Workers Compensation Nominal Insurer v Earl - [2012] NSWWCCPD 61

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:			Workers Compensation Nominal Insurer v Earl [2012] NSWWCCPD 61
APPELLANT:			Workers Compensation Nominal Insurer
RESPONDENT:			David Lancelot Earl
FILE NUMBER:			A1-2194/12
ARBITRATOR:	Mr G Capel
DATE OF ARBITRATOR’S DECISION:			26 June 2012
DATE OF APPEAL HEARING:		19 October 2012
DATE OF APPEAL DECISION:			31 October 2012
SUBJECT MATTER OF DECISION:			Purported cancellation of statutory policy of workers compensation insurance; cls 17 and 18 of statutory policy; need for consent of WorkCover Authority of NSW to cancel statutory policy; whether employer’s statutory policy validly cancelled; whether employer uninsured at date of injury; s 155AA of the Workers Compensation Act 1987; exempt employers; whether consent needed to cancel statutory policy of an exempt employer; meaning of “should be lapsed”; meaning of “compensation” and “in connection with a claim for compensation”; s 352 of the Workplace Injury Management and Workers Compensation Act 1998
PRESIDENTIAL MEMBER:			Deputy President Bill Roche
HEARING:			Oral
REPRESENTATION:			Appellant:	Mr P Perry, instructed by DLA Piper Australia
Respondent:	Mr P Stockley, instructed by Goldbergs Lawyers
ORDERS MADE ON APPEAL:			The Arbitrator’s determination of 26 June 2012 is confirmed. The appellant is to pay the respondent’s costs of the appeal, assessed at $2,530 plus GST.

INTRODUCTION

The issue in this appeal is whether the Nominal Insurer is entitled to recover from an employer compensation paid by the Nominal Insurer to a worker. The answer turns on whether, at the date of injury, the worker’s employer carried a mandatory worker’s compensation insurance policy (the statutory policy).
The employer submitted that he was insured because, before purporting to cancel his policy by letter dated 19 September 2008, the insurer had not obtained from the WorkCover Authority of NSW (WorkCover) written consent to cancel the policy. In the alternative, if the insurer had consent, the purported cancellation was ineffective. It followed that, under the terms of the statutory policy, his policy was automatically renewed after 30 June 2008 up to the date of injury on 5 January 2010.
The Nominal Insurer submitted that there was no need to cancel the employer’s policy because, when the employer’s wages bill dropped below $7,500, as it did in 2008, he became an “exempt employer” and he was not required to have a policy of workers compensation insurance but was insured under the “deemed policy” provisions. However, when his wages bill exceeded $7,500, as they did in 2009 and 2010, he was required to obtain a new policy, which he did not do.
In the alternative, the Nominal Insurer submitted that, in a document issued by WorkCover on 28 August 2008, WorkCover directed scheme agents to lapse policies held by exempt employers and that that direction provided the written consent for the cancellation of the employer’s policy by the insurer on 19 September 2008. If that cancellation was defective, because it purported to cancel the policy from 30 June 2008, it was effective to cancel the policy on and from…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NSWWCCPD 61
Decision Date: 31 October 2012

CaseChat Overview and Summary

In Workers Compensation Nominal Insurer v Earl, the dispute centred on the purported cancellation of a statutory policy of workers compensation insurance. The matter was before the New South Wales Supreme Court, which had to determine whether the employer's statutory policy was validly cancelled and whether the employer was uninsured at the date of the injury. The dispute arose from a series of communications between the insurer, CGU, and the employer, Mr Earl, regarding the renewal and cancellation of the policy. The court needed to interpret several provisions of the relevant statutory framework, including sections 155AA and 352 of the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998.

The primary legal issues before the court were whether the statutory policy was validly cancelled and whether the employer was uninsured at the date of the injury. The court examined the requirements for cancelling a statutory policy, particularly the need for consent from the WorkCover Authority of New South Wales. It also considered the definitions of "should be lapsed" and "compensation" in connection with a claim for compensation. The court had to determine if the policy was exempt from renewal and whether the insurer complied with the statutory requirements for cancellation.

The court concluded that the statutory policy was not validly cancelled because CGU did not have the authority to cancel it without the consent of the WorkCover Authority. The policy was deemed exempt from renewal, but the cancellation was ineffective as it was not authorised. The court found that the employer was uninsured at the date of the injury, as the policy was not validly cancelled and the employer did not obtain a new policy within the required timeframe. The court confirmed the Arbitrator's determination and ordered the appellant to pay the respondent's costs of the appeal.

Orders

Orders of the court

The Arbitrator’s determination of 26 June 2012 is confirmed.

The appellant is to pay the respondent’s costs of the appeal, assessed at $2,530 plus GST.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

By letter dated 15 August 2008, CGU advised Mr Earl that it had not received his declaration of actual wages for 30 June 2007 to 30 June 2008, or his declaration of estimated wages for the period 30 June 2008 to 30 June 2009. The letter added:“Please be advised that in accordance with WorkCover, if we do not receive your Declaration of Actual Wages and Declaration of Estimated Wages forms by 29/08/2008, CGU will automatically renew your policy using last year’s wages estimate, plus a 30% loading to calculate your premiums. To ensure that your final premium is calculated using the actual amount of wages paid, please submit the above forms by the specified date.” (emphasis included in original) CGU again wrote to Mr Earl on 26 August 2008. This letter was headed “Invitation to Renew Your Workers Compensation Policy”, which was due for renewal at 4 pm on 30 June 2008. The letter essentially repeated the statement reproduced in the preceding paragraph about the need to provide a declaration of actual and estimated wages by 29 August 2008. It added that, if the declaration of estimated wages was not received by that date, “WorkCover require CGU to automatically renew your policy using your previous year’s wages, plus a 30% loading to calculate your premium”. On 28 August 2008, WorkCover issued a document headed “Small Employer Policy Exemption” subtitled “Scheme Agent Administrative Requirements” (the exemption document). In summary, the exemption document provided details of the “procedures and requirements impacting employers and Scheme agents as a result of the introduction of the small employer policy exemption”. It stated in cl 4.3.1 that scheme agents should not renew policies with known wages of $7,500 or less unless an employer advised that estimated wages for the renewal were greater than that figure. If an employer with a policy renewal date on or after 30 June 2008 and known wages greater than $7,500 notified their scheme agent in writing prior to the renewal date that their estimated wages for the renewal year would be $7,500 or less, “the policy should be lapsed” (cl 4.3.2). On 29 August 2008, Mr Earl faxed a declaration of actual wages for 30 June 2007 to 30 June 2008 and an estimate of wages for the following year. Actual wages from 30 June 2007 to 30 June 2008 were $7,365 and estimated wages for 2008 to 2009 were $7,000. On 19 September 2008, CGU wrote to Mr Earl a letter headed “Exempt Policy Cancellation Notice”. The letter stated that their records indicated that his estimated wages (for 2008–2009) were $7,500 or less and, as a result, he was “classified as an exempt employer” and no longer required to hold a NSW workers compensation insurance policy. His policy had “therefore been cancelled with effect from 30/06/2008”. He was again advised that, should one of his workers sustain an injury, he had to report the injury to WorkCover within 48 hours and that WorkCover would arrange for a scheme agent to manage the claim for an administration fee of $175. He was also informed that, if he anticipated that his annual estimated wages would be above $7,500, he employed an apprentice, or was a member of a group for workers compensation purposes, he was required to immediately take out a NSW workers compensation insurance policy.