Rigby Jones Pty Ltd v GIO Workers Compensation (NSW) Ltd

[1998] HCATrans 423

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S87 of 1998

B e t w e e n -

RIGBY JONES PTY LIMITED

Applicant

and

GIO WORKERS COMPENSATION (NSW) LIMITED and GIO GENERAL INSURANCE LIMITED

Respondents

Application for special leave to appeal

GAUDRON J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 20 NOVEMBER 1998, AT 11.53 AM

Copyright in the High Court of Australia

MR J.B. TURNBULL:  If your Honours please, I appear for the applicant.  (instructed by Ingate & Associates)

MR S.D. RARES, SC:  May it please the Court, I appear with my learned friend, MR J.B. SIMPKINS, for the respondent.  (instructed by Hunt & Hunt)

MR TURNBULL:   Your Honours, there are, in my written submissions, a number of bases for this application but I have one primary basis, but before I come to that, could I ‑ ‑ ‑

GAUDRON J:   You had better direct your attention to its importance.  It is, after all, an act of the New South Wales Parliament.  It has no counterparts elsewhere.

MR TURNBULL:   It does not, your Honour.

GAUDRON J:   It has provisions for non-judicial resolution of disputes.

HAYNE J:   Why should the construction of this Act, in this respect, not ordinarily lie with the Court of Appeal?

MR TURNBULL:   Your Honour, it is a matter that could have some quite significant effect upon businesses carried out in New South Wales and, your Honours, I ‑ ‑ ‑

HAYNE J:   Let it be assumed that the consequences of the judgment are very large for insurers.

MR TURNBULL:   And for employers, your Honour, for whom I appear.

HAYNE J:   Perhaps so.  Why should that mean that the decision about the proper construction of the Act should not, in a case like this, rest with the Court of Appeal rather than here?

MR TURNBULL:   Because, your Honour, of the particular decision made by the Court of Appeal in relation to the construction.  Your Honour, in the decision of the Court of Appeal, Mr Justice Sheller – perhaps, I need to take your Honour to the particular section, section 172, of the Act.  Section 172(4) is the section to which my submission is directed primarily.  In each of the other subsections of section 172 there is a reference to “interest”.  Glaringly omitted from section 172(4) is the word “interest”.  Mr Justice Sheller, and each of the members of the Court of Appeal agreed with him, said that there was a necessary ‑ ‑ ‑

GAUDRON J:   But it is a payment of interest “under this section”.  It is not under subsection (1) or subsection (4).  If you look at subsection (2), it is a “payment of interest under this section may be waived”.

MR TURNBULL:   Yes, it is subsection (4) I am taking your Honour to.

GAUDRON J:   Yes, I know, but the interest provision is concerned with the whole section, not with subsection (4).

MR TURNBULL:   Yes, that is correct, your Honour, and that is the non‑judicial way in which interest may be waived.  I can tell your Honour that, although it is not in evidence, the applicant had recently made that application, and it has been refused.  Your Honour, the ‑ ‑ ‑

HAYNE J:   Let it be assumed then that that has very adverse effects on insurers and very adverse effects on employers.  Why are those not matters for the legislature to address, determining whether that is a good, bad, indifferent allocation of resources in this State?

MR TURNBULL:   Your Honours, we say that the legislature has addressed it in subsection (4)  ‑ ‑ ‑

HAYNE J:   I understand that.

MR TURNBULL:   But, if I can come back to your Honour’s question as to why your Honour should deal with this matter.  Mr Justice Sheller said it was a necessary but shorthand way of dealing with subsection (4) to include the words by inference “premium plus interest” into subsection (4) when they do not exist.  In my submission, your Honours, to read legislation as being written in a shorthand way, is to misconstrue the way that this particular and, indeed, any legislation, whether it be in this State or any other, should be read.  And, your Honour, that is the matter that we primarily complain of, and it is a matter that could, in terms of – I appreciate it is the Court of Appeal dealing with New South Wales legislation but it is a matter of general importance, we would say, in interpreting the legislation, not only in New South Wales, but legislation in any State in this country.

HAYNE J:   But your point is that they construed it wrongly?

MR TURNBULL:   Yes, your Honour.

HAYNE J:   No point of principle about the way in which statutes to be construed other than well-known and accepted principles would fall for consideration, would it?

MR TURNBULL:   That is correct.

HAYNE J:   You say, applying well-known and accepted principles, they got it wrong.

MR TURNBULL:   That is correct, your Honour.  Your Honour, the section – I was going to say initially, I said in my written submissions that it is subsection (4) that gives the power to the insurer to sue for the interest.  That is not correct, of course.  It arises in subsection (1).  What subsection (4) does is to limit the recovery of moneys outstanding and by that I mean the ‑ ‑ ‑

GAUDRON J:   It does not limit it, does it?  Is not the effect of subsection (4) to say it does not affect the entitlement?

MR TURNBULL:   To recover premium, and we do not deny that, and in this case the premium ‑ ‑ ‑

GAUDRON J:   If there was a premium payable under (1) and it remains outstanding, then there comes interest as well.

MR TURNBULL:   We say, your Honour, that is, with respect, not the way the legislature has intended it.  What the legislature has done is said you need to recover the premium.  I should say this, as your Honours will have seen, this subsection was only inserted consequent upon a decision of Mr Justice Giles in 1988, where, before this subsection was inserted, there was no power to recover premium or interest pending the redetermination of the premium by the WorkCover Authority.  Consequent upon that, the legislature introduced subsection (4) but did not see fit to say, you can recover premium pending the Authority’s redetermination, and you can recover interest.  All you can recover is the premium and that allows funds to flow into the WorkCover Authority’s pool to keep the thing going but that interest should await the outcome of the redetermination and by the WorkCover Authority of ‑ ‑ ‑

GAUDRON J:   Presumably, the question of interest only arises because the premium was not paid ‑ ‑ ‑

MR TURNBULL:   That is correct.

GAUDRON J:   So, we did not have this flow of funds in this case, to keep the Authority going.  So, why would you not construe the construction as involving an entitlement to interest in that situation?

MR TURNBULL:   The direct answer to that question, your Honour, is because it is not in the section, but can I just say ‑ ‑ ‑

GAUDRON J:   It is in the section.

MR TURNBULL:   I am sorry, in the subsection (4).

GAUDRON J:   Yes.

MR TURNBULL:   The premium that was not paid was not the entire premium.  It was that which the employer calculated itself was not owing and, indeed, virtually all of that was refunded to the employer.  If the section is to be read in the way that the Court of Appeal said, then you have a situation where, as occurred here, the employer has to pay the premium and then sometimes years later, in this case eight years later, the WorkCover Authority makes a redetermination, and as we understand it, on the same facts as were available to the insurer.  The insurer has the benefit of the money, can sue for it and, on the interpretation put forward by the Court of Appeal, can sue for the interest as well, which is all this case was about, was suing for the interest because the premium had been paid.

It has the benefit of that money for, in some cases, up to eight years, refunds it and there is then no right to recover interest by the employer to recover interest on the funds that have been retained by the WorkCover Authority for so many years.  The business, the employer, has then lost the benefit of that money because it has to pay it in the first instant, it has to pay the penalty rate of interest of 1.2 per cent compounded per month.  And when it is refunded, as it was in this case, the employer has no entitlement to obtaining interest on those funds.  It has lost the benefit of the funds.  In our submission, that is not the scheme that the legislature intended.  What the legislature intended when it introduced subsection (4) was to allow the recovery or premium but not to require the payment of interest until such time as the redetermination takes place and then on only so much of that money as is properly determined to have been payable by the employer to the insurer.

It is suggested by the respondent in this appeal that if there is any unjustness it is dealt with by what your Honour Justice Gaudron referred to in subsection (2), that is the ability of the insurer to waive or the authority to waive the right to interest.  But there is ‑ ‑ ‑

GAUDRON J:   I did not suggest that that was an answer to injustice.  What I was putting to you is that that is a matter that goes to the construction of it.

MR TURNBULL:   I am sorry, your Honour.  I am suggesting that is what is said by the respondent in the case, that that deals with the injustice.  We say it does not deal with it ‑ ‑ ‑

GAUDRON J:   Well, injustice is irrelevant here, is it not?  I mean, we are looking at what the section says.  There may be all sorts of economic and commercial grounds upon which to argue injustice but we are concerned with what the section says.

MR TURNBULL:   Yes. 

GAUDRON J:   And if you think it is commercially or economically unjust, that is a matter for the Parliament, not the courts.

MR TURNBULL:   Certainly, your Honour.  But, your Honour, we say that when one looks at the section, the deliberate exclusion of the word “interest” from the section, was just that.  It was deliberate.  There is no ambiguity in the section.  We say it is clear that subsection (1) gives you the right to sue for principal and interest.  Subsection (4) retains that right in the face of an application under section 170, but does not retain the right in relation to premium, but does not retain the right in relation to the question of interest.  In so far as it can be said that employers could use the construction that I suggest to your Honours, to avoid the payment of premium over a period of time until a redetermination takes place, the employer does it at its own risk because of the high rate of interest that is provided for in subsection (1), 1.2 per cent per month compounded, far beyond that which is a commercial rate of interest.

So that, an employer only does it, as I say, with the risk of having to pay a much higher rate of interest on the money than it would otherwise do if, for example, it borrowed the money to pay the premium.  In the present case, as indicated, your Honour, the premium that was withheld was not the entire premium.  It was that which the employer said was not properly payable and, indeed, that turned out to be generally the result in each of the years for which the employer – and it has been every year – made a claim for redetermination under section 170.  In my submission, your Honour, the construction of the section which the Court of Appeal puts on it when it refers to a necessary but shorthand way, is not the way that the section should be viewed.

It was not necessary to do it in a shorthand way.  If the legislature wanted to include the right to recover interest, the words would have been in the section.  They are not in the section.  It is consistent with a scheme to ensure the premium is paid but that it does not force the employer to pay

interest until such time as the redetermination takes place.  Your Honours, I can see that there is ‑ ‑ ‑

GAUDRON J:   There is not a lot to be said ‑ ‑ ‑

MR TURNBULL:   There is not a lot more that I can say, your Honour.  I think your Honours have grasped the issue.  Unless there is anything else, your Honours.  I should say, there is some other matters referred to in my written submissions, I do not wish to talk to those other than what is put into those submissions.

GAUDRON J:   Thank you, Mr Turnbull.  We need not trouble you, Mr Rares.

We are of the view that the proposed appeal does not enjoy sufficient prospect of success to justify the grant of special leave.   Moreover, it raises no question of general principle but turns on its own facts and the particular provisions of the Workers Compensation Act 1987 (NSW). Accordingly, special leave is refused.

MR RARES:    Could we have costs, your Honours?

GAUDRON J:   You cannot resist that, can you?

MR TURNBULL:  I have nothing to say.

GAUDRON J:   The application is refused with costs.

AT 12.08 PM THE MATTER WAS CONCLUDED