McGrath v P.M. Electric Pty Ltd & Ors
[2022] NSWPIC 263
•2 June 2022
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| Citation: | McGrath v P.M. Electric Pty Limited & Ors [2022] NSWPIC 263 |
| APPLICANT: | Nicole McGrath |
| FIRST RESPONDENT: | P.M. Electric Pty Limited |
| SECOND RESPONDENT: | Taleya Amelia McGrath |
| THIRD RESPONDENT: | Kayden Charles McGrath |
| SENIOR MEMBER: | Kerry Haddock |
DATE OF DECISION: | 2 June 2022 |
| CATCHWORDS: | WORKERS COMPENSATION - Claim for benefits in respect of death of a worker; matter remitted on appeal for re-determination of issues as to whether injury arose out of or in the course of employment; whether employment was a substantial contributing factor to injury; apportionment; and interest; |
DETERMINATIONS MADE: | 1. That the worker, Nicholas Charles McGrath, died on 21 September 2019 as a result of injury arising out of or in the course of employment with the first respondent, pursuant to section 4 of the Workers Compensation Act 1987. 2. That the worker’s employment was a substantial contributing factor to the injury, pursuant to section 9A of the Workers Compensation Act 1987. 3. That the applicant was partly dependent for support on the worker at the date of his death. 4. That the second respondent was dependent for support on the worker at the date of his death. 5. That the third respondent was dependent for support on the worker at the date of his death. 6. That there were no other persons dependent for support on the worker at the date of his death. 7. That the first respondent is liable for payment of lump sum compensation of $810,050. 8. That the first respondent is to pay to the applicant, pursuant to section 25(1)(a) of the Workers Compensation Act 1987 and section 85A(1)(a) of the Workers Compensation Act 1987, the sum of $567,035. 9. That the first respondent is to pay the sum of $121,507.50, pursuant to section 25(1)(a) of the Workers Compensation Act 1987, to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the Workers Compensation Act 1987, for the second respondent until she attains the age of 18 years. 10. That the first respondent is to pay the sum of $121,507.50, pursuant to section 25(1)(a) of the Workers Compensation Act 1987, to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the Workers Compensation Act 1987, for the third respondent until he attains the age of 18 years. 11. That the first respondent is to pay to the applicant, pursuant to section 109 of the Workplace Injury Management and Workers Compensation Act 1998, interest on the sum of $567,035 at the rate of 2.1% per annum for the period from 6 March 2020 to 31 May 2022. 12. That the first respondent is to pay, pursuant to section 109 of the Workplace Injury Management and Workers Compensation Act 1998, interest on the sum of $121,507.50 at the rate of 2.1% per annum for the period from 6 March 2020 to 31 May 2022; and the interest is to be paid to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the Workers Compensation Act 1987 for the second respondent until she attains the age of 18 years. 13. That the first respondent is to pay, pursuant to section 109 of the Workplace Injury Management and Workers Compensation Act 1998 interest on the sum of $121,507.50 at the rate of 2.1% per annum for the period from 6 March 2020 to 31 May 2022; and the interest is to be paid to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the Workers Compensation Act 1987 for the third respondent until he attains the age of 18 years. 14. That the parties have liberty to apply. |
STATEMENT OF REASONS
BACKGROUND
1. The worker, Nicholas McGrath (Mr McGrath), died in Singapore on 21 September 2019 as a result of injuries sustained in the employ of the first respondent, P.M. Electric Pty Limited. Mr McGrath suffered a wound to his right wrist when he cut his arm on shattered glass. This resulted in acute haemorrhage and in his death.
2. The applicant, Nicole McGrath (Ms McGrath), the worker’s wife, made a claim pursuant to section 25 of the Workers Compensation Act 1987 (the 1987 Act) for the lump sum death benefit, claiming to have been dependent on the worker. Ms McGrath also claimed funeral expenses and the cost of transporting Mr McGrath’s body from Singapore, pursuant to sections 26 and 28 of the 1987 Act. A claim was made for weekly benefits for the children of the marriage, Taleya McGrath and Kayden McGrath.
3. The first respondent’s insurer, Insurance & Care NSW (iCare), disputed liability for the claim.
4. Ms McGrath filed an Application in Respect of Death of Worker (the Application) on 21 January 2021. Taleyah and Kayden were joined to the Application as the second and third respondents, respectively.
5. The first respondent filed its Reply on 12 February 2021. It confirmed that the matters in dispute were confirmed as per the dispute notice/s attached to the Application.
6. Replies were filed on behalf of the second and third respondents on 6 April 2021.
7. The matter was listed for arbitration hearing before a member of the Personal Injury Commission (the Commission) on 16 April 2021. The member issued a Certificate of Determination (COD) dated 8 June 2021. She determined that Mr McGrath was in the course of his employment when the injury that caused his death occurred, but his employment was not a substantial contributing factor to the injury. She therefore made an award for the first respondent.
8. Ms McGrath and the children lodged appeals against the decision of the member, and the appeals were heard together.
9. On 4 March 2022, Deputy President Wood ordered that the member’s COD dated 8 June 2021 be revoked. She remitted the matter to another non-presidential member for re-determination of the issues as to whether injury arose out of or in the course of the deceased’s employment, in accordance with section 4 of the 1987 Act; whether the deceased’s employment was a substantial contributing factor to the injury, in accordance with section 9A of the 1987 Act; and any remaining issues, including any issue in respect of the apportionment of compensation pursuant to section 25(1) of the 1987 Act and interest on the arrears of compensation payable.
ISSUES FOR DETERMINATION
10. The parties agree that the following issues remain in dispute:
a. (a) the apportionment of the death benefit, and
b. (b) whether interest is to be paid on the death benefit and if so, the amount of interest and the period over which it is to be awarded.
PROCEDURE BEFORE THE COMMISSION
a.11. The matter was listed for telephone conference before me on 13 April 2022. Mr Hallion of counsel, instructed by Ms Sinclair, appeared for the applicant; Ms Petrolo appeared for the first respondent; Mr Morgan of counsel, instructed by Mr Driscoll, appeared for the second respondent; and Mr Gaitanis of counsel, instructed by Mr Calf, appeared for the third respondent. The applicant and her support person, Mr Cassidy, attended. Mr Estreich of EML and Ms Dean of iCare also attended.
b.12. I issued a direction (the first direction), dated 13 April 2022. The Application was amended to include a claim for interest. The matter was listed for conciliation/arbitration hearing on 23 June 2022, for the entire day; and the parties were granted liberty to request a further telephone conference, or that the matter be listed for hearing for only three hours.
c.13. At the direction of the Division Head, the first direction was revoked, and an amended direction, also dated 13 April 2022, was issued.
d.14. The amended direction, in addition to amending the Application to include a claim for interest, directed that the first respondent advise the Commission on or before 27 April 2022 whether the dispute as to liability was maintained. If the dispute was withdrawn, the parties were directed to file and serve written submissions, of no more than two pages, with respect to apportionment and the claim for interest, in accordance with the timetable included in the direction. If the dispute was maintained, the matter was to be listed for conciliation/arbitration hearing on 23 June 2022, for the entire day; and the parties were given liberty to request a further telephone conference, or that the matter be listed for hearing for only three hours.
e.15. On 27 April 2022, the first respondent’s solicitor advised the Commission that she had been instructed that the first respondent withdrew the dispute as to liability.
f.16. The applicant and the first respondent have provided written submissions in respect of the outstanding issues.
EVIDENCE
Documentary evidence
a.17. The following documents were in evidence before the Commission and considered in making this determination:
b. (a) the Application and attached documents;
c. (b) Reply by first respondent and attached documents;
d. (c) Reply by second respondent and attached documents;
e. (d) Reply by third respondent and attached documents, and
f. (e) Application to Admit Late Documents dated 7 April 2021 and attached documents, filed by the first respondent.
FINDINGS AND REASONS
Evidence
a.18. Given that the first respondent has withdrawn the dispute as to liability, it is unnecessary that I refer in detail to most of the evidence.
b.19. I will refer to the events that are relevant to the issue of apportionment of the death benefit and the issue of interest.
c.20. It appears that the claim for the death benefit was made on 3 December 2019, as that is the date to which iCare referred in its notice disputing liability, and counsel have made submissions referring to that date of claim. It is not before the Commission.
d.21. Icare issued Ms McGrath with the notice disputing liability, pursuant to section 78 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) on 6 March 2020.
e.22. The Application was filed on 25 January 2021. It attached Ms McGrath’s statement, dated 20 January 2021, addressing, among other matters, her dependency and that of the children on Mr McGrath, including that neither she nor Mr McGrath had previously been married or had other children. It also attached an autopsy report; the couple’s marriage certificate; the birth certificates of Taleya and Kayden; and the certification of registration of death.
f.23. By letter dated 2 February 2021, the solicitors for the first respondent requested that the applicant provide copies of the findings of the coroner; the post-mortem toxicology report; all documents from the Singapore police and coroner’s court; details of and/or authority as the appointed legal personal representative of the worker; and last will and testament, grant of probate and/or letters of administration. They advised that they were not in a position to respond to the claim without this information.
g.24. By email on 8 February 2021, the solicitors for the applicant attached the coroner’s findings and documents from the Singapore police and coroner’s court. They advised they were seeking instructions with respect to the balance of the request.
Legislation
a.25. Section 25 of the 1987 Act provides:
“Death of worker leaving dependants
(1) If death results from an injury, the amount of compensation payable by the employer under this Act shall be- (a) the amount of $750,000 (the ‘lump sum death benefit’), which is to be apportioned among any dependants who are wholly or partly dependent for support on the worker or (if there are no such dependants) paid to the worker's legal personal representative, and
(b) in addition, an amount of $66.60 per week in respect of--
(i) each dependent child of the worker under the age of 16 years, and
(ii) each dependent child of the worker being a student over the age of 16 years but under the age of 21 years.
(2) Payments in respect of a dependent child under subsection (1) (b) shall continue-
(a) except as provided by paragraph (b) - until the child dies or reaches the age of 16 years, whichever first occurs, or
(b) in the case of a dependent child who is a student at the time of the worker's death or after reaching the age of 16 years-until the child dies, reaches the age of 21 years or ceases to be a student, whichever first occurs.
(3) The amount of any weekly payments, or other compensation payable under this Act, shall not be deducted from the amounts referred to in subsection (1) (a) or (b).
(4) If an amount mentioned in subsection (1) (a) at any time after the commencement of this Act-
(a) is adjusted by the operation of Division 6, or
(b) is adjusted by an amendment of this section, the compensation payable under subsection (1) (a) is to be calculated by reference to the amount in force at the date of death.
(4A) If the death of a worker results both from an injury received before the adjustment of an amount mentioned in subsection (1) (a) and an injury received after that adjustment, the worker shall, for the purposes of subsection (1) (a), be treated as having died as a result of the injury received after that adjustment.
(5) In this section-- ‘child of the worker’ means a child or stepchild of the worker and includes a person to whom the worker stood in the place of a parent. ‘dependent child of the worker’ means a child of the worker who was wholly or partly dependent for support on the worker. ‘student’ means a person receiving full-time education at a school, college or university.”
a.26. Section 29 of the 1987 Act provides:
“Apportionment of payments between dependants
(1) The compensation payable under this Division to each dependant of a deceased worker may be apportioned by the Commission or by the NSW Trustee.
(1A) The lump sum death benefit payable under this Division is not to be apportioned if a deceased worker leaves only one dependant (whether wholly or partly dependent on the worker for support) and the whole of the lump sum death benefit is to be paid to that one dependant.
(1B) In apportioning the lump sum death benefit payable under this Division between 2 or more dependants, the whole lump sum death benefit is to be apportioned among those dependants (so that the sum of the apportioned amounts equals the full lump sum death benefit).
(2) Application for apportionment may be made by or on behalf of a person entitled to the compensation-
(a) to the NSW Trustee, or
(b) to the Commission (whether or not an application has been made to the NSW Trustee or the NSW Trustee has made a decision).
(3) The NSW Trustee may decline to deal with an application for apportionment and advise the parties to apply to the Commission.
(4) The NSW Trustee is not to deal with an application for apportionment of compensation if an application for apportionment of the same compensation is before the Commission.
(5) A decision by the NSW Trustee to apportion compensation under this Division is subject to any decision made by the Commission with respect to the matter.
(6) If there are both total and partial dependants of a deceased worker, the compensation may be apportioned partly to the total and partly to the partial dependants.
(7) If a dependant dies-
(a) before a claim under this Division is made, or
(b) if a claim has been made, before an agreement or award has been arrived at or made, the legal personal representative of the dependant has no right to payment of compensation, and the amount of compensation shall be calculated and apportioned as if that dependant had died before the worker.
(8) The regulations may make provision for or with respect to the publication of applications for apportionment and any other matter connected with apportionment.”
a.27. Section 109 of the 1998 Act provides:
“109 Interest before order for payment
(1) In any proceedings before the Commission, the Commission may order that there is to be included, in any sum to be paid, interest at such rate as the Commission thinks fit on the whole or any part of the sum for the whole or any part of the period before the sum is payable, subject to the limitations imposed by this section.
(2) Interest cannot be ordered under this section-
(a) on any compensation payable under Division 4 of Part 3 of the 1987 Act, or
(b) on any compensation payable under this Act for any period before a claim for the compensation was duly made, or
(c) on any compensation payable under this Act for any period during which proceedings before the Commission were adjourned on the application of the claimant for the compensation or pursuant to section 102.
(3) This section does not-
(a) authorise the giving of interest upon interest, or
(b) apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise.”
SUBMISSIONS
a.28. The applicant and the first respondent have provided written submissions, so I will refer to them only briefly. The applicant has referred throughout to “the respondent”. I will refer to “the first respondent” in summarising her submissions.
Applicant
a.29. The applicant submitted that there is no dispute between her and the second and third respondents as to the apportionment of the lump sum. An award is sought in accordance with the submission made before the member at first instance.
b.30. As regards an award of interest, the applicant submitted that a claim, on the prescribed iCare form (the claim form), was made on 3 December 2019, on behalf of herself and the second and third respondents. The first respondent denied liability in a section 78 notice dated 6 March 2020, upon the basis that it was not a work injury.
c.31. The applicant submitted that the claim was duly made at the time of the notice, when the first respondent was apprised of her dependency and that of the second and third respondents. Nothing has changed since the claim and the withdrawal of the denial on 28 April 2022. She submitted that the “nature and amount of compensation claimed” was ascertainable through the date of death and legislated benefits.
d.32. The applicant submitted that the obligation of the first respondent was under section 260(2) of the 1998 Act, which prescribes compliance with the SIRA Guidelines for Claiming Workers Compensation (the Guidelines). She referred to the Guidelines at B7.
e.33. The applicant submitted that the information in the prescribed form must, at least by implication, be treated as requesting particulars “sufficient to enable the employer to ascertain the nature and amount of compensation claimed”. She referred to decisions of the Compensation Court of New South Wales applying Schedule 6, Part 11, clause 1(a) of the 1998 Act [sic: the 1987 Act]. None of these decisions was identified.
f.34. The applicant submitted that, to the extent the information in the claim form was not compliant or deficient, it gave rise to an “aspect of the claim” which under section 78 of the 1998 Act had to be disputed, and it was not. Any belated objection cannot now be raised without leave, or otherwise constitutes a waiver.
g.35. The applicant submitted that, to the extent there is any failure to particularise, this would not be fatal, as the discretion allows interest to be awarded on any part of the sum. In Haidary v Wandella Pet Foods Pty Limited, Dynamix Pty Ltd and Burragong Pet Foods Pty Ltd [2005] NSWWCCPD 9 (Haidary), Deputy President Fleming excused the failure of the worker’s legal advisers to properly detail the basis of his claim at an early stage, and found this conduct was not sufficient to deny him interest.
h.36. The applicant submitted that the issue between the parties was always nexus, and the claim was not settled or compromised because nexus was hotly disputed. She submitted the issue was not the nature or legitimacy of dependency and those particulars were from the commencement sufficient and entitlement ascertainable by the first respondent.
37. The applicant submitted that the date from which interest is to be assessed is the date of the section 78 notice, 6 March 2020, when the first respondent had the opportunity to pay, but denied liability.
j.38. As regards the rate of interest, the applicant submitted that section 109 of the 1998 Act provides for an order of interest on compensation prior to the date of order for payment (emphasis in original). The lump sum payable is $810,050. In the two years between 6 March 2020 and 28 April 2022, when the denial was withdrawn, the CPI indexed death benefit increased to $862,350, an increase of $52,300.
k.39. The applicant submitted that a corollary of the inflationary effects on the death benefit is a commensurate erosion in the value of $810,050. Assuming an inflation rate of 5.1% since March 2021, the value of the death benefit has been eroded by as much as $41,000. She relied on Australian Bureau of Statistics published for the period March 2021 to March 2022. She submitted this means a loss of purchasing power through delay, and a significant financial disadvantage by reason of the respondent’s denial.
l.40. The applicant submitted that in Haidary, Fleming DP concluded that, in the absence of guidance, an appropriate rate of interest on a worker’s past earnings was the Supreme Court rate. Fleming DP applied the Court of Appeal’s reasoning in Pheeney v Doolan (No 2) [1977] 1 NSWLR 601 (Pheeney), in which it was held it was necessary to determine in what respect the claimant has been financially disadvantaged by delay in the payment of damages (emphasis in original).
m.41. The applicant submitted that a financial disadvantage cannot be assessed solely by asking what the loss of opportunity was to earn interest by the delay. The more significant financial disadvantage is that brought about by inflation. She submitted that Pheeney requires that regard be had to the form of interest income that could have been earned on the real principal; and the loss of purchasing power due to the effects of inflation, which erodes the value of the benefit in the hands of the successful party. She submitted that the sum of $44,365 was potentially eroded from the purchasing power of the benefit of $410,050 [sic: $810,050].
n.42. The applicant submitted that, in Bennett v Jones [1977] 2 NSWLR 355 (Bennett), the Court of Appeal considered that entitlement to interest was to be determined by what is “fair in an economic sense between the parties”. She submitted that the interest rate that would apply to adjust for inflation and loss of purchasing power and the loss of opportunity to accrue interest on the capital sum would need to be around 7.3%. She submitted that this equates with an interest rate of 3.5%, which approximates the indexation results in the Supreme Court.
o.43. The applicant submitted that assessment of interest takes on the entitlement of a judgment debt arising as of 6 March 2020. The applicable rate of interest is the Supreme Court post judgment interest rate. Since the claim was made, that has ranged from 7.25% to the present rate of 6.10%. This rate best approximates to the financial disadvantage suffered by the applicant due to the delay.
p.44. In the alternative, the applicant submitted that a more conservative but less equitable rate is that provided by the Supreme Court pre-judgment interest, which since the claim was made has ranged from 5.2% to presently 4.1%. She submitted that, on any view, a figure of 2%, representing the retail banking rate for the loss of opportunity to earn interest, does not alleviate the financial disadvantage as a result of delay, and is contrary to Pheeney, Bennett and Haidary.
q.45. The applicant submitted that in House v R (1936) 55 CLR 499 the High Court observed that an appellate court may infer that in some way there has been a failure properly to exercise a discretion “if upon the facts [the result] is unreasonable or plainly unjust”. She submitted it provides compelling guidance as to the approach to be taken in determining entitlement to, and the rate of, interest.
r.46. The applicant submitted that the delay has resulted in significant financial disadvantage, which is not addressed, through a loss of opportunity to invest the funds, which fails to have regard to the loss of value of the benefit. The first respondent has been advantaged at her expense. She has been deprived of the deceased’s support and left to support two dependent children alone. She submitted that such a “result” should not stand as a result of the exercise of the discretion unless the law compels it, and it does not.
First respondent
a.47. The first respondent submitted that no claim for interest was made by the applicant, the second respondent or the third respondent. An entitlement to interest does not flow of right, but from a determination by the Commission in the exercise of its discretion. In the absence of interest being claimed, there is nothing before the Commission to enliven the discretion – Pasminco Ltd v Walters [2005] NSWWCCPD 30 at [76] – [78]; and Canham v Kenna Investments Pty Ltd [2006] NSWWCCPD 202 at [27]. The first respondent submitted therefore that no interest ought to be allowed.
b.48. If the above submission is rejected, the first respondent submitted that the Commission’s jurisdiction to award interest is found in section 109 of the 1998 Act and is discretionary – Haidary. The discretion extends to both the date from which interest is to run and the rate at which it is to be calculated. Pursuant to section 109(2)(b), interest cannot be ordered for any period before a claim for the compensation was “duly made”.
c.49. The first respondent submitted that although “duly made” is not defined in the legislation, a claim is duly made within the meaning of section 109(2)(b) when the claims for dependency are made. It referred to the decision of his Honour President Keating in Kaur v Thales Underwater Systems Pty Ltd [2011] NSWWCCPD 6 (Kaur).
d.50. The first respondent submitted that the position outlined in Kaur was discussed by Arbitrator Isaksen (as he then was) in Lavelle v David Paul Browne & Ors (WCC533/19) (Lavelle), in a decision dated 10 October 2019. The first respondent submitted that subsequent cases confirm the proposition that a claim has not been duly made until particulars of the dependency alleged have been provided.
e.51. The first respondent submitted that, although liability was disputed by section 78 notice dated 6 March 2020, it was not until her statement of 20 January 2021 that the applicant provided details of her dependency. The Application was lodged on 25 January 2021. The first respondent’s solicitors sought further material by letter dated 2 February 2021. Some of the material was forwarded by email on 8 February 2021. A factual investigation was requested on 1 February 2021 and received on 8 February 2021. The first respondent submitted that it was therefore not until 8 February 2021 that it had the material it required to properly determine the claim.
f.52. The first respondent submitted that an important factor to be taken into account in the exercise of the discretion is that it has not been legally possible for it to pay any part of the lump sum and payment will not be possible until the Commission has made a determination of those persons who were dependent for support upon the deceased; a determination apportioning the lump sum as between the dependants pursuant to section 29 of the 1987 Act; and orders under section 85(1)(a) and/or section 85A(1) of the Act for payments consistent with that apportionment.
g.53. The first respondent therefore submitted that interest ought not to be awarded until 8 February 2021, at the earliest. This approach is consistent with a number of Commission decisions and ought to be adopted.
h.54. In respect of the rate of interest to be awarded, the first respondent submitted that an award of interest should not be punitive – Bennett. Section 109(1) of the 1998 Act requires regard to the actual rates of interest offered by the banks, which at all relevant times have been significantly less and consistent with the cash rates published by the Reserve Bank of Australia, that is 0.25% to 30 November 2020; 0.10% to May 2022; and 0.35% thereafter. The rates at which interest has been ordered by the Commission recently has varied between 2% and 2.5%.
55. The first respondent submitted that a factor to be taken into account in determining the rate at which interest is to be awarded is whether there has been any delay in the conclusion of the proceedings. Although the deceased died on 21 September 2019, no particulars of dependency were provided until the applicant’s statement of 21 January 2021 and no Application was filed until 25 January 2021.
j.56. The first respondent submitted that liability was complex because of where and how the worker died, and the member at first instance found against the applicant. This was the subject of a complex appeal, as not only did the applicant appeal, but the second and third respondents also appealed. The appeals were determined by Wood DP on 4 March 2022 and the matter was remitted for re-determination.
k.57. It was only after this time that the first respondent conceded liability. It submitted therefore that it was not possessed of information in respect of dependency until 25 January 2021 (when the Application was filed) and of liability until 8 February 2021 (when the factual investigation was received); and because of the complex nature of the liability dispute, the matter had to be determined by the Commission.
l.58. The first respondent finally submitted that no interest ought to be awarded, but if the Commission is against this submission, then interest ought only to be awarded from the time it conceded liability.
Applicant in reply
a.59. The applicant submitted that the first respondent’s contention is that section 109 of the 1998 Act is to be construed as a constraint on the remedying of unfairness under section 25 of the 1987 Act, where the loss is caused by an employer’s belief that it might win the case, informed by an erroneous view of the law. On the first respondent’s submission, not only is the resulting unfairness the legislative intent of section 109 of the 1998 Act, but by implication, it is to be financially advantaged, whether there is merit in the dispute or otherwise.
b.60. The applicant submitted that, on the first respondent’s submission, the “duly made” qualification in section 109 of the 1998 Act is not intended to ensure it was not prejudiced through being unable to assess the claim, but a device intended to thwart any entitlement to interest. Its contention is that, even where a claim is disputed on the basis of liability, the discretion is to be exercised in its favour whenever it elects to dispute, ex post fact [sic] a claim was “duly made” or for any other extraneous consideration.
c.61. The applicant submitted that, on the first respondent’s submissions, the financial disadvantage she suffered due to delay both advances the objects of the legislation and any redress through an order that it make good the loss of purchasing power and use of the money due to delay is “punitive”.
d.62. The applicant submitted that the first respondent does not appear to dispute her primary premise that the delay in payment has resulted in an erosion of the purchasing value of the entitlement reflected in CPI increases that have resulted to increase the benefit by $52,300.
e.63. The applicant submitted that to accept the respondent’s submission requires in the exercise of the discretion that consideration be given to factors totally irrelevant to the reason for the loss she has occasioned. This is contrary to authority.
f.64. With respect to the submission that there is no claim for interest, the applicant submitted that leave was given to amend the Application, and in the absence of authority to the contrary, the amendment for the claim for interest operated nunc pro tunc. Moreover, the Commission had no jurisdiction to entertain interest under section 109 of the 1998 Act until a determination was made that a sum be paid. It is this determination that enlivens the jurisdiction to order interest. The applicant cannot be criticised for not seeking an order that the Commission had no jurisdiction to make.
g.65. As regards the relevance of “duly made” to the exercise of discretion, the applicant submitted that section 9 of the 1987 Act provides that, in the circumstances of death, she “shall receive compensation from the worker’s employer in accordance with the Act”. An inchoate liability arose and was imposed on the first respondent under section 9 at the time of death on 21 September 2019. This liability crystallised when on the uncontroverted evidence a claim was made on 6 December 2019, when the applicant made a declaration averring to the jurisdictional fact that she and the second and third respondents were the only dependants of the deceased.
h.66. The applicant submitted that the conduct of the parties in the exercise of the discretion only arises where it is germane to its exercise. The relevant conduct is that the first respondent disputed liability, not whether it was “legally possible” to determine the claim. Even assuming it was not “legally possible” to determine the claim, that was not why the applicant was disadvantaged. It was because the first respondent disputed liability.
67. The applicant submitted that, even if it was not “legally possible” to determine the claim, the first respondent could have applied to the Commission to determine it or paid the money to the Public Trustees [sic]. Both avenues would have avoided it being advantaged through delaying the claim for 136 weeks, but were not taken up, due to the dispute about legal eligibility.
j.68. The applicant submitted that, in any event, whether unfairness or prejudice arises from the sufficiency of particulars is a question of fact. A party asserting unfairness where there is stated a prima facie case which is not otherwise disputed bears an onus to rebut the case through direct (assumed to mean “direct evidence”) as to why payment was not made. A willingness to treat a dispute to a claim for interest, ex post facto, on the basis of a failure to particularise allows a respondent to escape too readily the obligation to pay for the cost of keeping dependants out of their compensation entitlement. (A footnote is referred to, but none is provided). The first respondent advances no evidence to support the proposition that had it been given other information it would have abandoned the liability dispute.
k.69. The applicant submitted that the claim was made on the employer on 3 December 2019. She was required to declare that the information on dependency was “true and correct” to the best of her knowledge. The regulations provide for this declaration to operate as a statutory averment sufficient in law to discharge the onus of proving particulars of dependency. In the absence of evidence that might cast doubt on the conclusions as to dependency, the applicant established a prima facie case. Within a week of the claim, the first respondent obtained a statement from Peter Murray. He does not cast doubt on or rebut the presumption that she and the children were dependent.
l.70. The applicant submitted that the point of requiring the averment in the form of a declaration is to obviate the need to prove such matters to the insurer and enable the claim to be determined. It was made “legally possible” to determine the claim. That it was not “legally possible” to assess the entitlement was never the reason the compensation was not paid. If it was the reason, it is not explained by direct evidence, which is required to rebut a prima facie case of dependency and entitlement.
m.71. The applicant submitted that the first respondent relies on an assertion and correspondence from which an inference should be drawn that it was not “legally possible” to assess the entitlement, and but for this, some other outcome would have resulted. Whether it was not until 20 January 2021 that she provided details of her dependency is not supported by direct evidence as to how a different outcome would have resulted and relies on an inference being drawn that is adverse to her.
n.72. The applicant submitted that it is self-evident that her providing details of her dependency did (assumed to mean “did not”) alter the first respondent’s position on payment of compensation. The Commission can be satisfied that whether it treated the claim as “duly made” was irrelevant, as the issue was legal eligible [sic].
o.73. The applicant submitted that the inference on which the first respondent relies for unfairness cannot be drawn from circumstantial evidence in the present circumstances. She relies on Commercial Union Assurance Co of Australia Ltd v Fercom Pty Ltd (1991) 22 NSWLR 389 (Handley JA at 418). The evidence before the Commission is that the section 78 notice disputed the claim on the basis of liability; and this does not support that there was any reason other than that the first respondent disputed the applicant was eligible.
p.74. The applicant concluded that the first respondent has not established on the evidence that in any meaningful way the time for payment would have been truncated by a different particularisation of the claim; and that is the relevant consideration in the exercise of the discretion to award interest. A construction that enables a party ex post facto particularisation of a claim where that has never been the reason for non-payment does not give effect to the purpose of “duly made”, which is to prevent unfairness “to the at liable party” by interest accruing where it is not possible to assess the claim to make payment.
SUMMARY
Apportionment
a.75. The applicant submitted that there is no dispute as to the apportionment of the lump sum. She seeks an award in accordance with the submission made before the member who initially determined the matter. Having reviewed that determination, the submission was that the compensation should be apportioned as to 70% to the applicant; and 15% to each of the second and third respondents.
b.76. The first respondent has made no submissions on the issue of apportionment. I am satisfied that the apportionment agreed by the applicant, the second respondent and the third respondent is appropriate, given that there is little difference in age between the children, and no evidence that either has special needs. The sum apportioned to the applicant will of course benefit the children, and she has given evidence of her intentions with respect to their education.
c.77. I therefore determine that the sum of $810,050 is to be apportioned as to 70% to the applicant; 15% to the second respondent; and 15% to the third respondent.
Interest
a.78. The power to award interest is discretionary. It is subject to the limitations set out in sections 109(2) and (3). Relevantly, subsection (2)(b) provides that interest cannot be ordered on any compensation payable for any period before a claim for compensation was duly made. The applicant’s submissions must be considered in light of the constraints imposed by section 109.
b.79. In Haidary, Fleming DP discussed the reasoning behind an award of interest and the relevant interest rate. She said:
“The award of interest by the Commission, pursuant to section 109 of the 1998 Act is discretionary. Mr Haidary will only be entitled to interest, if awarded, on those amounts of his weekly entitlement that were unpaid, and only from the date that his claim ‘was duly made’. The likely amount of interest that would be due on these sums is small, relative to the whole of his claim, but nonetheless they may form part of Mr Haidary’s entitlement. The purpose of ordering interest on an award is to compensate the worker for the loss of his or her income, not to penalise the employer (Virag v James N Kirby t/as Betts Electric Motors (1990) 6 NSW CCR; Healey v McPherson Binding Pty Ltd (1989) 5 NSWCCR 139).”
a.80. The first respondent’s submission that no claim for interest has been made, and therefore there is nothing to enliven the Commission’s discretion to award interest may be shortly dealt with. At the telephone conference before me on 13 April 2022, the applicant was granted leave, without objection, to amend the Application to include a claim for interest.
b.81. The second respondent’s Reply also included submissions, including on the issue of interest, and sought an order that the first respondent was to pay interest on the lump sum benefit. Taleya, at least, made a claim for interest when her Reply was filed. Wood DP referred to this claim in her determination [at 140]. She remitted the matter for re-determination of, inter alia, the payment of interest. The discretion is enlivened. The issues are therefore whether it is to be exercised, and, if so, how it is to be applied.
c.82. I am satisfied that it is appropriate in this case to exercise my discretion to award interest.
d.83. The applicant has submitted that the claim was not settled or compromised because nexus was disputed. However, section 25 of the 1987 Act does not allow for settlement or compromise of a claim for the lump sum death benefit.
e.84. The first respondent submitted that it was not legally possible for it to pay the lump sum until the Commission determined those who were dependent and the apportionment of liability. However, it would have been open to it to pay the lump sum to the NSW Trustee and Guardian, to be apportioned in due course.
f.85. Member Batchelor said in Zhang v Universe Investments Pty Ltd t/as Kings Seafoods [2021] NSWPIC 128 (Zhang):
“The first respondent submits that despite the denial of liability, had the lump sum been paid immediately to the NSW Trustee, no payment would have been made to any dependant until the determination on liability, dependency and apportionment followed by the order(s) for payment. That is correct. However in my view the first respondent’s insurer was at liberty to pay the NSW Trustee the lump sum death benefit once it became clear that the applicant and second and third respondents were at least partially dependent for support on the deceased at the time of his death. This would ensure that the insurer did not have the use of the compensation pending the determination of liability, dependency and apportionment. Alternatively, if the insurer did not adopt that course, it could agree to, or in default thereof should be ordered to pay, interest on the parts of the lump sum death benefit apportioned to the applicant and first and second respondent from the time that particulars of their dependency were supplied.”
a.86. There is no legislative provision that provides for a time limit in which an insurer is required to determine a claim pursuant to section 25 of the 1987 Act. There is no requirement that a claimant provide specific information or evidence. Accordingly, the legislation does not require specific material to be served in making a claim for the death benefit pursuant to section 25 of the 1987 Act.
b.87. Both parties have referred to the Guidelines, and in particular “B7”. This appears to be a reference to the original Guidelines, which referred in Part B7 to “Payments in the event of death”. These Guidelines no longer apply. They have been superseded on several occasions by new Guidelines, from at least December 2018. None of the new Guidelines contains any reference to payments in the event of death.
c.88. The current Guidelines are dated 1 March 2021, and they apply to all claims from 1 March 2021, irrespective of when the claim is made. They contain no reference to payments in the event of death. The Guidelines provide no assistance in determining the claim for interest.
d.89. The only reference I have been able to find to management of death claims is in the SIRA Standards of Practice, the latest version of which is dated April 2022.
e.90. Standard 31.1 provides that:
“If an insurer becomes aware of a death that may be work-related, the insurer is to proactively investigate the circumstances of the death, including in cases where the death occurred some time after a work-related injury."
a.91. The applicant has submitted that the claim was made on 3 December 2019, when the claim form was completed. As I have observed, the claim form is not in evidence. I do not know what it said. I do not accept the applicant’s submission that, if it was deficient, it had to be disputed under section 78 of the 1998 Act. It was not “any aspect of a claim”, but the notification of a claim, to which the insurer was required to respond. The applicant has submitted that interest should be awarded from the date of the section 78 notice, that is 6 March 2020.
b.92. Mr Murray’s statement, which is dated 16 December 2019, says nothing about dependency. It is directed to establishing the circumstances of the worker’s death. It does not assist the applicant in respect of the claim for interest.
c.93. The applicant has submitted that in Haidary, Fleming DP applied Pheeney. I am unable to find any reference to Pheeney in her decision.
d.94. In Pheeney the Court of Appeal said that it was necessary to determine in what respect the plaintiff has been financially disadvantaged by delay in the payment of damages so as to make an appropriate allowance of interest. Reynolds JA, Moffitt P and Mahoney JA agreeing on point, said of the interest provision:
“It provides an ancillary power akin to an order for costs, and its purpose is to aid the court to do more complete justice between the parties than is otherwise possible ... It is not designed to compensate a plaintiff for loss arising out of the cause of action, but to provide compensation where it is otherwise appropriate to do so for the circumstance that a sum of money has been outstanding to him for a period of time.”
a.95. The applicant has not referred to the decision of President Keating in Kaur, which has consistently been applied in the Commission.
b.96. In Kaur, Keating P said at [139]:
“Section 109(2)(b) of the 1998 Act prohibits interest on any award of compensation payable under the Act for any period before a claim for the compensation was duly made. I accept the submission that the claim for compensation on behalf of the appellants was not duly made until the day of the arbitration. I therefore accept Thales’s submission that, as at the arbitration, the appellants could not be entitled to interest pursuant to s 109 of the 1998 Act.”
a.97. The phrase “duly made” has been held to mean “fully particularised” and was applied in Kathryn Ann Kratz as executrix of the estate of the late Owen Beddall v Qantas Airways Limited [2020] NSWWCC (Kratz), in which Arbitrator Isaksen referred to the decision of Arbitrator Wynyard in Shanika Cooper v G & W Mudgee Concreting Pty Ltd & Ors (WCC6411/18) and his own decision in Lavelle, in which he agreed with Arbitrator Wynyard’s approach. Arbitrator Wynyard took a similar approach in the recent decision of Mudgee Explorer Tours Pty Ltd v Clarke [2021] NSWPIC 41.
b.98. While I do not know what the claim form said, when one reviews the section 78 notice, it does not dispute that there were persons who were dependent for support on Mr McGrath at the date of his death. The matters in dispute were, in summary, injury “in the course of employment”; substantial contributing factor; and eligibility for compensation, including for weekly benefits pursuant to section 25(1)(b) of the 1987 Act. The weekly benefits could only have been payable in respect of dependent children.
c.99. The first respondent requested particulars of the claim, but on the evidence before me, they did not include particulars of the dependants. It investigated the claim, but it must have been satisfied when it issued the section 78 notice on 6 March 2020, that it had sufficient evidence to dispute it.
d.100. On review of the transcript of proceedings on 16 April 2021, before the member who originally determined the claim, she said (at page 54, approximately point 10):
“…there’s nothing that could be said about dependency, I don’t think. The only issue is the extent of the apportionment and as I understand it you’ve all agreed.”
a.101. The first respondent made no submissions before the member on the issue of dependency.
b.102. I am satisfied that, as at 6 March 2020, the claim was “duly made”, in that the first respondent had sufficient evidence on which to determine the claim, including the issue of dependency. It may not have been able to apportion the lump sum, but it could have taken either of the courses referred to by Arbitrator Batchelor in Zhang. Interest should be awarded from 6 March 2020 to date.
c.103. I do not accept the applicant’s submission that the rate of inflation should be applied to the award of interest. Had the death benefit been paid in March 2020, she and the second and third respondents would not have achieved a rate of bank interest that was remotely commensurate with the rate of inflation.
d.104. In Bennett, it was held that interest should generally be awarded on the “neutral” basis that the defendant “ought to have paid” the plaintiff at a particular time, but did not, and since that time the plaintiff has been out-of-pocket of that money and the defendant has had the benefit of it. The first respondent has had the benefit of the lump sum, but it would also not have achieved a rate of interest that was commensurate with inflation.
e.105. The cash rate set by the Reserve Bank has recently been raised to 0.35%, and there are indications that interest rates may rise. However, they are still historically low. The first respondent submitted that recent awards of interest have varied between 2% and 2.5% per annum, but most recently, they appear to have varied between 2% per annum and 2.1% per annum. In some cases, the parties agreed on a somewhat higher rate of interest.
f.106. It appears to me that the appropriate rate at which to award interest on the death benefit is 2.1% per annum.
g.107. The applicant has not submitted that it is necessary to make an award of weekly benefits pursuant to section 25(1)(b) of the 1987 Act, and I assume that, in view of the acceptance of liability, payments of weekly benefits in respect of the children are being made.
h.108. The applicant has also not submitted that it is necessary to make an award in respect of the claim for funeral expenses, pursuant to section 26 of the 1987 Act, or the expenses of transporting Mr McGrath’s body to Australia, pursuant to section 28 of the Act. I assume that the funeral expenses have been, or will be, paid. I note that, before the member who initially determined the matter, counsel for the first respondent referred to “the guides” or “the regulations” restricting the amount payable to $15,000, but not to any dispute that funeral expenses would be payable should liability be determined in the applicant’s favour.
109. The restriction on payment of no more than $15,000 applies to funeral expenses. There is no restriction on the amount payable to transport a worker’s body, save that it is to be the lesser cost of transporting it to an appropriate place for preparation for burial or cremation or the usual place of residence. I assume that the first respondent has paid, or is to make arrangements to pay, the costs of bringing Mr McGrath home. I will, however, give the parties liberty to apply in the event that I am mistaken.
j.110. I believe it is appropriate to determine the issues in accordance with the determination of Wood DP and the concession made by the first respondent.
k.111. I therefore make the following determinations:
(a) that the worker, Nicholas Charles McGrath, died on 21 September 2019 as a result of injury arising out of or in the course of his employment with the first respondent, pursuant to section 4 of the 1987 Act;
(b) that the worker’s employment was a substantial contributing factor to the injury, pursuant to section 9A of the 1987 Act;
(c) that the applicant was partly dependent for support on the worker at the date of his death;
(d) that the second respondent was dependent for support on the worker at the date of his death;
(e) that the third respondent was dependent for support on the worker at the date of his death;
(f) that there were no other persons dependent for support on the worker at the date of his death;
(g) that the first respondent is liable for payment of lump sum compensation of $810,050;
(h) that the first respondent is to pay to the applicant, pursuant to section 25(1)(a) of the 1987 Act and section 85A(1)(a) of the 1987 Act, the sum of $567,035;
(i) that the first respondent is to pay the sum of $121,507.50, pursuant to section 25(1)(a) of the 1987 Act, to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the 1987 Act, for the second respondent until she attains the age of 18 years;
(j) that the first respondent is to pay the sum of $121,507.50, pursuant to section 25(1)(a) of the 1987 Act, to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the 1987 Act, for the third respondent until he attains the age of 18 years;
(k) that the first respondent is to pay to the applicant, pursuant to section 109 of the 1998 Act, interest on the sum of $567,035 at the rate of 2.1% per annum for the period from 6 March 2020 to 31 May 2022;
(l) that the first respondent is to pay, pursuant to section 109 of the 1998 Act, interest on the sum of $121,507.50 at the rate of 2.1% per annum for the period from 6 March 2020 to 31 May 2022; and the interest is to be paid to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the 1987 Act for the second respondent until she attains the age of 18 years;
(m) that the first respondent is to pay, pursuant to section 109 of the 1998 Act interest on the sum of $121,507.50 at the rate of 2.1% per annum for the period from 6 March 2020 to 31 May 2022; and the interest is to be paid to the NSW Trustee and Guardian, to be held on trust pursuant to section 85(1)(a) of the 1987 Act for the third respondent until he attains the age of 18 years, and
(n) that the parties have liberty to apply.
Key Legal Topics
Areas of Law
-
Workers Compensation Law
Legal Concepts
-
Claim for Benefits
-
Apportionment
-
Interest on Lump Sum
-
Dependency
7
8
2