JVGL Enterprises Pty Ltd t/as Sycamore Group v Workers Compensation Nominal Insurer (iCare) & Ors

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	JVGL Enterprises Pty Ltd t/as Sycamore Group v Workers Compensation Nominal Insurer (iCare) & Ors [2024] NSWPIC 89
APPLICANT:	JVGL Enterprises Pty Ltd t/as Sycamore Group
FIRST RESPONDENT:	Workers Compensation Nominal Insurer
SECOND RESPONDENT:	Lillian Broadbent
MEMBER:	Rachel Homan
DATE OF DECISION:	27 February 2024
CATCHWORDS:	WORKERS COMPENSATION - Workers Compensation Act 1987; application pursuant to section 145(3) for determination of uninsured employer’s liability to reimburse the Insurance Fund; injured worker who is a resident of South Australia joined to the proceedings; whether it is arguable that in determining the application the Commission would exercise federal jurisdiction; section 154A; whether the Nominal Insurer is the State for the purposes of section 75(iv) of the Constitution; whether the matter is “between” the State and a resident of another State; whether the matter “concerns a claim for compensation” for the purposes of section 26 of the Personal Injury Commission Act 2020; whether the Commission would be exercising judicial power in determining the application; Held – it is arguable that in determining the application the Commission would exercise federal jurisdiction; proceedings stood over pending an application to the District Court.
DETERMINATIONS MADE:	The Commission opines: 1. The applicant’s submission that determination of the application would involve federal jurisdiction is arguable. The Commission orders: 2. The proceedings are stood over pending an application to the District Court by the applicant pursuant to s 26 of the Personal Injury Commission Act 2020.

STATEMENT OF REASONS

BACKGROUND

Ms Lillian Broadbent (the second respondent) was employed as a store manager by JVGL Enterprises Pty Ltd t/as Sycamore Group (the applicant).
The second respondent commenced employment with the applicant in Victoria. On 13 December 2021, the second respondent relocated to New South Wales to help set up a new cafe in Sydney.
On 21 October 2022, the second respondent made a claim for workers compensation under the New South Wales scheme in respect of a psychological injury. The claim was initially disputed but, on 5 May 2023, iCare (the first respondent) wrote to the second respondent advising her that liability to pay compensation had been accepted.
As at the date of injury identified in iCare’s documents, the applicant did not hold a policy of workers compensation insurance in New South Wales. At all relevant times, the applicant did hold a current policy of insurance in Victoria.
On 8 September 2023, iCare wrote to the applicant advising it that a claim for compensation had been lodged and accepted under Division 6 of Part 4 of the Workers Compensation Act 1987 (the 1987 Act). Pursuant to s 145 of the 1987 Act, reimbursement of payments made to the second respondent from the Workers Compensation Insurance Fund was sought. The letter enclosed a notice pursuant to s 145(1) of the 1987 Act.
The applicant commenced the current proceedings in the Personal Injury Commission (the Commission) by lodgement of a Miscellaneous Application on 13 October 2023. The applicant seeks orders that the amount sought in the notice issued under s 145(1) of the 1987 Act is not recoverable; or in the alternative, is reduced.
The Miscellaneous Application named the Workers Compensation Nominal Insurer as respondent. At a preliminary conference on 15 November 2023, orders were made, pursuant to r 62(1) of the Personal Injury Commission Rules 2021, joining the second respondent to the proceedings on the basis that her interests may be affected by any determination made by the Commission.
At all times since the commencement of the proceedings in the Commission, the second respondent has been a resident of South Australia.

PROCEDURE BEFORE THE COMMISSION

After two preliminary conferences, the matter proceeded to conciliation conference and arbitration hearing on 23 February 2024.
The Commission had, at the preliminary conferences, raised with the parties the question of whether it was arguable that the proceedings involved federal jurisdiction, noting that the second respondent was a resident of South Australia, and the first respondent was the New South Wales Workers Compensation Nominal Insurer.
The parties were unable to agree on the question of whether it was arguable that the proceedings involved federal jurisdiction. The matter proceeded to arbitration of that question. The parties agreed that the jurisdictional question required determination before the Commission could deal with the substantive issues in the proceedings.
The applicant was represented by Mr Paul Macken, legal practitioner. The first respondent was represented by Mr Andrew Combe of counsel, instructed by Ms Alice Davis. The second respondent was represented by Mr John Gaitanis, instructed by Mr George Staninovski.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:
(a)    Miscellaneous Application and attached documents;
(b)    Reply lodged by the first respondent and attached documents, and
(c)    Reply lodged by the second respondent and attached documents.
Consideration of an Application to Admit Late Documents lodged by the second respondent on 13 February 2024 was deferred.

Federal jurisdiction

Section 75(iv) of the Commonwealth of Australia Constitution Act (the Constitution) vests original jurisdiction in all matters between “States, or between residents of different States, or between a State and a resident of another State” in the High Court.
Section 77 of the Constitution provides that Parliament has the power to invest any court of a State with federal jurisdiction.
Section 39 of the Judiciary Act 1903 (Cth) vests federal jurisdiction in a court of the State in matters between a State and a resident of another State.
In Burns v Corbett,[1] the High Court held that a State Parliament lacks legislative capacity to confer on a State tribunal that is not a court of the State within the meaning of s 77(ii) and
[1] [2018] HCA 15.
s 77(iii) of the Constitution, judicial power with respect to any matter described in s 75 of the Constitution.
Consistently with Orellana-Fuentes v Standard Knitting Mill Pty Ltd [2003] NSWCA 146 and Attorney-General for New South Wales v Gatsby [2018] NSWCA 254 the Commission is not a court of a State.
Division 3.2 of the Personal Injury Commission Act 2020 deals with the determination of disputes involving federal jurisdiction. Section 26 of that Act relevantly provides:
“26 Applications involving federal jurisdiction may be made to District Court
(1)     A person with standing to apply to the President or the Commission for a matter concerning a compensation claim to be determined by the usual decision-maker (a compensation matter application) may, with the leave of the District Court, make the application to the Court instead of the President or Commission.
…
(3)     The District Court may grant leave for a compensation matter application to be made to the Court only if it is satisfied that—
(a) an application was first made to the President or Commission, and
(b) the determination of the matter by the usual decision-maker would involve an exercise of federal jurisdiction, and
(c) the usual decision-maker would otherwise have had jurisdiction enabling the
decision-maker to determine the application.
…
(5)     The District Court may—
(a) remit a compensation matter application for determination by the usual decision-maker if the Court is satisfied that the usual decision-maker has jurisdiction to determine it, and
(b) do so instead of granting leave or after granting leave.”
The Courts have found that certain matters coming before the Commission do not involve an exercise of federal jurisdiction, notwithstanding that they concern disputes between residents of different States, or between a State and a resident of another State. In particular, it has been held that in many proceedings, the Commission exercises an administrative function, rather than a judicial function of the kind described in s 75 of the Constitution.
In Searle v McGregor [2022] NSWCA 213, it was found that medical disputes in the Workers Compensation and Motor Accident Divisions involved the exercise of administrative, not judicial, power and as such were not affected by federal jurisdiction.
In Kanajenahalli v State of New South Wales (Western New South Wales Local Health District) [2023] NSWCA 202, the Court of Appeal found that where the only issue in dispute in proceedings in respect of a claim for compensation was the application of s 11A(1) of the 1987 Act, the Commission was also exercising administrative, rather than judicial power.
Most recently in Chetty v Queanbeyan-Palerang Regional Council [2024] NSWDC 12, the District Court found that the Commission exercised administrative and not judicial power in determining a dispute under s (4)(b)(i) of the 1987 Act, commenting:
“In my opinion, insofar as they concern the question of whether or not they involve an exercise of judicial power, there is no material difference between determining the issue raised by the parties under s.4(b)(i) of the Workers Compensation Act 1987 in this case and determining the issue raised under s.11A(1) in Kanajenahalli.
An added consideration is the carefully considered view expressed by Kirk JA (Bell CJ and Ward P agreeing) in Searle that it is possible that many (and conceivably all or nearly all) of the myriad decision-making roles played by decision-makers within the Commission do not involve an exercise of judicial power (paragraph [17(i)] above).”
There is no judicial authority to which I have been directed dealing specifically with the question of whether, in determining liability in respect of a payment referred to in a s 145(1) notice, the Commission exercises a judicial or administrative function.
In Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16, an issue arose before the High Court as to whether a constitutional defence asserted by the appellants needed to meet some threshold degree of arguability before the controversy would attract federal jurisdiction. The Court found:
“The resolution in principle is that for a claim or defence in reliance on a Commonwealth law or in reliance on the Constitution to give rise to a matter of a description in s 76(i) or s 76(ii) of the Constitution, it is enough that the claim or defence be genuinely in controversy and that it give rise to an issue capable of judicial determination. That is to say, it is enough that the claim or defence be genuinely raised and not incapable on its face of legal argument.
That is what should be taken to have been meant by repeated acknowledgements that the assertion of a claim or defence will not give rise to a matter within the description in s 76(i) or s 76(ii) of the Constitution if the claim or defence is ‘unarguable’ or if the claim or defence is ‘colourable’ in that it is made for the purpose of ‘fabricating’, jurisdiction^[46].
Thus, the State jurisdiction of a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution is not denied, just as the federal jurisdiction of this Court under s 76(i) or s 76 (ii) or of another court under s 77(i) or s 77(iii) of the Constitution is not engaged, by the assertion of a claim or defence that amounts to ‘constitutional nonsense’^[47] or any other form of legal nonsense. But examination of what the prospects of success of a legally coherent claim or defence might be, were that claim or defence to be judicially determined on its merits, forms no part of the requisite assessment.”
The Court held that were the tribunal to determine the prospects of success of the constitutional defence this would,
“…inevitably involve that tribunal being drawn down the forbidden path of judicially determining the merits of a matter within a description in s 76(i) or s 76(ii) of the Constitution.”

Applicant’s submissions

The applicant noted that there was no question that the second respondent was a resident of South Australia.
The applicant conceded that it could not be a “resident” of another State despite being based in Victoria as it was a company and not a natural person.
The applicant submitted that it was arguable, however, that the first respondent was the State of New South Wales. The applicant submitted that the first respondent ought to be regarded as the State or its agent for the purposes of s 75(iv) in the same way that a local council or other statutory authority would.
The applicant submitted that s 154A(3) of the 1987 Act did not answer that question completely as state legislation was subservient to federal legislation.
The applicant submitted that the Commission need only be satisfied that it is arguable that the matter involves federal jurisdiction. Once the proposition is colourable, it is not a question the Commission can determine for itself.
While conceding that the argument that the proceedings involved federal jurisdiction might not be regarded as strong in this case, there were no degrees of “arguability”.
The applicant submitted that the proceedings did “concern” a claim for compensation for the purposes of s 26 of the Personal Injury Commission Act 2020. The second respondent had been joined to the proceedings as her interests could be impacted. The second respondent’s claim for compensation was what gave rise to the present proceedings. If the Commission were to accept the applicant’s argument that there was no injury, no further compensation would be recoverable by the second respondent. The matter clearly “concerned” a claim for compensation.

First respondent’s submissions

The first respondent referred the Commission to the terms of s 75(iv) and submitted that it was not colourable that the proceedings involved federal jurisdiction.
The first respondent submitted that s 154A of the 1987 Act established the Nominal Insurer. Sub-section 154A(3) made clear that the Nominal Insurer is not and does not represent the State or any authority of the State.
As the first respondent was not a State, it could not be argued that the proceedings involved a matter between a State and a resident of another State.
The first respondent agreed that the applicant was not a resident of another State referring to the decision in Marshall v O’Flaherty [2022] NSWDC 502.
The first respondent also submitted that it was not colourable that the matter involved federal jurisdiction because, for the purposes of s 26 of the Personal Injury Commission Act 2020, the matter did not concern a compensation claim or a claim for work injury damages.
The second respondent was not claiming compensation or work injury damages in these proceedings. What was sought was a review of the applicant’s liability to repay compensation.
The second respondent was only joined to the proceedings pursuant to a direction of the Commission under r 62 on the basis that the member formed the view that the worker should be joined as a party. No relief was sought by or against the second respondent. The second respondent had not made a claim that was the subject of a dispute.
In those circumstances, s 26 had no application. There was no claim for compensation capable of referral to the District Court.

Second respondent’s submissions

The second respondent adopted the first respondent’s submissions noting that there was no dispute between a State and a resident of another State.

FINDINGS AND REASONS

There is no dispute between the parties in these proceedings that the second respondent was, at the time of lodgement of the Miscellaneous Application, and continues until the present time to be, a resident of the State of South Australia.
The parties also agreed that the applicant, as a private corporate entity, is neither a State nor a “resident” of a State.
The parties disagreed, however, on the question of whether the first respondent constituted the State of New South Wales for the purposes of s 75(iv) of the Constitution.
The first respondent is a statutory legal entity established by s 154A of the 1987 Act. Importantly, however, s 154A(3) provides:
“The Nominal Insurer is not and does not represent the State or any authority of the State.”
Section 154B of the 1987 Act provides that the first respondent is taken to be a licensed insurer as if it were the holder of a licence in force under Division 3 of Part 7. Sub-section 154B(5) provides that the liabilities of the Nominal Insurer as insurer under a policy of insurance can only be satisfied from the Insurance Fund and are not liabilities of the State, ICNSW or any authority of the State.
The ‘Insurance Fund’ is established under s 154D of the 1987 Act. Sub-section 154D(6) provides that:
“For the purposes of this Act and any other Act or law, each of the State, the Nominal Insurer, ICNSW and any authority of the State—
(a) has no beneficial interest in or entitlement to the assets of the Insurance Fund, and
(b) has no liability to meet any deficit in the Insurance Fund and no entitlement to any surplus in the Insurance Fund, and
(c) is not trustee of the Insurance Fund.”
The second reading speech for the Workers Compensation Amendment (Insurance Reform) Bill 2003 which inserted the above provisions into the 1987 Act described the Nominal Insurer’s purpose as:
“The Nominal Insurer will issue policies of insurance and handle claims under policies as the insurer for the scheme. The Nominal Insurer will not represent the State and its liabilities will be able to be satisfied only from the insurance fund. It will be able to contract with agents, to issue policies of insurance and/or to handle claims on its behalf, and to provide funds management advice and services.”
Further:
“Neither the State, the Nominal Insurer, WorkCover nor any authority of the State will have any interest in the fund and are neither liable to meet any deficit in the fund nor entitled to any surplus in the fund. This is consistent with the longstanding position of Government that the workers compensation funds are the responsibility of the employers of New South Wales.”
The words of s 154A(3) and the second reading speech, on their face, support the first respondent’s submission that it is not the State or a State entity when considering s 75(iv).
The applicant has argued, however, that s 154A(3) may not provide a complete answer to that question.
In Crouch v Commissioner for Railways (Queensland) (1985) 159 CLR 22, the plurality of the High Court (Mason, Wilson, Brennan, Deane and Dawson JJ) stated:
“...neither a person appointed as a nominal defendant to represent a State in an action to enforce a claim against the State nor a State Minister who sues in his or her own name on behalf of the State to enforce a right of the State constitutes the State. The subject of the action in which he or she is sued or sues in that capacity might well however, depending upon the context, properly be described as a ‘matter’ between the other party and the State against which or for whose benefit the claim lies, at whose expense it is resisted or pursued and from or by whose treasury any verdict will be satisfied or received. [At 36-37].
....
When the word ‘matter’ is used in Ch. III of the Constitution in its ordinary prima facie sense of the subject matter for determination in a legal proceeding rather than the legal proceeding itself, it focuses attention upon the substance of the dispute...whether a particular ‘matter’ lies within the original jurisdiction of the Court under s. 75(iv) as a matter ‘[b]etween States’ or as a matter ‘between a State and a resident of another State’ falls to be determined by reference to the substantial subject matter of the controversy and not by reference only to the form in which the legal proceedings involving it happen to be framed.” [At 37.]

In Lee v Fletcher International Exports Pty Ltd [2023] NSWDC 71 the District Court considered the authority in Crouch in the context of a submission that a self-insurer was an emanation of the State of NSW. The Court found,
“In Crouch at 39-40, the plurality of the High Court considered a number of factors in determining whether the subject matter of that claim was a claim against an instrumentality or emanation of the State sued in its capacity as such. In that case, the claim arose from the discharge of traditional governmental functions of the State; the burden of any judgment if the plaintiff’s claim should succeed would fall upon the Consolidated Revenue of the State and the funds involved in resisting the claim were to come from the same source.
None of those factors are present in the matter currently before the Court. The claim does not arise from the discharge of traditional governmental functions of the State. The defendant is a private corporation engaged in trade or commerce. The plaintiff brings proceedings in her capacity as an employee seeking compensation for an alleged workplace injury suffered in the course of employment. As a self-insurer, it may be inferred that the defendant will meet both the plaintiff’s claim and the burden of any judgment should the plaintiff ultimately succeed.
The defendant is sued in its capacity as the plaintiff’s employer at the time of the accident. The relevant source of the plaintiff’s entitlement is s 9 of the Workers Compensation Act, which imposes a liability on the defendant as employer to pay compensation. This is a private, inter partes relationship between an employer and employee, and does not raise any matter which can properly be described as a matter in which a function of a State is engaged.”
There are obvious differences between a private corporation of the kind in Lee and a legal entity established under an Act of State and funded by a fund created by an Act of State.
There is also unreported authority in the matter of Matthew Ritchie (plaintiff) v the Nominal Defendant (defendant) District Court Sydney No 2021/117151 that the Nominal Defendant in claims under the Motor Accidents Compensation Act 1999 is an entity of the State of NSW for the purposes of s 75(iv).
I accept there are, however, some significant differences between the Nominal Defendant in Motor Accidents matters and the first respondent. Section 32 of the Motor Accidents Compensation Act 1999 provides that the Nominal Defendant is the State Insurance Regulatory Authority (SIRA). Section 17(2) of the State Insurance and Care Governance Act 2015 provides that SIRA is, for the purposes of any Act, a NSW government agency.
I have not been directed to any authority on the question of whether proceedings involving the first respondent are capable of constituting a matter involving “the State” for the purposes of s 75(iv). There is, in my view some force to the submissions made by the first and second respondent. I accept, however, that the applicant’s position is arguable or colourable.
It is necessary next to consider, the first respondent’s alternate submission by reference to s 26 of the Personal Injury Commission Act 2020. This submission requires consideration of the nature of the “matter” before the Commission.
Division 6 of the 1987 Act permits workers who consider that they have a claim against an employer for compensation to make a claim against the Nominal Insurer if the employer is uninsured: s 140 of the 1987 Act.
Sub-section 141(3) provides that if a payment is made in respect of a claim under Division 6, the Nominal Insurer may recover the amount paid from the employer. The process for requiring an uninsured employer to reimburse the Insurance Fund is set out in s 145 of the 1987 Act and requires a notice to be served under s 145(1).
Sub-section 145(3) provides that a person on whom such a notice has been served may apply to the Commission for a determination as to the person’s liability in respect of the payment concerned.
In hearing such an application, s 145(4) provides that the Commission may make such determination in relation to the application, and such awards or orders as to the payment of compensation or in respect of the injured worker concerned, as the Commission thinks fit.
Section 26 of the Personal Injury Commission Act 2020 provides that a person with standing to apply to the Commission for determination of “a matter concerning a compensation claim” may, with leave, make the application in the District Court. The District Court may grant leave only if, amongst other things, “the determination of the matter by the usual decision-maker would involve an exercise of federal jurisdiction”.
The first respondent submits that the current proceedings do not constitute “a matter concerning a compensation claim”.
While accepting that the Commission is not being asked in these proceedings to make a determination on a compensation claim, the applicant argues that they “concern” a compensation claim. It was the making of a compensation claim by the second respondent, and the first respondent’s acceptance of that claim, that gave rise to the applicant’s potential liability to reimburse the Insurance Fund. It is that liability which is the subject of these proceedings.
It is, in my view, arguable or colourable that the matter here “concerns”, in the sense that it relates to or is in connection with, “a compensation claim” as that expression is defined in s 25(d) of the 2020 Act.
I am not satisfied that proceedings of the kind currently before me are excluded from s 26 of the Personal Injury Commission Act 2020.
A further issue that arises from the first and second respondents’ submissions is whether the proceedings concern a matter “between” a State and a resident of another State for the purposes of s 75(iv). The first respondent observes that there is no dispute between the first and second respondents in the proceedings. The dispute concerns the applicant’s liability to reimburse the Insurance Fund.
That observation is apt. However, as the applicant points out, the resolution of that matter potentially impacts and concerns a matter between the first respondent and the second respondent, being the first respondent’s liability to continue making payments of compensation to the second respondent.
For example, in the current case, the applicant argues that compensation was not payable because the second respondent’s employment was not connected with the State of New South Wales for the purposes of s 9AA of the 1987 Act. The applicant also argues that the injury did not satisfy the requirements of ss 4 and 9A of the 1987 Act as there was an insufficient connection between the injury and employment. If the Commission were to accept either argument, no further compensation would be payable by the first respondent to the second respondent.
It was due to the potential for a determination of the matter in this case to impact the second respondent’s entitlement to receive compensation from the first respondent, that the second respondent was joined to the proceedings at the direction of the Commission at the first preliminary conference.
In these circumstances, I accept that there is a colourable argument that the present proceedings concern a matter between a State and a resident of another State.
The only other issue impacting upon the question of whether it is colourable that the proceedings involve federal jurisdiction is the question of whether the Commission, in determining the dispute between the applicant and first respondent, would be exercising judicial power.
As noted above, a number of cases have now held that in exercising certain powers, the Commission engages in an administrative function. In Chetty v Queanbeyan-Palerang Regional Council [2024] NSWDC 12, to which the parties were referred in conciliation, it was noted that it was conceivable that many, if not all, of the determinations the Commission is called upon to make involve administrative rather than judicial power. It must, however, have been foreshadowed that some matters would come before the Commission, determination of which would involve the exercise judicial power, given the inclusion of s 26 in the Personal Injury Commission Act 2020.
There are some notable differences between a determination of a medical dispute or a dispute as to whether the statutory criteria in s 4 or s 11A(1) of the 1987 Act are met and the determination of an application under s 145(3). In determining the applicant’s liability to reimburse the Insurance Fund, subsection 145(4) gives the Commission broad powers to make such determination and such awards or orders as to the payment of compensation under the 1987 Act to or in respect of the injured worker as the Commission thinks fit.
Neither Chetty, nor any other case to which I have been referred, deals with the Commission’s particular function or power in determining an application under s 145(3). I accept that there is a colourable argument that the Commission’s powers under s 145 are distinguishable from its other decision-making powers.
After careful consideration of the submissions, I have formed the view that it is arguable or colourable that the proceedings involve federal jurisdiction. It may well be that the District Court finds that the matter does not invoke federal jurisdiction. It is not, however, the Commission’s place to determine that in question in all the circumstances described above.
It is also not appropriate, given the time limited nature of these proceedings for them to be dismissed pursuant to s 54 of the Personal Injury Commission Act 2020. Accordingly, the matter will be stood over, pending an application by the applicant to seek leave to bring the proceedings before the District Court pursuant to s 26 of the Personal Injury Commission Act 2020.

[2024] NSWPIC 89

27 February 2024