South Australian Meat Corporation v Alexander Mundie No. SCGRG 95/1588 Judgment No. 5463 Number of Pages 10 Workers' Compensation

[1996] SASC 5463

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Workers' compensation - jurisdictlon of the Supreme Court - Proceedings instituted in the Supreme Court by exempt employer for declarations that the defendant worker was not entitled to income maintenance under the WorkersRehabilitation and Compensation Act 1986, that a valid notice to terminate payments had been given, that the terms of settlement of earlier proceedings by the worker in the District Court operated to prevent him from subsequently claiming income maintenance, and that in any event his alleged fraud in concealing the existence of previous back injuries in answer to a questionnaire which he signed before commencing employment vitiated the claims for compensation under the Act - appeal from a Master's rejection of an application by the defendant for summary judgment dismissing the proceedings in the Supreme Court allowed - held that all of the relief sought with respect to the claims for compensation should be dealt with by apprporiate recourse to the procedures under the Act and could not properly be dealt with by declaratory relief in the Supreme Court - as to the question of fraud, the Act was a complete code for the determination of claims for compensation, and if alleged fraud was relevant to any such claim it could and should be taken into account in processing the claim under the Act and could not be made the subject of recourse to the equitable jurisdiction of the Supreme Court - on any view, the plaintiff's claims could not succeed and should be dismissed. Workers Rehabilitation and Compensation Act 1986 ss 36,43,95,97,99,100 and 120; Workers' Compensation Act 1971 ss70 and 90(1); Supreme Court Rules R
25.04, referred to. Forster v Jododez Australia Pty Ltd and Anor (1972) 127 CLR 421; Ismakovich v The Broken Hill Pty Company Ltd Industrial Court, Deputy President Stanley, 15 April 1982, W34/1982, unreported; Liverpool and London and Globe Insurance Co Ltd v J. W. Deaves Pty Ltd and Ors (1971) 2 NSWLR 131; Schofield v Comcare (1995) Australian Workers Compensation Cases Digest 74-686 CCH, considered.

HRNG ADELAIDE, 15 January 1996 #DATE 19:2:1996 #ADD 28:3:1996

Counsel for appellant:     Mr A Besanko QC with him
   Mr A Rossi

Solicitors for appellant:    Mantsoros and Partners

Counsel for respondent:     Mr N Strawbridge

Solicitors for respondent: Minter Ellison Baker O'Loughlin

ORDER
Appeal allowed.

JUDGE1 PERRY J This is an appeal by the defendant against the refusal by a Master of an application by the defendant pursuant to R 25.04 seeking summary judgment, that is, dismissal of the plaintiff's claim.

2. Notwithstanding the fact that the proceedings before me are by way of an appeal, I will continue to refer to the parties as the plaintiff and the defendant.

3. In dealing with the application, the Master did not give separate reasons, but he made the following observation in his fiat:
    "The onus in such a case is a very high one, and requires
    the defendant to establish that the plaintiff's claim cannot
    succeed. In this case Mr Rossi for the defendant has on
    several occasions indicated that the court should exercise
    its discretion in favour of the defendant. This seems to me
    to imply that there is some arguable basis for the claim. I
    am not satisfied, therefore, that the onus has been
    discharged. I therefore dismiss the application."

4. A mere reference by counsel to the fact that the court has a discretion whether or not to allow an application for summary judgment is not tantamount to a concession that there is an arguable basis for the plaintiff's claim. There is always a discretion as to whether or not summary judgment should be given at the interlocutory stage of proceedings, or whether the proceedings should be allowed to go to trial.

5. It does not appear from the terms of the order that the Master directed his mind to the merits of the application. In those circumstances, the best course is for me to address the application afresh and substitute such view as I may come to following my consideration of it.

6. For the purposes of dealing with the matter, I accept at face value the allegations in the statement of claim. In particular I assume the accuracy of the various allegations of fact made by the plaintiff. Most of them are, in any event, admitted in the defence.

7. The plaintiff is an exempt employer within the meaning of s60 of the Workers Rehabilitation and Compensation Act 1986 ("the Act"). It employed the defendant as a maintenance fitter as from 26 February 1990, following the defendant's application to the plaintiff for work.

8. Before taking him on, the plaintiff required the defendant to provide answers to a written questionnaire. This included questions obliging the defendant to state whether he had previously experienced illness, injury or disability, and if so, whether that had caused any absence from work, and further, whether he had experienced back pain. The defendant answered each of those questions in the negative.

9. It is asserted in the statement of claim that the answers amounted to representations and that, inter alia:
    ".... 8.2 The defendant knew the representations were false
    and knew that the plaintiff would rely on the
    representations when considering his application for
    employment and the duties to be provided.

8.3 The plaintiff relied on the representations made by the
    defendant when considering his application for employment
    and the dates to be provided to him".

10. The statement of claim also asserts that the questionnaire included a warning that "false information given deliberately for the purpose of concealing any disability" would render the applicant for employment, in this case the defendant, liable to dismissal.

11. It goes on to assert that the defendant "fraudulently represented to the plaintiff the extent of his working capacity" (paragraph 12).

12. In fact, it appears that before applying for work with the plaintiff, the defendant had, in the course of previous employment by the Royal Adelaide Hospital, suffered a number of injuries to his back, the first of them being in 1977, and other injuries or exacerbations of the injury suffered then, on various dates leading up to about April 1983. He was examined and treated by a number of medical practitioners with respect to his back condition.

13. In 1983 he commenced proceedings in the Industrial Court seeking workers compensation against the Royal Adelaide Hospital. Those proceedings resulted in a consent order pronounced in February 1984 by the Industrial Court pursuant to which he received $20,000 under s70 of the Workers Compensation Act 1971.

14. Thereafter the defendant received an invalid pension for various periods between 1983 and 1984 and 1986 and 1988 on the basis that he was incapacitated for work to the extent of at least 85% by reason of his back disability.

15. It is that pre-existing history of back injuries, coupled with the circumstances of the successful claim for compensation against the Royal Adelaide Hospital and the subsequent grant to the defendant of an invalid pension, considered against the answers to the questionnaire leading to his employment by the plaintiff, which gives rise to the allegation of a fraudulent misrepresentation on the defendant's part.

16. The plaintiff asserts (statement of claim para 14), and must therefore be taken to admit, that on 16 December 1991 the defendant suffered an injury to his lower back during the course of his employment by the plaintiff. In consequence of that injury, the defendant made a claim against the plaintiff for compensation under the Act. In response to that claim, the plaintiff paid weekly payments of income maintenance pursuant to s35 of the Act for the period 16 December 1991 to 29 May 1992 and for a period of 1.3 hours on 4 June 1992, and made certain other incidental payments pursuant to the Act.

17. The plaintiff asserts that the defendant returned to work on about 29 May 1992 whereupon it ceased payments of weekly income maintenance.

18. On 12 June 1992, representatives of the plaintiff had a conversation with the defendant and his union representative. During the course of that conversation, his previous medical history, which had apparently by then become known to the plaintiff, was put to him. On the same day he was summarily dismissed.

19. In the course of proceedings commenced by the defendant against the plaintiff in the District Court, on 14 February 1995 an order was made in that court by consent in favour of the defendant against the plaintiff for a further payment of $11,500 inclusive of interest and costs, that sum being awarded as a lump sum by way of compensation for non-economic loss pursuant to s43 of the Act.

20. It appears that following the defendant's alleged return to work on 29 May 1992, the plaintiff did not give notice to him in writing of its decision to discontinue weekly payments, as might arguably have been required by s36(3) of the Act.

21. On 7 March 1995, the defendant made an application for a review of the plaintiff's "decision" in June 1992 to cease weekly payments. That application for review came on for hearing before a review officer on 19 August 1995.

22. By written notice dated 7 August 1995, which was after the defendant's application to review the cessation of weekly payments had been brought, but before the hearing of it before the review officer, the plaintiff purported to give notice to the defendant of its decision "to discontinue your weekly payments of income maintenance, including any overtime component, as from 1 June 1992 on the ground that you have returned to work".

23. In a decision made on 14 August 1995, a review officer held that the notice had not been served as required by the Act (s36(3a)(c)) "as soon as practicable after the decision" to discontinue had been made. He further held that payments had not "legally ceased" (transcript 30).

24. In the light of those findings, and after further finding that the appropriate rate of weekly payments was $581.79, he determined and ordered: "... that payments have been illegally ceased or ceased not in conformity with the Act, and that Mr Mundie is entitled to weekly payments at the rate of $581.79, as adjusted from time to time pursuant to the Act, from 12 June 1992 and continuing until lawfully ceased pursuant to the Act." (transcript 33)

25. An incidental question involved in the proceedings heard by the review officer was as to the application of s95(4). That provides that "an application for review ... must be made within one month after the person applying for the review receives notice of a decision to which the review relates" unless an extension of time for making the application is given in accordance with the section. Here, of course, the only written notice was not given until 8 August 1995, which was after the application by the defendant to review the plaintiff's decision to discontinue the payments of income maintenance had been instituted.

26. The plaintiff appealed against the review officer's determination to which I have referred. That appeal is still pending.

27. The proceedings in this Court were instituted on 10 August 1995 when a summons was issued to which the statement of claim was attached.

28. After setting out a number of allegations of fact in the statement of claim, which I have endeavoured to summarise, the plaintiff goes on to seek various declarations which, as Mr Besanko QC of counsel for the defendant pointed out in his argument before me, relate broadly to three topics, namely:
(1) The effect of the notice provisions in s36(3) of the
    Act (statement of claim paragraphs 29.1 and 29.2).

(2) The effect of the alleged fraud (paragraphs 29.3 to
    29.6).

(3) The effect of the orders made by the District Court
    (paragraphs 29.7 to 29.9).

29. Within the first category, the plaintiff seeks declarations that it was not obliged to give a notice in writing of its decision to discontinue weekly payments following the defendant's return to work on 1 June 1992, or alternatively, that the notice given on 8 August 1995 was valid and effective for the purposes of s36(3) of the Act.

30. As to the second category, the plaintiff seeks declarations that the defendant's claim for compensation (going back to the time when it was originally made in December 1991) " is vitiated by the defendant's fraud", as is the determination made by the plaintiff to accept the claim, and that any claim or entitlement to benefits which the defendant has made or may make pursuant to the Act is similarly vitiated by his fraud, and further that it would be contrary to public policy to permit him to enforce any entitlement to benefits under the Act in the circumstances.

31. As to the third category, the plaintiff seeks declarations that the consent order in the District Court made in February 1995 precludes the defendant from asserting any entitlement to further compensation or benefits under the Act, and that in particular the defendant's acquiescence in the consent order in some way precludes the defendant from seeking any order, by which I assume any further order, under the Act in respect of the disabilities to which the order relates.

32. Within this third category there is a specific plea:
    "29.9 That the defendant is estopped from asserting any
    entitlement to compensation or other benefit under the
    Workers Rehabilitation and Compensation Act 1986 for any of
    the disabilities pleaded in paragraph 27.2 of the Statement
    of Claim, the defendant having by the undertaking referred
    to, agreed he has no incapacity arising out of the
    disabilities referred to."

33. In order to understand that plea, it is necessary to refer to the terms of the consent order as pleaded in the statement of claim. (In the order the "plaintiff" refers to the defendant in these proceedings and the "defendant" refers to the plaintiff in these proceedings.)

34. That order was expressed as follows:
    "By consent:

1. There be judgment for the plaintiff against the
    defendant in the sum of $11,500 inclusive of interest and
    costs.

NOTE 1. That the defendant determines this day pursuant to
    Section 43 of the Workers Rehabilitation and Compensation
    Act 1986 that there is a Nil entitlement for the following
    pleaded disabilities:
    _ lumbar spine
    _ both shoulders
    _ cervical spine
    _ both lower limbs
    _ depression and anxiety
    _ loss of the capacity to engage in sexual intercourse.

2. An undertaking by the plaintiff not to seek a Review of
    the above determination."

35. It is convenient to deal first with the third category to which I have referred.

36. Even if the plaintiff was otherwise entitled to invoke the jurisdiction of this Court with respect to the matters the subject of the declarations sought, a question which I will come to, the claims for declarations in this category do not survive analysis against the provisions of s43 of the Act.

37. Section 43(1) provides:
    "Subject to this Act, where a worker suffers a permanent
    disability and the disability is compensable under this Act,
    the worker is entitled (in addition to an entitlement apart
    from this section) to compensation for non-economic loss by
    way of a lump sum.

(2) ..."

38. The words "entitlement apart from this section" include the workers entitlement under Division 4 to compensation by way of income maintenance. An undertaking by a worker not to seek a review of a determination of a lump sum awarded by way of compensation for non-economic loss under s43 of the Act cannot have any effect on the worker's entitlement to income maintenance. That is so even where the determination of an entitlement under s43 is in terms denying any entitlement with specific reference to a lumbar spine disability, and even where such a disability is said in the context of the claim for income maintenance, to justify the maintenance of weekly payments.

39. The fact that the defendant was prepared to give an undertaking in those terms may, of course, be a relevant item of evidence in the context of a claim for income maintenance, if an issue as to the worker's back condition became relevant to the determination of such a claim. But on the face of it, here, no such question arises. This aspect of the case appears to be limited to the issue whether or not the appropriate procedures have been followed entitling a discontinuance of weekly payments. Whether or not there is an ongoing disabling back condition in fact is irrelevant to a determination of that issue.

40. It follows that, in my opinion, the declaration sought as to the effect of the orders made in the District Court are predicated upon an untenable construction of the relevant provisions of the Act.

41. As to the first category of declaration sought, that is to say, as to the necessity for and efficacy of a notice in writing to discontinue weekly payments, clearly, this is a matter which should be left to the review and appeal authorities established by the Act.

42. I was referred by Mr Besanko QC to dicta by Walsh J in Forster v Jododex Australia Pty Ltd and Anor (1972) 127 CLR 421, which is apposite (427):
    "In my opinion, when a special tribunal is appointed by a
    statute to deal with matters arising under its provisions
    and to determine disputes concerning the granting of rights
    or privileges which are dependent entirely upon the statute,
    then as a general rule and in the absence of some special
    reason for intervention, the special procedures laid down by
    the statute should be allowed to take their course and
    should not be displaced by the making of declaratory orders
    concerning the respective rights of the parties under the
    statute."

43. Here there is no reason to think that the respective rights of the parties with respect to the issues which arise in connection with the notice provisions to be found in s36 of the Act cannot properly and effectively be determined by the processes of review (s95), appeal to the Tribunal (s97), case stated (s99), and ultimately by an appeal to this Court on a question of law under s100. In those circumstances, it would clearly be inappropriate for this Court to entertain applications for declaratory relief of the kind sought.

44. This leads me to deal with the second category to which I have referred, namely the declaration sought as to the effect of the alleged fraud of the defendant.

45. In the ordinary administration of the scheme of compensation provided for in the Act, the question of fraud is more often encountered with respect to the circumstances said to give rise to an injury, or as to the existence or extent of a disability said to arise from an injury.

46. Allegations that a worker has fraudulently pretended to have suffered a disability, or fraudulently pretended that a genuine disability was suffered in circumstances giving rise to a claim under the Act, are regularly considered and ruled upon by those responsible for adjudicating upon claims made under the Act.

47. It is important to note that has it is not suggested by the plaintiff that the defendant has been guilty of a fraudulent pretence with respect to the injury which he suffered while in the plaintiff's employ. On the contrary, for reasons which I have given, the plaintiff must be taken to have accepted that such an injury did occur.

48. Here, however, the fraud which is asserted is fraud said to attach to the circumstances in which the defendant was engaged as an employee by the plaintiff.

49. Further, it is said that the procedures invoked by the defendant in the exercise of what he asserts to be his rights under the Act are in some way "vitiated" by reason of that alleged fraud.

50. The only express references in the Act to conduct which could conceivably amount to fraud appear under the heading "Part 7 Miscellaneous", more particularly s120 which appears within that part. That section provides:

    "(1) A person who-
    (a) obtains by dishonest means a payment or other benefit
    under this Act; or
    (b) dishonestly claims to be entitled to a payment or other
    benefit under this Act; or
    (c) dishonestly makes a statement about a claim under this
    Act knowing the statement is false or misleading; or
    (d) dishonestly makes an application, or gives a return,
    under this Act knowing the application or return to be false
    or misleading,
    is guilty of an offence.
    Penalty: $50,000 or imprisonment for one year.

(2) A person who-
    (a) aids, abets, counsels or procures the commission of an
    offence against subsection (1); or
    (b) solicits or incites the commission of any such offence,
    is guilty of an offence.
    Penalty: $10,000 or imprisonment for one year.

(3) Where a court convicts a person of an offence against
    this section, or finds a person guilty of such an offence
    without recording a conviction, the court must, on
    application by the Corporation or an exempt employer, order
    the person who committed the offence-
    (a) to make good any loss to the applicant resulting from
    the commission of the offence; and
    (b) to reimburse costs incurred by the applicant in
    investigating and prosecuting the offence."

51. Where dishonesty takes the form of fraud, the fraud will be relevant to a prosecution for dishonesty under that section. Upon conviction, there is jurisdiction under subs(3) for the court to order the offender to make good any loss to the Corporation or an exempt employer, insofar as the loss results from the commission of the offence.

52. Under s36(1)(e) of the Act, weekly payments may be discontinued if "the worker is dismissed from employment for serious and wilful misconduct". That expression, however, is not apt to comprehend conduct by the worker which antedated the entry by him or her into the relevant contract of employment: see Ismakovich v The Broken Hill Pty Company Ltd (Industrial Court, Deputy President Stanley, unreported, 15 April 1982, W34/1982) at 26:
    "... my researches do not reveal any case in which it has
    been found that any act or omission by the worker, prior to
    the contract of employment being entered into between the
    worker and the employer, constituted serious and wilful
    misconduct as that expression is understood in workers
    compensation legislation."

53. That was a case which fell to be determined under the Workers' Compensation Act 1971. That Act provided that in the case of industrial diseases, compensation was not payable for the manifestation of a disease "that is of such a nature as to be contracted by a gradual process", if the worker had "wilfully and falsely represented himself in writing as not having previously suffered from the particular" disease (s90(1)). There does not appear to be a corresponding provision in the Act now in question. (But see the Safety Rehabilitation and Compensation Act (Cth) (1988) s7(7) and Schofield v Comcare (Administrative Appeals Tribunal, 17 February 1995, AAT No 10.015).

54. No doubt a fraudulent mis-statement of the kind alleged in this case is relevant to the question whether or not the employer may dismiss summarily. But that question is not relevant to the question now at issue.

55. In my opinion, fraud said to attach to the circumstances in which an employee secures employment is irrelevant to the determination of the employee's rights under the Act vis a vis the employer when those rights are said to arise out of an injury genuinely suffered during the course of the employment. I suppose one would have to acknowledge that this might be subject to an exception where not only was there fraud inducing the employer to employ the worker, but the worker deliberately then exposed himself to the risk of injury with a view to obtaining compensation. That, however, is likely to be caught within the exception relating to serious and wilful misconduct.

56. Clearly, the Act is intended to be a complete code defining the circumstances in which a worker is entitled to compensation for employment related injuries. Applications for declarations should not be entertained in this Court if the making of them would have the effect of binding or purporting to bind a worker in respect of his or her rights under the Act: Liverpool and London and Globe Insurance Co Ltd v J.W. Deaves Pty Ltd and Ors
(1971) 2 NSWLR 131.

57. To accept the argument that fraud said to infect the circumstances in which the worker secured the relevant employment could operate to extinguish claims otherwise pursuable under the Act, would be to amend the Act by writing into it an exception which cannot either expressly or by implication be found within it.

58. As though by way of an afterthought, in the prayer for relief which finds expression in paragraph 30 of the statement of claim, the plaintiff seeks "30.2 damages". The claim for damages is not particularised or linked with any alleged cause of action. Insofar as Mr Strawbridge suggested that that part of the prayer for relief conceals a latent claim for damages on the footing that the plaintiff would seek reimbursement of any weekly payments of compensation which it might be called upon to make, it cannot be regarded as having any greater chance of success than the plaintiff's other claims. To admit such a claim would again interfere with the working out of the rights and liabilities created by the Act in a manner not contemplated by it.

59. In my opinion, none of the plaintiff's claims can succeed in this Court "on any possible view of the facts or the law" (R 25.04(1)(c)).

60. The appeal should be allowed. In substitution for the order appealed from there should be an order that the application by the defendant pursuant to R 25.04 seeking summary judgment, be allowed to the intent that the action be dismissed.

61. I so order.