Holcim (Australia) Holdings Pty Ltd v VWA
[2010] VSC 424
•13 October 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
No. 1629 of 2010
| HOLCIM (AUSTRALIA) HOLDINGS PTY LTD (ACN 003 433 118) | Plaintiff |
| V | |
| VICTORIAN WORKCOVER AUTHORITY | Defendant |
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JUDGE: | J FORREST J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 August 2010 | |
DATE OF JUDGMENT: | 13 October 2010 | |
CASE MAY BE CITED AS: | Holcim (Australia) Holdings Pty Ltd v VWA | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 424 | |
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ACCIDENT COMPENSATION ACT – Statutory construction – Sections 141 and 142 Accident Compensation Act - Approval of employer as self-insurer – Whether subsequent application is a renewal or a fresh application.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G Uren QC with Mr G Harris | Monahan & Rowell |
| For the Defendant | Mr C Caleo SC | Minter Ellison |
HIS HONOUR:
Introduction
This application for judicial review of a decision of the Victorian Workcover Authority[1] raises a nice point concerning the “renewal” of approval or further approval of a self-insurer’s ability to operate in this State under Part V of the Accident Compensation Act.[2]
[1]Referred to subsequently as ‘the Authority’.
[2]Referred to subsequently as ‘the Act’.
The question is whether a company, having obtained approval to operate as a self-insurer, needs to go through the approval process again (in compliance with the statutory requirements imposed by s 141 and s 142 of the Act) at the end of the period of approval – as the Authority contends. Alternatively, as Holcim[3] argues, whether any subsequent application to continue as a self-insurer is a “renewal” requiring consideration by the Authority of the terms of s 142(2) alone (directed towards its compliance with the Act and conditions of approval as a self-insurer, as well as its financial resources and safety record) in determining whether Holcim is fit and proper to continue as a self-insurer.
[3]Holcim (Australia) Holdings Pty Ltd, the plaintiff referred to subsequently as ‘Holcim’.
The resolution of this issue will have a significant consequence. When it was previously approved in 2003 and 2006, Holcim was not a subsidiary of another company. However, by the time of the application which is the subject of these proceedings, Holcim had become a subsidiary of an Australian holding company and therefore is unable to make a valid application for approval if s 141(1) applies; it can only continue as a self-insurer if its argument concerning the application of s142(2) and the characterisation of its current application as a “renewal” succeeds.
Background facts
On 11 April 2003, Rinker Group Ltd was approved by the Authority as a self-insurer under Part V of the Act.[4] At that time it was not a subsidiary of any other Australian corporation.
[4]Letter of 11 April 2003, Exhibit MW1.
On 11 April 2006, Rinker Group was again approved by the Authority as a self- for a period of four years.[5]
[5]Letter dated 10 February 2006, Exhibit HJ2.
On 30 July 2007, Rinker advised the Authority in the following terms:
We confirm that Cemex Australia Pty Ltd has now acquired more than 90% of the shares of Rinker Group Ltd and accordingly the acquisition has moved into the compulsory acquisition phase. On this basis in the near future, Rinker Group Ltd shall become a wholly owned subsidiary of Cemex Australia Pty Ltd.
We confirm that the business interests and assets of Rinker Group Ltd remain unaltered and it, together with its subsidiary, shall remain the operating group of companies and employers within Australia.
Accordingly, it is our company’s intention to seek the continuation of our current approval to self-insure for the balance of the current approval period.[6]
[6]Exhibit MW2.
This communication triggered a review of the approval by the Authority, pursuant to s 148(1)(d) of the Act, which mandates such a review if a self-insurer “is a target company within the meaning of the Companies (Acquisition of Shares) (Victoria) Code.”
On 28 September 2007, the Authority wrote to Rinker in the following terms:[7]
You advised that Cemex Australia Pty Ltd (‘Cemex’) had acquired Rinker and would, in the near future, become a wholly owned subsidiary of Cemex. This has now eventuated with Rinker becoming a subsidiary of a company incorporated in Australia effective 7 August 2007.
The VWA is required to review the approval of a body corporate for self-insurance if it is a target company within the meaning of the Companies (Acquisition of Shares) Code. The takeover at Rinker by Cemex triggered such a review.
Following a review of Rinker’s restructure and its performance as a self-insurer, the VWA has decided to exercise its discretion to allow Rinker to retain its status as a self-insurer until the expiry of the current approval period on 11 April 2010.
[7]Exhibit MW3.
Pausing here, this advice did not exactly reflect the terms of the legislation. Under s 149(4) the Authority’s discretion was confined to revoking the approval given to Rinker; otherwise its approval would remain in force until it expired at the end of the designated period.
On 16 November 2007, Rinker Group Ltd converted to a private company under the name of Rinker Group Pty Ltd.
On 8 October 2009, Rinker changed its name to Holcim (Australia) Holdings Pty Ltd, the plaintiff in this proceeding.
On 19 February 2010, Holcim made an application to the Authority to renew its approval.[8] It is not in issue that it was, by then, a subsidiary of Holcim Participation (Australia) Pty Ltd.
[8]Letter of 19 February 2010, Exhibit HJ3.
By letter of 25 February 2010, the solicitors for the Authority rejected the application in the following terms:
An application under s 141 of the Accident Compensation Act may only be made by a body corporate that is not a subsidiary of another Australian body corporate. We understand that Holcim Australia is a subsidiary of another corporation: Holcim Participation (Australia) Pty Ltd.
Holcim Australia is ineligible to apply for approval as a self-insurer. Your letter of 19 February 2010 does not constitute a valid application for approval as a self-insurer under s 141 of the Accident Compensation Act
On the same day Holcim issued proceedings in this Court seeking judicial review of the Authority’s decision.
Applicable legislation
Part V of the Act enables companies employing workers in this State to “self-insure” (subject to approval) rather than pay workers’ compensation premiums or excesses to the Authority which is the default statutory insurer of such liabilities.[9] A number of companies hold such approval.
[9]See s 125A of the Act and the Accident Compensation (Workcover Insurance) Act 1995
At the time of Holcim’s application the relevant portions of Part V read as follows:[10]
[10]There were significant amendments made to s 141 and s 142 by the Accident Compensation Amendment Act (No 9/2010) which came into force on 1 July 2010.
141 Application for approval as self-insurer
(1)An employer that is a body corporate and is not a subsidiary of another body corporate (other than a foreign company within the meaning of the Corporations Law that, when the application is made, is not a registered foreign company within the meaning of that Law) may make application in writing to the Authority for approval as a self insurer for—
(a) workers employed by it; and
(b) if it is a holding company—workers employed by each of its subsidiaries which is not a non-WorkCover employer within the meaning of Part VIA.
(1A)For the purposes of this section if a holding company satisfies the requirements of subsection (2) but does not itself employ any workers, the holding company is deemed to be an employer.
(2)A body corporate shall not make an application under subsection (1) unless it satisfies the prescribed minimum requirements as to financial strength and viability.
(3)An application under subsection (1) shall be accompanied by such information as the Authority
142 Approval as self-insurer
(1) Where an application is made by a body corporate under section 141, the Authority may—
(a) approve the body corporate as a self-insurer for—
(i) if it is not a holding company, workers employed by it; or
(ii) if it is a holding company—workers employed by it and workers employed by each of its subsidiaries—
if the Authority is satisfied that the body corporate is fit and proper to be a self-insurer;
or
(b) refuse to grant such approval.
(2) In determining whether a body corporate is fit and proper to be a self-insurer for the purposes of this Act, the Authority shall have regard to the following matters—
(a) whether the body corporate is, and is likely to continue to be, able to meet its liabilities;
(b) the resources, including employees, that the body corporate has for the purpose of administering claims for compensation;
(c) the incidence of injuries to workers arising out of and in the course of employment by the body corporate and, if applicable, its subsidiaries and the cost of claims in respect of such injuries;
(d) the safety of the working conditions for workers employed by the body corporate and, if applicable, by its subsidiaries;
(h) if the application is for renewal of approval as a self-insurer by a body corporate that is or has at any time been a self-insurer for the purposes of this Part—whether the body corporate has at any time failed to comply with this Act or the regulations or any conditions of its approval as a self-insurer;
(i) such other matters as the Authority thinks fit.
(4) An approval of a body corporate as a self-insurer—
(a) is subject to the prescribed terms and conditions and to such terms and conditions as the Authority determines from time to time; and
(aa) is subject to a deemed condition that the body corporate is under a contractual obligation that if it becomes a non-WorkCover employer within the meaning of Part VIA it will make any payments in respect of tail claims liabilities required to be made in accordance with that Part; and
(b) has effect, unless sooner revoked—
(i) if the body corporate is not a self-insurer immediately before the approval is given—for the period of three years after the approval is given; and
(ii) in any other case—for the period of four years after the approval is given.
[emphasis added]
I should also set out the terms of s 148 under which the Authority conducted its review of the approval of Rinker in September 2007:[11]
[11]See [8] above.
148 Review of approval
(1)The Authority shall review the approval of a body corporate as a self-insurer under this Part if—
(a)the body corporate is under official management, is commenced to be wound up or has ceased to carry on business;
(b)a receiver or receiver and manager is appointed in respect of the property or part of the property of the body corporate under the Companies (Victoria) Code or the corresponding law of another State or Territory;
(c)the body corporate enters into a compromise or scheme of arrangement with its creditors; or
(d)the body corporate is a target company within the meaning of the Companies (Acquisition of Shares) (Victoria) Code.
(2)An officer within the meaning of section 5 of the Companies (Victoria) Code of a body corporate to which subsection (1) or (3) applies must give notice of the occurrence of any of the circumstances referred to in subsection (1) or (3) to the Authority within 28 days of the occurrence of the circumstances.
100 penalty units.
(3) If—
(a)a body corporate that is a holding company that is approved as a self-insurer under this Part for workers employed by it and workers employed by its subsidiaries ceases to be the holding company in relation to those subsidiaries;
(aa)a subsidiary of a holding company that is a holding company that is approved as a self-insurer under this Part becomes a non-WorkCover employer within the meaning of Part VIA;
(ab)a subsidiary to which paragraph (aa) applies ceases to be a non-WorkCover employer within the meaning of Part VIA;
(b)a body corporate becomes or ceases to be a subsidiary of another body corporate that is so approved; or
(c)a body corporate that is approved as a self-insurer and that is not a holding company becomes a holding company—
the Authority may review the approval of the body corporate under this Part.
(4)If, after a review under subsection (1) or (3), the Authority is of the opinion that an approval of a body corporate as a self-insurer should be revoked, the Authority may revoke the approval by notice in writing given to the body corporate.
(5)The Authority shall not revoke the approval of a body corporate as a self-insurer under this section unless the Authority has given not less than 28 days notice in writing to the body corporate of the intention to revoke the approval together with the reasons and has stated in the notice that the body corporate may, within 28 days after receiving the notice, make a submission to the Authority.
The submissions of the parties
I hope that I do no disservice to the parties’ helpful and succinct submissions by the following summary.
Holcim’s contention essentially turns upon the construction of s 142(2) and its place in the self-insurer approval process. In its written submissions it said as follows of s 142(2)(h):
This provision gives to an already approved self-insurer a right to apply to renew what it already has. This right is not, in terms, fettered beyond the discretionary considerations expressly imposed on such an applicant by the terms of that section. Those considerations understandably, are confined to the defendant being satisfied that the approved self-insurer has not conducted itself during the period of its approval, in a way that is in breach of its obligations as self-insurer under the Act, the regulations or any conditions imposed on the approval itself.[12]
[12]Part of the submissions.
At the hearing, however, Holcim’s contention was more expansive. It argued that s 142(2) in its entirety was a standalone provision referable to any consideration of the fitness of a company to be a self-insurer whether an original approval under s 141, a renewal of approval or a review of its approval. This, it said, meant that in Holcim’s case it need only have its renewal considered by reference to the criteria in s 142(2).
The Authority contends that s 142(2) and particularly, sub-section (h), needs to be read in context. It says that the effect of sub-section (h) is to add a condition, amongst the other conditions imposed by s 142(2), where a self-insurer is seeking to renew its approval. It argues that any application for approval must satisfy the terms of s 141 and s 142 and that, in reality, a renewal is simply a fresh application to be approved as a self-insurer applying the provisions of both sections.
Analysis
Section 141(1) enables an employer to apply to the Authority for approval as a self-insurer. A self-insurer must satisfy a series of conditions before the application can be considered under s 142:
(a)The application must be made by an employer that is a body corporate;
(b)The body corporate must not be a subsidiary of another body corporate (except in the case of a foreign company);
(c)The application must be made in writing to the Authority;
(d)The application must be made for approval as a self-insurer for workers either employed by the body corporate or, if it is a holding company, workers employed by each of its subsidiaries which are not Workcover employers within the meaning of Part V of the Act;
(e)It must satisfy the prescribed minimum requirements as to financial strength and viability;
(f)The application must be accompanied by such information as the Authority requires; some of which is prescribed by the Accident Compensation Regulations.
Section 142(1) then enables the Authority to approve an application by either a company employing workers in its own right, or by a holding company. The section requires that the Authority be satisfied that the applicant is fit and proper to be a self-insurer, and s 142(2) sets out the criteria to be applied.
Holcim argued that the opening words of s 142(2), and particularly the reference to it being applicable “for the purposes of this Act”, made it clear that s 142(2) was not confined to a s 141 application. In particular, it pointed to the revocation procedures in ss 148(4), 142D and 149. Under each of those provisions, the Authority may exercise a discretion with regard to granting approval for a company to continue to operate as a self-insurer. However, these revocation provisions do not use the expression “fit and proper person” – nor do they refer to s 142(2) as providing the relevant criteria. Whilst it may make sense for the Authority to utilise the criteria contained in s 142(2), there is no statutory obligation for it to do so – indeed, the manner in which the review discretion is to be exercised is left unfettered by statutory criteria.
Holcim also argued that interpreting s 142(2) in the manner contended for was consistent with the power of the Authority to undertake a review of an approval where a self-insurer becomes a subsidiary, under s 148. It said that in a case such as this, once s 148(1)(d) was engaged (as it was here – Holcim being a target company) the Authority’s power was confined to revocation of the approval pursuant to s 148(4). It went on to assert that the determination by the Authority of such a revocation would necessarily require consideration of whether the subsidiary was a fit and proper person as defined by s 142(2).
I do not accept Holcim’s submission that s 148 limits the operation of ss 141 and 142. That section enables the Authority, in certain circumstances, to review a current approval and empowers it to revoke it (s 148(4) and s 149). Its effect is confined to the period during which the approval is in force. It does not, I think, by either its terms or implication, restrict the operation of ss 141 and 142 which apply at the time of an application or, arguably, at the time of a renewal or further application.
In my opinion, contrary to Holcim’s submission, the structure and context of the two sections (s 142(1) and (2)) point to the provisions being treated jointly, and thereby operating in conjunction with s 141. My reasoning is as follows.
Section 142(1) requires the Authority to be satisfied that the company is fit and proper to be a self-insurer. Notwithstanding the breadth of the expression “for the purposes of this Act” in sub-s 2, the context of the two provisions implies that they be read together: s 142(1) empowers the Authority to approve an application (whenever it is made) for a company to be a self-insurer, while sub-s 2 sets out the criteria to be applied by the Authority when deciding whether to grant its approval. If this construction be correct then, necessarily, an application must be made under s 141.
Contextually, this is a preferable interpretation of the interaction between ss 141 and 142. Section 141, by setting out the conditions upon which an application can be made, “sets the scene”[13] for the exercise of power to grant approval and the application of the criteria contained in ss 142(1) and (2) respectively. The content relevant to the exercise of the power by the Authority is provided by s 142(2).
[13]See Barwon Spinners v Podolak (2005) 14 VR 622, [5].
Approval by the Authority of a company to operate as a self-insurer is for a fixed term as set out by s 142(4). The word “renewal” is not used in that sub-section; rather, the period of duration of an approval is specified depending upon whether the company was a self-insurer immediately before the approval is given (s 142(4)(b)). It is implicit, particularly when viewed in the context of ss 141 and 142 (1) and (2), that each application for approval after the initial application is not a “renewal”, as such, but rather a further application pursuant to s 141.
Accordingly, each time an application for approval is made, be it for the first time or at any subsequent time, it needs to be made pursuant to s 141 which, if satisfied, then requires the application of the criteria set out in s 142. On an initial application, the criteria relating to “fit and proper” are set out in sub-clauses (a), (b), (c), (d) and (i) are applicable. On any subsequent application the Authority must have regard to each of those matters, and in addition by virtue of sub-section (2)(h), it is required to consider whether the self-insurer has complied with the Act, the regulations or its conditions of approval – i.e. to examine the self-insurer’s conduct since its grant of approval, in the context of its compliance with its obligations under the Act or the conditions of approval. The use of the word “renewal” merely distinguishes the requirements of the sub-section to a subsequent application from those applicable to an initial application. This analysis, it seems to me, is consistent with the general purpose and policy of the two sections considered as a whole.
The approach just described also accords with what was said by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority:[14]
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that “the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed”. Thus, the process of construction must always begin by examining the context of the provision that is being construed.
[14](1998) 153 ALR 490, [69].
The failure by the legislation to stipulate any separate criteria for a “renewal” – other than in s 142(2)(h) – is singular. In my view it cannot be thought that the legislature by implication sought to treat each “renewal” (for decades perhaps) as governed by s 142(2)(h) alone or, for that matter, by s 142 without regard to s 141. If it had wished to provide for separate stand-alone criteria for a renewal process, it could readily have set it out.
As I have said, Holcim’s original argument focused on s 142(2)(h) as providing a right to seek renewal. I do not accept this proposition. This sub-section contains the only reference to “renewal of approval” within s 142. It is within a set of criteria which the Authority “shall have regard to” in determining whether a company is “fit and proper” to be a self-insurer. Section 142(2)(h) does not, in effect, have a life of its own. It does not provide a “right” to an existing self-insurer to seek renewal on the limited basis set out in the sub-section.
I do not accept Holcim’s contention that permitting a company that is a subsidiary to continue to act as a self-insurer is consistent with the objects of the Act. In my view, and for the reasons I have set out, one of the purposes of ss 141 and 142 is to ensure that any company, whether on its first application or any subsequent application, is not a subsidiary of another Australian company.
There is one other matter which militates against the construction urged by Holcim. The reference in s 142(2)(h) to renewal is not limited to the renewal of an existing approval. An application for renewal includes a company which “is or has at any time been a self-insurer”. So it applies to any company that had in the past (whether two years or twenty years ago) been a self-insurer. On Holcim’s construction, therefore, once a company had passed through the approval process, it is only constrained by the application of the criteria contained in s 142(2) (or perhaps on its original submission by that in s 142(2)(h) alone), or where a review has been triggered by s 148. This construction is, I think, untenable. Indeed, it demonstrates that the proper construction of ss 141 and 142 is that s 142(2)(h) is simply a further consideration additional to the others contained in s 142(2) which are relevant to any company which has received approval in the past – namely, whether it has complied with the provisions of the Act and/or the terms of the approval during the period in which it was a self-insurer.
Holcim placed considerable emphasis on the decision of the South Australian Full Court in Truenergy v Minister for Industrial Relations.[15] Although that decision turned upon legislation[16] in some aspects similar to that under consideration here, there is a critical difference: the set of criteria of some seven different matters to be applied in determining whether to renew the registration of an employer (said to be akin to an approval in the present case) are all expressly stated by the W.R.C.A. to be relevant to the consideration of a renewal. No doubt if s 142 had been expressed in similar terms (and putting aside any reference within it to s 141), then there would have been considerable force in the argument that the whole of that section was a standalone provision, independent of s 141. But that is not the case here and, with respect, I think that the Truenergy decision is of little assistance here.
[15](2005) 93 SASR 393.
[16]Workers Rehabilitation and Compensation Act 1986 (SA) – “W.R.C.A.”
In summary, the exercise of the power under s 142 to grant an approval (be it initial or a further approval) is necessarily conditional upon an application being made under s 141. To treat s 142(2)(h) as a standalone provision governing an application for “renewal” is to promote it to a position not intended by the legislature. Similarly, to treat s 142 as a standalone provision is contrary to the proper construction of ss 141 and 142. Each application is a fresh application governed by s 141; if satisfied, it then requires a determination by the Authority as to whether to grant approval, taking into account the relevant criteria set out in s 142.
Conclusion
I am not persuaded that the Authority was in error in rejecting Holcim’s application to renew its approval on the basis that it did not satisfy the conditions of s 141(1).
Holcim’s application should be dismissed and subject to any submissions by counsel, with costs.
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