Hughes Helicopters Pty Ltd v Brink
[2021] NSWPIC 393
•6 October 2021
| CERTIFICATE OF DETERMINATION OF MEMBER | |
CITATION: | Hughes Helicopters Pty Ltd v Brink [2021] NSWPIC 393 |
| APPLICANT: | Hughes Helicopters Pty Ltd |
FIRST RESPONDENT: | Brooke Louise Brink |
| SECOND RESPONDENT: THIRD RESPONDENT: | Ethan William Brink Ava Thea Brink |
| MEMBER: | Catherine McDonald |
| DATE OF DECISION: | 6 October 2021 |
| CATCHWORDS: | WORKERS COMPENSATION - Interest on the death benefit payable under section 25 of the Workers Compensation Act 1987; apportionment between surviving spouse and young children agreed; period for which interest is payable; Haidary v Wandella Pet Food and Kaur v Underwater Systems considered; interest ordered from the time the claim was “duly made” being when the insurer had all relevant information; whether interest should be awarded at court rates ; Ruby v Marsh considered; Held - interest awarded at 2.1% from date claim “duly made” to date of agreement as to apportionment. |
| DETERMINATIONS MADE: | 1. The applicant is to pay interest on the sum payable under s 25 of the Workers Compensation Act 1987 from 24 February 2021 to 27 August 2021 at the rate of 2.1%. |
STATEMENT OF REASONS
BACKGROUND
Nicolaas Johan Brink (Nicolaas) died on 2 December 2020 as a result of an injury suffered in the course of his employment with Hughes Helicopters Pty Ltd (Hughes). At a conciliation conference on 27 August 2021, the parties agreed that Brooke Louise Brink (Brooke), Ethan William Brink (Ethan) and Ava Thea Brink (Ava) were dependent on Nicholaas for support at the date of his death. With the consent of the parties, I made orders apportioning the lump sum of $834,200 – 80% to Brooke and 10% to each of Ethan and Ava. I also made orders about payment of the sums apportioned.
The parties requested leave to file written submissions with respect to interest. I made orders that Brooke, Ethan and Ava file submissions by 3 September 2021 and that Hughes file submissions by 10 September. On 17 September submissions in reply were file on behalf of Ava to which Hughes objected.
The only issues for determination are the period for which interest is payable and the rate at which it should be paid.
Section 109 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) provides:
“109 Interest before order for payment (cf former s 113)
(1) In any proceedings before the Commission, the Commission may order that there is to be included, in any sum to be paid, interest at such rate as the Commission thinks fit on the whole or any part of the sum for the whole or any part of the period before the sum is payable, subject to the limitations imposed by this section.
(2) Interest cannot be ordered under this section—
(a)on any compensation payable under Division 4 of Part 3 of the 1987 Act, or
(b)on any compensation payable under this Act for any period before a claim for the compensation was duly made, or
(c)on any compensation payable under this Act for any period during which proceedings before the Commission were adjourned on the application of the claimant for the compensation or pursuant to section 102.
(3) This section does not—
(a)authorise the giving of interest upon interest, or
(b)apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise.”
SUBMISSIONS
The submissions made remain on the Commission’s file and are summarised below.
The beneficiaries
Mr Robison of counsel appeared for Brooke. He said that a claim form was lodged on 25 February 2021, 85 days after Nicolaas died. Mr Robison noted that s 109 empowers the Commission to award interest but does not provide legislative guidance as to is quantification.
Mr Robison said that interest should run from the date of Nicolaas’ death or, in the alternative, from the date of claim. He distinguished my decision in Empire Contracting Pty Ltd ATF Empire Contracting Trust v Gov[1] (in which I ordered that interest run from the date on which the insurer had all of the material relevant to apportionment) because the late joinder of parties in that case and the fact there were 10 respondents meant that the insurer would have had difficulty coming to terms with the range of claims.
[1] [2021] NSWPIC 254.
Mr Robison said that there was no cogent reason why the Commission should not award interest at the rate specified in the Uniform Civil Procedure Rules (UCPR) being the cash rate plus 6% (r 36.7). He argued that the practice of the Commission on matters of “mainstream practice” should be the same as the courts, relying on the statement by Heydon J in Kirk v Industrial Court of New South Wales[2] (Kirk).
[2] [201] HCA 1; (2010) 239 CLR 531 at [112].
Mr Morgan of counsel prepared submissions on behalf of Ethan. He quoted s 109 and noted that the Commission’s power to award interest is discretionary, citing Haidary v Wandella Pet Foods Pty Ltd.[3] Mr Morgan said that the recent decisions of the Commission had overlooked the fundamental principle in the awarding of interest. He said that there was never going to be a dispute about payment of the death benefit. He said that where the employer “has retained monies to which it was not entitled” the benefit of that retention should flow to the dependants because the legislative intent was beneficial and the provision should be construed beneficially.
[3] [2005] NSWWCCPD 9 at [10].
Mr Morgan said that the legislation was no longer “couched in terms of a need to establish a level of dependency for the death benefit to be paid” and that it is misconceived to suggest that provision of full particulars of dependency was a precondition of entitlement. He said that the point of an award of interest was that one party had money in its control and derived a benefit when it was not so entitled. Cases where dependants were held out of an entitlement to interest by the provision of a late reply by one of them, such as Youseph v Homebush Unit Trust t/as Primo Smallgoods[4] penalise rather than benefit those entitled to the benefit.
[4] [2021] NSWPIC 299.
Mr Morgan said that interest should run from the date of the claim for the death benefit on 25 February 2021. He adopted Mr Robison’s submissions with respect to the rate and set out the provisions of the Supreme Court’s Practice Note No SC Gen 16 which provides that pre-judgment interest is payable at the rate 4% above the cash rate set by the Reserve Bank of Australia.
Mr Tanner prepared submissions on behalf of Ava and agreed that interest should be paid at 6.1% from the date of Nicholaas’ death. He said that there has never been a dispute that the death benefit was payable and that since the date of death, the insurer has had the benefit of the money, being able to invest it and derive interest from it. Mr Tanner said that the death benefit is fixed, unlike other forms of compensation where the insurer will not know the quantum payable until the worker’s entitlement has been determined. He said that in a beneficial scheme it would be inequitable and unconscionable if the insurer was to benefit from a delay in determining the apportionment. Referring to cases in which the payment of the death benefit was delayed “because of unmeritorious claims by parties making unfounded claims”, Mr Tanner asked rhetorically why deserving parties should suffer the adverse effects of being denied their entitlement.
Mr Tanner argued that interest should be payable from the date of death and that the employer in this case would “obviously” have been aware that it was liable to pay compensation. In the alternative, he said that interest should run from the date of claim. He said that there was no reason why the rate should not be the same as that applied in the Courts.
The employer
Mr Harris, solicitor, prepared submissions on behalf of the employer. He said that reliance on provisions applicable to the Supreme and District Courts overlooks the facts that those provisions are not discretionary. He said that it was significant that the insurer was unable to pay the death benefit until 30 August 2021 when the Commission determined those persons dependant on Nicholaas for support, apportioned the lump-sum between the dependants and made orders under ss 85(1)(a) and 85A (1) for payment out. Whilst it would have been possible for the insurer to immediately pay the death benefit to the NSW Trustee & Guardian, no beneficiary requested that and it should be accepted that the fees charged by the NSW Trustee & Guardian would have exceeded the interest payable. Even if the money had been paid to the NSW Trustee & Guardian immediately, no payment would have been made to any dependant until the sum was apportioned by the Commission.
Mr Harris said that the argument that the insurer had the benefit of the money to the exclusion of the person entitled to compensation was not appropriate to a claim for the death benefit where the insurer was unable to pay the benefit before determination by the Commission except by payment to the NSW Trustee & Guardian, which none of the parties requested. Mr Harris’ primary submission was that interest should not be payable.
With respect to the period for which any interest should be paid, Mr Harris noted that s 109(2)(b) provides that interest cannot be ordered before a claim for compensation is duly made. In the case of a death claim, a claim is not duly made until full particulars of the alleged dependency have been provided, citing the decision of Keating P in Kaur v Thales Underwater Systems Pty Ltd[5] (Kaur). Mr Harris set out decisions in which arbitrators of the Workers Compensation Commission held that “duly made” in s 109(2) meant fully particularised. He said that the submission that interest was payable from the date of death was inconsistent with the decision in Kaur.
[5] [2011] NSWWCCPD 6.
Mr Harris said it followed that interest should not be paid to any of the dependants before their reply was served which provided particulars of dependency. That means that interest was not payable to Brooke before 6 July 2021, to Ethan before 22 June 2021 or to Ava before 7 July 2021. Mr Harris noted that it was not possible to finalise the apportionment at the telephone conference on 3 August 2021 because those representing Ava sought more time. Any interest payable to Ava should terminate at 3 August 2021.
With respect to the rate at which interest should be paid, Mr Harris noted that 6.1% represented post-judgment interest under the UCPR. Mr Harris said that the discretion in s 109(1) requires the Commission to have regard to the actual rates of interest offered by banks. He set out examples of decisions by arbitrators and members awarding interest in the range of two to three percent.
Submissions in reply
Those representing Ava purported to file submissions in reply prepared by Mr Tanner dated 17 September 2021, despite no order having been made or sought for submissions in reply. The submissions took issue with the propositions made by Mr Harris but effectively restated the position which had been put in chief.
Mr Harris wrote to the Commission opposing the filing of the submissions on 20 September 2021. Ava’s solicitor wrote to the Commission on the same date defending the filing of the submissions, on the basis that submissions in reply to those made on behalf of Hughes would have been made had the matter been dealt with orally.
No order was sought for submissions in reply and the submissions which were filed add little, apart from the concession that the rate of pre-judgment interest under the UCPR and Supreme Court practice note is 4.1%. For that reason alone, I grant leave to reply on them.
FINDINGS AND REASONS
The chronology is set out in Hughes’ submissions and I understand it is not controversial.
2 December 2020 Date of Nicholaas’ death 10 December 2020 Letter from insurer to Brooke requesting evidence in support of the claim 24 February 2021 Notification form 2 June 2021 Letter from insurer to Brooke accepting liability and requesting information in relation to dependency 21 June 2021 Application in respect of death of worker registered 21 June 2021 Letter from Hughes solicitors to respondents’ solicitors 22 June 2021 Reply for Ethan served 6 July 2021 Reply for Brooke served 7 July 2021 Reply for Ava served 3 August 2021 Telephone conference 27 August 2021 Conciliation/arbitration
Interest in the Commission is governed by s 109 of the 1998 Act which gives the Commission a discretion as to whether to award interest.
The submissions made by counsel for the beneficiaries stressed that the Commission should be guided by the principles applicable to interest on damages under the UCPR. Those submissions generally assume that interest is payable on damages, without considering the Civil Procedure Act 2005. Section 100(1) provides:
“100 Interest up to judgment
(cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A)
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit—
(a)on the whole or any part of the money, and
(b)for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.”
The entitlement to pre-judgment interest under that legislation is discretionary as it is under the 1998 Act. While interest is usually agreed or awarded, there will be cases in which a court is required to exercise discretion as to whether interest is to be awarded.
The submissions filed for Ethan quote part of Practice Note No. SC Gen 16. The full paragraph says
“Practitioners and litigants should expect that where, pursuant to s 100 (1) and (2) of the Civil Procedure Act 2005, interest in respect of a pre-judgment period is to be included in a judgment, the Court will have regard to the following rates, being rates agreed upon by the Discount and Interest Rate Harmonisation Committee established following a referral by the Council of Chief Justices:
(a) in respect of the period from 1 January to 30 June in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
(b) in respect of the period from 1 July to 31 December in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.”
The rates are those to which the relevant Court will have regard in the exercise of its discretion. The legislation does not provide that interest is payable as of right and at those rates, though they are the rates which will generally be applied. The current rate under that Practice Direction is 4.1%.
Rule 36.7 of the UCPR, to which Mr Robison referred provides that interest under s 101 of the Civil Procedure Act is payable at the rate of 6% above the Reserve Bank cash rate. Section 101 applies to the payment of interest on that part of a judgment debt which is from time to time unpaid. It has no relevance to these proceedings.
The submission that the practice of the Personal Injury Commission with respect to the award of interest should be the same as that of the Supreme and District Courts might have force if the Commission was required to apply the Civil Procedure Act and the UCPR. The legislation the Commission applies is different and its application is to guided by those cases – particularly Presidential decisions – which apply the 1998 Act. Heydon J’s dissenting judgment in Kirk about potential problems arising from the creation of specialist courts has no application to this decision. The Personal Injury Commission is charged with the application of the 1998 Act.
Date from which interest is payable
In Haidary v Wandella Pet Foods Pty Limited[6] Fleming DP considered an award of interest on weekly compensation and said:
“The award of interest by the Commission, pursuant to section 109 of the 1998 Act is discretionary. Mr Haidary will only be entitled to interest, if awarded, on those amounts of his weekly entitlement that were unpaid, and only from the date that his claim ‘was duly made’. The likely amount of interest that would be due on these sums is small, relative to the whole of his claim, but nonetheless they may form part of Mr Haidary’s entitlement. The purpose of ordering interest on an award is to compensate the worker for the loss of his or her income, not to penalise the employer (Virag v James N Kirby t/as Betts Electric Motors (1990) 6 NSW CCR; Healey v McPherson Binding Pty Ltd (1989) 5 NSWCCR 139).”
[6] [2005] NSWWCCPD 9.
Kaur was an application for apportionment of the death benefit between a number of alleged dependants. The insurer admitted liability to pay the benefit three years after the death and the sum was paid to the then Public Trustee. About two years later, proceedings were commenced in the Commission. At a conciliation conference and arbitration hearing, further parties sought to be joined.
With respect to a claim for interest under s 109 by two of the dependents, Keating P said[7]:
“Section 109(2)(b) of the 1998 Act prohibits interest on any award of compensation payable under the Act for any period before a claim for the compensation was duly made. I accept the submission that the claim for compensation on behalf of the appellants was not duly made until the day of the arbitration. I therefore accept Thales’s submission that, as at the arbitration, the appellants could not be entitled to interest pursuant to s 109 of the 1998 Act.”
[7] At [139].
His Honour did not award interest to those beneficiaries.
It is appropriate that I follow a Presidential decision as to the matters to be considered when awarding interest. It is therefore necessary to determine when, in this case, the claim was effectively “duly made”. That must be at the time when the insurer had the information to permit it to ascertain if the death benefit was payable, to whom and how it should be apportioned.
Hughes’ insurer wrote to Brooke seeking information about the claim on 10 December 2020. It sought information to inform its decision about liability as well as apportionment. I do not accept the submission that it was clear from that time that the death benefit would be payable.
There is in fact no evidence about the liability investigations undertaken but it is likely that some investigation would be required to determine liability as a result of a helicopter accident. The statements taken by an investigator from Brooke and from Nicolaas’s brother were signed after that date in late January 2021, which suggests that investigation was ongoing.
A claim form was lodged on or about 24 February 2021. The copy attached to Hughes’ submissions does not detail the documents served with it though the face of the form indicates that documents were provided.
Liability was accepted by a letter dated 2 June 2021 but the insurer sought information as to dependency. While it is unclear when the information was provided, I anticipate that most of the documents requested had already been provided. Brooke’s statutory declaration sets out particulars of dependency.
In the absence of any more detail about the progress of the investigation and any consideration about liability, I consider that interest is payable and should run from 24 February 2021 being the date that the claim form was lodged.
Ethan and Ava were separately represented but they are both very young and neither they nor those acting as their tutors would be in a position to provide the information that the insurer required, without obtaining it from Brooke. There is no basis to order that the payment of interest should commence on different dates.
Interest should run until the date of the conciliation conference and arbitration hearing on 27 August 2021 when apportionment was agreed.
Rate of interest
Counsel for the beneficiaries argued that interest should be payable at the rate adopted for the UCPR by the courts. In Haidary, Fleming DP was guided in that case by the rates applied in the Supreme Court and considered that rate was more relevant at that time than the Jamberoo schedule adopted by the former Compensation Court in 1994. That decision was made more than 15 years ago and in respect of a small period of weekly compensation.
The rate of interest is discretionary. Mr Harris set out the details of a series of decisions of arbitrators of the Workers Compensation Commission or members of the Personal Injury Commission. The tenor of those decisions is that, in the current economic climate, 4.1% is too high and I agree. Recent awards are in the range of 2 to 3%.
In Ruby v Marsh[8] Barwick CJ described the purpose of an award of interest on damages:
“The purpose of giving courts the power to award interest on damages is to my mind twofold, and neither aspect of the purpose should be lost sight of. In the first place, the successful plaintiff, who by the verdict has been turned into an investor by the award of a capital sum, and whose claim in the writ has been justified to the extent of the verdict returned, ought in justice to be placed in the position in which he would have been had the amount of the verdict been paid to him at the date of the commencement of the action. In the second place, the power to award interest on the verdict from the date of the writ is to provide a discouragement to defendants, who in the greater number of actions for damages for personal injuries are insured, from delaying settlement of the claim or an early conclusion of proceedings so as to have over a longer period of time the profitable use of the money which ultimately the defendant agrees or is called upon by judgment to pay. Each of these reasons, incidentally, in my opinion, calls for the judge to award a rate of interest related to the market place subject to the limit allowed by the legislature. There can be no basis for the award of some nominal rate of interest, unless of course there is good cause for so doing in the special circumstances of the particular case.”
[8] [1975] HCA 32; (1975) 132 CLR 642.
The rate of 4.1% is considerably higher than could be obtained from a financial institution. If one of the purposes of an award of interest is to place the dependants in the position they would have been in if the money had been paid when the claim was duly made, it is appropriate that the rate be closer to what might be recovered if the money was invested.
I consider that the appropriate range of interest is 2% above the cash rate of 0.1% set by the Reserve Bank and award interest.
I order Hughes to pay interest on the sum payable under s 25 of the Workers Compensation Act 1987 from 24 February 2021 to 27 August 2021 at the rate of 2.1%.
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