Legislative Council, Parliamentary Debates, 29 March 2001 at 12881

Workers Compensation Guidelines

Category:

Principal judgment

Parties:

Julie Heise (Applicant)
Employers Mutual Limited (Respondent)

Representation:

Counsel:

B Walker SC and M Weightman (Applicant)
G Watson SC and D Tang (Respondent)

Solicitors:

Cardillo Gray Partners (Applicant)
HWL Ebsworth (Respondent)

File Number(s):

2022/140658

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Common Law

Citation:

Employers Mutual Limited v Heise [2022] NSWSC 465

Date of Decision:

19 April 2022

Before:

Adamson J

File Number(s):

2021/273126

HEADNOTE

[This headnote is not to be read as part of the judgment]

The applicant was a former police officer injured in connection with her duties. She made a claim for lump sum compensation for permanent impairment. The claim was sent to the respondent, a company retained to act on behalf of the State (the deemed employer) in dealing with such claims. Section 281 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the 1998 Act) required that a “person on whom a claim for lump sum compensation … is made” determine the claim within two months of all relevant particulars having been supplied by the applicant. Under s 283 of that Act, “[a] person who fails to determine a claim as and when required” by the statute is guilty of an offence. When the claim was not determined within the set time, the applicant brought a private prosecution in the Local Court against the respondent for breach of s 283. The matter was heard by Magistrate Lacy at Newcastle Local Court. The respondent was convicted and fined $2,500.

The respondent then appealed to the Supreme Court. Adamson J set aside the conviction on the basis that the respondent was not a person who fell within the scope of the duty in s 281(1), as given criminal effect by s 283(1). The dispute below was principally one about the construction of the terms of ss 281 and 283. The applicant sought leave to appeal from the decision of Adamson J, disputing her Honour’s construction of the provision. The applicant put five main arguments on appeal:

1. the applicant had made a claim on respondent, which had a contractual duty to determine it;

2. it was significant that the respondent was itself (or had been in the past) a licensed insurer;

3. the Guidelines supplied content with respect to who was to be treated as an insurer;

4. the status and role of EML as claims manager rendered it an insurer;

5. the State itself could not be prosecuted, and this meant the respondent as claims manager should be capable of prosecution.

The Court (per Kirk JA, Mitchelmore JA and Griffiths AJA agreeing) granted the applicant leave to appeal but dismissed the appeal, and held:

With respect to the first argument:

It is evident that the obligation to determine a claim in s 281(1) applies to a recipient of the claim who has the power to determine it. The Parliament cannot sensibly have intended that a person breach a duty which they do not have the legal ability to comply with. Employers or insurers may contract with others to enable them to perform these duties. But whether or not that is done, the statutory duties and potential criminal liability still apply to those employers or insurers. In circumstances where contract cannot override or transfer the statutory duties away from employers and insurers, it would be odd if someone could become subject to those duties by contracting to undertake them on behalf of the employer or insurer: at [40]-[41].

With respect to the second argument:

Whether or not the respondent was licensed as an insurer, it was not the relevant insurer for the State with respect to the applicant’s claim. Even if it was in fact an “insurer”, that was mere happenstance; it was not the relevant insurer: at [47].

With respect to the third argument:

The statute contains no Henry VIII clause allowing the Guidelines to effectively rewrite the 1998 Act. The sections of the 1998 Act which refer to the Guidelines confer no power to determine who is to be treated as an insurer or employer. Even if the Guidelines said in terms that the respondent is to be treated as an insurer for the purposes of the legislation, that would have no effect on the issue of statutory construction on which this case turns, the Guidelines being subject to the Act: at [53]. In any event, the Guidelines did not state that: at [57]-[59].

Fletcher International Exports Pty Ltd v Barrow [2007] NSWCA 244 at [41]-[43]; Tan v National Australia Bank Ltd (2008) 6 DDCR 363; [2008] NSWCA 198 at [34], referred to.

With respect to the fourth argument:

The mere fact that the State, or a body corporate, engaged other persons to deal with and determine claims on its behalf does not require or suggest that such other persons are themselves subject to the relevant duties, and potential criminal liability. There is no statutory reference to “claims manager” in either the 1998 or 1987 Acts. There is no statutory footing for distinguishing a body such as the respondent from other third parties acting on behalf of the State or corporations. The applicant’s argument would seem to lead to potential direct criminal liability of employees of the State or corporations who had been allocated decision-making responsibility for claims. That does not appear a likely intention of the Parliament: at [64]-[65].

With respect to the fifth argument:

If the State cannot be prosecuted that is because of the strong general presumption to that effect, a presumption which recognises the distinctive character of governments. That presumption and recognition does not support seeking to stretch statutory provisions so as to find other means of effectively holding the State to account. Doing so is not required by the principle, and to do so would at the least be in tension with it: at [74].

Bropho v Western Australia (1990) 171 CLR 1 at 22-23; [1990] HCA 24, State Authorities Superannuation Board v Commissioner of State Taxation for Western Australia (1996) 189 CLR 253 at 293; [1996] HCA, Telstra v Worthing (1999) 197 CLR 61; [1999] HCA 12 at [22], considered.

JUDGMENT

1. MITCHELMORE JA: I agree with Kirk JA.

2. KIRK JA: Ms Julie Heise is a former police officer who was injured in connection with her duties. She later made a claim for lump sum compensation for permanent impairment. The claim was sent to Employers Mutual Limited (EML), a company retained to act on behalf of the State (the deemed employer) in dealing with such claims. Various interactions followed.

3. Section 281 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the 1998 Act) required that the claim be determined within two months of all relevant particulars having been supplied by Ms Heise. Section 283 of that Act made a failure to comply with this requirement a criminal offence. The claim was not determined within the set time.

4. Ms Heise brought a private prosecution in the Local Court against EML for breach of s 283. After various preliminary disputes the matter was heard by Magistrate Lacy at Newcastle Local Court. EML was convicted and fined $2,500.

5. EML then appealed to the Supreme Court. Adamson J set aside the conviction on the basis that EML was not a person who fell within the scope of the duty in s 281(1), as given criminal effect by s 283(1): Employers Mutual Limited v Heise [2022] NSWSC 465 (J). The dispute below was principally one about the construction of the terms of ss 281 and 283. Ms Heise now seeks leave to appeal from the decision of Adamson J, disputing her Honour’s construction of the provision. There are two grounds of appeal, but the second ground depends on the first, which relates to construction.

6. The application raises an issue of principle. Leave to appeal should be granted. However, her Honour’s conclusion was correct and the appeal should be dismissed with costs. EML was not relevantly a person subject to ss 281 and 283 as regards determining the appellant’s claim for lump sum compensation.

7. In what follows I first set out the relevant background, then summarise the statutory scheme, before addressing the issue of statutory construction raised.

Background

8. On 12 May 2009 the appellant was injured in a motor vehicle accident in connection with her duties. On 11 April 2017 the appellant’s solicitors lodged a claim seeking lump sum compensation for permanent impairment under s 66 of the Workers Compensation Act 1987 (NSW) (the 1987 Act). The claim was lodged with EML, for reasons explained below.

9. On 14 September 2017 the appellant was examined by a doctor retained by EML. Having heard nothing further from EML, on 24 July 2018 the appellant filed an application to resolve a dispute in the Workers Compensation Commission. The State of New South Wales was named as the respondent.

10. On 26 September 2018 the appellant filed a court attendance notice in the Local Court at Newcastle, beginning a private prosecution against EML for contravention of s 283(1) of the 1998 Act. The short particulars alleged that EML “failed to determine a claim for lump sum compensation within 2 months after the claimant … had provided to the Defendant all relevant particulars about the claim”.

11. On 14 November 2018, and in accordance with the 1998 Act, an Approved Medical Specialist certified the appellant’s “whole person impairment” as being 19%, having assessed the appellant on 26 October 2018. The appellant’s claim was then resolved by agreement on 23 November 2018. On 19 December 2018 the Workers Compensation Commission made orders by consent awarding the appellant lump sum compensation of $43,600.

12. Meanwhile, as regards the prosecution, on 20 November 2018 EML filed a summons in the Supreme Court challenging the court attendance notice on the basis of standing. McCallum J dismissed the summons: Employers Mutual Limited v Heise [2018] NSWSC 1842. Further attempts to halt the prosecution by means of notices of motion brought in the Local Court also failed.

13. The prosecution was heard before Magistrate Lacy in Newcastle on 28 April 2021. Her Honour convicted EML on 16 June 2021. EML successfully appealed to the Supreme Court.

The statutory scheme

14. The parties agreed that the version of the 1998 Act which was relevant for present purposes was the historical version for 1 December 2017 to 14 June 2018. Although the reason for this was not explained to this Court, it appears to flow from Magistrate Lacy’s alternative finding as to when the appellant had provided to EML all relevant particulars about her claim (being 7 February 2018). In this context, it suffices to focus on the law as it stood as at 7 April 2018, being two months after the more conservative date adopted by Magistrate Lacy. The appellant’s claim should have been determined by that date at the latest if the time limit in s 281 had been complied with. The provisions referred to below are as at that date. Similarly, the guidelines referred to below are those that applied as at that time.

Who was the appellant’s “employer” and who was the insurer?

15. The appellant was a police officer in the New South Wales Police Force. At common law she was therefore a public officer and not an employee: Commissioner of Police (NSW) v Cottle (2022) 96 ALJR 304; [2022] HCA 7 at [9]. Section 3(5) of the 1987 Act, however, provides that “[t]he Crown shall, for the purposes of this Act, be treated as the employer of members of the Police Force”. The reference to “the Crown” can be taken as a reference to the State of New South Wales, as represented by the Executive Government of the State.

16. Section 60(1) of the 1998 Act states that “[p]rovisions relating to a worker’s entitlement to compensation … are contained in the 1987 Act”. Moreover, s 2A of the 1987 Act provides: “[t]his Act is to be construed with, and as if it formed part of, the 1998 Act. Accordingly, a reference in this Act to this Act includes a reference to the 1998 Act”. The 1998 Act can therefore also be taken as treating the State as the employer of police officers (leaving aside those potentially excepted by the definition of “worker” in s 4 of that Act).

17. Pursuant to s 155(1) of the 1987 Act, an employer is required to obtain from a licensed insurer, and maintain, a compliant insurance policy covering the employer’s potential liability (both under the Act and more broadly) to workers employed by the employer. However, this requirement does not apply to a “self-insurer”. That term is defined in s 3(1) of the 1987 Act to mean, amongst other things, the holder of a licence as such, along with “any Government employer covered for the time being by the Government’s managed fund scheme (as provided by section 211B)”.

18. Section 211B relevantly provides that:

(1) Any Government employer covered for the time being by the Government’s managed fund scheme is taken to be a self-insurer for the purposes of this Act.

(2) The Government’s managed fund scheme is any arrangement under which the self-insurer liabilities … of particular Government employers covered by the arrangement are paid by the Government of the State or by the Self Insurance Corporation on its behalf.

(3) The Self Insurance Corporation may enter into an arrangement with the Authority under which the Corporation acts on behalf of Government employers for the purpose of paying contributions under this Act and for other purposes of this Act. …

19. It was not in dispute that the State was relevantly a self-insurer as regards the appellant’s claim. The appellant’s compensation entitlements were covered by the State’s Treasury Managed Fund which is operated by the Self Insurance Corporation (SICorp): see J [17(2)].

20. SICorp is constituted by the NSW Self Insurance Corporation Act 2004 (NSW). That Act provides in s 8(1)(b) that SICorp has, as one of its functions with respect to Government managed fund schemes, the function “to enter into agreements or arrangements with other persons to provide services (as agents or otherwise) in relation to the operation of any Government managed fund scheme”. Under s 7(2) it also has “the functions imposed on it” under s 211B of the 1987 Act.

21. At the relevant time, SICorp, on behalf of the NSW Police Force, had engaged EML under a claims management agreement to manage workers compensation claims made by officers of the NSW Police Force: J [17(3)]. That agreement was not in evidence. EML is a private company; it is not part of the State.

22. In sum, the State was the deemed employer of the appellant and a self-insurer. Relevant governmental liabilities were managed by SICorp for the State, but that entity had engaged a private contractor, EML, to manage such claims on its behalf.

23. The word “insurer” is defined in s 250 of the 1998 Act to mean, for the purposes of Chapter 7 of the 1998 Act, “a licensed insurer, specialised insurer or self-insurer, or a former licensed insurer”. The State, as a self-insurer, was thus a deemed insurer. Sections 281 and 283 are found within Chapter 7.

How a claim was to be made

24. Chapter 7 of the 1998 Act is headed “New claims procedures”. The appellant’s claim was governed by this chapter. Part 2 of the chapter is titled “Giving notice of injury and making a claim”. Within Div 1 of that Part, s 254 requires a worker to give notice to their employer as soon as possible after suffering an injury.

25. Division 2 of Part 2 is headed “Making a claim for compensation or damages”. Section 260(1) provides that “[a] claim must be made in accordance with the applicable requirements of the Workers Compensation Guidelines” (Guidelines).

26. The statute does not state in terms upon whom a claim is to be made. It is apparent from the scheme that it can be made to the relevant employer or insurer. As regards the latter, s 260(6) provides that, subject to the Guidelines, an insurer “can waive a requirement of those Guidelines with respect to the making of a claim on the insurer”. That contemplates claims being made on insurers.

27. As regards employers, s 264 illustrates that a worker can lodge a claim with an employer, but the employer is then required to forward it on to the relevant insurer for the insurer to deal with it, with the employer obliged to assist the insurer with provision of information:

264   Action by employer in respect of claims, injuries and compensation

(1)  An employer (not being a self-insurer) who receives a claim or any other documentation in respect of a claim must, within 7 days after receiving the claim or documentation, forward it to the employer’s insurer.

Maximum penalty: 50 penalty units.

(2)  An employer who receives a request from the employer’s insurer for specified information in respect of a claim or notified injury, or documentation in respect of a claim or notified injury, must, within 7 days after receipt of the request, furnish the insurer with such of the specified information or documentation as is in the employer’s possession or reasonably obtainable by the employer.

Maximum penalty: 50 penalty units. …

28. Part 3 of Chapter 7 is titled “Dealing with claims”. Division 2 deals with claims for weekly payments. Division 3 addresses claims for medical expenses. Division 4, containing s 281, is directed to claims for lump sum compensation or work injury damages. Each of Div 2 and Div 3 contains a similar provision to s 281, requiring claims to be determined within a particular time period: see, respectively, ss 274 and 279. Failure to comply with each of these time requirements was subject to criminal sanction pursuant to s 283.

29. Section 281 is relevantly in the following terms:

281   Liability to be accepted and settlement offer made

(1)  The person on whom a claim for lump sum compensation or work injury damages is made must, within the time required by this section, determine the claim by:

(a)  accepting liability and making a reasonable offer of settlement to the claimant, or

(b)  disputing liability.

(2)  A claim must be so determined:

(a)  within 1 month after the degree of permanent impairment first becomes fully ascertainable, as agreed by the parties or as determined by an approved medical specialist, or

(b)  within 2 months after the claimant has provided to the insurer all relevant particulars about the claim,

whichever is the later.

Note — Section 283 makes failure to comply with this section an offence. Section 74 requires notice of a dispute to be given. If an offer of settlement is not made as required by this section, the claim can be referred for assessment as soon as the time for making the offer has expired.

(2A) The determination of a claim cannot be delayed beyond 2 months after the claimant has provided to the insurer all relevant particulars about the claim (that delay being on the basis that the degree of permanent impairment of the injured worker resulting from the injury is not fully ascertainable), unless the insurer has within that 2-month period notified the claimant that the degree of permanent impairment of the injured worker resulting from the injury is not fully ascertainable. …

(5)  An employer is not required to determine a claim as provided by this section if:

(a)  the employer has duly forwarded the claim to an insurer who the employer believes is liable to indemnify the employer in respect of the claim, and

(b)  the employer has complied with all reasonable requests of the insurer with respect to the claim.

Note — A claim forwarded to the insurer is taken to have been made on the insurer. …

30. Section 282 sets out the relevant particulars to be provided by a claimant (as referred to in s 281(2)(b)) so as “to enable the insurer, as far as practicable, to make a proper assessment of the claimant’s full entitlement on the claim”.

31. The effect of s 281(5) is that the employer renders itself off the hook as regards having to determine the claim – and thus being subject to potential criminal liability for failing to do so in time – by forwarding a claim on to the relevant insurer (or, strictly, to the entity which the employer believes is its insurer), and then complying with reasonable requests of the insurer. There are equivalent provisions in Div 2 and Div 3: see, respectively, ss 274(6) and 279(2). These provisions are consistent with s 264, quoted above at [27]. Also relevant in this regard is s 250(3), which provides:

A claim served on an insurer in accordance with the Workers Compensation Guidelines or forwarded to an insurer by the employer is taken to have been made on the insurer (and to have been so made when it was made on the employer).

32. These provisions illustrate again that the relevant “person on whom a claim is made” – as referred to in ss 274(1), 279(1) and 281(1) – is either the employer or the insurer.

33. Section 283 of the 1998 Act is the provision under which EML was charged and convicted in the Local Court. It is within Div 5 of Pt 3, which Division is headed “Enforcement of claims obligations”. The section reads as follows:

283   Offence of failing to determine a claim for compensation

(1)  A person who fails to determine a claim as and when required by this Part is guilty of an offence unless the person has a reasonable excuse for the failure.

Maximum penalty: 50 penalty units.

(2)  A person does not have a reasonable excuse for a failure for the purposes of this section unless the person has an excuse that the Workers Compensation Guidelines provide is a reasonable excuse.

(3)  A person who has or anticipates having a reasonable excuse for the purposes of this section must notify the claimant in writing as soon as practicable.

Determination

34. The appellant submitted her claim for lump sum compensation on 11 April 2017. Taking account of the subsequent interactions, and as noted above, it should have been determined by 7 April 2018 at the latest in order to comply with the time limit in s 281. The claim was submitted by the appellant to EML, which was acting on behalf of SICorp, which was acting on behalf of the State. The State was both (deemed) employer and insurer for the purposes of the statutory scheme.

35. The issue in this case turns on whether EML, as opposed to the State (or SICorp), falls within the classes of person referred to in each of ss 283 and 281 as regards determination of the claim.

36. Section 283, which creates the offence, refers to a “person who fails to determine a claim as and when required by this Part”. The relevant requirement here is in s 281(1), which imposes the relevant time limit on “[t]he person on whom a claim for lump sum compensation or work injury damages is made”. Thus the question is whether or not EML is such a person.

37. There were various, somewhat overlapping, strands to the appellant’s argument which I shall address in turn, being that:

1. the appellant had made a claim on EML, which had a contractual duty to determine it;

2. it was significant that EML was itself (or had been in the past) a licensed insurer;

3. the Guidelines supplied content with respect to who was to be treated as an insurer;

4. the status and role of EML as claims manager rendered it an insurer;

5. the State itself could not be prosecuted, and this meant EML as claims manager should be capable of prosecution.

The person must have the legal power and duty to determine the claim

38. In a simple factual sense the appellant did make the claim on EML. And there is no dispute that EML, as a corporation, is a legal “person”: Interpretation Act 1987 (NSW), s 21(1). But these matters do not suffice.

39. It is evident that the obligation in s 281(1) applies to a recipient of the claim who has the power to determine it. The Parliament cannot sensibly have intended that a person breach a duty which they do not have the legal ability to comply with. Thus, for example, a business does not breach the section if it ignores a claim made by a person mistakenly asserting that the business had employed them. And an insurer would not breach the section if it did not determine a claim that an employer had forwarded to it, where it was not the insurer of that employer as regards such claims. The appellant thus accepted that ss 281 and 283 only apply as regards a person with the legal power and duty to determine the claim in question.

40. The appellant also accepted that she was not founding her case upon a contractual power and obligation of EML to determine the obligation, not least because the contract was not in evidence. The point goes deeper than the simple absence of evidence. The power to determine the claim must be a power arising under the statutory scheme. Employers or insurers may contract with others to enable them to perform these duties. But whether or not that is done, the statutory duties in ss 274, 279 and 281, along with the potential criminal liability under s 283, still apply to those employers or insurers. So much is implicit in the provisions themselves. The point is reinforced by s 234 of the 1998 Act, which provides that both it and the 1987 Act “apply despite any contract to the contrary”. In circumstances where contract cannot override or transfer the statutory duties away from employers and insurers, it would be odd if someone could become subject to those duties by contracting to undertake them on behalf of the employer or insurer. The statutory duties and potential liabilities cannot be avoided or assumed by contract.

41. As explained above, the statutory scheme does not identify in terms upon whom a relevant claim is to be made, but it is apparent from the context that it is the worker’s employer or the employer’s insurer. That context immediately weighs against the appellant’s argument that EML could be a “person on whom a claim … is made” pursuant to s 281. EML was neither the employer of the appellant nor the insurer of that employer. However, the appellant presented further arguments as to why EML fell within s 281(1), as addressed below.

The claimed significance of EML being licensed as an insurer

42. One argument which was relied on by the appellant was that EML was in fact licensed as an insurer. The appellant seemed to argue that it was enough that EML was in fact an insurer, had responsibility for determining the claim, and the claim had been made on it in accordance with the arrangements made between the State, SICorp and EML – even though EML was not the State’s insurer as regards the appellant’s claim.

43. The factual foundation for this point was a little unclear. Adamson J said at [17(7)] that Magistrate Lacy made a finding that “EML was a licensed insurer, the licence for which had been issued under the Workers Compensation Act 1926 (NSW)”. This statement was not challenged in the notice of appeal or by any notice of contention. Adamson J also noted that EML had not written any business as a licensed insurer after 30 June 1987 (at [17(8)]). Magistrate Lacy’s finding is ambiguous as to under which Act EML held a licence:

I am satisfied on the evidence the defendant’s very senior officers, Mr Vickers, general manager and Mr Wilson, chief risk and senior legal counsel, who agree that the defendant is a licensed insurer, in addition to the fact the defendant was engaged under a claims management [agreement] with SICorp to manage workers compensation claims on behalf of the New South Wales Police Force, that the defendant is an insurer for the purposes of s 281(2)(b).

44. The appellant emphasised the use of the present tense, seeking to infer that Magistrate Lacy found that EML was licensed under the 1987 Act. However, there was evidence from Mr Vickers (in re-examination) that EML held a licence under the 1926 Act and not the 1987 Act. The appellant noted that s 250(1) of the 1998 Act defines “insurer”, for the purposes of Ch 7, as including “a former licensed insurer”. That term is defined in turn in s 4(1) of the 1998 Act to mean a person, not currently licensed, who was previously a licensed insurer (including under the 1926 Act) and who continues to have liabilities under relevant policies of insurance. The respondent contended that there was no evidence it had any such continuing liabilities. The appellant sought to trump this argument by noting that s 3(1) of the 1987 Act states that “licensed insurer means an insurer who is the holder of a licence granted under Division 3 of Part 7 and in force”.

45. On the face of it the evidence does not establish that EML falls within the notion of “insurer” as defined in s 250(1), as it appears that its only licence was under the 1926 Act, and there is an absence of evidence that it continues to have any liabilities under policies issued under that Act. However, it is not necessary to resolve the exact status of EML. The point is irrelevant.

46. Whether or not EML was licensed as an insurer, it was not the relevant insurer for the State with respect to the appellant’s claim. Even if it was in fact an “insurer” that was mere happenstance; it was not the relevant insurer. Adamson J made this point at [76].

47. The appellant argued that this conclusion was erroneous because, in effect, it read in the word “employer’s” before “insurer”. Yet neither s 281(1) nor s 283(1) uses the word “insurer”. The appellant’s claim of reading another word in before the word “insurer” is thus based upon a false premise. The relevant words in the provisions are “the person on whom a claim … is made”. As explained above at [25]-[32], that should be understood in the statutory context as referring to the employer or the insurer of the employer. That conclusion is based on the text, structure and context of the relevant provisions; it is not founded on one particular use of the word “insurer”.

48. That understanding is reinforced by s 281(5) – along with the equivalent provisions in ss 274(6) and 279(2) – which remove the employer from being subject to the duty of determination if it has “duly forwarded the claim to an insurer who the employer believes is liable to indemnify the employer in respect of the claim”, and has complied with all reasonable requests of the insurer with respect to the claim. The insurer to whom the claim is to be forwarded is the one believed to be the entity liable to indemnify the employer. It does not refer to an entity which is a claims manager which is also licensed as an insurer.

49. That understanding is further supported by reference to s 281(2)(b), which states the following as one of the two possible time limits: “within 2 months after the claimant has provided to the insurer all relevant particulars about the claim”. The reference to “the insurer” refers to the insurer who is dealing with the claim in its capacity as insurer, the claim having been forwarded by the employer.

The significance of the Guidelines

50. The appellant argued that the Guidelines had the effect that EML was to be treated as the relevant insurer, because the Guidelines say the following:

The guidelines apply to workers, employers and insurers as defined in the 1987 Act and the 1998 Act.

Insurers include:

1. Workers Compensation Nominal Insurer and its five agents: Allianz Australia Workers’ Compensation (NSW) Limited, CGU Workers Compensation (NSW) Limited, Employers Mutual NSW Limited, GIO General Limited and QBE Workers Compensation (NSW) Limited.

2. SICorp through the Treasury Managed Fund and its three workers compensation claims management service providers: Allianz Australia Insurance Ltd, Employer’s Mutual Limited and QBE Insurance Australia Limited.

3. Self insurers – those employers SIRA has licenced to manage their own workers compensation liabilities and claims. …

51. Section 260(1) of the 1998 Act provides that a “claim must be made in accordance with the applicable requirements of the Workers Compensation Guidelines”. Section 376(1) authorises the State Insurance Regulatory Authority to issue guidelines with respect to, amongst other, things, “such other matters as a provision of the Workers Compensation Acts provides may be the subject of Workers Compensation Guidelines”. Neither side suggested that the Guidelines were made beyond power.

52. The appellant’s written submissions claimed that s 260(1) “has the express effect of giving primacy to the Guidelines in the context of s 376”, which appeared to suggest that the Guidelines in some way overrode the statutory scheme. That suggestion was disavowed by senior counsel for the appellant in oral submissions. Section 376 is not a Henry VIII clause allowing the Guidelines to effectively rewrite the Act. And s 260(1) simply deals with the topic of how a claimant is to go about making a claim. It says nothing about who is to be treated as an insurer or employer. Even if the Guidelines said in terms that “EML is to be treated as an insurer for the purposes of the legislation”, that would have no effect on the issue of statutory construction on which this case turns, the Guidelines being subject to the Act: note Fletcher International Exports Pty Ltd v Barrow [2007] NSWCA 244 at [41]-[43]; Tan v National Australia Bank Ltd (2008) 6 DDCR 363; [2008] NSWCA 198 at [34].

53. The appellant submitted that the Guidelines “assist … by providing content to who it was who had to do something”. In the absence of some specific statutory foundation for doing so, the Guidelines cannot deem as insurer or employer an entity which is not an insurer or employer within the context of the statutory scheme. The appellant pointed to no such statutory basis. Section 260(1), as noted, simply addresses how a claim is to be made by an injured worker.

54. The Guidelines are given significance by s 283(2), which provides that a person “does not have a reasonable excuse for a failure for the purposes of this section unless the person has an excuse that the [Guidelines] provide is a reasonable excuse”. But that goes to what may constitute the answer to a charge of having a reasonable excuse. It does not go to what sorts of persons are subject to the duties in ss 274, 279 and 281.

55. The Guidelines are also referred to in s 250(3), which is quoted above at [31]. But that provision simply refers to claims being served on an insurer in accordance with the Guidelines. It does not give significance to the Guidelines in relation to who is an insurer. It may be that the effect of the Guidelines is that service on EML is taken to be service on the State as self-insurer. That does not make EML the insurer.

56. In any event, the Guidelines do not state that EML is an insurer, or to be treated as such. As Adamson J noted at [77], the Guidelines do not purport to override the 1998 Act, taking account of the fact that they specifically state – on the same page as the passage quoted above at [50] – that words defined in the legislation have the same meaning in the Guidelines.

57. Moreover, the appellant’s argument misconstrues the passage quoted from the Guidelines. The appellant described the Guidelines as a form of “delegated legislation”. That may be overstating their significance: cf Ballas v Dept of Education (State of NSW) (2020) 102 NSWLR 783; [2020] NSWCA 86 at [97]; Kempe v Complete Community Services Pty Ltd [2022] NSWSC 1095 at [30]. Regardless, what is clear from the Guidelines is that they are not drafted in the manner of legislation, nor, it seems, with the care and precision typically associated with legislation. I infer that they are drafted by the Authority itself rather than by Parliamentary Counsel. An introductory page states that the Authority “has developed these Guidelines”.

58. The passage quoted does seem to suggest that SICorp is an insurer, “through the Treasury Managed Fund and its three workers compensation claims management service providers [including EML]”. It may be that what was meant is that the Treasury Managed Fund is to be treated as an insurer through SICorp. In any event, EML is identified as a claims management service provider through which SICorp acts. It does not state that EML is an insurer, or to be treated as such. It is SICorp (rightly or wrongly) which is identified as an insurer. There is, perhaps, another way of reading this dot point: as if it read “SICorp (through the Treasury Managed Fund) and its three workers compensation claims management service providers”. That reading would suggest that the Guidelines indicate that the three claims managers are also to be treated as insurers. However, that is not the most natural reading of the language. The word “through” seems to refer to both the Treasury Managed Fund and the claims managers. After all, SICorp is indeed acting through those managers. Incidentally, the appellant did not suggest that s 8(1)(b) of the NSW Self Insurance Corporation Act, quoted above at [20], affected this issue.

59. The argument of the appellant based on the Guidelines is without merit.

The status and role of EML as claims manager

60. The appellant argued that it was significant that s 281(1) spoke of the person on whom a claim is made, as opposed to a person against whom a claim is made. She noted that there was no dispute that her claim was appropriately directed to EML given the arrangements the State had made. She queried how EML could have been exercising decision-making power on behalf of the State in the way that it had been if the statutory scheme did not recognise the role of a claims manager as effectively standing in the shoes of the State as self-insurer.

61. The meaning of “person on whom a claim … is made” has already been addressed. Insofar as a distinction is drawn with possible language of “against whom” a claim is made, it is overstated. The 1998 Act does speak of proceedings being brought against someone: ss 61(2)(a) and (c), 254(3)(a) and (c), and 311. That language is apposite when person A asks a third party to determine a claim made against person B. That is why court cases are generally denominated as X vs Y. Orders of a court or independent decision-maker are made against a party: that notion is found in ss 108(2)(c) and 235D(6) of the 1998 Act. But the language of against, or versus, is a little less apposite where person A makes a claim on person B for the latter to resolve themselves; then the claim is being made on them, in that it is for that person to determine the claim (although there is a usage of “against” in that type of context in s 140(1) of the 1987 Act). That is the situation that ss 274, 279 and 281 are addressed to. It is understandable, thus, that the language of “on whom” is used in those sections.

60. That point does not mean that the phrase should be taken to encompass a contractor appointed to manage claims on behalf of a recipient employer or insurer. Nor does the fact that the State can appoint a third party to manage claims made on it.

61. There is nothing novel in the State acting through third parties. The State is an artificial legal entity. As such, and like a body corporate, it can only act through the agency of humans (leaving aside any issues that may arise with computerisation). When the State determines something it does so through the actions of some third party. As a matter of principle, that third party may be a human employee, it may be a human independent contractor, or it may be a corporate contractor which itself acts through human employees or independent contractors. Here, the State acts through SICorp, which acts through EML, which acts through human employees. Whether or not the actions taken by EML in this regard should be regarded as an exercise of agency or delegation, and the extent to which such is authorised by the statutory scheme, are issues which were not argued and which it is neither necessary nor appropriate to determine here: cf Northern Land Council v Quall (2020) 271 CLR 394; [2020] HCA 33 at [21], [77]-[78] and [82].

62. In this context the mere fact that the State, or a body corporate, engaged other persons to deal with and determine claims on its behalf does not require or suggest that such other persons are themselves subject to the duties, and potential criminal liability, created by ss 274, 279, 281 and 283. As the appellant accepted, there is no statutory reference to “claims manager” in either the 1998 or 1987 Acts. There is no statutory footing for distinguishing a body such as EML from other third parties acting on behalf of the State or corporations. The appellant’s argument would seem to lead to potential direct criminal liability of employees of the State or corporations who had been allocated decision-making responsibility for claims (a consequence that the appellant’s senior counsel accepted “probably” followed). That does not appear a likely intention of the Parliament. It is more likely that if Parliament had intended such third parties to be potentially criminally liable then that would have been spelt out.

63. Furthermore, in the absence of any statutory recognition of claims managers or the like, this aspect of the appellant’s argument seems to depend upon there being a contractual right and duty on a person to determine a claim on behalf of an employer or insurer. Yet, as noted above, the appellant disavowed reliance on contracts.

64. It is conceivable that agents or employees could have accessorial liability as having counselled, procured, aided or abetted an offence by the employer or insurer. It is not necessary to address that issue here.

65. Although the scheme does not provide for claims managers, the 1987 Act does recognise “scheme agents” of the Nominal Insurer for certain purposes: ss 154G-154M. Those purposes do not expressly include the purposes of Ch 7 of the 1998 Act: cf J [71]. Nevertheless, those provisions illustrate that it would have been relatively easy for Parliament to provide that the duties and potential criminal liability arising under ss 274, 279, 281 and 283 extended to agents or employees acting on behalf of employers or insurers.

66. There was also a purposive element to the appellant’s argument. She referred to the Minister’s second reading speech for the legislation which introduced Ch 7, in which the Minister referred to insurers frequently failing to meet required time frames, saying that “[t]o ensure that insurers determine claims in a timely manner, the bill proposes to establish firm time frames for the determination of lump sum compensation”: NSW Legislative Council, Parliamentary Debates, 29 March 2001 at 12881. No doubt imposing potential criminal liability was meant to concentrate minds on complying with the statutory time limits. That purpose is achieved by subjecting the employers and insurers themselves to the obligations. And, as noted above, employers and insurers cannot contract out of the obligations. The purpose does not require that agents or employees also be held liable. To impose such liability might concentrate relevant minds even more, but “no legislation pursues its purposes at all costs”: CFMEU v Mammoet Australia Pty Ltd (2013) 248 CLR 619; [2013] HCA 36 at [41].

The distinct position of the State

69. In oral submissions the appellant’s core argument appeared to be that the position of the State was distinctive, such that the notion of a “person on whom the claim is made” did reach to capture a claims manager such as EML where the State was both employer and self-insurer. The nub of that argument was that “[t]he notion of the State prosecuting the State is … an absurdity”, seemingly because as a matter of construction that possibility would not be open because of the “spectacle” that it would present. In effect, the argument was that because the State could not or would not prosecute itself for failure to comply with the requisite time limits, the provisions should be construed to enable prosecution of those managing claims on its behalf, otherwise the purpose of the provisions (as reflected in the Minister’s second reading speech) would be undermined. No authority was cited in relation to the issue of the State prosecuting itself.

70. The starting point is to note that s 7(1) of the 1998 Act indicates that the Act “binds the Crown in right of New South Wales …”. That provision overcomes the presumption that statutes do not bind the State or its emanations: note Bropho v Western Australia (1990) 171 CLR 1 at 22-23; [1990] HCA 24. For that reason the State is bound by the time limits in s 281 (and in ss 274 and 279). That does not mean, however, that the State can be prosecuted for breach of s 283, which creates a criminal offence. The High Court has indicated that a distinct and weightier presumption applies in relation to liability to prosecution. Four members of the Court stated as follows in State Authorities Superannuation Board v Commissioner of State Taxation for Western Australia (1996) 189 CLR 253 at 293; [1996] HCA, in discussing whether an offence provision in one State’s Act applied to another State:

An intention that the Crown should not be bound by that provision is manifested, not by the application of a presumption of the kind discussed in Bropho, but by a different presumption based upon the inherent unlikelihood that the legislature should seek to render the Crown liable to a criminal penalty. … The principle that the Crown cannot be made criminally liable save in the most exceptional circumstances has no application other than to s 39(1a) of the Act and is not inconsistent with the rest of the Act being given an operation so as to bind the Crown.

71. Subsequently, the whole Court said in Telstra v Worthing (1999) 197 CLR 61; [1999] HCA 12 at [22] that it “will require the clearest indication of a legislative purpose to demonstrate that these penal provisions attach to the Commonwealth”.

72. Here, given the lack of developed argument on this issue, it is not desirable to determine the question of whether the State can be prosecuted for contravention of s 283. It suffices to assume that it cannot be. That lends some apparent credence to the appellant’s argument that the purpose of the time provisions are undermined. However, that does not lead to the conclusion that a claims manager such as EML can be prosecuted.

73. If the State cannot be prosecuted that is because of the strong general presumption to that effect, a presumption which recognises the distinctive character of governments. That presumption and recognition does not support seeking to stretch statutory provisions so as to find other means of effectively holding the State to account. Doing so is not required by the principle, and to do so would at the least be in tension with it.

74. Insofar as the appellant’s argument is to the effect that the provisions in question should be construed so as to encompass claims managers or other agents generally (ie for all employers and insurers), then that would be using a principle which exempts the State from criminal liability in a rather perverse way to extend forms of liability for all others. The principle of the State’s exemption does not overcome all the textual, contextual and purposive factors militating against the appellant’s construction, as addressed above.

75. If the appellant’s argument is that s 281 (and ss 274 and 279) should be construed distinctively just as regards the State, such that with respect to the State alone claims managers or other agents could be treated as a “person on whom a claim … is made”, then that distorts the statutory text so as to mean different things in relation to different people. That is a most unlikely construction. Once again, there is no basis for using the exempting principle to seek to find other ways to hold the State and its agents or employees accountable.

76. Moreover, the force of the appellant’s complaint about the purpose of the provisions being undermined is limited. Sections 274, 279 and 281 – which set the time limits but do not themselves impose criminal penalties – bind the State. Those limits are potentially enforceable by seeking mandamus or injunction in the Supreme Court. And, more practically, a failure to comply could have become the subject of a dispute referred to the Workers Compensation Commission (now the Personal Injury Commission): s 288, 1998 Act. Indeed, that is exactly what happened here, as explained above at [9]. It is noteworthy, incidentally, that in that proceeding the State – and not EML – was named as the respondent by the appellant. That appropriately reflected that the State (as employer and self-insurer) was the person on whom the claim had been made, and that EML was merely acting on its behalf.

77. The appellant’s arguments based on the possible immunity of the State from prosecution are unpersuasive.

Conclusion and orders

78. The appeal should be dismissed. Adamson J did not err in her construction of ss 281 and 283 of the 1998 Act. EML is not a “person on whom a claim … is made” within the meaning of s 281. Her Honour was correct to conclude that the prosecution should have been dismissed by the Local Court. Costs should follow the event, the appellant having made no argument to the contrary.

79. The orders of the Court should be as follows:

1. Leave to appeal is granted.

2. The appellant is to file a notice of appeal within 28 days in terms consistent with the draft amended notice of appeal.

3. The appeal is dismissed with costs.

80. GRIFFITHS AJA: I agree with Kirk JA.

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Decision last updated: 21 December 2022