Shirley v Mooloo Farms Pty Ltd
[2003] TASSC 101
•13 October 2003
[2003] TASSC 101
CITATION: Shirley v Mooloo Farms Pty Ltd [2003] TASSC 101
PARTIES: SHIRLEY, Martin Edmund
v
MOOLOO FARMS PTY LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: BDR LCA 11/2003
DELIVERED ON: 13 October 2003
DELIVERED AT: Hobart
HEARING DATES: 29 September 2003
JUDGMENT OF: Underwood J
CATCHWORDS:
Workers Compensation – Insurance or levy – Tasmania – Uninsured employer – Penal proceedings – Mandatory penalty – Where no conviction ordered – Interaction with Sentencing Act.
Workers Rehabilitation and Compensation Act1988 (Tas), ss97(10), (11) and 130.
Sentencing Act 1997 (Tas), ss7(f), 10(2)(b).
Aust Dig Workers Compensation [252]
REPRESENTATION:
Counsel:
Applicant: F C Neasey
Respondent: J R Smith
Solicitors:
Appellant: Director of Public Prosecutions
Respondent: Smith & Glover
Judgment Number: [2003] TASSC 101
Number of Paragraphs: 25
Serial No 101/2003
File No BDR LCA 11/2003
MARTIN EDMUND SHIRLEY v MOOLOO FARMS PTY LTD
REASONS FOR JUDGMENT UNDERWOOD J
13 October 2003
Since June 1996, Mooloo Farms Pty Ltd ("the respondent") has operated a dairy farm. Mr Seath is a director of the respondent. In June 2002, he and a farmhand, Mr Pyke, were its employees.
On 21 May 2002, Mr Pyke suffered an injury to his right little finger which necessitated its amputation at the first joint. This injury arose out of and in the course of Mr Pyke's employment with the respondent. On 17 June 2002, Mr Pyke submitted a claim for workers compensation. Shortly thereafter, Mr Seath discovered that the respondent had not been insured as required by the Workers Rehabilitation and Compensation Act 1988 ("the Act"), since 4 July 2001.
By a complaint dated 24 June 2003, the respondent was prosecuted for being in breach of the Act between 5 July 2001 and 27 June 2002. The Act, s97(1) requires an employer who is not a self-insurer, to maintain in force with a licensed insurer a policy of insurance that complies with the statutory requirements. Section 97(4) makes it an offence to be in breach of subs(1) and imposes a liability to pay a maximum fine of 500 penalty points.
The respondent pleaded guilty to the charge. The learned magistrate was told that since the respondent commenced business in 1996, Mr Seath had always ensured that all appropriate insurance policies were maintained. To do this, he relied upon an insurance broker. A workers compensation policy was maintained from the inception of the business until July 2001. Premiums were paid by periodic bank transfer from the respondent's bank account.
In 2001, the broker's daughter took over her father's work. In May or June that year, she called upon Mr Seath and they discussed the respondent's insurance needs for the ensuing year. Mr Seath gave her the necessary wage information (unchanged from the then current year) and assumed that he had thereby arranged workers compensation insurance from July 2001 to July 2002.
However, for a reason not apparent upon the plea of guilty in the court of petty sessions, the previous direct debit arrangement did not work and Mr Seath did not notice that debits were not being made to the respondent's bank account. He was completely unaware that the respondent was uninsured until Mr Pyke made his claim. Material before the learned magistrate indicated that the unpaid premium for the year would have been in the order of $2,500.
Upon making the discovery, Mr Seath's broker referred him to the nominal insurer. Mr Seath spoke to an officer at the nominal insurer's office and in result, believed that the respondent had to pay Mr Pyke's entitlements under the Act. This was done. The respondent paid Mr Pyke a total of $3,915.77 being medical expenses and a lump sum payment for the partial loss of a finger. The material does not disclose whether wages were paid, but in all the circumstances, it is a reasonable inference that the respondent paid Mr Pyke's wages during his period of incapacity.
In these circumstances, the learned magistrate utilised the provisions of the Sentencing Act 1997, s7(f), without proceeding to a conviction. An order was made that the proceedings be adjourned for a period of three years upon the respondent undertaking, through its director, that during that period of time it will not commit any offence contrary to the provisions of the Act and that it will appear for conviction and sentence if called upon during that period of time.
The applicant has applied for a review of that order. As filed, the motion to review contained two grounds. However, upon the hearing, Mr F Neasey, who appeared as counsel for the applicant, abandoned the second ground, namely that the penalty was manifestly inadequate. The first ground provides:
"The learned magistrate erred in law in failing to order that the respondent pay to the Board an amount equal to the total of the insurance premium that it had avoided by failing to maintain insurance during the relevant period, as required by Section 97(10) of the Workers Rehabilitation and Compensation Act1988."
The Act, s97(10) and (11) provides:
"(10) A court that convicts an employer of an offence under subsection (1), (6) or (7) is to, in addition to any other penalty imposed in respect of the offence, order the employer to pay to the Board an amount equal to the total of any insurance premiums which the court is satisfied the employer has, at any time during the period of 5 years before the conviction, avoided by failing to maintain insurance as required by subsection (1), failing to provide an estimate or statement as required by subsection (6) or (7) or giving any false information or particular in any such estimate or statement.
(11) In determining the amount under subsection (10), a court is to take into account any amount payable by the employer to the Nominal Insurer under section 130(1)."
The Act, s130(1), to which I shall refer shortly, enables the nominal insurer to recover from (inter alia) an uninsured employer, the amount it has had to pay to the employer's worker. That subsection had no operation in this case because the respondent itself voluntarily paid the worker his entitlements under the Act. Consequently, there was nothing for the nominal insurer to recover pursuant to s130(1). The learned magistrate, the prosecutor, and counsel for the respondent, took the view that the effect of s97(10) and (11) required the court to first assess the amount of money equal to the premiums the respondent had avoided by failing to maintain a policy of insurance and then deduct therefrom any amount payable by the respondent pursuant to the Act, s130(1). As noted, in this case, there was nothing to be taken into account as the respondent voluntarily paid the worker. However, it was assumed in the magistrates court that had the respondent relied upon the nominal insurer to pay Mr Pyke, thus making it liable to repay that sum to the nominal insurer, the amount to be taken into account pursuant to the Act, s97(11), would have exceeded the premium avoided. Consequently, the respondent would not have been ordered to pay anything pursuant to s97(10) had it left the nominal insurer to pay out Mr Pyke.
Not surprisingly, this appeared to work an injustice to the respondent. It was assumed in the magistrates court that a condition precedent to making an order pursuant to the Act, s97(10), was the ordering of a conviction and, accordingly, the learned magistrate made the order which is the subject of this appeal. The Sentencing Act, s10(2)(b), was not mentioned in the magistrates court. It provides:
"(2) A finding of guilt without the recording of a conviction ¾
(a)…
(b)has the same effect as if a conviction had been recorded for the purpose of ¾
(i) appeals against sentence; or
(ii) proceedings for variation or breach of sentence; or
(iii) subsequent proceedings against the offender for the same offence; or
(iv) enactments providing for the mandatory forfeiture of property on conviction; or
(v) enactments providing for any other kind of mandatory penalty on conviction, not involving disqualification for, or loss of, office or the forfeiture, or suspension, of pensions or other benefits."
Mr Neasey submitted that the provisions of the Act, s97(10), constituted "any other kind of mandatory penalty" within the meaning of the Sentencing Act, s10(2)(b)(v) and accordingly, the learned magistrate fell into error by not ordering the respondent to pay an amount equal to the total of any insurance premiums which the court was satisfied the respondent had avoided by failing to maintain insurance as required by s97(1). As mentioned, material put to the learned magistrate showed that this sum was in the order of $2,500.
The question is whether the provisions of the Act, s97(10), constitute "any other kind of mandatory penalty" within the meaning of the Sentencing Act, s10(2)(b)(v).
The traditional statutory phrase used to enact a discretionary maximum penalty is, a person who is in breach of a specified statutory requirement "is liable to a fine of X penalty units" or, "is liable to be ordered to pay …". The traditional statutory phrase used to enact the discretionary additional penalty is "in addition to any other penalty that may be imposed, the Court may order …".
It seems clear enough to me that Parliament intended the provisions of the Act, s97(10), to be mandatory for it provides, not that a court may order payment of an amount equal to the premium avoided, but that a court is to order such payment. No discretion is conferred.
Further, payment of the premium avoided was intended by Parliament to be a penalty first, because it enacted, "in addition to any other penalty imposed" the order for payment is to be made. Second, because s97(10) applies equally to a conviction for a breach of s97(1), (6) and (7) notwithstanding that the maximum penalty for a breach of either subss(6) or (7) is less than the maximum penalty for breach of subs(1). Third, because the Sentencing Act, s10(2)(b)(v), clearly contemplates that the expression "penalty" be given a wide construction. The immediately preceding paragraph refers to "enactments providing for the mandatory forfeiture of property on conviction". Paragraph (v) refers not just to mandatory penalties but to "any other kind of mandatory penalty". The width of that expression is emphasised by the concluding words of par(v) that expressly exclude from it penalties "involving disqualification for, or loss of, office or the forfeiture, or suspension, of pensions or other benefits".
Although, of course, the meaning of any expression in an Act is governed by the statutory context, the following passage taken from the judgment of Fisher J in Re Network Agencies International Ltd [1992] 3 NZLR 325 at 328 indicates that in addition to the specific matters to which I have drawn attention in this case, "penalty" is a word of wide import:
"'Penalty' is relevantly defined in The Shorter Oxford English Dictionary as 'A punishment imposed for breach of law, rule or contract; a loss, disability, or disadvantage of some kind, either fixed by law for some offence or agreed upon in case of violation of a contract'. 'Forfeiture' is defined as the process by which something is 'lost owing to crime or fault; penalty for breach of contract or neglect, fine'. Both contemplate some form of disadvantage imposed principally for punitive reasons. 'Penalty' would appear to be a broad term covering all possible forms of imposed disadvantage."
That is sufficient to determine the motion to review. The learned magistrate fell into error by not making an order that the respondent pay WorkCover Tasmania Board the sum of $2,250. However, it would be remiss of me not to refer to the Act, s130(1), even though it has no effect on this matter.
Section 130(1) confers a right on the nominal insurer to recover claims it has paid or judgments it has satisfied "as a debt due to it" from:
· an uninsured employer;
· a licensed insurer with whom the employer had a policy of insurance;
· a person against whom the employer or licensed insurer had a right of indemnity or contribution; or
· a person liable to pay compensation under s29 (a principal who has entered into a contract with a subcontractor).
Section 130(2) is not material for present purposes. Section 130(3) deals with a different matter. It provides that an uninsured employer is liable to pay the nominal insurer "in addition to any other debts due under this Part, an amount equal to the total of any insurance premiums which the nominal insurer is satisfied the employer has, at any time during the period of five years before the payment was made, avoided by failing to comply with section 97(1)". This is the same phrase as is used in s97(10), apart from the substitution of the nominal insurer for the court.
Subsection (4) enacts a rider. It provides, by par(a), that if the employer pays an amount to the Board, the nominal insurer cannot recover any more under s130(3) and, by par(b), in the event of such a payment, the Board must hand it over to the nominal insurer. Subsection (5) makes it an offence not to pay an amount assessed as being payable pursuant subs(3).
So it can be seen from s130 that not only can the nominal insurer recover from an uninsured employer the claim it has paid, but it can also recover an amount equal to the premium avoided. I draw attention to all of this because I suspect that there is an error in s97(11). When assessing an amount equal to the premium avoided, that subsection requires a court to take into account any amount payable by the employer to the nominal insurer to reimburse the latter for any claims paid by it to an uninsured worker. There is no logic to this. In many, if not the majority, of cases the claims paid by the nominal insurer would far exceed the premium avoided. Why would the Parliament reduce the amount equal to the premium avoided by any claim paid by the nominal insurer when s130 imposes an obligation on the uninsured employer to pay the nominal insurer both the claims paid and the premium avoided?
However, it would make sense and fit the statutory scheme of things if, when making an order pursuant to s97(10), the court were required by s97(11) to take into account any amount that the uninsured employer is liable to pay the nominal insurer for premiums avoided pursuant to s130(3).
The motion to review is allowed. The order made in the magistrates court is varied by adding to the end thereof an order that the respondent pay WorkCover Tasmania Board the sum of $2,250. I will hear counsel with respect to time to pay.
0
2