Manpower Services (Australia) Pty Ltd v WorkCover Corporation of South Australia
[2011] SASC 107
•7 July 2011
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application for Judicial Review)
MANPOWER SERVICES (AUSTRALIA) PTY LTD v WORKCOVER CORPORATION OF SOUTH AUSTRALIA
[2011] SASC 107
Judgment of The Honourable Chief Justice Doyle
7 July 2011
ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - ERROR OF LAW
ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - RELEVANT CONSIDERATIONS
ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - IRRELEVANT CONSIDERATIONS
Manpower Services (Australia) Pty Ltd (Manpower) sought judicial review to challenge the validity of a decision made by the WorkCover Levy Review Panel (the Panel) under s 72 of the Workers Rehabilitation and Compensation Act 1986 (SA) (the Act) - Manpower carries on a "labour hire" business whereby it supplies staff to "host employers" in various industries in return for a fee - section 66 of the Act provides for the WorkCover Corporation of South Australia (the Corporation) to impose levies on employers - by power conferred under s 66(3), the Corporation assessed Manpower to operate within the class of industry "Employment Services" - however, in determining the class of industry in which Manpower employs workers for the purposes of s 66(4), the Corporation decided to have regard to the activities of Manpower's employees at its host employers' workplaces - that decision by the Corporation resulted in a finding that Manpower had not paid the correct amount of levy, entitling the Corporation to assess the amount payable by Manpower and impose penalty interest and a fine, exercising powers conferred by s 70 and s 71 of the Act - in accordance with s 72 of the Act, Manpower sought review of the Corporation's decision from the Panel - the Panel reduced the amount of the fine, but otherwise left the Corporation's decision undisturbed - Manpower thereafter sought judicial review of the Panel's decision - the issues to be decided on judicial review were: (1) whether the Corporation erred in law in deciding the class of industry applicable to the workers employed by Manpower; (2) whether the Panel erred in law in failing to treat the Corporation's assessment as erroneous; and (3) whether the Panel erred in law in failing to make a new assessment.
Held: The Corporation made incorrect determinations under s 66(4) of the Act - the Panel failed to treat the Corporation's assessment as erroneous - the decision of the Panel was set aside.
Workers Rehabilitation and Compensation Act 1986 (SA) s 66, s 66(3), s 66(4), s 66(6), s 69(1)(b), s 69(3), s 69A, s 69E, s 70, s 70(1), s 70(2), s 71(1), s 72(1) and s 72(3); WorkCover Corporation Act 1994 (SA) s 13(1)(a), referred to.
Minister for Aboriginal Affairs and Anor v Peko-Wallsend Limited & Ors (1986) 162 CLR 24, discussed.
Manpower Services (Australia) Pty Ltd v WorkCover Corporation of South Australia [2010] SAWLRP 7, considered.
MANPOWER SERVICES (AUSTRALIA) PTY LTD v WORKCOVER CORPORATION OF SOUTH AUSTRALIA
[2011] SASC 107Civil
DOYLE CJ: In these proceedings by way of judicial review, Manpower Services (Australia) Pty Ltd (Manpower) challenges the validity of a decision by the WorkCover Levy Review Panel (the Panel), exercising powers delegated to it under s 72(3) of the Workers Rehabilitation and Compensation Act 1986 (SA) (the Act): Manpower Services (Australia) Pty Ltd v WorkCover Corporation of South Australia [2010] SAWLRP 7. WorkCover Corporation of SA (the Corporation) had assessed the amount payable by Manpower by way of levy under the Act. The assessment was for an amount greater than that paid by Manpower. The Corporation also imposed penalty interest and a fine, exercising powers conferred by s 70 and s 71 of the Act. Manpower disputed the assessment, and the Panel reviewed the decision. The Panel reduced the amount of the fine, but otherwise left the decision undisturbed.
It finally emerged at the hearing that the central issue for decision turns on the proper application in this case of the list of classes of industry into which the Corporation, exercising powers conferred by s 66 of the Act, had divided the industries carried on in the State. Section 66(3), as part of the scheme for the imposition of levies on employers, empowered the Corporation to “divide the industries carried on in the State into various classes”. The issue is whether, in making the assessment in question, the Corporation erred when it determined “the class of industry” in which Manpower employed workers. The submission by Manpower before the Panel, and now on judicial review, is that the Corporation erred in law in deciding the class of industry applicable to the workers employed by Manpower. That decision by the Corporation meant that Manpower had failed to pay the full amount of the levy payable by it, entitling the Corporation to assess the amount payable and to require a payment of interest and to impose a fine. Manpower claims that the Panel also erred in law in failing to treat the assessment as erroneous, and in failing to make a new assessment.
The Legislation
The Corporation is responsible for the administration of the Act: WorkCover Corporation Act 1994 (SA) s 13(1)(a). The Act establishes a scheme for the compensation of workers who suffer a compensable disability. The scheme is funded by a levy payable by employers (other than self insured employers) to the Corporation. Section 66 of the Act provides relevantly:
66—Imposition of levies
(1)An employer (not being a self-insured employer) is liable to pay a levy to the Corporation under this section.
(2)The levy is a percentage of the aggregate remuneration paid to the employer's workers in each class of industry in which the employer employs workers.
(2a)The levy will, subject to this Act, be payable at first instance on the basis of an estimate of aggregate remuneration for a particular financial year in accordance with Division 6.
(3)The Corporation may for the purposes of this section divide the industries carried on in the State into various classes.
(4)The Corporation may determine any question as to the class of industry in which an employer employs workers.
(5)In determining the class of industry in which an employer employs workers the following provisions will be applied—
(a)if the employer employs a worker in two or more classes of industry—
(i)the worker will, subject to any determination by the Corporation to the contrary, be treated as if solely employed in the class of industry in which he or she is predominantly employed; and
(ii)if it is not possible to determine which is the predominant class, the worker will be treated as if solely employed in a class of industry determined by the Corporation; and
(b)if the employer employs workers in different classes of industry at a particular workplace, all workers employed at the workplace will, if the Corporation so determines, be treated as engaged in the predominant class of industry; and
(c)in determining what is the predominant class of industry, the Corporation will have regard to—
(i)the importance within the employer's total operations of each class of industry in which workers are employed; and
(ii)any other relevant factor.
(6)The Corporation—
(a)must fix the percentages applicable to the various classes of industry by notice published in the Gazette; and
(b)may, by subsequent notice published in the Gazette, vary the percentages so fixed.
…
(8)In fixing the percentage applicable to a particular class of industry the corporation must have regard to—
(a) the extent to which work carried on in that class is, in the opinion of the Corporation, likely to contribute to the cost of compensable disabilities; and
(b) the need for the Corporation to establish and maintain sufficient funds—
(i) to satisfy the Corporation's current and future liabilities in respect of compensable disabilities attributable to traumas occurring in a particular period from levies raised from remuneration paid in that period; and
(ii) to make proper provision for administrative and other expenditure of the Corporation; and
(iii) to make up any insufficiency in the Compensation Fund resulting from previous liabilities or expenditures or from a reassessment of future liabilities.
…
At this stage I make the following brief points. The Corporation has exercised the power conferred by s 66(3). It has adopted or approved a list which assigns a distinctive number to each of a detailed and lengthy list of industry classes. The number is commonly referred to as “the SAWIC code” (South Australian WorkCover Industrial Classification). The evidence is that there are a little more than 500 classes and SAWIC codes. The classes are divided into a number of broad categories. For example, the list of classes begins as follows:
Agriculture, Forestry and Fishing
012401 Poultry farming
013401 Grape growing (incl sun-drying)
There then follows a list of activities under this heading, each with its own SAWIC code. Then there is another list under the next heading which is “Mining” and so on to the end of the list.
The resolution of the Corporation dividing the industries into classes was not proved before me, but the case proceeded on the basis that the document or documents containing the list had been adopted by WorkCover. I was told that for each class, or at least for many of them, a separate document was available from the Corporation that explained or outlined the activities covered by that class.
Although s 66 of the Act does not expressly require the Corporation to “divide the industries carried on in the State into various classes”, it may be that s 66 does so require. Its provisions appear to assume that the Corporation will do so. In any event, the Corporation has divided the industries carried on in the State into classes.
The Act does not directly require the publication of those classes. But the effect of s 66(6) is that the Corporation will have to do so, because it is required to fix a percentage of aggregate remuneration payable for each class of industry, and to publish notice of that in the Gazette. The Corporation has done that. The documents admitted into evidence include an excerpt from the Government Gazette of 25 May 2006 (pages 1410-1447). This document is a determination by the Corporation of levy rates payable in respect of remuneration paid to workers in each class of industry established by the Corporation. I set out the heading of the Appendix to that document, and the first few entries in the Appendix:
APPENDIX
WORKCOVER CORPORATION OF SOUTH AUSTRALIA
WorkCover Rates per $100 Remuneration exclusive of GST – Effective 1 July 2006
Column 1 Column 2 Column 3 SAWIC Code Number Description Levy Rate per $100 AGRICULTURE, FORESTY AND FISHING 012401 Poultry farming 5.70 013401 Grape growing (incl sun-drying) 3.00 013601 Fruit growing 4.50 014401 Vegetable growing 6.10
Pausing there, I consider it clear that s 66 distinguishes between a decision by the Corporation to divide industries into classes, in exercise of the power conferred by s 66(3), and a determination by the Corporation as to the class of industry into which a particular employer employs workers, in exercise of the power conferred by s 66(4) of the Act. The first decision must precede the second.
These proceedings arise from the decision by the Corporation as to the class of industry in which Manpower employed workers at the relevant time. Manpower argues that the decision is infected by error of law and invalid, and that the Panel erred in law in failing to correct the decision.
An employer is required to submit to the Corporation in each financial year a return with an estimate of the aggregate remuneration that the employer expects to pay to workers in each class of industry during the financial year: s 69(1)(b). That return must be accompanied by the levy payable based on the estimate: s 69(3). The estimate can be revised upwards or downwards: s 69A. The corporation has power to adjust the levy payable, in a variety of circumstances: s 69E.
Section 70 of the Act enables the Corporation to review an employer’s return if the Corporation has reasonable grounds to believe it to be defective. If the employer has not paid the full amount of levy, the Corporation is to make an assessment of the amount payable: s 70(2). The Corporation can also impose a fine: s 70(3). In addition, the Corporation can impose penalty interest: s 71(1).
In November 2007 the Corporation carried out an audit of Manpower’s remuneration records for the years ending 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2007. Apparently it had come to the Corporation’s attention that Manpower might be entitled to a substantial refund in respect of one of those years. It was the Corporation’s standard practice, when a potentially large refund arose, to carry out an audit.
Having carried out the audit, the Corporation made an assessment of the levy payable by Manpower, in exercise of the power conferred by s 70(1). It issued a Notice of Assessment dated 13 May 2008. The assessment resulted in a small levy refund to Manpower in respect of the year ending 30 June 2004, and in a substantial additional levy payment in respect of the other three years. The total amount payable by Manpower was $381,283.82, which included penalty interest of $47,642.14 and a fine of $28,435.92.
Section 72 of the Act relevantly provides:
72—Review
(1)Where an employer considers that a decision of the Corporation as to—
(aa) the estimate of remuneration that is to be used for the calculation of a levy; or
(a) the fixing or assessment of a levy; or
(b) the imposition of penalty interest or a fine; or
(c) the imposition or variation of a condition of a kind that may lead to the imposition of a supplementary levy,
is unreasonable, the board must, on application by the employer, review the decision.
…
(3)The review will be conducted, in accordance with procedures determined by the board, by the board itself, or by a committee or person to whom the board has delegated its powers of review under this section, and the board has an absolute discretion as to whether it will permit the employer or a representative of the employer to be heard orally on the review.
(4)On review, the board may—
(aa) alter an estimate;
(a) alter a levy or an assessment;
(b) quash or reduce penalty interest or a fine;
(c) direct the repayment of amounts overpaid;
(d) quash or vary a condition imposed by the Corporation.
…
Manpower challenged the decision by letter dated 14 August 2008. It claimed to be appealing, but its letter was treated as a claim for a review under s 72(1). The Corporation reconsidered its decision, but by letter dated 10 September 2008 confirmed its decision. It has not been suggested that that reconsideration discharged any obligation to review the decision.
The Panel had previously been established by the Corporation. It was established in 2000. By determination of the Corporation dated 29 December 2007, the functions and powers of the Panel at the relevant time were as follows (see Government Gazette 3 July 2008 pages 3196-3197):
3.Function and powers under section 72 of Workers Rehabilitation and Compensation Act 1986
The function of the Panel shall be to perform the functions of the Board under section 72 of the Workers Rehabilitation and Compensation Act 1986 (“the Act”) as delegate of the Board under that section in reviewing decisions of the Corporation pursuant to subsections 66(4), 66(5), 66(6), 67(1), 67(3), 67(4), 70(1), 70(3), 70(4), 71(1), 71(2) of the Act and (subject to the succeeding clauses of this determination) the powers of the Board under section 72 of the Act (other than the power to review a decision of the Corporation on a matter of law going to the validity of that decision) are delegated to the panel for that purpose.
It is not necessary to set out the other provisions of the determination.
The Panel conducted a hearing. Its decision was published on 5 August 2010. It reduced the fine, but otherwise confirmed the Corporation’s decision.
Manpower then instituted the present proceedings.
The Dispute
Manpower carries on a “labour hire” business. It employs workers whom it hires out or contracts out to persons or organisations (“the host employer”). As Manpower is the employer of these workers, it is liable to pay the levy under the Act. The workers work at the workplace of the host employer.
The dispute the subject of these proceedings is in relation to the levy payable by Manpower in respect of remuneration paid by Manpower to workers at work places operated by two particular “host employers” – Hewlett-Packard Australia Pty Ltd (HP) and Motorola Australia Pty Ltd (Motorola).
It is common ground that the class of industry in which Manpower employed these workers is the class designated by the Corporation as “Employment Services”. That class appears in the list of classes under the heading “Community Services” and is designated as follows:
SAWIC Code
NumberDescription Levy Rate per $100 849101 Employment Services – Category 1. 7.50 849102 Employment Services – Category 2. 4.10 849103 Employment Services – Category 3. 0.90
I gather that these classes were introduced in about November 2000: Panel reasons at [8]. The levy rate applicable to each class has varied slightly over time but as can be seen from what is set out above, the difference between the levy rate for Category 2 and Category 3 (the categories in contention here) is significant.
The dispute between Manpower and the Corporation is as to the class of industry in which the workers hired by Manpower to HP and to Motorola were engaged. In particular, were they engaged in the class “SAWIC 849102 Employment Services – Category 2” or in “SAWIC 849103 Employment Services – Category 3”?
As the Panel observed in its reasons at [10], the description of these classes gives no indication as to their content. That content is provided by a further document which was treated as reflecting a determination by the Corporation. That document is described as “Employment Services’ Classification Guide”, effective from 1 July 2003. The case was argued on the basis that the particular version before the Court (it might have included some variations since 2003) was the document relevant to the present case. This document allocates each of the 500 or so SAWIC classes to one or other of the three categories into which “Employment Services” is divided. It does so by grouping the SAWIC code numbers under one or other of the three categories. By way of example, under the heading:
SAWIC 849102 Employment Services – Category 2
the first entry is:
SAWIC codes 471001 to 479605 inclusive.
Other SAWIC codes are referred to under this category, and under Category 1 and Category 3.
This same document then contains eight pages in which, as best I can tell, all of the SAWIC codes are set out with the accompanying text from the list of classes, under one or other of the three Categories.
The case proceeded on the implicit basis that this document, the “Employment Services’ Classification Guide”, was to be treated as recording a decision by the Corporation to divide the industry of “Employment Services” into three categories, each category having the content indicated by reference to the grouping of the SAWIC codes.
I can now be more specific as to the dispute. The dispute between Manpower and the Corporation is as to whether the workers hired by Manpower to HP and to Motorola were employed in a class of industry grouped under Category 2 (as the Corporation contended) or under Category 3 (as Manpower contented).
The dispute came about in the following manner. What follows is drawn from the reasons of the Panel, and in this respect, as I understand it, there is no dispute. HP was a company created by the merger of two separate companies, each of which had been a client of Manpower. One of these companies had been assigned to the class “638107 Computer Consultancy” and the other had been assigned to the class “473701 Computer Wholesaling”. The former attracted a levy rate of 0.4 percent, and the latter a levy rate of 0.5 percent. But the former class fell within Employment Services - Category 3 attracting a levy rate of 0.9 percent, while the latter class fell within Employment Services - Category 2, attracting a levy rate of 4.4 percent or 4.5 percent (there was some variation in the rate over time). I gather that the Corporation had determined the class of industry in which HP employed workers that it employed some time before this dispute arose. The workers employed by Manpower and hired to HP were not, of course, employed by HP. The relevant employees of Manpower did not make enquiry of HP to ascertain the class assigned to its workers by the Corporation. They made their own decision. On the basis of their knowledge of the work carried out by HP they treated the class of industry in which HP’s workers (and those hired out by Manpower) were engaged as “638107 Computer Consultancy”, falling within Employment Services - Category 3 and attracting the lower levy rate.
At all relevant times Manpower has maintained that it correctly identified the class of industry in which workers hired to HP were engaged.
The contention by the Corporation was and continues to be that the class determined by the Corporation in relation to the host employer (HP) was not only correct in fact, but was decisive. That is, that the class of industry or SAWIC Code for Manpower was that determined by the Corporation in relation to the host employer, and that that determination was conclusive as to the relevant class for Manpower’s purposes as well. From this argument two issues emerge. First, was the class determined by the Corporation for the purposes of the host employer’s levy calculation decisive as to the question of the class of industry as between Manpower and the Corporation? Second, if it was not, what in fact was the correct class?
The position in relation to Motorola is confusing. As best I can tell Manpower maintained that the correct class of industry in which the workers hired to Motorola were engaged was “633601 Technical Services N.E.C.” (Not Elsewhere Covered), which class fell in Employment Services - Category 3. The Corporation maintained that the correct class was “473501 Electrical and Electronic Equipment Wholesaling”, which fell in Employment Services - Category 2.
This audit by the Corporation disclosed that Manpower had treated the workers hired to HP and to Motorola as engaged in a class of industry that fell within Employment Services – Category 3. That led to the determination by the Corporation that the workers were employed in Employment Services – Category 2, the assessment of the levy (at a higher rate) by the Corporation under s 70, and the imposition of fines and penalty interest (for each year in question).
Submissions
Mr Tokley, counsel for Manpower, put three main submissions.
First, the issue under s 72(1) of the Act was whether the Corporation’s decision was unreasonable. The Panel had erred in law in deciding, as it seems to have done, that the Corporation’s decision was not unreasonable because in its opinion Manpower could have ascertained the class determined by the Corporation, and was apparently at fault in failing to do so. Mr Tokley submits that that process of reasoning was wrong in law.
Second, he submitted that the Corporation’s decision was unreasonable because its decision as to the class of industry described as “Employment Services”, produced a situation in which a class of industry attracting a relatively low levy rate in its own right, attracted a higher levy rate when that class of industry was allocated to one of the three categories into which Employment Services was divided. As a matter of fact, he is correct. As the Panel commented at [63], the three categories for Employment Services could not be rationalised as high risk, medium risk and low risk. There were too many anomalies.
Third, he submits that the Corporation and the Panel erred in law to the extent that they gave effect to the Corporation’s opinion that the class of industry determined by it in relation to the host employer was decisive in relation to the question of class of industry when it arose as between Manpower and the Corporation.
Mr Stanley QC, counsel for the Corporation, submitted as follows.
First, the Panel could interfere with the decision made by the Corporation only if that decision was unreasonable. This was a question of fact, and not a question of law. The decision by the Corporation could not be said to be unreasonable, and the Panel was correct to so decide. The Corporation’s approach, namely, that the Corporation’s determination as to the class of industry engaged in by the host employer should be applied when determining the class of industry in relation to the employers of Manpower was not unreasonable. That is, the Corporation was entitled, for reasons of administrative convenience, to treat the SAWIC code determined for the host employer as binding a labour hire company like Manpower.
His second submission, which is a variant of the first, was that documents published by the Corporation amounted to a determination that for the purposes of employers engaged in Employment Services, the class of industry determined by the Corporation in relation to the host employer was, as a matter of law, decisive. That is, as a matter of law it was not open to an employer engaged in Employment Services to contend that the relevant class of industry was anything other than the class already determined by the Corporation in relation to the host employer.
His third submission was that in any event no error of law on the part of the Panel had been demonstrated.
Consideration of submissions
In his written submission Mr Tokley accepted that the Panel could alter the Corporation’s assessment of the levy only if the Corporation’s decision was shown to be unreasonable. That is the approach that the Panel took. That is what Mr Stanley submitted.
I am not satisfied that this is correct. I agree that s 72(1) of the Act is, in this respect, oddly expressed. On its face it requires the Corporation (or its delegate) to review a decision that the employer considers to be unreasonable. That is an odd thing to provide. When and how does the Corporation decide whether the employer considers the decision to be unreasonable?
Mr Stanley submits that giving s 72(1) its apparent meaning produces the result that the words “… where an employer considers that a decision of the Corporation … is unreasonable …” perform no useful function, because, as he submits, the state of mind of the employer is “inscrutable”. He argues that it is arbitrary to make the employer’s opinion a precondition to the conduct of a review. He submits that the provisions should be read as providing that the Corporation’s decision can be altered only if the Corporation (or its delegate) is satisfied that the decision is unreasonable. How one gets to that result, as a matter of statutory interpretation, was not made clear to me. It amounts to treating the provision as providing that “… where the Corporation considers that a decision … is unreasonable”. This give rise to an equally strange result. The Corporation could have to consider whether its own decision is unreasonable.
As each party proceeded on the basis that the Panel could alter the decision only if satisfied it was unreasonable, I will do the same. I do so because, in the end, the correct approach to this aspect of s 72 makes no difference to the outcome, as will appear.
I turn to the question of whether Mr Stanley is correct in submitting that in determining the class of industry in which HP’s workers were engaged, the Corporation’s determination, as between it and the host employer, is conclusive when that question arises as between the Corporation and Manpower as an employer engaged in “Employment Services”. As I noted above, Mr Stanley’s submission was that in determining the class of industry engaged in by an employer engaging in “Employment Services”, one is required as a matter of law to apply that class already determined as between the Corporation and the host employer. One does not, by way of distinction, consider the facts and the available classes, and then made a decision as to the correct class on those facts, even if that decision might demonstrate or suggest that a determination as between WorkCover and the host employer is incorrect.
I do not accept the submission.
As I said above at [3], s 66(3) of the Act contemplates that industries will be divided into classes. Section 66(6) requires the Corporation to fix a percentage applicable to each class of industry. That enables an employer when furnishing a return, and the Corporation, should occasion arise for it to do so, to calculate the levy payable under s 66(1) of the Act.
If the concept of a “class of industry” is to have meaning, it must be the case that the Corporation first establishes the classes, then, by a separate determination, decides upon the class of industry in which a particular employer employs workers. The second decision must be based on the facts of the case, considered in light of the list of classes. This approach is consistent with the Appendix, referred to above at [6], fixing a percentage for the various classes.
When the question of the class of industry in which Manpower employed workers hired to HP arose, as it did in the course of the audit, one would expect the Corporation to make a decision that involved considering the work in which Manpower’s workers were employed, against the list of classes of industry. In the present case, as it is common ground that Manpower’s workers were employed in “Employment Services”, the decision that was called for was a decision as to the category of “Employment Services”, which turned upon the determination of the class of industry in which the workers were employed.
Why should an earlier decision by the Corporation, if one had been made, determining a class of industry for the workers employed by HP, be treated as determinative of the question of the class of industry in which Manpower’s workers hired to HP were employed? Of course, one would expect the same decision in each case, because one is examining or considering the work of workers at the same workplace. But it is another thing to say, as Mr Stanley argues, that the earlier decision is determinative of the question, and that there is no occasion for the Corporation in such a case to consider the matter afresh. On his approach it is not open to Manpower, as a matter of law, to argue that the earlier decision is wrong or inappropriate. Whatever the class of industry determined in relation to HP as host employer, that class is to be applied to Manpower. Manpower is not entitled to have a different decision made, even if that decision might be said to be the correct one.
The submission amounts to saying that the Corporation’s determination under s 66(4) of the Act, as to the class of industry in which a host employer employs workers, is conclusive as against an employer such as Manpower, who provides employers to work for and at the workplace of the host employer. In my opinion that is not correct. The submission also gives rise to the anomaly that at any time the host employer could dispute the correctness of the Corporation’s decision by claiming a review under s 72(1), and yet at no stage, on Mr Stanley’s approach, can an employer such as Manpower do anything other than watch from the sidelines.
The submission does not explain what happens if the host employer does not already have a SAWIC Code.
I consider also that the submission is inconsistent with the structure of s 66, which contemplates separate decisions dividing the industries carried on in the State into classes, and then determining into which class of industry a particular employer employs workers.
There is no support for the submission in the document “Employment Services Classification Guide” issued by the Corporation, and referred to above at [22]. Nor is there anything to support the submission in another document issued by the Corporation, “Employment Services’ Historical Industry Levy Rates”. Each of these documents was put before the Panel and before me.
Mr Stanley seems to base his submission on another document emanating from the Corporation. The Panel’s reasons indicate that this is one of a number of documents available on the Corporation’s website. The document comprises ten pages of printed material, evidently intended to assist an employer in complying with its obligation to furnish a return under s 69 of the Act and to self-assess and pay the required levy under s 69(3). The material appears to date back to about 2001, and to have been revised from time to time. The version proved before the Panel appears to date from about 2009, and I assume that it is the latest version.
Some of the content is historical in nature, reviewing and recording earlier decisions by the Corporation particularly in relation to levy rates. The document also records briefly the decision by the Corporation to create three categories in relation to “Employment Services”. The document contains several pages headed “Helpful Hints” which are precisely that. In effect, in this part of the document the Corporation advises an employer engaged in “Employment Services” to obtain the “SAWIC Code” from the host employer, or from the Corporation if it cannot obtain it from the host employer, and then to adopt that Code (thereby treating workers as employed in that class of industry) for the purposes of self assessing and calculating the levy. For example, the text includes the following:
Step 2. Match the SAWIC Code of the client location to which your own workers are to be supplied or expected to be supplied as it appears in the applicable “Employment Services Category” …
There is another section headed “Labour Hire FAQs” (Frequently Asked Questions). In this section also the Corporation advises an employer to apply the SAWIC Code “corresponding to the client’s location”.
I accept that this material proceeds on the basis that the class of industry in which the Corporation has determined the host employer employs workers will be the class of industry in which an employer like Manpower employs workers provided to the host employer. The material assumes a consistency of approach, which is to be expected.
This material comprises what I called “Guidelines” and “Helpful Hints”. The material is not expressed in a manner that suggests that when a decision is made by the Corporation under s 66(3) these guidelines and helpful hints become part of the definition of the class of industry in which the provider of Employment Services employs workers. That is, the material is not so expressed as to indicate that for this particular industry it is not a question of matching the facts to the relevant class of industry in the list of industries, but simply a matter of adopting a decision made by the Corporation as between it and the host employer. Mr Stanley’s submission amounts to saying that that is what it has done. I do not agree.
In short, I consider this material to be what it describes itself as – helpful hints. It is no more than that. This material cannot render irrelevant the enquiry as to the correct class of industry.
Mr Stanley had a fallback position. It is that the Panel can interfere only if the Corporation’s decision is unreasonable, and that it is not unreasonable for the Corporation to treat the SAWIC Code assigned to the host employer as decisive. He submits that this avoids the need to make an individual assessment for labour hire employees at each relevant workplace, and enables labour hire employers to ascertain with certainty which is the relevant class of industry.
I do not accept this submission either. Even if the Panel can interfere only if the Corporation’s decision is unreasonable, it cannot be “not unreasonable” for the Corporation to insist upon what is demonstrated to be an incorrect decision as to the class of industry, assuming that the decision is demonstrated to be incorrect. It is, in my opinion, unreasonable to insist upon an incorrect determination under s 66(4) because it is administratively convenient for the Corporation to do so, because that promotes some kind of certainty, or because (as the Panel suggested) insisting on the correct decision would give rise to what it called “market distortion” or a risk of damaging the “financial balance of the scheme”. I am not persuaded, with respect, that the Panel is right in anticipating adverse results if the Corporation’s argument is rejected. But even if the Panel is right, I do not consider that such factors enable one to conclude that an incorrect decision is not unreasonable.
In the end the Panel appears to have accepted that the Corporation’s decision in relation to HP was incorrect. In its reasons at [57] the Panel said:
57.It seems to us that the evidence before us, from both sides, was mostly uncontradicted. As to the activities undertaken by the two host employers, we are inclined to accept the evidence offered by the applicant as to the predominant activities undertaken, although care must be taken not to confuse the predominant activities undertaken in the relevant locations with the activities undertaken by the applicant’s workers in those locations. As the Panel pointed out in Skilled Engineering & Ors v. WorkCover (No. 2) [2001] SAWLRP 11, at page 10:
“It is interesting to note that hired-out workers would attract the levy rate of the predominant industry of the host employer even if the hired-out workers did not themselves work in that industry. One can readily imagine that the fact that a particular task was not within the host employer’s industry might sometimes be the very reason for hiring in labour from an outside specialist.”
Having said that, we are comfortably satisfied that the applicant does appreciate the distinction and has provided a basis, indeed the only basis, on which we can draw factual conclusions, as far as is necessary, as to the predominant activities carried on in the relevant workplaces. Both hosts, while not wishing to become involved in these proceedings themselves, were prepared to co-operate to the extent of permitting access by Manpower and this Panel to information arguably otherwise protected by section 112 of the Act. If WorkCover truly disputed the factual assertions of the applicant, we are confident that a way would have been found to bring the truth to our notice.
The Panel’s reasons in relation to Motorola are not as clear, and it may be that they were not persuaded of error in that case. Towards the end of its reasons the Panel said (the “first host employer” is HP):
71.On the uncontradicted evidence before us, the situation, at least with respect to the first host employer, does seem fairly clear. But is our discretion under section 72 enlivened by the circumstances before us? In particular, how unreasonable is the position in which the applicant finds itself?
72.We have ultimately come to the conclusion that the applicant has largely brought the present situation on itself. WorkCover published extensive material on procedures it recommended be put in place for Employment Services employers to be aware of the correct category in respect of each host’s workplace. The applicant was aware of these recommendations and, indeed, says it put them in place. But not successfully. The procedures were put in place as part of the applicant’s training but were not followed, we were told, “largely because of staff turnover” … That admission is very much to the applicant’s credit, but the fact was evident even without it.
73.… While we are not a court of equity, we think there is room for a loose concept of clean hands to be taken into account in our deliberations as to what is unreasonable in a particular case. After extensive deliberation, given our inability to identify a “perfect” decision that could be substituted, we have concluded that WorkCover’s decision in this instance is not unreasonable in all the circumstances.
74.We emphasise that the consensus we have eventually reached is very much confined to the present case and the present circumstances. Whether the Panel would be prepared in another case to treat a particular Employment Services employer’s levy as Category 3, even where the host’s SAWIC appeared to fall into Category 2, but where the Employment Services employer had done what it could to acquaint itself with the category WokCover considered appropriate in a timely way, must await that other case.
In my respectful opinion the Panel has erred in law in this respect. The considerations to which it refers are not a reason for failing to decide that the Corporation’s decision was unreasonable, assuming that the decision has been demonstrated to be factually incorrect.
It follows that the Panel erred in law. It failed to ask and answer the correct question. Alternatively, in answering the question, it took into account considerations that were not relevant as a matter of law. The Panel has failed properly to exercise its delegated power. The decision to confirm the Corporation’s decision should be set aside.
As I understand his submissions, Mr Stanley did not deny that if the reasoning above is correct, the panel had erred in law and had erred in a manner that resulted in its decision being invalid. I am satisfied that that is so. It suffices to refer to some passages from the well known decision in Minister for Aboriginal Affairs and Anor v Peko-Wallsend Limited and Ors (1986) 162 CLR 24. There Mason J said at 39-42:
The failure of a decision-maker to take into account a relevant consideration in the making of an administrative decision is one instance of an abuse of discretion entitling a party with sufficient standing to seek judicial review of ultra vires administrative action. …
(a)The ground of failure to take into account a relevant consideration can only be made out if a decision-maker fails to take into account a consideration which he is bound to take into account in making that decision …
(b)What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive. If the relevant factors — and in this context I use this expression to refer to the factors which the decision-maker is bound to consider — are not expressly stated, they must be determined by implication from the subject-matter, scope and purpose of the Act. In the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject-matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard …
(c)Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision …
(d)The limited role of a court reviewing the exercise of an administrative discretion must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned …
Citations omitted
Similarly, at 55 Brennan J said:
The Court has no jurisdiction to visit the exercise of a statutory power with invalidity for failure to have regard to a particular matter unless some statute expressly or by implication requires the repository of the power to have regard to that matter or to matters of that kind as a condition of exercising the power. …
Apart from express provision, a statute may impliedly require the repository of a power in deciding on its exercise to have regard to certain considerations. The subject-matter, scope and purpose of the statute must be considered to determine whether the repository is bound to have regard to any and what matters …
Citations omitted
As the Corporation had divided the industries carried on in the State into various classes, it was obliged to determine the class of industry in which HP and Motorola employed workers. In my opinion it is clear from s 66 of the Act that the determination by the Corporation, or the Panel as the case may be, involve a consideration of the facts of the particular case and of the scope or meaning of the various classes of industry. It is clear by implication that that is how the decision is to be made. It is equally clear that when a decision is reviewed under s 72 of the Act, in the context of a dispute about the assessment of a levy, that the same process must be followed and that the decision or determination as between the Corporation and a host employer, in a case like this, cannot be decisive. It is an error of law to treat that decision as decisive. It is equally an error of law to take the approach that unless the decision is shown to be unreasonable in a very broad sense, including considerations of administrative convenience and management of the scheme, a decision already taken by the Corporation should be left undisturbed. It is for these reasons that I conclude that the errors of law that I have identified have the effect of invalidating the decision by the Panel.
Relief
In these proceedings I have no power to undertake the task of review under s 72 of the Act. I can interfere only if the Panel has made an error of law that invalidates its decision. I can then do no more than correct that error.
It appears from the passage set out above that the Panel thought that the Corporation had incorrectly determined the class of industry in relation to HP. The position in relation to Motorola is less clear. Had the Panel decided that, in any event, the decision was factually correct, there would be no point in setting aside the Panel’s decision. But as the Panel appears to have decided in relation to HP that the Corporation erred, it is appropriate to set aside a decision to that extent. As it is unclear just what its decision was in relation to Motorola, it is appropriate to set aside that aspect of the decision as well.
The appropriate order is an order setting aside the decision of the Panel. The decision having been set aside, it is necessary for the Panel to reconsider the matter in light of my reasons. It should decide whether or not the Corporation correctly treated Manpower in supplying workers to HP and to Motorola as engaged in “Employment Services Category 2” rather than “Employment Services Category 3”, in each case by reference to the list of industries into which the industries of the State are divided.
It is not appropriate for me to come to a final conclusion on the question of whether the issue for the Panel is whether the decision of the Corporation is unreasonable. I have not heard full submissions on the point. Both parties proceeded on the basis that this was the question. But the Panel should proceed on the basis that even if it is the question, it is wrong in law to conclude that the Corporation’s decision was not unreasonable having regard to broad considerations of the kind that led the Panel to so conclude.
I accept that, at the margins, the question of unreasonableness might arise. If the facts are unclear, and it is fairly arguable that one or more classes might apply in a given case, it might not be unreasonable for the Corporation to come to a conclusion that might be regarded as no stronger than a different conclusion. There is no reason to think that will arise here. I accept also that in relation to the decision to impose penalty interest or a fine, reasonableness could be a relevant concept. As with any kind of punishment, it is rare that one would be able to say that a decision as to penalty interest or a fine is right or wrong. It is more a question of whether it is inadequate or manifestly excessive. This is another reason for avoiding, in this case, a definitive statement as to the role of reasonableness, if that is a matter to be considered by the Panel.
Accordingly, I order that the decision of the WorkCover Levy Review Panel made 5 August 2010 be set aside.
That leaves the way clear for the Panel to reconsider the matter. I will hear the parties on the question of costs.
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