Victorian WorkCover Authority v BSA Ltd

[2017] VSCA 276

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0065

VICTORIAN WORKCOVER AUTHORITY	Appellant
v
BSA LIMITED & ORS (according to the attached Schedule)	Respondents

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JUDGES:	MAXWELL P, OSBORN and KAYE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	17 August 2017
DATE OF JUDGMENT:	28 September 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 276
JUDGMENT APPEALED FROM:	[2017] VSC 224 (Garde J)

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ACCIDENT COMPENSATION – Workplace injuries – Statutory compensation scheme – Claims assessment and management – Claim by worker for compensation – Authority subrogated to employer’s rights – Employer disputed fact of claimant’s employment – Authority rejected claim on other grounds – Claimant instituted proceedings against employer – Whether Authority subrogated to employer’s right to defend proceeding – Whether right of subrogation dependent on proof that claimant was employed – Appeal allowed – Workplace Injury Rehabilitation and Compensation Act 2013 ss 71(4), 493(1).

JUDICIAL REVIEW – Magistrates’ Court proceeding – Claim by worker against employer – Authority defending proceeding pursuant to right of subrogation – Employer intervened to dispute right of subrogation – Interlocutory ruling by magistrate – No right of appeal – Authority sought judicial review – Whether appropriate procedure – Fragmentation – Circumventing legislative policy – Magistrates’ Court Act 1989 s 109, Supreme Court (General Civil Procedure) Rules 2015 O 56.

WORDS AND PHRASES – ‘employer’, ‘worker’.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr S A O’Meara QC with Mr S E Gladman	Minter Ellison
For the Respondents	Mr N T Robinson QC with Ms C M Harris	Aitken Partners

MAXWELL P
OSBORN JA
KAYE JA:

1. Alen Nikolovski claims that he suffered an injury to his back in the course of installing a Foxtel cable television connection at a house in suburban Melbourne.  He seeks compensation pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013 (the ‘Act’) on the basis that he was employed by the first respondent (‘BSA’) at the time of the injury. 

1. The Victorian WorkCover Authority (‘Authority’) does not dispute that Mr Nikolovski was employed by BSA, within the extended definition of employment in the Act. But it disputes that the alleged injury arose out of, or in the course of, that employment. BSA, on the other hand, disputes that Mr Nikolovski was its employee at the time he was allegedly injured. It contends that he was in fact employed by Alen Nikolovski Pty Ltd, an independent contractor which at the relevant time carried out work for BSA.[1] 

   [1]An earlier claim made by the worker against Alen Nikolovski Pty Ltd was rejected by the Authority’s agent on the grounds that the worker was deemed to be an employee of BSA in circumstances where all the work he undertook was undertaken for BSA. 

1. Following an unsuccessful conciliation conference, Mr Nikolovski commenced proceedings against BSA in the Magistrates’ Court, seeking compensation for the alleged injury. The Authority sought to defend the proceeding pursuant to its rights of subrogation under s 71(4) of the Act. BSA appeared independently before the Court and disputed the right of the Authority to conduct the proceeding, contending that BSA was neither the employer nor deemed employer of Mr Nikolovski.

1. The magistrate ruled that, in order to decide the issue between BSA and the Authority as to the latter’s right of subrogation, he needed to satisfy himself as to whether Mr Nikolovski was in fact employed by BSA within the meaning of the Act. He rejected a submission by the Authority that it was unnecessary to hear evidence and that he should determine its right to conduct the defence of the proceeding by reference solely to the allegations made in the claim. The magistrate then adjourned the proceeding to allow for evidence to be given with respect to the employment issue.

1. The Authority challenged this procedural decision by way of an originating motion seeking relief pursuant to O 56 of the Supreme Court (General Civil Procedure) Rules 2015. The Authority sought an order quashing the magistrate’s ruling, on the basis that it disclosed an error of law on the face of the record, or alternatively a declaration that it was entitled to continue to conduct the proceeding on behalf of BSA. No appeal lay pursuant to s 109 of the Magistrates’ Court Act 1989 because the ruling constituted an interlocutory decision and was not, in terms of that provision, ‘a final order of the court in that proceeding’.[2]

   [2]Magistrates’ Court Act 1989 s 109(1).

The proceeding at first instance

1. Before the judge, the Authority contended that the terms ‘employer’ and ‘worker’ when used in s 71(4) of the Act included an alleged employer and an alleged worker.  Accordingly, Mr Nikolovski’s allegation that BSA was his employer was sufficient to engage the Authority’s right of subrogation.  Mr Nikolovski adopted those submissions. 

1. For its part, BSA contended that the terms ‘employer’ and ‘worker’ were to be given their defined meanings, and that the Authority was not entitled to exercise rights of subrogation unless BSA was in fact Mr Nikolovski’s employer, or deemed employer, at the time of the alleged injury.  Accordingly, the magistrate had not erred in his ruling.  In any event, BSA submitted, the Court should not, as a matter of discretion, interfere with a preliminary procedural ruling by the magistrate. 

1. The trial judge rejected the Authority’s construction of s 71(4) and held that the magistrate had jurisdiction to determine whether BSA was in fact Mr Nikolovski’s employer pursuant to s 264(1) of the Act. The construction question gives rise to the central issue which was debated before this Court on appeal.

Whether judicial review was appropriate

1. The trial judge made the following observations concerning the appropriateness of the O 56 proceeding:

The effect of the Authority’s action in issuing an O 56 proceeding following the ruling by the Magistrate to hear evidence is to fragment the hearing of the interlocutory applications before the Magistrate, and to deprive the Magistrate of the opportunity to give his reasons and make orders. The Authority might have won before the Magistrate had the Magistrate been permitted to hear evidence and conclude his hearing of the applications. The issues now raised by the Authority would have been just as strong as grounds in a judicial review proceeding at the conclusion of the applications after reasons had been given and orders made by the Magistrate.

The Authority’s decision to seek relief under O 56 at the time that it did also had the unfortunate effect of delaying the determination of the applications by over a year. It was preferable for the interlocutory applications to have been determined by the Magistrate and orders made before resort to judicial review. In the event, it will be necessary for the Magistrate to resume the hearing of the applications where he left off.

As stated in Kuek,[3] O 56 proceedings should not be conducted so as to fragment proceedings in inferior courts such as the Magistrates’ Court without good reason.[4]  It is hard to see any justification for the very early intervention of the Supreme Court sought by the Authority, or any reason why the Magistrate should not have been permitted to hear evidence, complete the hearing, publish his reasons and make orders in the applications.  However, in view of the fact that the Authority has failed in the points that it has raised, it is unnecessary to consider further whether relief should be refused.[5]

[3]Kuek v Victoria Legal Aid [2001] VSCA 80.

[4]Ibid [16].

[5]Victorian WorkCover Authority v BSA Limited & Ors [2017] VSC 224 [63]–[65] (citations in original) (‘Reasons’).

1. We respectfully endorse these observations. It can only be in an exceptional case that this Court should intervene in procedural decisions made in the course of a proceeding before the Magistrates’ Court. The policy which underlies s 109 of the Magistrates’ Court Act 1989 is clear:  the right of appeal on a question of law does not arise until a final decision has been made.  That policy should be given effect to.  The Court should not be asked to circumvent that policy by exercising its powers of judicial review unless there is an overwhelming reason of justice for doing so. 

1. In the present case, however, the ultimate question of statutory construction, which was agitated first in the Trial Division and which has now been argued before this Court, is one of general importance for the administration of the Act. Given that the question has been fully argued, and has already been the subject of considered determination by a single judge of this Court, it is appropriate that we decide it now, rather than leave it unresolved for ongoing contention.

1. In reaching this decision we have had regard in part to the objectives of the Act, in particular, those objectives which emphasise the intention that compensation is paid to injured workers as expeditiously as possible. The present proceeding has already resulted in a substantial delay in the resolution of Mr Nikolovski’s claim, and the point which is agitated has the capacity to materially delay the resolution of many other claims.[6] 

   [6]The Act s 10(d). 

The construction question

1. For the reasons which follow, we have come to the conclusion that the Authority’s construction of s 71(4) is correct. In order to explain why, it is necessary to turn to the relevant statutory provisions in some detail. Before doing so, it is also appropriate to say something about the relevant principles of statutory construction.

1. The trial judge stated the basic principles governing the construction of the relevant provisions, by reference first to the following passage from the judgment of the plurality in the High Court in Project Blue Sky Inc v Australian Broadcasting Authority:

[T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have.  Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision.  But not always.  The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.[7]

[7]Reasons [36], quoting Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 384 [78] (citations omitted) (‘Project Blue Sky’).

1. The judge also cited the following passage from the judgment of the plurality in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory):

This Court has stated on many occasions that the task of statutory interpretation must begin with a consideration of the text itself.  Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text.  The language which has actually been employed in the text of legislation is the surest guide to legislative intention.  The meaning of the text may require consideration of context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.[8]

[8]Reasons [37], quoting Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, 46–7 [47] (citations omitted). See also Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39]; Baini v The Queen (2012) 246 CLR 469, 476 [14]; SM v The Queen [2013] VSCA 342 [50]–[51]; Commissioner of State Revenue v EHL Burgess Properties Pty Ltd [2015] VSCA 269 [56].

1. His Honour further referred to the principle of legality, which requires statutes to be construed — in circumstances where constructional choices are open — so as to avoid or minimise encroachment upon rights or freedoms at common law.[9] 

   [9]Reasons [38], citing Momcilovic v The Queen (2011) 245 CLR 1, 46 [43]; R v Secretary of State for the Home Department, Ex parte Simms [2000] 2 AC 115, 131; Al-Kateb v Godwin (2004) 219 CLR 562, 577 [19].

1. These principles are not in issue but the Authority would also emphasise s 35(a) of the Interpretation of Legislation Act 1984, which directs the Court to prefer a construction ‘that would promote the purpose or object underlying the Act’ to one that would not.

1. Further, the Authority submits, the statute must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals.  Where conflict appears to arise from the language of particular provisions, the conflict must be resolved in the manner described in Project Blue Sky, as follows:

The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.[10]  The meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’.[11]  In Commissioner for Railways (NSW) v Agalianos,[12] Dixon CJ pointed out that ‘the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed’.  Thus, the process of construction must always begin by examining the context of the provision that is being construed.[13]

A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals.[14]  Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions.[15]  Reconciling conflicting provisions will often require the court ‘to determine which is the leading provision and which the subordinate provision, and which must give way to the other’.[16]  Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.[17]

[10]See Taylor v Public Service Board (NSW) (1976) 137 CLR 208, 213 (Barwick CJ).

[11]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 320 (Mason and Wilson JJ). See also South West Water Authority v Rumble’s [1985] AC 609, 617 (Lord Scarman) ‘in the context of the legislation read as a whole’.

[12](1955) 92 CLR 390, 397.

[13]Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590, 597; Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322, 332; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309, 312 (Gibbs CJ), 315 (Mason J), 321 (Deane J).

[14]Ross v The Queen (1979) 141 CLR 432, 440 (Gibbs J).

[15]See Australian Alliance Assurance Co Ltd v Attorney-General (Q) [1916] St R Qd 135, 161 (Cooper CJ); Minister for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565, 574 (Gummow J).

[16]Institute of Patent Agents v Lockwood [1894] AC 347, 360 (Lord Herschell LC).

[17]Project Blue Sky (1998) 194 CLR 355, 381–2 [69]–[70] (citations in original).

1. The Authority further relies on the principle that a construction that would produce inconvenient, improbable or irrational consequences should be avoided if there is a competing construction that is reasonably open and would not produce such consequences.[18] 

   [18]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 305, 320–1; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493, 509 [48]. See also R (Burkett) v Hammersmith and Fulham London Borough Council [2002] 1 WLR 1593, 1608 [46].

The role of the Authority under the Act

1. The objectives of the Act envisage that appropriate compensation will be paid to injured workers in an efficient and expeditious manner. The relevant objectives are as follows:

…

(d)ensure appropriate compensation under this Act or the Accident Compensation Act 1985 is paid to injured workers in the most socially and economically appropriate manner, as expeditiously as possible;  and

(e)ensure workers compensation costs are contained so as to minimise the burden on Victorian businesses;  and

…

(h)maintain a fully-funded scheme;  and

(i)in this context, to improve the health and safety of persons at work and reduce the social and economic costs to the Victorian community of accident compensation.[19]

[19]The Act s 10. 

1. The Act contemplates that the Authority (originally established under s 18 of the Accident Compensation Act 1985) will have an overall management function in achieving these objectives. 

1. Section 492 of the Act states the objectives of the Authority as follows:

(a)manage the accident compensation scheme as effectively, efficiently and economically as is possible;  and

(b)manage the accident compensation scheme in a financially viable manner;  and

(c)ensure that appropriate compensation is paid to injured workers in the most socially and economically appropriate manner and as expeditiously as possible;  and

(d)develop such internal management structures and procedures as will enable the Authority to perform its functions and exercise its powers effectively, efficiently and economically;  and

(e)administer this Act, the Accident Compensation Act 1985, the Workers Compensation Act 1958, the Occupational Health and Safety Act 2004, the Equipment (Public Safety) Act 1994 and the Dangerous Goods Act 1985.

1. Section 493(1) identifies the following relevant functions of the Authority:

(a)receive and assess and accept or reject claims for compensation;  and

(b)pay compensation to persons entitled to compensation under this Act or the Accident Compensation Act 1985;  and

…

(f)provide insurance in accordance with this Act and to determine, collect and recover premiums in accordance with this Act;  and

(g)ensure that the accident compensation scheme is competitive and fully-funded;  and

…

(j)administer the WorkCover Authority Fund;  and

…

(l)conduct or defend proceedings before a court or tribunal;  and

(m)defend actions against employers under this Act or the Accident Compensation Act 1985 and at common law;  …[20]

[20]Emphasis added. 

1. In performing these functions, the Authority must, amongst other things:

…

(b)ensure the efficient, effective and equitable occupational rehabilitation and compensation of persons injured at work;  and

(c)ensure the financial viability and efficient operation of the accident compensation scheme;  …[21] 

[21]The Act s 493(2). 

1. Section 494(1) further provides:

(1)Subject to this Act, the Authority has the power to do all things necessary or convenient to be done for or in connection with the performance of its functions and to enable it to achieve its objectives.

1. Specific powers of the Authority with respect to the function referred to in s 493(1)(a) — to ‘receive and assess and accept or reject’ claims for compensation — are further enumerated in div 2 of pt 3 of the Act. But it is the Authority’s discharge of that function which is at the heart of its case. The Authority submits that the discharge of this function necessarily involves assessing all of the elements of a claim, including whether the claimant is a ‘worker’, as defined, and whether the claim is made against an ‘employer’, as defined. The conferral on the Authority of this comprehensive claims assessment function is said to promote the expedient resolution of claims, as contemplated in each of the sections referred to above.

1. In turn, s 12 of the Act juxtaposes the fundamental rights of employers in respect of the determination of liability to pay compensation with obligations to comply with requirements under the Act relating to a claim for compensation:

An employer—

(a)is entitled to have the liability to pay compensation in respect of an injury arising out of or in the course of any employment determined in accordance with this Act or the Accident Compensation Act 1985;  and

(b)must comply with any requirement under this Act, the Accident Compensation Act 1985 or the Workers Compensation Act 1958 relating to a claim for compensation;  …

1. Before turning to the specific provisions of the Act which further govern the relationship between the Authority and employers, it is necessary to refer to the definitions of ‘employer’ and ‘worker’ in s 3 of the Act:

employer includes—

(a)       a person—

(i)        for whom a worker works;  or

(ii)       with whom a worker agrees to perform work—

at the person’s direction, instruction or request, whether under a contract of employment (whether express, implied, oral or in writing) or otherwise;  and

(b)       a person who is deemed to be an employer under this Act;  and

(c)if the services of a worker are temporarily lent or let on hire to another person by, or with the consent of, the person with whom the worker has entered into a contract of employment or apprenticeship or otherwise, the last mentioned person, while the worker is working for that other person;  and

(d)      the legal personal representative of an employer who is dead;

1. Section 4(3) provides for the further definition of a deemed employer pursuant to pt 1 of sch 1 of the Act.

1. Section 3 further relevantly provides:

worker means an individual—

(a)       who—

(i)        performs work for an employer;  or

(ii)       agrees with an employer to perform work—

at the employer’s direction, instruction or request, whether under a contract of employment (whether express, implied, oral or in writing) or otherwise;  or

(b)       who is deemed to be a worker under this Act;

Specific powers of the Authority

1. Division 2 of pt 3 of the Act provides for the joint liability of the Authority and the employer in respect of claims made under the Act. Section 70 imposes a direct liability upon the Authority in this regard:

(1)The Authority, as well as the employer, is directly liable to a worker and, in the event of the worker’s death, to the dependants of the worker, to pay compensation and damages in accordance with this Act or the Accident Compensation Act 1985 for which the employer is liable as an employer of the worker in respect of injuries arising out of, or in the course of, or due to the nature of, employment.

(2)Without derogating from the generality of subsection (1), the Authority is bound by, and subject to, any judgment, order, decision, award or determination given or made against the employer of a worker in respect of the injury or death for which compensation or damages is payable. 

1. Section 71 provides for the Authority to indemnify an employer in respect of the employer’s liability under the Act:

(1)The Authority is liable to indemnify an employer in respect of the employer’s liability as an employer of a worker to pay compensation and damages in accordance with this Act or the Accident Compensation Act 1985 … for injuries suffered by the worker arising out of, or in the course of, or due to the nature of employment by the employer.

…

(3)       Except as provided in this Act, an employer must not—

(a)make or agree to make any payment or settlement in relation to an injury or a claim for compensation in respect of an injury, to a worker or admit liability for any injury or claim;  or

(b)without the consent of the Authority, incur any expense or cost in relation to any such injury or claim.

(4)The Authority is subrogated to all rights of action or recovery that an employer has against a person in respect of—

(a)any claim for compensation;

(b)any claim for damages;

(c)any claim for contribution under section 23B of the Wrongs Act 1958 or a corresponding provision of an Act of the Commonwealth, another State or a Territory—

made by a worker employed by the employer, or the dependants of a worker, including the right—

(d)to undertake the settlement of a claim against the employer; and

(e)to take over during such period as it thinks fit the control of a claim on behalf of the employer in respect of proceedings brought against the employer;  and

(f)to defend or conduct any such proceedings brought against the employer in the name of the employer;  and

(g)to pursue such form of appellate relief in the name of the employer as the Authority thinks fit;  and

(h)to make decisions about the conduct of an application made, or proceedings brought, by the worker against the employer, including decisions relating to determinations of whole person impairment or serious injury, or both, in respect of the worker.[22]

[22]Emphasis added. 

1. As the structure of this section makes clear, it is a corollary of the Authority’s obligations to indemnify an employer in respect of liability under the Act that:

(a)               the employer is prohibited from admitting liability, or making any payment, with respect to a claim;  and

(b)               the Authority is subrogated to the employer’s rights with respect to the claim. 

1. The right of subrogation is conferred in very broad terms.  It encompasses ‘all rights of action or recovery that an employer has’ in respect of any ‘claim for compensation’, ‘claim for damages’, or ‘claim for contribution’ made ‘by a worker employed by the employer, or the dependants of a worker …’. 

1. Pursuant to s 75(2), the Authority (or a self-insurer) must give notice of a decision to accept or reject a claim.  A decision under s 75 is binding on the employer in respect of the employer’s liability under the employer’s excess.[23] 

   [23]The Act s 75(7). 

1. These provisions thus provide the mechanism for the discharge of the function given to the Authority by s 493(1)(a). The employer is, however, given a series of consequential rights arising out of decisions of the Authority made in discharge of that function. We deal with those below.

1. The claimant worker may dispute the Authority’s decision and, following a conciliation process, may institute proceedings in the Magistrates’ Court or in the County Court challenging the decision.[24]  As noted earlier, that is the course which Mr Nikolovski took in the present case.

   [24]The Act s 273. 

The consequences of the determination of a claim by the Authority

1. Under s 78, if the Authority gives notice to a worker of its decision to accept or reject a claim for compensation, the employer may require the Authority to provide a written statement of reasons for its decision.  The statement of reasons must be provided within 28 days.  Sub-section (3) provides, however, that no proceedings may be brought against the Authority ‘in respect of any question or other matter’ arising under the section.

1. By contrast, s 79 establishes a procedure for objection and review in a case where the Authority accepts the worker’s claim.  It provides as follows:

(1)If the Authority, by written notice, accepts a claim for compensation in respect of an injury or death under this Act or the Accident Compensation Act 1985, the employer may lodge an objection with the Authority in respect of the decision to accept the claim if the employer considers that—

(a)the alleged worker is not a worker within the meaning of this Act or the Accident Compensation Act 1985;  or

(b)the employer was not the correct employer of the worker at the time of the injury or death.

(2)An objection lodged by an employer under subsection (1) must—

(a)be in writing in a form approved by the Authority;  and

(b)state the grounds on which the objection is made and review by the Authority is sought;  and

(c)attach any document relevant to the objection and review;  and

(d)unless section 80 applies, be lodged within 60 days of receipt by the employer of the decision of the Authority to accept the claim for compensation in respect of which the employer is making the objection.

(3)An objection is taken to be lodged with the Authority when the objection is received by the Authority.

(4)An objection made by a claimed employer under this Division in respect of a claim does not affect existing liabilities the employer may have under this Act or the Accident Compensation Act 1985.

1. The term ‘claimed employer’ in s 79(4) is itself defined by s 69, as follows:

claimed employer means an employer that—

(a)       considers that s 79(1)(a) or (b) applies to the employer;  and

(b)       makes an objection under s 79;  …

1. After reviewing the objection lodged under s 79, the Authority must under s 84 confirm or set aside the decision to accept the claim.  The review decision is in turn appellable to the Supreme Court under s 85.  The consequences of the Authority reviewing its previous decision under s 84 are further provided for in ss 89 and 90. 

1. The particular significance for the employer of a claim being accepted by the Authority is that this may affect the insurance premium subsequently payable by the employer. Section 435 of the Act provides for a statutory contract of insurance under which:

(c)               the Authority is liable to indemnify the employer in accordance with s 71;  and

(d) the employer is required to pay premiums in accordance with the Act and comply with the provisions of the Act.

1. Part 10 of the Act governs the registration of employers and the determination of premiums. Section 434 of the Act requires employers to be registered and s 439 of the Act requires employers to give estimates of rateable remuneration in respect of premium periods when required by the Authority. The number of workers employed by an employer affects the calculation of rateable remuneration.

1. The Authority determines the premium payable by the employer by way of a calculation made in accordance with a premiums order made by the Governor in Council.[25]  The employer may then apply to the Authority for a review of a premium or other payment payable to the Authority.[26]  The Authority is then required to review the application and make a determination.[27] 

   [25]The Act ss 448–9.

   [26]The Act s 461. 

   [27]The Act s 468. 

1. The employer may challenge the Authority’s premium determination by way of either an application for review by the Victorian Civil and Administrative Tribunal or an appeal to the Supreme Court.[28] 

   [28]The Act s 478. 

Analysis of the construction question

1. As noted earlier, the Authority submits that, on the proper construction of s 71(4), the rights of a person alleged to be the employer of a claimant under the Act are subrogated to the Authority. On the other hand, BSA submits that the terms ‘employer’ and ‘worker employed by the employer’ are to be construed in accordance with the relevant definitions under the Act, which require that the employer in fact be the worker’s employer in order for rights of subrogation to arise.

1. As noted earlier, the judge upheld BSA’s construction.  The relevant part of his Honour’s reasons was as follows:

In my view, the correct approach to the interpretation of s 71(4) is to apply the definitions of ‘employer’ and ‘worker’ as found in s 3 of the Act to the language of that provision. This is the plain consequence of the statutory text and of an ordinary and grammatical reading of s 71(4) and the applicable definitions. It is not a case where the words actually used give rise to any real doubt or difficulty.

As submitted by BSA, the application of s 71(4) is dependent on whether the claimant is a worker, and BSA an employer within the meaning of the Act. In the present case, this entails consideration of the application of sch 1 cl 9 and in particular whether, in providing services to BSA, the claimant and his company are carrying on an independent trade or business.

…

While I accept that the Court may be at liberty to depart from the text of a definition contained in a statute in limited circumstances, there is no need or warrant here to depart from the statutory definitions of ‘employer’ and ‘worker’. The application of the statutory definitions to s 71(4) produces a sensible and harmonious result. There is no contrary indication in the statutory context of s 71(4) or in s 71(4) itself. In my view, the reverse is true.[29]

[29]Reasons [44]–[45], [48] (citations omitted).

1. We respectfully disagree.  In our view, the construction put forward by the Authority is clearly correct.  There are a series of interrelated considerations which support our conclusion, as follows: 

·the distinction between an entitlement to compensation under the Act and a claim for compensation;

·the powers of the Authority;

·the consequential provisions for the resolution of an alleged employer’s rights if the power of subrogation is exercised contrary to the employer’s interests;  and

·the consequences of the alternative construction. 

We will consider each in turn.

The distinction between entitlement and claim

1. In our view, the key to answering the construction question lies in the critical difference between an entitlement to compensation, on the one hand, and a claim for compensation, on the other. The Act of course deals separately with these subject-matters. Entitlement to compensation is dealt with by div 3 of pt 2 of the Act, while claims for compensation are dealt with by pt 3 of the Act.

1. The primary entitlement provision is s 39(1), which states:

If there is caused to a worker an injury arising out of or in the course of any employment, the worker is entitled to compensation in accordance with this Act.

The entitlement to compensation is thus conferred on a ‘worker’.  Using the simplest part of the definition, that means ‘an individual who performs work for an employer’.  Entitlement to compensation depends, therefore, on it being shown that the individual who suffered injury was in fact performing work for an employer and, moreover, that the injury in fact arose out of or in the course of that employment.

1. Thus, for entitlement to arise it must be established, or accepted, as a matter of fact that the injured individual was a worker at the relevant time.  Mere assertion to that effect would not suffice.  Establishing the relevant facts would also, of course, involve identifying the claimant’s employer, being ‘a person for whom [the] worker works’. 

1. It follows, plainly enough, that in the provisions of the Act dealing with entitlement, references to ‘worker’ and ‘employer’ are references to — and only to — persons who in fact had the relevant status at the relevant time. Provisions dealing with claims for compensation must, however, be approached differently. An individual who makes a claim for compensation thereby asserts that the circumstances of his/her case satisfy all of the conditions necessary to create an entitlement to compensation. That is, the individual claims to have been (at the relevant time) a worker performing work for an employer and to have suffered an injury ‘arising out of or in the course of’ that employment.

1. Whether any of those assertions of fact will be contested will, of course, depend on the circumstances of the case. Nevertheless, the provisions of the Act dealing with claims for compensation refer to the claimant as a ‘worker’ and to the person against whom the claim is made as an ‘employer’. Thus, s 20(2)(a) requires that a claim for compensation in the form of weekly payments must ‘state the date on which the worker ceased work because of the injury’.[30]  Likewise, s 20(5)(a) provides that the claim for compensation ‘must be given to or served on the employer’.[31]

   [30]Emphasis added.

   [31]Emphasis added.

1. To be strictly accurate, those provisions might have included (respectively) the additional words ‘or alleged worker’ and ‘or alleged employer’.  As at the date of the making of the claim, those matters of fact are merely asserted.  But the legislature obviously considered it unnecessary to add those words, treating them as necessarily implicit in provisions dealing with claims.  That is, a reference to a claim by a ‘worker’ against an ‘employer’ must, of necessity, comprehend a claim by a person asserting that he/she was a worker, against a person whom the claimant asserts was his/her employer at the relevant time. 

1. The significance of the distinction between entitlement and claim will now be apparent. First, it confirms the correctness of the Authority’s submission that the terms ‘employer’ and ‘worker’ are used in the Act in two senses. In provisions concerned with entitlement, the terms refer only to persons who in fact had the status described;[32] whilst in provisions concerned with claims, the terms include reference to persons who are claimed to have had that status at the relevant time.[33] 

   [32]See, eg, ss 28, 36(1), 39, 45(2), 46–7, 49(1)–(2), 50, 70, 71(1), 92, 93 (worker in fact);  ss 16(1), 17(1), 17(3), 28, 31(3), 32, 36(2), 47(1), 49(6), 70, 71(1), 73, 91–3, 94 (employer in fact). 

   [33]See, eg, ss 20(2)–(3), 21, 23, 25(1), 27(1)–(3), 71(3), 75(1), 75(4)–(6), 75(8), 76, 78(1), 88, 89, 90(1)–(2) (alleged worker);  ss 20(3)–(7), 21, 22(1)–(2), 29(1), 29(3), 31(2), 31(4), 69, 71(3), 75(4)–(6), 75(8), 78(1), 79(1)–(2), 80(1)–(2), 84(5) (alleged employer). 

1. Secondly, the provision under consideration here — s 71(4) — is a provision dealing not with entitlement but with claims. Consistently with the interpretive structure of the Act as described above, the terms ‘worker’ and ‘employer’ are therefore used in this provision in the second sense, that is, as encompassing (respectively) persons who claim to be workers and persons who are alleged to be employers. That this was the intended usage is confirmed by a consideration of the Authority’s claims assessment function, to which we now turn.

The powers of the Authority

1. The right of subrogation granted under s 71(4) is exercised as part of the Authority’s claims assessment function, that is, the function conferred by s 493(1)(a) of receiving, assessing, accepting or rejecting claims for compensation. In turn, the initial right of subrogation which is granted under s 71(4) is one with respect to ‘any claim for compensation’.

1. As noted earlier, an employer is prohibited by s 71(3) from making any payment or settlement in relation to any injury or claim for compensation in respect of an injury. Both the limitation upon the rights of the employer and the grant of the right of subrogation directly affect the position of an alleged employer with respect to a claim before any proceedings are instituted. For the effective discharge of the Authority’s claims assessment function, the limitation of rights under s 71(3), and the grant of rights under s 71(4), cannot be dependent upon a prior judicial determination of the fact of employment or indeed of any other element of a worker’s claim.

1. By s 71(4)(d) the right of subrogation expressly includes the right to undertake the settlement of a claim against the employer. This reinforces the conclusion that the Authority is empowered to determine all aspects of the merits of a claim against an alleged employer, and to settle the claim without the need for any court proceeding at all.

1. If the Authority accepts liability of any kind, then of course it must indemnify the employer pursuant to s 71(1).  It is this obligation which forms the critical context in which the right of subrogation is granted.  Further, by ss 71(4)(e) and (f) the Authority has the right to take over the control of a claim in respect of proceedings against the employer and to defend or conduct such proceedings.  The Authority is thus authorised to conduct the defence of a proceeding against an alleged employer on whichever ground(s) it chooses.  The Authority may choose to join issue with any element of the claim, including the fact of employment.[34]  Alternatively, it may accept the claim in its entirety. 

   [34]See, eg, Green v Victorian WorkCover Authority [1997] 1 VR 364; Kovacic v Henley Arch Pty Ltd (2009) 22 VR 21; Victorian WorkCover Authority v Game (2007) 16 VR 393.

The consequential provisions

1. As noted earlier, the Act confers a series of consequential rights on an employer following a determination by the Authority with respect to a claim.

1. First, whether the decision is to accept or reject a claim, the employer is entitled to written reasons for the decision made under s 78.  Secondly, if the Authority accepts a claim, ‘the employer’ may lodge an objection under s 79, if it considers:

(a)the alleged worker is not a worker within the meaning of this Act or the Accident Compensation Act 1985;  or

(b)the employer was not the correct employer of the worker at the time of the injury or death.[35]

(We interpolate that the use of the term ‘the employer’ in ss 79(1) and (2) and the use of the term ‘an employer’ in the definition of ‘claimed employer’ in s 69 are instances of the use of the term ‘employer’ to denote an alleged employer). 

[35]The Act s 79(1). 

1. Once an objection in respect of liability by an employer is lodged under s 79, then s 84 requires the Authority to either confirm or set aside the decision to accept a claim and to give written reasons for that decision. In turn, as we have said, s 85 provides for a right of further appeal to the Supreme Court. The Act thus makes detailed provision for the protection of an alleged employer in respect of a decision by the Authority that the alleged employer is in fact an employer within the meaning of the Act.

1. BSA submits that these rights of review and appeal do not adequately protect it because, although the Authority accepts BSA was the worker’s deemed employer at the date of the alleged injury, the Authority has rejected the claim and hence s 79 does not enable BSA to challenge the decision concerning deemed employment. In consequence, it is submitted, BSA is at risk that it may suffer increased premiums in respect of statutory insurance under the Act in circumstances where it was not in fact the worker’s employer.

1. It is common ground, however, that the Act enables BSA to challenge its status as the alleged employer of the worker for the purposes of the determination of the premium payable by it under the Act. Section 448 of the Act provides that the Governor in Council may by Order in Council make a Premiums Order for a premium period. The relevant order, for the purposes of this case, is the WorkCover Insurance Premiums Order (No 22) 2014/2015.

1. By cl 9 of that Order, the ‘Employer Performance Rating’ is used as a measure of the claims history of the employer, which, in turn, by cl 6, forms part of the prescribed formula by which the employer’s premium is calculated. It is common ground between the parties that the right of an employer to challenge a premium, pursuant to pt 10 of the Act, includes a right of a putative employer, in the position of BSA, to put in issue whether a particular claimant was a worker employed by it for the purposes of the Act.

1. It follows that the powers granted to the Authority in order to enable it to determine claims are complemented by a series of rights to review the consequences of that decision for the employer. This scheme encourages the view that the powers granted to the Authority under the Act should be given full force.

The consequences of the alternative construction

1. BSA’s construction, on the other hand, would impede the assessment and acceptance of claims by the Authority.  It would mean that, in a case like the present where the employer disputed the fact of employment, the Authority could not embark on its claims assessment function without a prior court determination of that issue.  As we have explained, that outcome would be directly contrary to the legislative structure, which contemplates court proceedings taking place (if at all) only after the Authority has made its decision on the claim.[36]

   [36]See [37] above.

1. Further, BSA’s construction would create the prospect of a preliminary dispute between the Authority and the putative employer concerning one of the key elements of the claim made by the worker — a dispute which must be resolved by a court — in any case in which there was a dispute between the Authority and the employer as to the fact, or absence, of employment. Thus, on the construction contended for by BSA, the statutory provisions would operate in a way which could, in an unfair way, adversely affect the worker’s rights, and which would have the potential to prevent, or at least materially delay, settlement or resolution of workers’ claims. In our view, such an outcome would be directly contrary to the objectives of the Act stated in s 10 and the objectives of the Authority specified in s 492.

1. Nor does the principle of legality have any application here.  What is in issue is not BSA’s common law rights but the conditions upon which it is entitled to indemnity pursuant to a statutory scheme of compensation.  That scheme provides for a series of consequential protections, for an alleged employer in the position of BSA, in respect of adverse consequences of the conduct of a claim by the Authority, or of a decision made by the Authority in respect of that claim. 

1. Further provision for the respective rights of a defendant, common law insurer and the Authority with respect to the defence of a common law proceeding is separately made by s 364 of the Act.

Conclusion

1. Leave to appeal should be granted and the appeal allowed.  The decision of the trial judge should be set aside and the matter remitted to the Magistrates’ Court for further hearing in accordance with law. 

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SCHEDULE OF PARTIES

VICTORIAN WORKCOVER AUTHORITY	Appellant
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BSA LIMITED	First Respondent
ALEN NIKOLOVSKI	Second Respondent
THE MAGISTRATES’ COURT OF VICTORIA	Third Respondent