Scammell & Co v Workcover Corporation of South Australia

[2007] HCATrans 104

[2007] HCATrans 104

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A20 of 2006

B e t w e e n -

SCAMMELL & CO

Applicant

and

WORKCOVER CORPORATION OF SOUTH AUSTRALIA

Respondent

Application for special leave to appeal

KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 2 MARCH 2007, AT 11.59 AM

Copyright in the High Court of Australia

MR W.J.N. WELLS, QC:   If the Court pleases, I appear for the applicant.  (Denise Watkins)

MR P.A. McNAMARA, QC:   If the Court pleases, I appear with MR C.M. BEAMES, for the respondent.  (instructed by Johnson Winter & Slattery)

KIRBY J:   Thank you.  Yes, Mr Wells.

MR WELLS:   May it please the Court.  There is reason to doubt the correctness of the Full Court’s decision and if it is wrong we submit that this Court should correct it.  It concerns the effective operation of State legislation that regulates compensation for work injury.  It compromises the worker’s right to legal representation which is promoted by the Act itself in section 85B.  It achieves, by implication, a surgical excision of the solicitor’s lien which it took express and detailed provision in antecedent legislation to achieve and the decision, we submit, fails to explain why the equitable right is limited to payments under a provision dealing with party and party costs, section 95, overlooking section 88G which deals with solicitor client costs, specially where an order ‑ ‑ ‑

KIRBY J:   Your theory of the legislation is that the lien is restored when for many years it was not available, but your argument then is it was not available by express legislation and that express provision is no longer part of the law of South Australia so it sort of cuts both ways?

MR WELLS:   With respect, your Honour, and I am perhaps jumping ahead, in the process of reasoning that the Full Court undertook that our submission is that what is evidence from the antecedent legislation is that a policy which had hitherto been adopted and pursued by detailed provision has been abandoned in favour of a different policy which under this Act explicitly urges legal representation in a jurisdiction where at the time legal representation is required the worker is financially at a disadvantage and those practitioners who undertake to represent need some ability to be assured of their costs in order to provide appropriate representation.

KIRBY J:   Did the Minister introducing the Bill that repealed the provision that formerly expressly prevented a lien on workers compensation payments, did the Minister refer to some policy or other reason for abolishing that lien, because it has been a very common provision throughout Australia?

MR WELLS:   As far as we can gather, your Honour, no reference is made either negatively or positively to that.  There is a fairly straightforward introduction of the sections of the Act with very little commentary which explains policy.  In part that may be explained by these circumstances in which the legislation was introduced and the extent to which during the course of its passage through Parliament it underwent fairly substantial change.  But that aside, your Honour, our submission is that it is a strange application with respect of legal reasoning to say that because there is a legislative tradition which has been pursued by previous legislation of limiting the equitable right and controlling it by provisions which require orders of the court, that because that tradition has no longer been imported into the existing legislation, that nevertheless the force of that tradition should operate as a basis for drawing implications from a disparate textual references within the existing legislation itself.

The submission that we make is that the process of reasoning by which the Full Court came to its conclusion involved five principal steps, each of which discloses error.  If I can take your Honours to the application book page 20, in the reasons for judgment of Justice Layton who delivered the only reasons on behalf of the court, step one in the five principal steps appears at paragraph 81 at the end of a discussion of a series of provisions dealing with, expressly, entitlements to income maintenance and medical expenses and focuses upon a provision of the present Act, section 46, which declares that WorkCover, the Corporation, has the liability for paying compensation where that has been adjudged under either the provisions of the Act or by the Tribunal.

KIRBY J:   And paying it to the worker, as I understand it?

MR WELLS:   Your Honour, we, with respect, take issue with that for this reason.  First of all, the text of particularly section 35, and section 46 of the Act do not speak in reverberant terms of anything to do with the physical payment of compensation.  Its operation is principally to declare the entitlement to income maintenance and the entitlement to medical expenses.

What the step one overlooks, in our submission, is the dual role of sections 35 and 36, establishing first of all the entitlement to income maintenance and then in the first instance regulating the making of those payments week by week during incapacity.  To that extent, if one delves far enough into sections 35 and 36 one finds references to payments to the worker but they do not exist there as the principal obligation.  The point is this, step one fails to recognise that the legal practitioner becomes involved where there is a determination by WorkCover or its agent not to make payments of income maintenance.  In other words, at a point well beyond section 35.

The dispute proceedings that follow in the Tribunal result in orders of the Tribunal as to entitlements and the payment of arrears, whether it be a lump sum for income maintenance, redemption or non‑economic losses.  The question is this, whether upon the making of an order by the Tribunal for compensation where there has previously been a refusal by WorkCover to make payments of any kind or of sufficient kind, whether at that point the order by the Tribunal a particular lien arises.  Sections 35 and 36 do not address that.  Section 46 does and does by referring to the liability that the WorkCover has to make payments of compensation without reference at all to circumstances, that is, who is to be the recipient. 

The first step which provides the foothold for the subsequent reasoning is, we submit, flawed in itself because it makes the tail wag the dog and picks up on one or two really incidental references to payments to workers in order to make the big proposition that this Act entrenches the obligation to make payments of compensation that is only directly and personally to the worker.  One may take leave to ask whether in fact on that analysis it would be open to WorkCover to make any payments to a worker’s bank account, given the large conclusion that is reached. 

Step two, your Honours, is reflected in paragraph 90 of her Honour’s reasons which are on page 22 of the application book and this follows her Honour’s consideration of the provisions in relation to the compensation fund which appear in section 64 of the Act, that is, when is WorkCover authorised to make payments out of the compensation fund, and her Honour’s consideration as a result of section 95.  Your Honours we invite you to note in paragraph 90 two features of her Honour’s conclusions.  The first is, her Honour concludes that:

In my view the clear intent of the legislative provisions is to require the defendant to pay the costs of a legal practitioner directly to the practitioner from the Compensation Fund if an award is made, but that the payment is limited to such an amount as the Tribunal orders.

Her Honour elevates a discretion relating to a provision with respect to party party costs, a discretion which does not in terms address the entitlement of a legal practitioner but addresses the advice and assistance provided by professionals.  Her Honour elevates that to, effectively, an entitlement by order to receive direct payments by order of the Tribunal.

Her Honour concludes, again by referring back to section 64, that in the absence of such an order there is no authority for WorkCover to make a payment out of the compensation fund.  Her Honour concludes that way because, if your Honours were to view section 64 of the Act which is in the materials, your Honours ‑ ‑ ‑

KIRBY J:   Yes, we have that.

MR WELLS:   Thank you, your Honour.  Section 64(3) is the critical provision:

The Compensation Fund shall be applied towards –

Her Honour identifies two possibilities, and she rejects this.  The first is:

(a)the payments of compensation that the Corporation is liable to make under this Act –

Her Honour seizes instead, passing over paragraph (b), on:

(c)the costs of the system of dispute resolution established by this Act –

Her Honour seizes on the reference there to the word “costs” and her Honour says dispute resolution is dealt with under Part 6A of the Act which includes section 95 so, therefore, section 95 must be the only avenue and, in particular, for present purposes, subsection (4), the only avenue by which authority exists to make payments out of the fund.

Our respectful submission is that that is a misconception of the right that we are talking about, the misconception we seek to elaborate, your Honours, in our written outline at paragraphs 13 to 16.  But in summary, the error, we submit, is this and this bears very much upon the nature of the right that is under consideration.  The right, let us call it for the moment an equitable right, as Chief Justice Jordan was very ready to do, an equitable right resistant to insolvency does not attach to a fund and, in particular, does not attach to the compensation fund.  It is a right which enables recovery from the moneys that are due, in this case, to the worker.

So the question that arises is, when, under section 64(3)(a), WorkCover corporation makes a payment of compensation, which it is perfectly authorised to do under paragraph (a), when it makes that payment, who is the person who gives the good discharge?  Is it the worker or, insofar as there is a right which exists in the solicitor to recover their costs out of the fruits of the proceedings, to that extent, is the only person who can give a good discharge the solicitor?  In the case at Bar, all of the moneys were paid to the worker, but our contention is that one cannot make the tail wag the dog again.  If, as we contend, there is a lien, then the worker could only give a discharge as to portion only and as to that amount which represented the value of the cost no discharge could be given.  There is nothing in section 64 that addresses that. 

The authority to make the payment is there.  The operation of the lien occurs at a subsequent point and the question therefore is not answered by saying, as her Honour offered it, that because there is no provision in section 64(3) which authorises payment to the solicitor, that therefore there can be no lien except to the extent that under section 95(4) the Tribunal is given a power to order a payment directly to a professional who has given legal advice.  But, as we say in our outline, all that does, apart from not identifying the practitioner as the chief beneficiary of that provision, leaves everything to a point in the proceedings which is at the end and subject to a discretion that the Tribunal has.

The third step, your Honours, in the process of reasoning is paragraph 91 on the same page and again we place some weight on how her Honour expresses it.  Her Honour identifies a strong indication that:

the WR&C Act intends to exclude any entitlement of a solicitor to claim a lien for payment by the defendant [WorkCover] from the Compensation Fund other than a payment following an award for costs under s 95(4).

Which does not, in terms, address the solicitors, only the more general provision of professionals.  Her Honour then goes on to say that that suggests that there is a modification of the “solicitor’s right of entitlement”.

KIRBY J:   Mr Wells, we have, as you would understand, read the reasons of Justice Layton very carefully.  We know the steps in her Honour’s reasons.  I would not want your time to expire without your addressing what seems to me a difficulty.  By the time statutory construction questions reach this Court, there are usually views that can be put on both sides of the interpretation.   You have landed a few blows this morning and I would fully accept that, but on the basis that this is legislation that has always been amended all the time, why would this Court become involved in working out whether we reached a different view to Justice Layton in the Full Court as distinct from saying this is the view that has been taken by the highest court of South Australia on quintessentially local legislation and if Parliament does not like it, it can change the statute?

MR WELLS:   Your Honour, our answer to that is this.  First of all, in our respectful submission, it is, as a generality, a dangerous assumption to make that all matters can be sorted out by a Parliament ‑ ‑ ‑

KIRBY J:   I would accept that too, but on the other hand, this is legislation which is constantly being scrutinised and it is writing against a background of fairly common provisions throughout this country which have lasted since 1926, in my understanding, that have prohibited the general law on liens from operating on compensation payments.

MR WELLS:   Your Honour, as we have attempted to show in our outline and the materials that we have provided to the Court, that is not now so.  It is true that in some jurisdictions there is ‑ ‑ ‑

KIRBY J:   In New South Wales I think it stills exists, but then you say a point against it is that it was in the South Australian Act and it has been removed and I accept that point.  Now, you read two affidavits.  One is by Denise Jean Watkins and the other by Anthony James Vincent Kerin.  I do not know if there is any objection to the reading of those affidavits.  Does Mr McNamara have any objection to those affidavits being read as relevant to the general importance of the matter?

MR McNAMARA:   We say to your Honours that those affidavits cannot, of course, assist in the construction of the Act, but I do not object to your Honours looking at them.

KIRBY J:   Yes, very well.  They are relevant to the importance of the issue, so we will read those, I would think.  Mr Wells, what do you make of those affidavits?

MR WELLS:   Your Honour, the propositions which lie behind those affidavits we seek to set out in our summary of argument, in the first instance, at paragraph 23 which is application book page 52.

KIRBY J:   The affidavits are argumentative.  At least Mr Kerin’s is argumentative.  He says small firms will not take these cases on on these conditions, but small firms have been taking these cases on since 1926.

MR WELLS:   Your Honour no doubt is right up to a point, but our contention is that what lies behind the current legislative policy is a better access to justice than has hitherto existed.  That is, the so‑called tradition and  history which is evident in the previous legislation has also exposed the limitations on the ability to provide a proper representation to clients.

KIRBY J:   But at a price of removing any restraint on the solicitor’s lien such that it could gobble up the whole of the compensation payment.

MR WELLS:   Not at all, your Honour.  Your Honours should not be misled by the figures in this case.  I do not mean to reflect on the submission in the way that I have just said, it is put in the respondent’s outline that the costs here were more than the compensation that was awarded.  Your Honours will need to bear in mind that there were two actions that were the subject of issues for the determination of the Full Court, one of which does not any longer exist.  It was a related action in the Industrial Court and most of the costs were in relation to that proceeding which the Full Court held could not be made the subject of the lien.  There

was only, I think, something like $3,000 out of the full compensation of 39 which was referrable to the workers compensation litigation.  So one should not see it out of context in that respect at all.  Your Honours, if I can just say that so far as ‑ ‑ ‑

KIRBY J:   One more sentence, Mr Wells.

MR WELLS:   I will try to avoid the commas, your Honour.

KIRBY J:   I am sorry, it is always a displeasure to stop an advocate such as you.

MR WELLS:   I am obliged to your Honour.  The Watkins’ affidavit, your Honour, addresses the extent to which the Act has a large influence on the life of the community in South Australia, as appears in paragraph 23 of the summary of argument.  May it please the Court.

KIRBY J:   Yes, thank you very much, Mr Wells.  Mr McNamara, the Court does not need your assistance.

The applicant challenges a judgment of the Full Court of the Supreme Court of South Australia.  That judgment given by Justice Layton involved the construction of the Workers Rehabilitation and Compensation Act 1986 (SA). The practical question in issue is whether that Act, in effect, abrogates the lien enjoyed by solicitors under the general law for their costs incurred in disputed claims before the State Workers Compensation Tribunal.

The applicant has presented a number of arguments that have a certain attractiveness.  We also appreciate that the issue may be one important for the funding of workers’ compensation litigation in the State of South Australia.  On the other hand, the interpretation adopted by the State’s highest court is open and the legislation in question is the subject of frequent review and amendment.

We do not believe that the application would have reasonable prospects of success if special leave were granted.  Accordingly, special leave is refused.  It is noted that there is an agreement between the parties as to the costs.

AT 12.23 PM THE MATTER WAS CONCLUDED