Workcover Authority of NSW v ICI Operations Pty Ltd & Anor

[2005] HCATrans 95

[2005] HCATrans 095

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S130 of 2004

B e t w e e n -

WORKCOVER AUTHORITY OF NEW SOUTH WALES

Applicant

and

ICI AUSTRALIA OPERATIONS PTY LTD (NOW KNOWN AS ORICA AUSTRALIA PTY LTD)

First Respondent

CGU INSURANCE LTD

Second Respondent

Application for special leave to appeal

GLEESON CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 MARCH 2005, AT 10.49 AM

Copyright in the High Court of Australia

MR G.F. LITTLE, SC:   May it please the Court, I appear with my learned friend, MR G.J. PARKER, for the applicant.  (instructed by Turks Legal)

MR P.J. DEAKIN, QC:   If the Court pleases, for both respondents in the matter with MR G.P.F. RUNDLE.  As was pointed out in the Court of Appeal, I think, more appropriately, it should only be the first respondent, but we have been brought here and we do appear on behalf of both.  (instructed by Phillips Fox)

GLEESON CJ:   Yes, Mr Little.

MR LITTLE:   May it please your Honour, the applicant in this case is a fund of last resort that has been ‑ ‑ ‑

GLEESON CJ:   Did not the decision of the court turn on the meaning and effect of an undertaking given by counsel in the course of litigation?

MR LITTLE:   The decision of the Court of Appeal did, your Honour, yes.

GLEESON CJ:   How does that raise a special leave point?  Are we supposed to construe the undertaking?

MR LITTLE:   We say that it is wider than that, your Honour.  We say that what the Court of Appeal has done is to engraft principles of the general law onto the statutory discretion so to constrain it, and we say that in doing that the Authority is now put in the position – suggested by his Honour Mr Justice McHugh in the early case involving the DPP – is now forced into a position where it says nothing, otherwise it will be found liable by virtue of its conduct rather than by virtue of the statute that constructs it.  It is our submission that, in any event, the Court of Appeal was wrong, in that it changed the finding of fact by the trial judge on an appeal limited, relevantly, to errors of law, and that it is not just this case that it is concerned with. 

With the proliferation of recent insolvencies of insurers, it is to be expected that many more matters involving a fund like this will come for determination and at present, given the finding of the Court of Appeal, the fund’s hands are tied unless it goes to court, and, of course, its very creation is not to be a defendant in proceedings.  It is there as somebody to whom recourse can be had, conclusion to proceedings, if it is determined that the insolvent insurer whose affairs it effectively administers is found to be the person who should be indemnified.  Now, it was brought to court ‑ ‑ ‑

GLEESON CJ:   The reasoning of the Court of Appeal appears, does it not, on page 151 in paragraph 350 and on page 152 at paragraph 354?

MR LITTLE:   Yes, it does, your Honour.

GLEESON CJ:   And that reasoning is, is it not, entirely fact specific?

MR LITTLE:   It is, your Honour, but, although it is a matter of fact, it leads to the larger question, which is whether the statutory discretion can be fettered in this way by principles of the general law.  For instance, it effectively is a finding that there is an estoppel against the discretion reposed in Workcover by the statute.  It is estopped from saying, “We have a complete discretion because of principles of the general law”, in this case, an undertaking.  So that we say whether that is a correct approach or not is very much a matter of principle and a matter of importance, not relevant just for this case but for many cases in the future. 

GLEESON CJ:   You mean, even if it is correct to say that the Workcover Authority gave an undertaking in this case, it ought to be able to resile from its undertaking?

MR LITTLE:   Yes, your Honour.

GLEESON CJ:   Why?

MR LITTLE:   Because it is given an unfettered statutory discretion, and effectively to hold it to an undertaking which the Court of Appeal has done is in fact to provide an estoppel against a statutory power or discretion.

GLEESON CJ:   That would produce the consequence that nobody would ever be able safely to rely on an undertaking of the Workcover Authority. 

MR LITTLE:   Well, that is so, your Honour, but the question is also whether in fact it is amenable to suit.  It has no staff as such, it has no power to conduct litigation.  It is really just a fund of last resort.  It says that it should be able to sit there quietly, receive an application at the end of the case to pay and then make a determination whether or not.  In this case, it was brought to court on a notice of motion to join it to the proceedings.  It said in certain circumstances it would exercise its discretion to pay ‑ ‑ ‑

GLEESON CJ:   In other words, it did not sit there quietly.

MR LITTLE:   Well, having been dragged to court, it did not sit there quietly, your Honour, but the Court of Appeal now has, in our submission, effectively constituted it as a defendant who can be brought to court by principles of the general law, notwithstanding the protection it is given by its statute.  That, we say, is a question for determination and an important question, because of the likely reappearance of these issues. 

I do not feel that there is much more I can say than that, your Honour, other than to say that the trial judge very carefully considered the question of the undertaking and their Honours in the Court of Appeal embarked on a factual exercise overturning findings of fact by the trial judge, when they were limited to correcting errors of law.

GLEESON CJ:   Thank you.  Yes, Mr Deakin.

MR DEAKIN:   We are a little troubled by the answer my learned friend gave to your Honour the Chief Justice in relation to the unfettered nature of the discretion.  It seemed to be a part of my learned friend’s submissions that essentially the Authority was not bound by the undertaking which it gave to the court.  As we understood the way the case was conducted at first instance, the argument was that it was a conditional undertaking.  It was for that reason that the terms of the undertaking were not invoked and, therefore, were not available to be raised against the Authority.  So that is a different proposition to what was advanced in the Court of Appeal. 

Your Honours, we submit, I think as your Honour the Chief Justice said, that this whole case turns upon the terms of an undertaking proffered to the court.  It involves no question of general principle at all.  Your Honours have had the benefit of looking at a comprehensive and carefully reasoned judgment, analysing all of the provisions of the Workers Compensation Act that are applicable, and we submit the outcome is manifestly correct and does not demonstrate any general question of principle. 

What the Court of Appeal confirmed was the trial judge’s conclusions that the section does give the Authority an unfettered discretion, in ordinary circumstances, as to whether they choose to pay moneys arising from a judgment or award of the Commission or not.  The only reason in this case why that discretion is not available in unqualified terms is because of the undertaking which the Authority proffered to the court.

GLEESON CJ:   Which the Court of Appeal said was an exercise of the discretion. 

MR DEAKIN:   Yes, I think it may have said it just slightly differently, your Honour, that it was lawfully binding on itself, it having indicated the way in which it was going to exercise its discretion.

GLEESON CJ:   What it said in the second sentence on page 152 was “The Authority exercised its discretion”. 

MR DEAKIN:   Yes, and, having indicated the way in which it was going to exercise its discretion, it was bound by that indication.  Your Honours, we submit that that really is the correct analysis of the case.  My learned friend’s criticism of it being in the nature of a question of fact and not a question of law, we would also respectfully submit, is erroneous for the reasons that Justice McColl in the judgment of the court gave, namely, assuming, as the Court of Appeal found, that the law was correctly enunciated by the trial judge, it was not properly applied to the facts of the case and that is an error of law. 

The construction of the statute from which the court’s conclusion derived that the contingency arose from an error in the powers that the authority had is also a question of construction of the statute and that is also an error of law.  That is really what the case turned on and it does not involve any broad question of principle at all.  I suppose my learned friend has sought to invoke the fact that there may be other cases involving insolvent insurers.  That is true, but this is a case about an undertaking and about the terms of an undertaking.  That does not give rise to any broad questions of principle at all. 

The key to my learned friend’s case, as outlined in his summary of argument, is the passage at 156 in the book, at paragraph 374 of the judgment, where, having repeated those passages that your Honour the Chief Justice has already referred to, amounting to the findings that were determinative of the case, Justice McColl says that, in her view, the trial judge: 

erred in characterising the undertaking the Authority gave . . . as contingent. 

That arises from the misconstruction of the section, but her Honour goes on to say:

However, even if it was in fact contingent –

So let us assume for the purposes of the argument that it was in fact contingent –

it was subject to a contingency which turned on the Authority’s erroneous views of its powers.

So even if it is accepted that my learned friend’s submission is right, that whether it was a contingent undertaking or not is a question of fact, the court has said there is a second string to why the appeal should be allowed, namely, that that assumption that it was a contingent undertaking derived from an erroneous view of the operation of the statute.  That is a question of

law.  So it is our respectful submission that the matter does not give rise to any general principle and there is no demonstrated error in the court and special leave should be refused.

GLEESON CJ:   Yes, Mr Little.

MR LITTLE:   Well, if your Honours are persuaded by my learned friend’s argument that these were errors of law, it may be that those questions of law are matters that should be clarified.  Specifically, as my friend has put it, it is not within the special leave questions as framed by ourselves, but if it is raised in the way it is, that is, the power of the Authority to pay an insurer rather than pay an employer, as is stated in the statute, it is an important matter and it is something that, in our submission, needs this Court’s guidance.

GLEESON CJ:   Thank you, Mr Little.

We are of the view that this case does not raise an issue suitable to a grant of special leave to appeal and we are not persuaded that the interests of justice require such a grant.  The application is dismissed with costs.

AT 11.01 AM THE MATTER WAS CONCLUDED