Victorian WorkCover Authority v Commonwealth of Australia

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 7966 of 2003

VICTORIAN WORKCOVER AUTHORITY	Plaintiff
v
COMMONWEALTH OF AUSTRALIA	Defendant

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JUDGE:	KAYE J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	9 November 2004
DATE OF JUDGMENT:	19 November 2004
CASE MAY BE CITED AS:	Victorian WorkCover Authority v Commonwealth of Australia
MEDIUM NEUTRAL CITATION:	[2004] VSC 474

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CONSTITUTIONAL LAW – Suit to which Commonwealth a party – Suit to which emanation of State a party – s.64 Judiciary Act (Cth) – Presumption that statute does not bind the Crown – Application of s.138 Accident Compensation Act (Vic)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. Beach, S.C. with Mr M. Wheelahan	Wisewoulds
For the Defendant	Dr G. Griffith, Q.C. with Mr S. McLeish	Phillips Fox

TABLE OF CONTENTS

Judiciary Act s.64................................................................................................................................ 3

Construction of s.138 of the Accident Compensation Act......................................................... 24

Conclusion......................................................................................................................................... 26

HIS HONOUR:

These proceedings consist of a claim by the Victorian WorkCover Authority (“the Authority”), pursuant to s.138 of the Accident Compensation Act, against the Commonwealth of Australia (“the Commonwealth”), to recover compensation paid under the Act to an injured worker. The issues have been significantly narrowed by agreement between the parties. The question for decision concerns the application of s.138 to the Commonwealth at the suit of the Authority.

A statement of agreed facts was tendered in evidence. The Commonwealth was, at the relevant time, the occupier of premises at Mt Macedon Road, Mt Macedon, consisting of the Emergency Management Institute of Australia. In 1997 the Commonwealth entered into an agreement with Skilled Engineering Limited (“Skilled Engineering”) to supply casual labour at the premises. Pursuant to that agreement one Paula Stewart was assigned to work as a waitress and a cleaner at the premises. On 30 March 1998, Ms Stewart tripped and fell when she attempted to avoid a wasp or wasps at the premises. As a result she suffered injury arising out of the course of her employment with Skilled Engineering. The employment of the worker was a contributing factor to her injury. At the time of the incident HIH Winterthur Workers Compensation (Vic) Limited (“HIH”) was the authorised insurer of the employer in accordance with the Accident Compensation (WorkCover Insurance) Act 1993. By reason of s.73 of that Act, the Authority, on and from 30 June 1999, became the successor in law of the authorised insurer. After the incident Ms Stewart lodged a claim for compensation in writing with the employer under the Accident Compensation Act. Pursuant to its obligations under the Act, HIH, and subsequently the Authority, made payments of compensation to and on behalf of the worker in the amount of $38,076.94. The accident was caused in part as the result of the negligence of the defendant, the Commonwealth of Australia. Conditional upon the adjudication of the legal issues raised by the defence, it was agreed that the defendant’s total liability to the plaintiff under s.138 of the Act would be $5,000, to be apportioned as follows:

(a)$2,240 relating to payments made by HIH before 30 June 1999;
(b)$2,760 relating to payments made by the Authority itself on or after 30 June 1999.

The proceedings were initially commenced in the High Court. By an order of Hayne J made 25 August 2003 the proceedings were remitted to the Supreme Court pursuant to s.44 of the Judiciary Act 1903 (Cth).

As at the date of Ms Stewart’s injury, s.138(1) of the Accident Compensation Act 1985 provided:

“Where an injury or a death for which compensation has been paid, or is or may be payable, by the Authority, an authorised insurer, a self‑insurer or an employer was caused under circumstances creating a legal liability in a third party to pay damages or that would, but for s.134A, create such a liability in respect of the injury or death, the Authority, authorised insurer, self-insurer or employer is entitled to be indemnified by the third party in accordance with this section.”

The plaintiff’s principal submission is that s.138(1) applies so as to bind the Commonwealth by virtue of the application of s.64 of the Judiciary Act 1903 (Commonwealth). As an alternative, the plaintiff also contended – albeit rather faintly – that, of its own force, s.138 applies to the Commonwealth. Both those propositions are disputed by the Commonwealth.

Judiciary Act s.64

Section 64 of the Judiciary Act provides:

“In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject.”

The plaintiff’s submission, that s.138 of the Accident Compensation Act applies to the Commonwealth by virtue of the operation of s.64 of the Judiciary Act, is based on the well-established proposition that s.64 does not only deal with matters of procedure. The rights to which it refers also include substantive rights. That proposition was established by the High Court in Maguire v Simpson[1]. It was confirmed and applied in The Commonwealth of Australia v Evans Deakin Industries Limited and Anor[2]. The plaintiff relied on those authorities to contend that, regardless of whether, on its correct construction, s.138 of the Accident Compensation Act applies to the Commonwealth, nevertheless s.64, by affecting the substantive rights of the parties, “picks up” or incorporates s.138, by treating the Commonwealth, in a suit commenced against it, as a subject.
[1](1977) 139 CLR 362.
[2](1986) 161 CLR 254.

The defendant has expressly reserved its right to argue that Maguire v Simpson and The Commonwealth of Australia v Evans Deakin Industries Limited and Anor were wrongly decided. However, the defendant accepted that I am bound by those decisions. The defendant’s submission to me was that the principle established by those cases is subject to an important qualification, which derives from the requirement by s.64 that the rights of the parties shall “as nearly as possible be the same … as in a suit between subject and subject.” The Commonwealth contended that it is not possible to equate the rights of the Authority under s.138 of the Accident Compensation Act to those of a subject, for the purposes of s.64, and that thus s.64 does not apply to a claim by the Authority under s.138. In essence, the Commonwealth’s submission was based on two premises, namely:

(a)that the Authority is an emanation of the Crown and the right of the State of Victoria;
(b)that the Authority, in that capacity, discharges a function which is peculiarly a function of government, and which is not capable of being equated, as nearly as possible, to the rights of a subject.

In response, the plaintiff conceded, for the purposes of this case, that it is an emanation of the Crown in the right of the State of Victoria. However it disputed the second premise in the defendant’s argument, namely, that its functions are so peculiarly governmental that its rights, in a suit commenced by it under s.138 against the Commonwealth, are not capable of being the same “as nearly as possible” as those of a subject for the purposes of s.64 of the Judiciary Act.

Accordingly, the principal issue between the parties is quite narrow. Shortly expressed, it is whether the rights of the Authority are capable, for the purposes of s.64, of being “as nearly as possible” the same as the rights of a subject in a suit commenced by it against the Commonwealth. The issue between the parties in this case does not concern the nature of the role or function of the Commonwealth as the occupier of the premises on which the worker’s accident occurred. The defendant, correctly, accepts that the Commonwealth’s rights and liabilities may, for the purposes of s.64, be equated “as nearly as possible” to those of a subject in such a suit. The Commonwealth also accepts that s.64 applies in a proceeding between the Commonwealth and a State, or between two States[3].
[3]The Commonwealth v Miller (1910) 10 CLR 742 at 753, per Isaacs J; British American Tobacco v Western Australia (2003) 200 ALR 403 at 422, per McHugh, Gummow and Hayne JJ.

It is useful, first, to consider briefly the decisions in Maguire v Simpson and Evans Deakin Industries. In Maguire v Simpson, the Commonwealth Trading Bank was owed a debt by a partnership. The assets of the partnership were sold and paid into court by order of the Supreme Court of New South Wales. The bank made a claim on the fund. The plaintiff, Maguire, and others, also made claims on the fund. They submitted that the bank’s claim was barred by s.14(1) and extinguished by s.63 of the Limitation Act 1969 (New South Wales). In response the bank contended that the New South Wales Act did not apply to it, because the bank was an organ or instrumentality of the Commonwealth of Australia; Inglis v Commonwealth Trading Bank of Australia[4]. The High Court held that the provisions of the New South Wales Limitation Act applied to the claim of the bank on the fund, by virtue of s.64 of the Judiciary Act. The court held that s.64 was not merely procedural in operation, but also affected the substantive rights of the parties. Thus it held that, even if, as a matter of construction, the New South Wales Limitation Act did not apply of its own force to the Commonwealth Trading Bank as an instrumentality of the Crown, nevertheless s.64 of the Judiciary Act operated to make the New South Wales Act apply to the bank. The court so held because, on any claim by the bank, there was constituted a suit between subject and subject, and as such the New South Wales Act applied[5]. The effect of the decision of the High Court is encapsulated in the following passage from the judgment of Mason J[6]:

“I put to one side the question whether the provisions of the State statute could apply of their own force to a debt owing to the Bank, for it is my opinion that the provisions of the statute are picked up and made applicable in any action that the Bank could bring to recover the debt by s.64 of the Judiciary Act, as amended.”

[4](1969) 119 CLR 334.

[5]See especially at pp.373, per Barwick CJ; 380-381, 385 per Gibbs J; 396-7, 400-402 per Mason J; 406 per Jacobs J; 408 per Murphy J.

[6]Pages 396-7.

The decision in Maguire v Simpson was followed by the High Court in The Commonwealth of Australia v Evans Deakins Industries Limited and Anor[7]. In that case the Commonwealth had contracted with a company to perform construction work at Brisbane. The contractor then sub‑contracted some works to Evans Deakin Industries Limited. Evans Deakin carried out the work but was not paid for it. It commenced proceedings, as plaintiff, against the Commonwealth, relying on the Subcontractors Charges Act 1974 (Qld). That legislation entitled a sub‑contractor to a charge on the money payable by an employer to a contractor for the performance of work. It rendered the employer liable in debt to the sub‑contractor if the employer, on notice to it from the sub‑contractor, failed to retain a sufficient part of the money payable to the contractor to satisfy the sub‑contractor’s claim. The Commonwealth contended that the Queensland Act only applied if there existed a validly constituted suit to which the Commonwealth is a party. It contended that there was no validly constituted suit, because, on its correct construction, the Queensland Act did not apply to the Commonwealth. The High Court (Brennan J dissenting) rejected that argument. It held that, by reason of s.64 of the Judiciary Act, upon commencement of the suit against it, the Commonwealth became subject to the same rights and obligations as a subject under the Queensland Subcontractors Charges Act. The joint judgment of the majority[8] referred to Maguire v Simpson and stated:

“That case establishes that in every suit to which the Commonwealth is a party s.64 requires the rights of the parties to be ascertained, as nearly as possible, by the same rules of law, substantive and procedural, statutory and otherwise, as would apply if the Commonwealth were a subject instead of being the Crown.”[9]

[7]Above.

[8]Consisting of Gibbs CJ, Mason, Wilson, Deane and Dawson JJ.

[9]Pages 262-3; see also Bass v Permanent Trustee Co Limited (1999) 198 CLR 334 at paragraph 28; Austral Pacific Group Limited (in liq) v Airservices Australia (2000) 203 CLR 136 at paragraph 15 (per Gleeson CJ, Gummow and Hayne JJ), paragraph 60 (per McHugh J); Whiteford and Anor v Commonwealth of Australia (1995) 38 NSWLR 100 at 107-110 (per Kirby J), 114 (per Sheller JA); Baillieu and Anor v Australian Electoral Commission and Anor (1996) 63 FCR 210 at 225-6.

The majority judgment in Evans Deakin then considered the effect of the phrase “as nearly as possible” in s.64 of the Judiciary Act. Their Honours stated:

“If the Commonwealth were a subject, Evans Deakin, as sub‑contractor, would, on the facts alleged in the statement of claim, be entitled to enforce the charge given by the Subcontractors Charges Act. The qualification to s.64 expressed by the phrase ‘as nearly as possible’ would not render the Subcontractors Charges Act inapplicable. That phrase has been differently paraphrased by different judges, as the discussion by Stephen J in Maguire v Simpson[10] shows. The natural meaning of the expression appears to be that suggested by Kitto J in Asiatic Steam Navigation Co Limited v The Commonwealth[11] “as completely as possible”. Kitto J went on to say[12] that s.64 in effect requires the court “to put out of account any special position of the Crown and, as far as possible to decide all questions of right in the same way as they would have been decided if the Commonwealth or State had been a subject.” It is unnecessary to consider for present purposes whether in some cases at least it would be right to consider the special position of the Crown, but this is not a case of that kind. Here the Commonwealth, in entering into a building contract, was not performing a function peculiar to government; it was making a contract of a kind commonly entered into by ordinary members of the public and the determination of the rights and liabilities of the Commonwealth by reference to the Subcontractors Charges Act would not be incompatible with the position of the Commonwealth or detrimental to the public welfare. Even if the words “as nearly as possible” are given a wider meaning than that which Kitto J attributed to them, they do not exclude the rights given to Evans Deakin by the Subcontractors Charges Act in the present case.”[13]

[10](1977) 139 CLR at 393-395.

[11](1956) 96 CLR 397 at 427.

[12](1956) 96 CLR at 428.

[13]Above at pp.264-5.

The passage from Evans Deakins, which I have just quoted, identifies the proposition on which the Commonwealth relies in this case. Dr Griffith QC, who appeared with Mr S. McLeish on behalf of the Commonwealth, submitted that the Authority, as an organ of the State of Victoria, was and is responsible for the implementation of a State scheme for universal payment of benefits in respect of injured workers. The rights of the Authority in respect of that scheme – and in particular its rights under s.138 of the Accident Compensation Act to recover payments made to or on behalf of injured workers – are rights peculiar to the Authority’s governmental function, and thus can not be equated “as nearly as possible” with the rights between subject and subject in a suit commenced by it. Accordingly, it was contended, s.64 of the Judiciary Act does not apply to a proceeding instituted by the Authority under s.138 of the Accident Compensation Act. In support of that proposition I was referred to the above passage in Evans Deakin, and to passages from judgments of the High Court in the Commonwealth v Western Australia[14], British American Tobacco Australia Limited v Western Australia[15], and Austral Pacific Group Limited (in liq) v Airservices Australia[16].
[14](1999) 196 CLR 392 at 438-9 (per Gummow J) and at 476 (per Hayne J).
[15](2003) 200 ALR 403 at 411 (per Gleeson CJ) and at 421 (per McHugh, Gummow and Hayne JJ).
[16]Above at 144 (per Gleeson CJ, Gummow and Hayne JJ).

It is necessary first to summarise briefly the basic statutory structure which is contained in the Accident Compensation Act and related legislation. Under s.18 of the Act, the Authority is established as a body corporate. Section 19 describes its objectives, s.20 describes its functions, and s.20A and B specifies its powers. Section 82(1) of the Act provides for the basic entitlement to compensation. It states that if there is caused to a worker an injury arising out of or in the course of any employment, and if the worker’s employment was a significant contributing factor, “the worker shall be entitled to compensation in accordance with this Act.”

The Act and related legislation contain detailed provision for the payment of the benefits. Section 125A(2) of the Act – on which the plaintiff heavily relied – provides that where a worker or a worker’s dependents are entitled to compensation in respect of an injury arising out of or in the course of any employment, “the liability to pay compensation is to be assumed in all cases by the worker’s employer.” Alongside the Act, and adjacent to that obligation of the employer, was constituted an insurance scheme, the principal provisions of which are set out in the Accident Compensation (WorkCover Insurance) Act 1993 (the “WorkCover Insurance Act”). Until 30 June 1999, s.7 of the WorkCover Insurance Act required an employer to obtain and keep in force a WorkCover Insurance Policy with an authorised insurer in respect of all of the employer’s liability under the Accident Compensation Act 1985. Section 9(2) required that the policy of insurance provide that the authorised insurer, as well as the employer, be directly liable to any worker or any person insured under the policy. Section 9(3) provided that a liability under a policy of insurance of an authorised insurer to a worker or any other person was enforceable as if the worker or other person were a party to the policy. Under Part 5 of the WorkCover Insurance Act there was established a scheme called the Uninsured Employers and Indemnity Scheme. Section 55(2) provides that a claim may be made under the scheme by a person who has a claim in respect of an injury to a worker against an employer who cannot be identified, or in respect of whom no valid WorkCover insurance policy can be located. Section 56 provides that the Authority must establish and maintain a fund called the Uninsured and Employers Indemnity Fund from which were to be made payments towards claims made against the scheme.

Returning to the Accident Compensation Act, Part 5 of that Act provided for self-insurers. Essentially that Part provides for an employer to seek and obtain an approval as a self-insurer for workers employed by it, and if the company is a holding company, workers employed by each of its subsidiaries.

It is in that legislative background that, before 30 June 1999, s.138 of the Accident Compensation Act provided for the right of the Authority, an authorised insurer, a self‑insurer or an employer to recover payments made to or in respect of an injured worker under the Act.

On 30 June 1999 the Accident Compensation (Amendment) Act 1998 (“the 1998 Act”) commenced operation. The 1998 Act significantly altered the insurance structure of the legislation. In particular, s.12 of the 1998 Act repealed the provisions of the WorkCover Insurance Act which provided for the licensing of authorised insurers. Section 18 of the 1998 Act introduced a new Part 7 into the WorkCover Insurance Act. In particular, it introduced s.75 into the WorkCover Insurance Act, which provided for the immediate cancellation of licenses in force under the WorkCover Insurance Act. Section 18 of the 1990 Act also introduced s.73 of the WorkCover Insurance Act which provides:

“73. Authority is successor in law
For the purposes of this Act and the Accident Compensation Act 1985, the Authority is a successor in law of an authorised insurer.”

Thus, from 30 June 1999, the Authority has made payments to and on behalf of the injured worker. Further, the Authority, in the present case, seeks to recover payments made by the authorised insurer before 30 June 1999 as the successor in law of the authorised insurer pursuant to s.73 of the WorkCover Insurance Act.

Dr Griffith relied on a number of specific provisions of the legislation to support his contention that the Authority, as an emanation of the Crown, is carrying out a function peculiar to government, so that its rights could not, for the purposes of s.64 of the Judiciary Act, be “as nearly as possible the same” as the rights between subject and subject.

Dr Griffith’s submissions in this context can be divided into two periods, focussing respectively on the legislation before and after 30 June 1999. His primary submission focussed on the legislation, and in particular the status and role of the Authority, since 30 June 1999. It was pointed out that, since 30 June 1999, the Authority may make payments to or in respect of an injured worker in one of two capacities. It may make those payments in order to discharge the obligation of the employer, under s.125A of the Accident Compensation Act. Alternatively, it may make the payments in discharge of its own direct liability to the worker under s.9(2) and (3) of the WorkCover Insurance Act. In the present case, it is common ground that the Authority made the payments to Ms Stewart since 30 June 1999, in its own right, and in satisfaction of its own obligations under the provisions of the WorkCover Insurance Act.

In this context, Dr Griffith submitted that since 1999 the Authority has operated a statutory scheme of providing universal benefits for and in respect of injured workers. He contended that that scheme is one peculiar to a governmental function, and that the rights of recovery of the Authority in respect of payments so made cannot be equated, as nearly as possible, to the rights of a subject. Secondly, Dr Griffith contended that, in relation to the payments made by the authorised insurer before 30 June 1999, the Authority is now, as part of the current legislative scheme, the successor at law of the insurer, and therefore that it recovers those payments as part of that scheme.

Although it was suggested in argument that the legislation current at the time of Ms Stewart’s accident in June 1998 was applicable to this issue, nevertheless, in developing this point, the defendant relied on the provisions of the legislation since 30 June 1999. Essentially the point made on behalf of the Commonwealth is that the Authority, as the plaintiff in the suit, is to be characterised as an emanation of the Crown, exercising peculiarly governmental functions, in relation to payments made both before and after 30 June 1999.

In this context the defendant relies particularly on the current provisions of the WorkCover Insurance Act, creating a direct, and sole, liability of the Authority to the injured worker. The Authority now occupies the role of the sole insurer under the scheme. The defendant contended that, albeit that the scheme still bears the external characteristics of an insurance scheme, nevertheless its substance is a scheme implemented by the Authority for and on behalf of the government. The defendant also pointed to a number of the current provisions of the Accident Compensation Act imposing on the Authority direct liabilities to injured workers. In this context reference was made to provisions such as s.92C, s.99(5), s.104B(8) and s.114D, of the Act. Reference was also made to the provisions of Part 5 of the Act relating to the liability of the Authority, through the Uninsured Employers and Indemnity Scheme, in cases where an employer is either uninsured or cannot be identified or located.

In response Mr D. Beach, SC, who appeared with Mr M. Wheelahan on behalf of the plaintiff, submitted that the rights of the Authority in a suit commenced by it under s.138 of the Accident Compensation Act, may be equated, as nearly as possible, to those of a subject, for the purposes of s.64 of the Judiciary Act. Mr Beach particularly relied on s.125A of the Accident Compensation Act which imposes the primary liability, for the payment of compensation benefits, on the employer. Mr Beach contended that that provision has two effects. First, it contradicts the submission of the defendant that the Authority is the organ of government implementing a scheme by which it has sole responsibility for the payment of worker’s compensation benefits. Secondly, Mr Beach pointed out that, both before and after 30 June 1999, an employer may make payments pursuant to its primary obligation, and seek to recoup those payments by action brought in its own name under s.138 of the Accident Compensation Act. Such a proceeding would manifestly be one between “subject and subject”. Equally, the Authority may, as insurer of the employer, make a payment to or on behalf of an injured worker pursuant to its obligations under its statutory policy with the employer. In those circumstances, the Authority, exercising an insurer’s right of subrogation, would be entitled to bring an action in the name of the employer pursuant to s.138 of the Accident Compensation Act. Again, such an action would be one between subject and subject. Mr Beach then contended that the nature of the rights asserted, and the nature of the underlying action, do not so radically alter, in circumstances where the Authority has either made the payment directly itself, or, by reason of s.73 of the WorkCover Insurance Act, has succeeded to the rights of the authorised insurer, and has instituted proceedings in its own name for recovery of those payments pursuant to s.138 of the Act. In other words, the fact that the Authority is the plaintiff does not so alter the suit as to preclude it from being characterised as an action between subject and subject.

There is no direct authority which covers the point argued before me. On a number of occasions the High Court has considered the qualification to s.64, with which I am now concerned. However, generally the point has only been considered by that court in passing. Nevertheless, from a proper consideration of s.64, and taking into account the authorities which do relate to it, and to which I shall refer, I consider that the following points can be made which are relevant to the question before me:

(1)Section 64 was based on provisions in colonial statutes which had been passed in the later part of the 19^th Century. By those provisions the colonial legislatures of the time recognised that the scope of activity of the governments of the colonies was generally larger and wider than in other countries. The Australian colonial governments, as part of their ordinary functions, undertook enterprises which, at that time, were ordinarily left to private citizens. It was considered unjust that, when governments carried out those activities, they should be entitled to the benefit of Crown immunity. Thus s.64 (and the colonial provisions which preceded it) was enacted to render governments, carrying out those functions, amenable to suit. This consideration lay at the basis of the decision in Maguire v Simpson (above). In that case the High Court relied on the decision of the Privy Council in Farnell v Bowman[17], in which the Judicial Committee expressly recognised that the provisions in question were a response to the expanded scope of governmental activity. Thus s. 64, as it was enacted, was intended to apply notwithstanding that the organ of the State or Commonwealth concerned was undertaking functions which , in the Australian context, might be properly characterised as governmental.
(2)When the Judiciary Act, containing s.64, was enacted in 1903, the scope of those governmental activities was nevertheless by no means as extensive as at the present time. In Farnell v Bowman[18], the Privy Council referred to activities such as the construction of railways and canals, and other construction works, as instances of activities which, although not then undertaken by governments overseas, were part of the function of Australian colonial governments and as such intended to be covered by the New South Wales legislative predecessor to s.64 of the Judiciary Act. By the beginning of the 21^st Century, those activities would be recognised as traditional governmental functions (until the era of “privatisation”). In other words, s.64 of the Judiciary Act was intended to apply to functions undertaken by governments which, although somewhat new to governments of those times, would now be recognised as traditional activities of Australian governments.
(3)It is important to focus on the precise words of s.64 of the Judiciary Act. The phrase, which is of relevance in this case, provides that the rights of the parties shall “as nearly as possible” be the same as in a suit between subject and subject. The section is basically facultative. The position of the Commonwealth or a State need not be identical to the position of a subject. Where the rights of the parties may not be the same as between subject and subject, that does not, on the face of it, preclude the operation of s.64. Rather, in such a circumstance, the rights, which may not be so equated, are excluded from the suit. Thus, in the Evans Deakin case, the majority of the High Court expressed preference for the views of Kitto J in Asiatic Steam Navigation Co v The Commonwealth[19], that the phrase “as nearly as possible” means “as completely as possible”, and that s.64 requires the court to “put out of account any special position of the Crown, and as far as possible to decide all questions of right in the same way they would have been decided if the Commonwealth or State had been a subject.”
(4)Section 64 of the Judiciary Act requires that it is the rights of the parties – as distinct from the status of the parties or their functions – which are required to be, as nearly as possible, the same as between subject and subject. Thus, in the Commonwealth v Anderson[20] Dixon CJ stated:
“It is perhaps not unimportant to bear in mind that it is the rights of parties as in a suit between subject and subject, not the law, that are to apply as nearly as may be.”
(5)On the other hand there is some, albeit limited, authority for the proposition that where the State or Commonwealth is performing a function “peculiar to” government, its rights, or the rights of the other party to the litigation, may not be possible of being “as nearly as possible” the rights which would apply between subject and subject. That is, there may be something inherent in the position or function of the Crown which cannot be “put out of account”, and which may preclude the suit being determined as if the rights in issue were between subject and subject. It is in that category of case that s.64 may have no application.

[17](1887) 12 App Cas 643.

[18]Above, at 649.

[19](1956) 96 CLR 397 at 427, 428.

[20](1960) 105 CLR 303 at 310.

The third point, which I have set out above, is supported by passages in the joint judgment of McHugh, Gummow and Hayne JJ in British American Tobacco Limited v Western Australia[21]. In that case the appellant (BAT) paid fees to the second respondent (the Commissioner of State Taxation for Western Australia) pursuant to the Western Australian Tobacco Franchise Act. In August 1997 the High Court declared that provisions of that Act were invalid. In April 1998 BAT gave notice under s.6 of the Crown Suits Act 1947 (WA) that it proposed to commence action for recovery of the licence fees paid by it. BAT commenced proceedings in the Supreme Court of Western Australia seeking recovery of those fees. In response the second respondent relied on s.6 of the Crown Suits Act. That section provided that no right of action lies against the Crown unless the party proposing to take action gives written notice as soon as practicable or within three months after the cause of action accrues. The Full Court of the Supreme Court of Western Australia entered summary judgment for the respondents on the ground that BAT had failed to comply with s.6. BAT appealed to the High Court. Its appeal was unanimously allowed.
[21](2003) 200 ALR 403.

One of the questions was whether s.79 of the Judiciary Act operated to apply s.6 of the Crown Suit Act to the action. Section 79 states that the laws of each State or Territory shall “except as otherwise provided by the Constitution or the Rules of the Commonwealth” be binding on all courts exercising federal jurisdiction in this State or Territory. McHugh, Gummow and Hayne JJ (with whom Callinan J agreed) held that s.79 did not “pick up” s.6 of the Crown Suits Act. One of their Honours’ reasons for that conclusion was that, to apply s.6 by dint of s.79, “ … would deny the requirement by s.64 that the rights of BAT and the State in that action be as nearly as possible the same as those in a suit between subject and subject.”[22] Obviously, s.6(1), which only applied to the Crown, could not be so applied.
[22]At para 69.

The State of New South Wales, which intervened in support of the respondents, contended that s.64 should not be so applied, since to do so would prejudice the peculiar governmental interest in the protection of public revenue against reimbursement of moneys levied and collected without a valid legislative mandate[23]. McHugh, Gummow and Hayne JJ referred to the passage from Kitto J in Asiatic Steam Navigation Co Limited v Commonwealth, which I have quoted above. They then noted[24] that there may be “some respects” in which rights of parties could not be rendered “as nearly as possible” the same within the meaning of s.64, and that: “examples of that impossibility had been given by Else-Mitchell J in Commonwealth v Lawrence.”[25]
[23]At para 78.
[24]At para 81, referring to South Australia v Commonwealth (1962) 108 CLR 130 at 139-141 (per Dixon CJ).
[25](1960) NSWR 312 at 315.

McHugh, Gummow and Hayne JJ then rejected the contention of the State of New South Wales, stating:

“The extent to which the Commonwealth might legislate to curtail or limit the pursuit by BAT of the rights to recovery which it may otherwise have is not in issue here. Rather, the question is whether a facultative provision such as s.64 of the Judiciary Act, which otherwise assists BAT, should be given a limited operation by an expanded, and contradictory, reading of the phrase ‘as nearly as possible’. The submissions made against BAT respecting the construction of s.64 should be rejected.”[26]

[26]At para 48.

As I have noted, the joint judgment in British American Tobacco referred with approval to Commonwealth v Lawrence[27] in which Else-Mitchell J[28] gave four examples of cases in which it might be impossible in “some respects” to equate the rights, the subject of the litigation, to rights “as between subject and subject”. Those examples were:

(i)In an action in which the Commonwealth or a State seeks to recover a debt, it is impossible to disregard the fact that Crown debts of Commonwealth or State are entitled to priority by virtue of the prerogative and are not subject to the statutes of limitation.
(ii)In an action against the Commonwealth or a State for breach of contract it is impossible to disregard the sort of considerations discussed in New South Wales v Bardolph[29], that is the issue of the authority of servants of the Crown to contract on its behalf.
(iii)In an action in relation to the disposal of lands of the Crown it is impossible to disregard the restraints on disposal of Crown lands.
(iv)In an action per quod servitium amisit against the Commonwealth or a State it is impossible to assimilate the Crown to the position of a private employer.

[27]Above.

[28]At 315.

[29](1934) 52 CLR 455.

In each of the instances cited by Else‑Mitchell J, the rights of the Crown and the opposite party were not capable of being equated, as nearly as possible, to rights between subject and subject, because there was intrinsic to the involvement of the Crown in the particular transaction a privilege, immunity or restriction which could not be divested or severed. In other words, in those instances, the involvement of the Crown, as a party, necessarily would attract a privilege, immunity or restriction which is peculiar to the Crown, and thus it may be impossible in some respects for the suit to be as nearly as possible one between subject and subject.

The authorities are less clear, however, whether s.64 of the Judiciary Act is precluded, in toto, from applying to a case where the function of the Crown is so unique that it may not be possible, “as nearly as possible”, for the rights in the suit to be the same as between subject and subject. The passage from the majority judgment in Evans Deakin, to which I have referred at paragraph 13 above, suggests that may be the case, where the Commonwealth is “performing a function peculiar to government”. Further support for that view may be found in the judgment of Gummow J in Commonwealth of Australia v the State of Western Australia and ors.

In that case, the Commonwealth had acquired land at Lancelin, in Western Australia. It used that land as a defence practice area. Part of the land consisted of an island which was declared to be an air gunnery and bombing area. The third and fourth defendants applied to the Wardens of the South-West Mineral Field (the Mining Wardens) for the issue of exploration licences over that land. The Commonwealth commenced proceedings in the High Court for declarations that the Mining Wardens did not have jurisdiction to entertain the applications for mining tenements over the land.

The Mining Act 1978 (WA) did not expressly bind the Commonwealth. It applied expressly to “Crown land”, to land reserved for public purposes by the State of Western Australia and to “private land”. “Crown land” was defined to mean all land in the State except land that had been lawfully granted in fee simple by or on behalf of the Crown and land the subject of a lease granted by and on behalf of the Crown. “Private land” was defined to cover land alienated from the Crown. The High Court held that, as a matter of its proper construction, the Mining Act did not apply, of its own force, to the land acquired by the Commonwealth, because that land did not fall within the definition of either “Crown land” or “private land”. It was contended on behalf of the defendants that nonetheless the action was a “suit” within s.64 of the Judiciary Act, and so the Mining Act had the same application it would have as against a subject.

That argument was unanimously rejected by the High Court. Gleeson CJ and Gaudron J rejected it[30] on the grounds that a proceeding in the warden’s court is not a “suit” and therefore s.64 of the Judiciary Act has no application to it. Gummow J[31] rejected the contention for the same reason. His Honour also rejected it because the Commonwealth does not own private land, and the phrase “as nearly as possible” in s.64 cannot operate to alter the nature of the respective rights in relation to different subject matter. In addition, Gummow J rejected the submission of the defendants for a reason which is pertinent to the present issue, in the following terms:

“Further, here the Commonwealth acquired the freehold and leasehold titles for defence purposes and was thus performing a function peculiar to government. The phrase ‘as nearly as possible’ does not embrace such a situation.”[32]

[30]At paras 45-49.

[31]At para 135.

[32]At para 134.

On the other hand, Hayne J[33] rejected the defendant’s submission on a ground which was similar to the second point made by Gummow J, namely, that the defendant’s submission sought to create rights and obligations which were not provided for by the State legislation, and which would not be recognised or enforced in any proceeding between subject and subject under the Western Australian Mining Act. McHugh J and Callinan J expressly concurred with Hayne J. Kirby J expressly agreed with both Gummow J and Hayne J.
[33]At para 248.

Accordingly, the main reason for the decision in Commonwealth v Western Australia was that, whilst it is permissible to use s.64 to incorporate or “pick up” State law, nevertheless it is not permissible to use s.64 to re-write State law[34]. Further, Gummow J held that the subject matter of the suit – in that case defence land – was such that it was not possible to equate the rights between the parties to rights between subject and subject. The land could not be divested of its characteristic as defence land. A fortiori, any claim to a mining licence in respect of that land could not involve the same rights as would ordinarily apply between subject and subject.
[34]See also Austral Pacific Group Limited (in liq) v Airservices Australia (above) at para 16, per Gleeson CJ, Gummow and Hayne JJ.

There is thus limited authority for the proposition that where the Commonwealth (or a State) is performing a function peculiar to government, s.64 has no application to a proceeding commenced by or against the Commonwealth (or that State). However, I do not understand the authorities, to which I have referred, to mean that a function is “peculiar” to the Crown just because it is a function exclusively performed by the Crown. Rather, in this context, I understand the adjective “peculiar” to denote a function the performance of which by the Crown involves particular rights, immunities and privileges peculiar to the Crown. In such a case, in a proceeding by or against the Crown, it would be incompatible with the position of the Crown to treat the respective rights of the parties as between subject and subject.

On the other hand, there is authority for the proposition that s.64 does not incorporate a particular State law, where to do so would have the result that there were no rights, in the suit, between subject and subject, which could be treated the same between the Commonwealth and the other party to the suit whether absolutely or as nearly as possible. An example of such a case was the The Commonwealth of Australia v Anderson[35]. In that case the Commonwealth, as plaintiff, brought ejectment proceedings against the defendants in the Supreme Court of New South Wales. The defendants contended that the Supreme Court did not have jurisdiction in such an action, and that, pursuant to the provisions of Part 3 of the Landlord and Tenant (Amendment) Act 1948 to 1958 (New South Wales), the only court with such jurisdiction was the Court of Petty Sessions. The High Court unanimously rejected that submission. Dixon CJ (with whom McTiernan, Fullagar, Kitto and Windeyer JJ agreed on this point) stated:

“It is difficult, indeed it is impossible, to find in Part III [of the Landlord and Tenants (Amendment) Act] the creation of definite rights between subject and subject operating independently of the authority of the competent courts, the petty sessions and proclaimed tenancy courts. In other words the provisions contained in Part III are not the source of definite rights between subject and subject capable of appropriation under s.64 of the Judiciary Act for the purpose of determining what are the rights between the Commonwealth and its tenants in a suit in the High Court or the Supreme Court. … In the application of s.64 of the Judiciary Act you begin with the existence of the jurisdiction and of the suit brought by or against the Commonwealth or State. Part III is based essentially upon the condition it prescribes that no such suit can be brought between subject and subject because their legal relations in the relevant subject matter are regulated otherwise. There are no resulting rights between subject and subject which can be treated as the same between the Commonwealth and the overholding tenant whether absolutely or as nearly as possible.”[36]

[35](1960) 105 CLR 303.

[36]At 311.

Having identified those principles it is necessary to apply them to the case before me.

Until 30 June 1999 the employer and the authorised insurer were each obliged to make payments of benefits to and on behalf of an injured worker. Under s.138 of the Accident Compensation Act, the authorised insurer was entitled to issue proceedings in its own name in respect of payments made in discharge of its obligation to the injured worker. Alternatively, the authorised insurer, exercising rights of subrogation, was entitled to issue proceedings on behalf of the employer in respect of payments made in discharge of the employer’s obligation in respect of the injured worker. It was not contended by the Commonwealth – nor could it be – that in either such claim, the rights asserted by the authorised insurer, either in its own name, or in the name of the employer, were not rights between subject and subject.

The Commonwealth sought to outflank that proposition by contending that the statutory assignment of the rights and liabilities of the authorised insurer to the Authority, as from 30 June 1999, was part of a scheme by which, since that date, the Authority has administered a statutory fund for the government for the benefit of injured workers. Thus, it was contended, the claim now made by VWA, in respect of payments made before 30 June 1999, is made in the capacity of the Authority as the administrator of that fund.

There is a short answer to that contention. It is the rights of the respective parties which are required to be as nearly as possible the same as in a suit between subject and subject, for the purposes of s.64 of the Judiciary Act. The rights relied on by the Authority, in respect of payments made by the authorised insurer before 30 June 1999, are precisely the same rights as those hitherto belonging to the authorised insurer, and which were, by force of statute, assigned to the Authority. It necessarily follows that the rights so assigned to the Authority, and asserted by it in respect of payments made before 30 June 1999, are rights capable of being the same (or as nearly as possible the same) as in a suit between subject and subject.

The submission of the Commonwealth concerning payments made by the Authority in its own right after 30 June 1999 requires more analysis. As I have stated the Commonwealth’s argument was that, since that date, the Authority has administered a statutory scheme, on behalf of the State of Victoria, for and on behalf of injured workers. In argument, it was put to me that the legislation in force at the time of the worker’s injury – that is, the legislation contained in reprint No. 8 of the Accident Compensation Act – is applicable. However, as I understood it, the substance of the argument made on behalf of the Commonwealth was based on the role of the Authority, since 30 June 1999, in funding and administering the WorkCover scheme, and in paying benefits to and in respect of injured workers, to the exclusion of authorised insurers.

If the issue between the parties involved a consideration of the nature and extent of the liability of the Commonwealth pursuant to s.138 of the Accident Compensation Act, that question must be determined by reference to the legislation applicable at the time of the injury sustained by the worker; see Transport Accident Commission v Lanson[37]. However, the point made on behalf of the Commonwealth is somewhat different. That point does not focus on the nature, extent or content of the liability created by s.138. Rather it focusses on the status of the Authority as the party claiming to be entitled to an indemnity pursuant to s.138.
[37](2001) 3 VR 250 at paras 11-13 (per Winneke P), paras 49 to 55 (per Phillips JA).

After 30 June 1999 the Authority effectively took over the role of the authorised insurer in paying claims on behalf of injured workers. Clearly, the amendments to the legislation which took effect as at that date intended that the Authority be able to make a claim, under s.138, for payments made after 30 June 1999, notwithstanding that the payments were made in respect of an injury sustained before that date. That being so, then it must follow that it is the legislation in effect after 30 June 1999 which is relevant to the question of the capacity and status of the Authority in instituting proceedings under s.138 of the Accident Compensation Act for payments made after 30 June 1999.

It is at this point, however, that I consider that the submission of the Commonwealth fails. Even if it is assumed, for the purposes of argument, that the Authority, since 30 June 1999, is not to be likened in its function to an insurer, but, rather, is the sole administrator of a statutory scheme on behalf of the State, nevertheless, that consideration does not make it impossible, in the sense discussed in the authorities, for the rights of the parties in an action under s.138 to be as nearly as possible the same as rights between subject and subject. There is nothing in the statutory cause of action under s.138 which is anathema to the implementation of rights between subject and subject. There are no special considerations, peculiar to the position of the Authority, of the type illustrated by Else-Mitchell J in Commonwealth v Lawrence[38]. The position of the Authority in such litigation does not have about it any of the type of considerations which are, for example, peculiar to a claim made for an exploration license on Commonwealth land used for defence practice purposes, as was the case in Commonwealth of Australia v State of Western Australia. The incorporation of s.138 of the Accident Compensation Act in the proceeding does not have the effect that there are no rights between the parties which may be the same as between subject and subject, as was the case in Commonwealth v Anderson.
[38]Above.

The flaw in the argument of the Commonwealth lies, in my view, in its focus on the status and functions of the Authority, as distinct from the rights asserted by the Authority in a claim made by it under s.138 of the Accident Compensation Act. Even if the Authority is the sole entity entitled to institute a claim under s.138 – and thus such a claim is a right “peculiar” to the Authority – it is the rights so asserted by the Authority, and not the status of the Authority, which are required, by s.64, to be equated, as nearly as possible, to rights between subject and subject. There is nothing about the rights so asserted by the Authority which renders them incapable of being so equated to rights between subject and subject.

In other words, in order to preclude s.64 of the Judiciary Act applying to a proceeding under s.138 of the Accident Compensation Act, it is not sufficient that the Authority is an emanation of the Crown which exercises a function which is exclusive to the Crown. Section 64 of the Judiciary Act is only precluded from incorporating a State statute if the rights of the parties, under the State statute, are so unique to the Crown, that their rights may not be equated (as nearly as possible) as those between subject and subject. That is not the case in a claim by the Authority under s.138 of the Accident Compensation Act. If the Authority was not an emanation of the Crown, but, instead, was an independent statutory corporation, its rights in an action for indemnity under s.138 would be precisely the same. A cause of action based on s.138 does not involve any rights so peculiar to the Crown that the rights of the parties in such an action may not, as nearly as possible, be the same as rights between two litigating subjects.

In addition, the submission of the Commonwealth does not adequately grapple with the fact that, after 30 June 1999, an action under s.138 may also be brought, in appropriate circumstances, by a self-insurer or an employer. Indeed, as I have already noted, the Commonwealth correctly accepted that if the Authority made payments in respect of an injured worker in satisfaction of the direct obligation of the employer to pay those benefits under s.125A of the Accident Compensation Act, the Authority might, by right of subrogation, issue proceedings under s.138 in the name of the employer. It follows that the right of indemnity, provided by s.138, is not unique to the Authority. Further, and more significantly, if such a claim is made in the name of the employer, the right asserted on behalf of the employer would be a right as between subject and subject. There is nothing inherently different about the right asserted by the Authority, when it sues on its own account for payments made by it in respect of an injured worker. Accordingly, it follows that the Authority, in bringing such a proceeding, asserts rights which, as nearly as possible, are the same as rights in a suit between subject and subject.

For those reasons, it is my conclusion that s.138(1) of the Accident Compensation Act 1985 applies so as to bind the Commonwealth of Australia by the application of s.64 of the Judiciary Act 1903 (Cth). It follows that the Commonwealth is liable to indemnify the plaintiff in respect of payments made, both before and after 30 June 1999, to and on behalf of the injured worker.

Construction of s.138 of the Accident Compensation Act

It is not strictly necessary for me to determine the alternative submission made on behalf of the plaintiff, namely, that, of its own force, s.138 of the Accident Compensation Act applies to the Commonwealth. Nevertheless, the point was argued before me, albeit in quite short compass. In deference to those submissions, I shall briefly express my views on the point.

In Bropho v State of Western Australia and Anor[39] the High Court considered statements in the authorities relating to the rule of statutory construction by which it is presumed that statutes are presumed not to bind the Crown. The High Court rejected the statements in the authorities which expressed the rule in an inflexible form, such as that, in the absence of an express reference to the Crown, a statute does not bind the Crown unless it does so by “necessary implication”. The Court held that such an inflexible rule does not apply to the construction of statutes[40]. Nevertheless, the Court held that there is a presumption of construction that general words of a statute do not bind the Crown or its instrumentalities, which presumption may be displaced by indications of statutory intention to the contrary. In their joint judgment, Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ stated:

“It follows from what has been said above that considerations of principle preclude recognition of an inflexible rule that a statute is not to be construed as binding the Crown or Crown instrumentalities or agents unless it manifests a legislative intent to do so either by express words or by ‘necessary implication’ in the limited and stringent sense explained above… The effect of the foregoing is not to overturn the settled construction of particular existing legislation. Nor is it to reverse or abolish the presumption that the general words of a statute do not bind the Crown or its instrumentalities or agents. It is simply to recognise that a stringent and rigid test for determining whether the general rules of a statute should not be read down so as to exclude the Crown is unacceptable.”[41]

[39](1990) 171 CLR 1.

[40]See especially at p.16-17, 21-22.

[41]Above at p.22.

The presumption, referred to in Bropho, applies to this case. Section 138(1) does not expressly refer to the Crown. In the absence of any indication to the contrary, that provision would, therefore, be presumed not to apply to the Crown.

Mr Beach contended that the presumption was displaced. He relied on the proposition that the Commonwealth was engaged in ordinary commercial activities by entering into the labour supply arrangement with the employer, and by permitting employees of Skilled Engineering to enter the Commonwealth premises. However, neither of those factors are relevant to the issue of statutory construction, namely, whether s.138(1) was intended to apply to the Crown. Mr Beach, recognising that point, also submitted that the scheme of the Accident Compensation Act was to provide for a self-funding scheme. As part of that scheme the statutory intention was to seek recovery of payments from negligent third parties who caused injury to the worker, and which were the basis of the payments made from the scheme. However, even accepting the premise to that argument, nevertheless it does not, in my view, rebut the presumption referred to in Bropho. That is, even if it is accepted that there is an intention that the scheme of the legislation is to provide, so far as possible, for worker’s compensation payments to be fully funded, nevertheless that underlying statutory intention does not, logically, produce the result that the legislature intended that s.138(1) apply to the Crown.

Nothing else was advanced on behalf of the plaintiff in support of the submission that s.138(1), as a matter of construction, does apply to the Crown. In the absence of any other circumstance producing that result, it therefore follows that, as a matter of statutory construction, s.138(1) does not apply to the Crown of its own force.

Conclusion

For the reasons which I set out above, I have come to the conclusion that s.138(1) of the Accident Compensation Act applies to the Commonwealth by virtue of the operation of s.64 of the Judiciary Act. It follows that the plaintiff’s claim against the defendant should succeed, both in respect of payments made by the Authority after 30 June 1999, and also in respect of payments made by the authorised insurer before 30 June 1999. I shall hear counsel in respect of the appropriate orders to be made, and on the issue of costs.

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Victorian WorkCover Authority v Commonwealth of Australia [2004] VSC 474

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Pedersen v Young [1964] HCA 28

Commonwealth v Western Australia [1999] HCA 5

Wilson v Alexander [2003] FCAFC 272

[2004] VSC 474

19 November 2004