Mackley v WorkCover Authority of New South Wales

[2005] NSWWCCPD 32

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
STATUS: Decision is confirmed on Appeal: Mackley v WorkCover Authority of New South Wales [2006] NSWCA 204; (2006) 5 DDCR 41
CITATION:		Mackley v WorkCover Authority of New South Wales [2005] NSWWCCPD 32
APPELLANT:		Robert Mackley
RESPONDENT:		WorkCover Authority of New South Wales
FILE NUMBER:		WCC 205-2004
DATE OF ARBITRATOR’S DECISION:		16 June 2004
DATE OF APPEAL DECISION:		10 May 2005
SUBJECT MATTER OF DECISION:		The powers of the Commission under section 145 of the Workers Compensation Act 1987 in respect of reimbursement of the WorkCover Authority of New South Wales.
PRESIDENTIAL MEMBER:		Acting Deputy President Robin Handley
HEARING:		On the papers
REPRESENTATION:		Appellant:		Duncan MacLean Solicitor
Respondent:		Turks Legal
ORDERS MADE ON APPEAL:		The decision of the Arbitrator dated 16 June 2004, is revoked and the following decision is made in its place:
1. Pursuant to section 145(4) of the Workers Compensation Act 1987, the Appellant, Mr Mackley, is relieved of liability to reimburse the Respondent, the WorkCover Authority of New South Wales, for the amount of $133,828.73 specified in a notice dated 11 December 2003.
2.       The Respondent is to pay the Appellant’s costs as agreed or assessed.

BACKGROUND TO THE APPEAL

1. On 5 July 2004, the Appellant, Robert Mackley, sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) in respect of a decision dated 16 June 2004.

1. The Respondent to the Appeal is the WorkCover Authority of New South Wales (‘WorkCover’).

1. Mr Mackley is a carpenter who lives at Manilla, a small town near Tamworth. On 14 June 2001, he was installing a woodburning heater in a house in Manilla. During the course of the morning, when it became necessary to move the heater, he asked a friend, Michael McLeod, who lived nearby, to help him move the heater because it was too heavy to move on his own. Mr McLeod helped him move the heater and then went home. When, during the afternoon, Mr Mackley needed someone to pass him tools while he was working in the roof space altering some timbers to accommodate the flue, he again asked Mr McLeod for his help. Mr McLeod agreed and, while helping Mr Mackley, fell from a ladder injuring his right arm and back.

1. Mr Mackley gave evidence before the Compensation Court of NSW that he did not regard himself as employing Mr McLeod – rather Mr McLeod was a mate helping him out. However, Mr McLeod gave evidence that Mr Mackley had offered to pay him $15 per hour to work for him as a builder’s labourer.

1. Mr Mackley did not have workers compensation insurance. Mr McLeod claimed compensation from the Uninsured Liability and Indemnity Scheme administered by the WorkCover Authority and paid from the WorkCover Authority Fund. WorkCover accepted the claim and paid Mr McLeod weekly benefits and compensation for medical and other treatment. Then, in 2002, Mr McLeod claimed compensation in the Compensation Court for permanent impairment of his back and right arm, for pain and suffering and for further medical and other treatment expenses. On 5 September 2003, after a hearing on 29 August and 2 September 2003, Geraghty CCJ delivered judgment in favour of Mr McLeod, ordering that WorkCover pay compensation to Mr McLeod.

1. At a further hearing on 2 December 2003, WorkCover sought an order for reimbursement of the compensation awarded from Mr Mackley pursuant to section 144 of the Workers Compensation Act 1987 (‘the 1987 Act’). After hearing evidence and submissions, Geraghty CCJ gave an ex tempore judgment declining to make such an order. According to a corrected draft of his judgment, which does not appear to have subsequently been published, he said:

“I am persuaded that Mr Mackley could not reasonably have been expected in the circumstances to regard himself as an employer who was bound to have workers compensation and to act in all regards as an employer and to accept all the burdens of that, since the arrangement was between friends and on a very casual basis albeit that he was at the time the employer.”

However, he noted that it would be open to WorkCover to seek reimbursement from Mr Mackley pursuant to section 145 of the 1987 Act.

1. WorkCover had previously sought reimbursement from Mr Mackley pursuant to a notice issued under section 145(1) dated 22 September 2003. Following the judgment given by Geraghty CCJ, WorkCover issued a second notice to Mr Mackley dated 11 December 2003 claiming reimbursement of $133,828.73 in respect of compensation paid to Mr McLeod and medical expenses. Mr Mackley lodged an ‘Application to Resolve a Dispute’ with the Commission which was registered on 7 January 2004.

1. On 10 June 2004, following an unsuccessful conciliation, the matter was determined by an Arbitrator who gave an ex tempore decision.

THE DECISION UNDER REVIEW

1. The Certificate of Determination, dated 16 June 2004, records the Arbitrator’s orders as follows:

“(1) That the Applicant pay to the Respondent the sum of $133,828.73 in accordance with the certificate issued pursuant to section 145(5).

(2) That each party pay their own costs.”

ISSUES IN DISPUTE

1. The issues in dispute in the appeal are:

(1) whether the Commission has power to waive the liability of an employer to reimburse WorkCover pursuant to section 145(2) of the 1987 Act and, if so, whether the Arbitrator erred in law by not ordering WorkCover to waive the liability of Mr Mackley;

(2)        whether the Arbitrator erred in law by failing to make a determination of Mr Mackley’s liability for reimbursement of the compensation paid to Mr McLeod and medical expenses;

(3)        whether WorkCover was estopped from seeking reimbursement from Mr Mackley by reason of Geraghty CCJ’s finding in the Compensation Court proceedings that he “could not reasonably have been expected in the circumstances to regard himself as an employer” (see paragraph 6 above).

ON THE PAPERS REVIEW

1. Section 354(6) of the 1998 Act provides:

“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”

1. Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by Mr Mackley that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances. 

1. Neither party sought to adduce fresh evidence.

LEAVE

1. Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’), which provides:

“352Appeal against decision of Commission constituted by Arbitrator

(1)A party to a dispute in connection with a claim for compensation may, with leave of the Commission constituted by a Presidential member, appeal to the Commission as so constituted against a decision in respect of the dispute by the Commission constituted by an Arbitrator.

(2)The Commission is not to grant leave to appeal unless the amount of compensation at issue on the appeal is both:

(a)at least $5,000 (or such other amount as may be prescribed by the regulations), and

(b)at least 20% of the amount awarded in the decision appealed against.

(3)If the Commission refuses to grant leave to appeal, the Commission must state reasons for the refusal in writing to the parties.

(4)An appeal can only be made within 28 days after the making of the decision appealed against.

(5)An appeal under this section is to be by way of review of the decision appealed against.

(6)Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.

(7)On appeal, the decision may be confirmed or may be revoked and a new decision made in its place.

Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission.

(8)In this section, decision includes an award, interim award, order, determination, ruling and direction.”

1. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.

1. With regard to section 352(2), I am satisfied that the amount of compensation at issue is at least $5,000 and at least 20% of the amount awarded.

1. Thus, the appeal meets the threshold requirements of section 352 and I am satisfied that I should grant Mr Mackley leave to appeal.

SUBMISSIONS

1. Both parties referred to a number of relevant decisions where sections 144 and 145 of the 1987 Act were discussed. Mr Mackley sought to rely on the decision of the New South Wales Court of Appeal in GRE Workers’ Insurance (NSW) Ltd v NohilPty Ltd (1996) 13 NSWCCR 74 (‘Nohil’) which he submitted is the only decision binding on the Commission. He submitted that the approach adopted by Geraghty CCJ in the Compensation Court in the current matter is to be preferred to that adopted by Curtis CCJ in Petersen v Tansiri (2001) 22 NSWCCR 602 (‘Petersen’), which he suggested “was not a correct approach”. He sought to distinguish the decision in Hadchiti v Llandilo Staircases Pty Ltd (2002) 23 NSWCCR 170 (‘Hadchiti’) on its facts. WorkCover submitted that the Arbitrator had correctly relied on Petersen and Hadchiti and that the decision in Nohil did not deal with whether the Commission has jurisdiction in relation to section 145(2).

1. Mr Mackley submitted that the Commission has power to review the acts of WorkCover under section 145(2) given the breadth of the power given to the Commission by section 145(4). WorkCover disputed this, relying on the cases cited above.

1. Finally, Mr Mackley submitted that the Arbitrator had an obligation to determine what weekly benefits were payable to Mr McLeod and that by, effectively, refusing to do so, the Arbitrator made an error of law. WorkCover submitted that the Arbitrator did make the required determination under section 145(3) by ordering Mr Mackley to pay the sum of $133,828.73.

EVIDENCE, FINDINGS AND DISCUSSION

1. Section 145 of the 1987 Act provides relevantly:

“(1) The Authority may serve on a person who, in the opinion of the Authority, was:

(a) in respect of an injured worker to or in respect of whom a payment has been made under the Scheme, an employer at the relevant time, or

(b) an insurer under this Act of such an employer,

a notice requiring that person, within a period specified in the notice, to reimburse the WorkCover Authority Fund an amount (not being an amount exceeding the amount of the payment made) specified in the notice.

(2) The Authority may, by instrument in writing, waive the liability of an employer under subsection (1) to reimburse the WorkCover Authority Fund an amount, if the Authority, in respect of the amount, is satisfied that:

(a) the amount is beyond the capacity of the employer to pay,

(b) the employer could not reasonably have been expected to regard himself or herself as an employer at the relevant time,

(c) the employer, not being a corporation, is bankrupt and the liability under this section is not provable in the bankruptcy,

(d) the employer, being a corporation, is being wound up and the liability under this section is not provable in the winding up,

(e) the employer, being a corporation, has been dissolved, or

(f) it would not be commercially feasible for the Authority to attempt to recover the amount.

(3) A person on whom a notice has been served under subsection (1) in respect of an injured worker may, within the period specified in the notice, apply to the Commission for a determination as to the person’s liability in respect of the payment concerned.

(4) The Commission may hear any such application and may:

(a) make such determination in relation to the application, and

(b) make such awards or orders as to the payment of compensation under this Act to or in respect of the injured worker concerned,

as the Commission thinks fit.

(5) In any proceedings under subsection (4), a certificate executed by the Authority and certifying that:

(a)the payments specified in the certificate were paid to or in respect of an injured worker named in the certificate, and

(b)a person named in the certificate was, in the opinion of the Authority, liable at the relevant time to pay to or in respect of the injured worker compensation under this Act or work injury damages,

is (without proof of its execution by the Authority) admissible in evidence in any proceedings and is evidence of the matters stated in the certificate.”

1. On 11 December 2003, WorkCover served a notice on Mr Mackley pursuant to section 145(1) claiming reimbursement of $133,828.73 in respect of compensation paid to Mr McLeod and medical expenses, and enclosing a certificate under section 145(5). Mr Mackley applied to the Commission pursuant to section 145(3) for a determination of his liability in respect of the reimbursement sought. The Commission has broad powers in relation to such an application pursuant to section 145(4).

1. Mr Mackley submitted that the Commission has power to review the acts of WorkCover under section 145(2) given the breadth of the power given to the Commission by section 145(4). Counsel relied on the decision of the NSW Court of Appeal in Nohil. In that decision, which concerned an employer seeking an indemnity from an insurer, Cole JA, with whom Clarke and Handley JJA agreed, stated at 81:

“Subsection (3) permits determination as to the ‘person’s liability’. A person’s liability includes not only any obligation to pay compensation, but also that person’s right to any indemnity in respect of that compensation, for instance, from its insurer. Subsection (4) confers a power on the hearing of such an application to make ‘orders as to the payment of compensation … in respect of the injured worker concerned’. That is a plenary power permitting the Court to make appropriate orders adjusting the rights of all persons or bodies who may have an existing or potential liability or entitlement to be relieved of liability because of insurance in respect of the compensation claimed by or awarded to the injured worker.”

1. WorkCover submitted that the Commission was not empowered to review the exercise of its discretion pursuant to section 145(2). WorkCover further submitted that the Arbitrator was correct in finding that he did not have jurisdiction to order WorkCover to waive the liability of Mr Mackley, and relied on the decision in Petersen where Curtis CCJ held, at paragraph 6, that the power under section 145(4) did not give him jurisdiction to make an order excusing the employer of liability pursuant to section 145(2). In Hadchiti, Wright CCJ held, at paragraph 86, after referring to the decision in Nohil, that section 145(3):

“does not give the Commission or Court a power to waive liability but rather to determine questions of liability that arise after compensation has been paid voluntarily by the WorkCover Authority.”

1. In my view, the legislation and cases cited make it clear that the Commission’s power pursuant to subsections 145(3) and (4) does not extend to reviewing the exercise of WorkCover’s discretion pursuant to section 145(2) or to exercising the power of waiver thereunder. Thus, with regard to the first issue in dispute, the Arbitrator did not err in law. However, as the Court of Appeal recognised in Nohil, the Commission’s power is, nevertheless, a broad one whereby it may determine the liability of a person on whom a notice for reimbursement has been served pursuant to section 145(1), in respect of an amount of compensation paid by WorkCover under the Uninsured Liability and Indemnity Scheme. The transcript suggests that the Arbitrator may have viewed “a determination as to the person’s liability” (section 145(3)) narrowly as meaning the quantum of liability and not including broader questions as to whether a person should be liable to reimburse WorkCover. By so doing, the Arbitrator made an error of law: it is clear from Nohil that the section 145(4) “plenary power” permits the Commission to make orders adjusting the rights of parties as to liability as it thinks fit.

1. The question then arises whether the Commission should use its broad powers to adjust the rights of the parties. The current matter has already been to the NSW Compensation Court where Geraghty CCJ heard an application by Mr McLeod under section 144 for compensation for permanent impairment, pain and suffering and for further medical and other treatment expenses. Having delivered judgment in favour of Mr McLeod, Geraghty CCJ then heard an application from WorkCover pursuant to section 144(3) for an order entitling WorkCover to recover the compensation it had paid pursuant to Geraghty CCJ’s judgment, from Mr Mackley.

1. Having heard submissions from Counsel both for WorkCover and Mr Mackley, Geraghty CCJ gave an ex tempore judgment in which, according to the draft submitted by Mr Mackley in the current proceedings, he stated as follows:

“in order not to make an order for reimbursement, the circumstances need to be abnormal. I have taken these matters into consideration. Firstly, in determining whether Michael McLeod was an employee of Robert Mackley, or not, was an extremely difficult exercise. There always remained some doubt in my mind, since, say, the oral evidence of both simply contradicted one another, and I determined the matter on the evidence which Mackley gave as to the completion of a form in hospital when McLeod was being treated, and I decided it on the balance of probability, always conscious that there was a doubt in my mind as to how the matter should have been decided. It was the forms that Mackley completed and his explanations of how he went about those completions which swung the balance in favour of Mr McLeod and determined my finding that McLeod was a worker. That matter, I think, needs to be weighed in the balance.

Furthermore, the arrangement between the parties was always a very casual arrangement that was to last at most a matter of hours, on one day; it was not something that continued over a period of even a week, or a few days. Furthermore, it seems to me that Mr Mackley at the time was not accustomed to employing other people, and even granted that he was asking Mr McLeod to work for him for some hours and that he would be paid (given that I did not even find that he was going to be paid $15 an hour as Mr McLeod had alleged was said) it seems to me that there was sufficient vagueness about the arrangement that required someone of studied legal knowledge to apply the complicated tests of employment in order to come to a finding. In other words I am persuaded that Mr Mackley could not reasonably have been expected in the circumstances to regard himself as an employer who was bound to have workers compensation and to act in all regards as an employer and to accept all the burdens of that, since the arrangement was between friends and on a very casual basis albeit that he was at the time the employer.

Also weighing in my mind is the concept that WorkCover is there to establish a safety net for the injured worker and some kind of lump sum fund to protect the injured worker, not to take the place of the responsible or irresponsible employer, but to cover the situation where some misunderstanding resulted in unemployment and therefore to apply the considerations set out in subclause (2) of s 124. It seems to me that the current financial position of the applicant [sic - Mr Mackley], bearing in mind his debts and assets, is precarious at the least and that any extra liability placed on him is only going to push him further under.

The WorkCover Authority is able to proceed in any event under s 145 and can determine whether it wishes to proceed under that section or whether it wishes to exercise its discretion as set out in that section, and then the first respondent is able to seek the benefit of the discretion of the Commission as set out in that section, so that is not necessarily the end of the matter.

For those reasons, I decline to make an order for reimbursement.”

1. Geraghty CCJ recognised that applications for reimbursement of compensation paid under the Uninsured Liability and Indemnity Scheme can be made under both sections 144 and 145 of the 1987 Act. He dealt with an application under section 144. The matter before the Commission arises out of the reimbursement sought by WorkCover pursuant to section 145. It involves a fresh application to the Commission under section 145(3), there having been no previous determination in this matter under this subsection. Thus, with regard to the third issue in dispute, WorkCover cannot be estopped from seeking reimbursement from Mr Mackley pursuant to section 145(1).

1. In the proceedings before the Commission, there has been no disagreement between the parties as to the facts and the parties have not sought to adduce any fresh evidence in this appeal. Geraghty CCJ heard evidence from both Mr McLeod and Mr Mackley about the events of 14 June 2003 when the accident in which Mr McLeod was injured took place. His findings are reflected in the passage above. There is no basis on which I might find otherwise and I therefore find in accordance with Geraghty CCJ’s findings. Moreover, for the reasons he gave, quoted above, I have decided that I should exercise the broad powers with which the Commission is endowed by section 145(4) to relieve Mr Mackley of liability for reimbursing WorkCover. In so doing, I emphasise that I am not waiving Mr Mackley’s liability – rather I am exercising the power of the Commission pursuant to subsections 145(3) and (4) to determine the “person’s liability” (section 145(3)) to reimburse WorkCover for the amount specified in the Notice dated 11 December 2003.

1. With regard to the second issue in dispute, I also note that if I had decided that Mr Mackley was liable to reimburse WorkCover in respect of an amount of compensation paid by it to Mr McLeod, I would have remitted the matter to the Arbitrator to determine whether the amount of compensation in respect of which WorkCover claimed reimbursement was correct. While the Arbitrator noted that Mr Mackley had neither questioned the amount of compensation ordered to be paid by Geraghty CCJ in respect of permanent impairment and pain and suffering (pursuant to sections 66 and 67 respectively), nor questioned the amount claimed in respect of medical treatment (pursuant to section 60), Mr Mackley appeared to seek a review of the amount paid in respect of weekly benefits pursuant to section 40. The Arbitrator declined to embark on such a review, which he said “would be engaging in an exercise of speculation or unsubstantiated assumptions”.

1. Where such a review is requested by the party from whom reimbursement is sought, there having been no other external review of the amount of compensation paid, it seems to me not unreasonable in terms of the broad powers conferred on the Commission by section 145(4) and in the interests of fairness to Mr Mackley, for the Commission to undertake such a review. An examination of the information on which WorkCover made its decisions to pay weekly benefits would obviously assist in this process.

DECISION

1. The decision of the Arbitrator, dated 16 June 2004, is revoked and the following decision is made in its place: pursuant to section 145(4) of the 1987 Act, the Appellant, Mr Mackley, is relieved of liability to reimburse the Respondent, the WorkCover Authority of New South Wales, for the amount of $133,828.73 specified in a notice dated 11 December 2003.

COSTS

1. The Respondent is to pay the Appellant’s costs as agreed or assessed.

Robin Handley

Acting Deputy President  

10 May 2005

I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBIN HANDLEY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

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