Klein v Minister for Education
[2006] HCATrans 469
[2006] HCATrans 469
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Perth Nos P3 of 2006 and P4 of 2006
B e t w e e n -
ALAN DAVID JOHN KLEIN
Applicant
and
MINISTER FOR EDUCATION
Respondent
Applications for special leave to appeal
GUMMOW J
KIRBY J
HAYNE J
TRANSCRIPT OF PROCEEDINGS
FROM PERTH BY VIDEO LINK TO CANBERRA
ON FRIDAY, 1 SEPTEMBER 2006, AT 12.09 PM
Copyright in the High Court of Australia
MR C.P. SHANAHAN, SC: May it please the Court, I appear with my friend, MR S.J. BUTCHER, for the applicant. (instructed by Butcher Paull & Calder)
MR K.J. MARTIN, QC: May it please the Court, I appear with MS D.J. OSBORN for the respondent. (instructed by Blake Dawson Waldron)
GUMMOW J: Why are there two applications?
MR SHANAHAN: Because we were directed to put it in those terms by the Registry, your Honour.
KIRBY J: What was the thought behind the Registry’s order? We assume the Registry acts entirely rationally.
MR SHANAHAN: Yes, your Honour. As I understand it, it was simply that the matters raised by the applicant engaged two different aspects of the proceedings in the context of two different judgments given by the Court of Appeal, one dealing with the substantive appeal and the second dealing with the application to recall the unperfected judgment.
GUMMOW J: Yes, there are two sets of orders.
MR SHANAHAN: Well, two sets of reasons, your Honours.
KIRBY J: The unperfected judgment matter did not go anywhere but just in case the Registry took the view that it should be the subject of a separate application and so we have it before us.
MR SHANAHAN: Yes, that is so.
KIRBY J: But the essential issues are in the first application; is that correct?
MR SHANAHAN: In P3 of 2006, yes, your Honour.
GUMMOW J: You have misrepresented the situation, Mr Shanahan. There is an order at page 29 and there is an order at page 41, is there not?
MR SHANAHAN: I am sorry, your Honours. Yes, there are two sets of orders by the court. I did not mean to suggest there were not. I was simply going to the issue of why ‑ ‑ ‑
GUMMOW J: You said there were not, but, anyhow, let us get on with it. Now, it is said against you that this legislation has been changed.
MR SHANAHAN: Yes, it has, your Honour.
KIRBY J: Why should we be fussing about in interpreting the legislation of one State which is no longer the governing legislation?
MR SHANAHAN: Because your Honours have had a series of – I think we are now onto application P4 of 2006. The matters in P4 of 06 deal with section 175. It has come before this Court a number of times and it has come before this Court on the basis of access to common law damages in Western Australia. The reason why it is put before the Court on this occasion is that this matter raises different issues and it raises the issues as to whether or not public authorities are the workers compensation insurers of all of the employees of their contractors. In other words, it goes to the nature ‑ ‑ ‑
GUMMOW J: We will be invited to deal with a closed class.
MR SHANAHAN: No, your Honour.
GUMMOW J: The Act has been changed, so it seems at page 105, to clarify in a way that would, in fact, assist you, would it not, for the future? We do not ordinarily debate matters that have passed. It is statutory interpretation.
MR SHANAHAN: It is not sought to agitate those matters, your Honour, with great respect. Section 93B(5) clearly takes the provision at section 175 out of the gateway provisions in relation to access to common law damages and it is not sought to agitate this matter in relation to that closed class. What is said is this. If the Court of Appeal’s decision is allowed to stand, what it effectively does is to say that when a public authority contracts with a contractor for work then the principal, ie, the public authority, is the de facto or de jure workers compensation insurer for all of the workers of that contractor.
That is a point which subsists after the amendments to section 93B because all that that provision affects by way of amendment is to take section 175 out of the equation in relation to the gateway provisions. It does not deal with the nexus that is required in order to impose on a principal liability for workers compensation payments to the worker of a contractor.
The significance of that in this State is that if one recognises West Australia’s economic boom and the large amount of capital works that are going on in this State at the moment, the practical effect of it is that where a principal, ie, a statutory authority, employs a contractor that statutory authority is necessarily the workers compensation insurer for all of the contractor’s workers if one adopts the construction of section 6 that was accepted by her Honour Justice Wheeler in the Court of Appeal.
KIRBY J: But do you not, in order to succeed, have to establish that the provision of security services is not work directly as a part of the trade or business of education?
MR SHANAHAN: That is so.
KIRBY J: Is there not a problem in that given that, unless you have the security services, the common experience of humanity is that schools get burned down and then you do not have the education, the trade or business or provision of services at all?
MR SHANAHAN: The answer to that question, your Honour, lies in the nature of workers compensation itself. Initially with workers compensation there was a difficulty with employers seeking to contract out of their workers compensation liability by employing contractors and having the contractors provide them with a workforce. In order to counter that problem the legislature put in place mechanisms which identified a nexus between the nature of the principal’s trade or business and the work that was actually being executed by the worker at the time of injury. The history of those provisions is evident from the book of materials that has been filed. I do not seek to take your Honours to that. I simply make that observation that from the very ‑ ‑ ‑
GUMMOW J: You do make the point that the history of the structure of the compensation legislation in Western Australia differs from that, for example, in New South Wales?
MR SHANAHAN: It does, your Honours, yes. Can I say that in the other special leave applications that have come before this Court there has always been the assertion that the Western Australian Act is derived from the English provisions. I think that the material that has been filed shows that that is not the case. However, having said that, which appears to be counter to the applicant’s interest in this matter, the nature of the mechanism employed in the New South Wales and Victorian legislation is derived from the English legislation and is essentially for the same purpose. In other words, whilst different expressions are used, the purpose of those provisions, section 20 of the New South Wales Act and section 10A of the Victorian Act, both seek to accomplish the same end; in other words, to identify when a principal who is contracted for work from a contractor should be made liable for workers compensation to a worker of the contractor, employed by the contractor, injured in that work.
That is the significance of P4 of 2006. It squarely raises the difficulty if one adopts the construction of section 6 that her Honour Justice Wheeler accepted in the Court of Appeal. Can I just take your Honours to that very briefly?
KIRBY J: Well, you want to keep us up there in the high level of the policy of workers compensation, but in the end it has to be determined by reference to the provisions of section 6.
MR SHANAHAN: Yes, that is where I am going, your Honour.
KIRBY J: The problem for you, it seems to me, is that it is very hard to say that the provision of security is not part of the exercise of the performance and powers of duty of a statutory authority where its functions are that of providing education facilities.
MR SHANAHAN: I think that the best way to respond to that, your Honour, is to take your Honours to the decision in the District Court where his Honour Judge Nisbet considered what the nature of the obligations of the respondent Minister were in the context of the Education Act. That appears at page 13 of the application book at about line 20.
KIRBY J: Does this affect many cases that are waiting in the wings, the point in your case? Are you able to tell us that?
MR SHANAHAN: I am not able to tell your Honours what is in the Registry of this Court, but I can say that section 175 continues to be agitated in the context of his Honour Justice Gummow’s questions regarding the closed class. That continues to be an issue. But in relation to the issue agitated in P4 of 2006, it will be an issue that will be raised on every occasion that a statutory public or local government authority employs a contractor to execute work and one of the contractor’s workers is injured in the course of that work.
GUMMOW J: You were taking us to the District Court judge at page 13.
MR SHANAHAN: Thank you, your Honour. It is page 13 of the application book from line 20. Your Honours will see that it was agreed by the parties that the relevant legislation which deals with the statutory powers and duties of the respondent Minister was the Education Act 1928 and his Honour Judge Nisbet sets out the long title of that Act and concludes at the bottom of the page that the purpose of the Education Act:
is to provide public education and, for the purpose of providing public education the defendant is empowered to establish and maintain public schools.
The applicant accepts that the respondent Minister had the power to employ the contractor, Falcon, to provide the security services which were the services in which the applicant was injured. The simple question is not a matter of power; it is a question of whether or not the work that was being executed at the time fell within the meaning of section 6 and section 175. With respect, I would like to take the Court to section 6 at the time of the accident. That appears at page 23 of the book of materials that has been filed by the applicant pursuant to Practice Direction No 3 of 1996.
GUMMOW J: Yes, thank you.
MR SHANAHAN: Your Honours will see that the text of section 6 is short and if I might just be permitted to read it:
The exercise and performance of the powers and duties of a local government or other public, or statutory authority shall, for the purposes of this Act, be treated as the trade or business of such local government or other authority.
Keeping a finger perhaps at page 23 and then going to the terms of section ‑ ‑ ‑
GUMMOW J: Just a moment. Section 6 is in what statute?
MR SHANAHAN: Section 6 is in the Workers’ Compensation and Injury Management Act 1981, your Honour.
GUMMOW J: Yes, that is right. Where do we go then?
MR SHANAHAN: You then go to page 16 of the same book. If I could take your Honours to section 175(3) which is the relevant provision, that provision reads:
The principal is not liable under this section unless the work on which the worker is employed at the time of the occurrence of the disability is directly a part or process in the trade or business of the principal.
What is said about that is this. If one takes the expression at section 6 which is to be treated as the trade or business of the respondent Minister, then one can read section 175(3) in this way: “The principal is not liable under this section unless the work on which the worker is employed at the time of the occurrence of the disability is directly a part or process in the exercise and performance of the powers and duties of a local government or other public, or statutory authority”.
KIRBY J: Well, that is one way to put it. The other way to put it is, okay, it is not part of the trade or business of education but it is directly a process that is involved in the trade or business of education.
MR SHANAHAN: With great respect, your Honour, that is the point. What does “directly” mean? What does “directly” do in section 175(3)? That is the matter that was sought to be agitated in the Court of Appeal and her Honour Justice Wheeler in her reasons in the original reasons of the court at paragraph 16 on page 27 of the application book – so I have moved books.
KIRBY J: Yes, what is the point?
MR SHANAHAN: Her Honour says:
It may well be that, once the operation of 6 is correctly understood, there is little for the word “directly” to do in s 175(3), so far as public authorities are concerned.
With respect, that is the point that the applicant agitates here. It is said that there must be work for the word “directly” to do in section 175(3) because that is the heart of the nexus that the legislature have established in order to identify when a worker can go to a principal, rather than their direct employer, for workers compensation payments.
GUMMOW J: Yes. What do you say is the legislative purpose of 175(3) plus section 6?
MR SHANAHAN: The legislative purpose of section 175(3) is a beneficial provision to identify a broader pool of potential payees of workers compensation liability where perhaps there is a difficulty with getting a payment from a direct employer. The purpose of section 6 is simply to apply the Act to the employees of public statutory and local government authorities. The history of section 6 is that it has been used for that purpose and certainly in the book of material filed pursuant to the practice direction the applicant has sought to demonstrate that.
GUMMOW J: What do you say is the vice in the Court of Appeal’s treatment of these matters?
MR SHANAHAN: The vice in the Court of Appeal’s treatment is simply that to ignore the word “directly” or “part or process” by conflating ‑ ‑ ‑
GUMMOW J: But to achieve what result?
MR SHANAHAN: It achieves the result that any work done by a worker employed by a contractor, employed by such an authority, is necessarily caught by section 175(3) and that cannot be the intention of the legislature because of the words used at section 175(3) which specifically qualify the trade or business with the words “directly a part or process”.
KIRBY J: Your argument is that you cannot say “directly” does not have a significance because it has been put in there and it is obviously a word of limitation and that when you look to the object of this it is to direct workers ordinarily to the person who is their employer, who can be expected to take out compensation insurance, and if that is a contractor, so be it.
MR SHANAHAN: Yes.
KIRBY J: So that is the construction you say falls more naturally on this section and that Justice Wheeler’s error was to downplay the role of “directly” and not to correct it when it was brought back to her.
MR SHANAHAN: Yes.
KIRBY J: All right, we have the point. The only thing that worries me is that it is a sort of closed class and it does not really affect very many cases now.
MR SHANAHAN: I need to deal with that, your Honours, because it is a point that is raised against the applicant a number of times. This does not go to a closed class because section 175(3) continues to apply generally in respect of workers compensation liability, and I am drawing a distinction between workers compensation liability and access to common law damages. On the occasions that these matters have been before your Honours in the past applicants have been agitating the role of section 175 in allowing principals to claim the defence that was available under Part IV Division 2 of this Act. That is not the basis of the contentions that have been put to your Honours this morning.
Of course, the happy outcome for the applicant in this case would be that he would be able to avoid those provisions were special leave granted and were the applicant to succeed in his contention regarding the proper constructions of section 6 and 175(3). It has general application in the sense that the nexus that is described by section 175(3), whilst expressed in different terms, does apply in other States – and the applicant sought to show how the Tasmanian Act, the New South Wales Act and the Victorian
Act all contain provisions which are similar in their terms to the provision considered by this Court in Moir v Schrader and Frauenfelder v Reid.
GUMMOW J: Thank you.
MR SHANAHAN: Your Honours, I have not addressed the ‑ ‑ ‑
GUMMOW J: Yes, you have been talking about matter No 4, have you not?
MR SHANAHAN: I have. I am more than happy to ‑ ‑ ‑
GUMMOW J: Now, No 3 ‑ ‑ ‑
MR SHANAHAN: Yes, if I could just very briefly ‑ ‑ ‑
GUMMOW J: No, just let me say this to you. If you are right and you win in 4, 3 falls away, does it not?
MR SHANAHAN: Yes.
GUMMOW J: So if you got a grant of leave in 4, the appropriate course would be to stand over, would it not, the application for leave in 3?
MR SHANAHAN: Yes. My client is primarily interested in 4.
GUMMOW J: Yes, I understand that. Yes, Mr Martin.
MR MARTIN: May it please your Honours. Going directly to section 175(3), it is apparent ‑ ‑ ‑
GUMMOW J: First of all, do you agree with what has just been said to your opponent as to the relationship between 3 and 4?
MR MARTIN: Not quite, except we would say that the outcome in regard to 3 would be that it should be dismissed on the basis that there has been a full opportunity to be heard on the point and, indeed, the point will now be ventilated on appeal, if your Honours give leave, substantively concerning the construction issue that the P3 matter said was never heard properly.
KIRBY J: The problem is the poor old applicant comes along to the Registry and is told to bring these two applications. So one would not want to close off any significance that the other application has before it has disposed of the principal matter and one would think that the costs would follow the event of the outcome of the first matter. I rather think that you are trying to hint that you get your costs of the matter that you want to have dismissed. That would be a very ungenerous thought on your part. Normally, one would sort of just put it to one side and see how the principal matter flows and then the costs will follow the outcome of that in both matters.
MR MARTIN: I am happy for it to be in suspended animation, your Honour, but substantively the point of statutory construction that is advanced is going to be before the Court, if leave were granted.
GUMMOW J: Yes, go on. Let us hear what you want to say about No 4.
MR MARTIN: Your Honours, section 175 deals with the question of extending a liability where you have a scenario of contractor to make sure that there is some workers compensation potential relief available where there is an injured person who is an employee of a contractor but where the contractor for some reason has not take out arrangements with its employees. It is, as it were, a fallback provision but the consequence of which is that there is scope for an injured worker to seek compensation not only against their employer, the contractor, but also against the deemed employer, who is the principal who has engaged the contractor. The point of that beneficial provision is that it applies across the private sector and the public sector. So, in regard to section 175(3), that has to be read as a provision which needs to be engaged across all sectors.
What seems to have given rise to the problem in this particular case is that we are dealing with a scenario of the public sector which immediately makes relevant section 6 to which you have been taken, but of course section 6 would not be relevant at all in the context of the private sector claims which have essentially constituted all the unsuccessful special leave applications that have been brought before the Court to this point.
So there is a closed class insofar as prior to the amendment to 93B a deemed employer who had a workers compensation exposure, together with the contractor under 175, having been deemed an employer, could also then say, “Well, if I have the negative of this exposure to workers compensation for the employees of my contractor, I also have the advantages if that employee brings a common law claim against me in the same way as an employer by invoking the threshold defence under 93B.” Now, that was taken away in November 2004. That is the provision that has impacted adversely on appeal against Mr Klein here, but post‑November 2004 cannot impact adversely against him.
What we respectfully say in regard to the construction of the word “directly” in section 175(3) is that Justice Wheeler was right by saying that that is a provision that applies across both sectors, when one comes to the public sector and has to go then to what section 6 says, that it may be
because section 6 is drafted as a matter of legislative policy to make the exercise of a power or the performance of a duty part of the trade or business of the public sector deemed employer that the end result follows.
In the law as it now stands the end result is that the application of section 6 imposes a wide exposure on deemed public sector employers to make sure that they have arrangements in place to cover workers compensation exposures, but that, as her Honour said, is simply the way that section 6 operates when it is brought into play with section 175(3) in a context of a public sector deemed employer. It is a matter of drafting, it is a matter of what the legislature in Western Australia chose, rather uniquely it seems, to make the peg for the exposure.
There does not seem to be any counterpart parallels to section 6 around the country. What is really at issue here is the interplay of section 6 with section 175 and, even examining the statutory material concerning the New South Wales, Victorian, ACT parallels for section 175, I could not see any similar words using the word “directly” which seems to be the focus for the argument that our friends want to take to your Honours on appeal.
In our submission, we would respectfully adopt the way your Honour Justice Hayne put it in the dismissal of the Marsden special leave application, which I think my friend inserted in his materials, where you said it was a rather confined exercise in statutory construction of a local level without public importance. May it please the Court.
GUMMOW J: Thank you. We do not need to hear you in reply, Mr Shanahan.
There will be a grant of leave in matter P4 of 2006. The application in matter P3 of 2006 will stand over to be restored to the list after the disposition of the appeal in P4, unless after the disposition of the appeal P3 is resolved by consent.
The appeal will be a one‑day matter and the parties should hold themselves ready for listing in the October sittings of the Court in Perth. We will now adjourn to 10.15 am on Tuesday next, 5 September.
AT 12.36 PM THE MATTERS WERE CONCLUDED
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