Workers Compensation Nominal Insurer v Massoud - [2012] NSWWCCPD 62

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:			Workers Compensation Nominal Insurer v Massoud [2012] NSWWCCPD 62
APPELLANT:			Workers Compensation Nominal Insurer
FIRST RESPONDENTS:			Raymond Tannous Massoud and Antoine Massoud
SECOND RESPONDENT:		Adnan Al Othmani
FILE NUMBER:			A2-7269/09
ARBITRATOR:	Mr M Snell
DATE OF ARBITRATOR’S DECISION:			1 August 2012
DATE OF APPEAL DECISION:			31 October 2012
SUBJECT MATTER OF DECISION:			Application by Nominal Insurer for reimbursement of compensation from uninsured employer; application of principles in Raniere Holdings Pty Ltd v Daley [2005] NSWCA 121; 66 NSWLR 594; misconceived appeal lacking in substance; s 145 of the Workers Compensation Act 1987; interlocutory orders; ss 352(3A) and 354(7A) of the Workplace Injury Management and Workers Compensation Act 1998
PRESIDENTIAL MEMBER:			Deputy President Bill Roche
HEARING:			On the papers
REPRESENTATION:			Appellant:	DLA Piper Australia
First Respondents:	No appearance
Second Respondent:	Koutzoumis Lawyers
ORDERS MADE ON APPEAL:			The appeal is dismissed under s 354(7A) of the Workplace Injury Management and Workers Compensation Act 1998 as misconceived and lacking in substance. No order as to costs.

BACKGROUND

Adnan Al Othmani suffered serious back injuries when he fell from the roof of a pergola on 24 June 2006. As a result of his injuries, he is now a paraplegic. He claimed compensation from Raymond Massoud and Antoine Massoud. As the Massouds were uninsured, he also joined the Nominal Insurer to the proceedings.
His claim for compensation before Arbitrator Rimmer in the first arbitration was unsuccessful on the ground that he was not a worker or a deemed worker employed by the Massouds at the time of his fall. He successfully appealed that decision to an Acting Deputy President and the Court of Appeal upheld the Acting Deputy President’s decision. The Massouds were represented at, and took an active role in, the first arbitration but did not participate in either the appeal to the Acting Deputy President or the Court of Appeal.
As no orders had been made for the payment of compensation, the Commission listed the matter for teleconference before Senior Arbitrator Snell on 24 May 2012 to hear submissions on Mr Al Othmani’s entitlement to weekly, lump sum compensation and hospital and medical expenses. As Mr Al Othmani was overseas, the matter was adjourned until 28 June 2012. The Massouds did not participate in the teleconference and were not represented.
At the teleconference on 28 June 2012, the Nominal Insurer settled the claim and the Commission issued a Certificate of Determination – Consent Orders (the Consent Orders) on that day ordering the Nominal Insurer to pay weekly and other compensation, and costs, to and on behalf of Mr Al Othmani. The solicitor for the Nominal Insurer foreshadowed an application that it be reimbursed by the Massouds. The Massouds did not participate, either directly or through a solicitor, in the settlement and there is no evidence that they consented to it.
By letter dated 4 July 2012, the Nominal Insurer’s solicitor, DLA Piper Australia, applied for the matter to be listed for a further teleconference and sought orders that the Massouds reimburse the Nominal Insurer the compensation and costs it agreed to pay to Mr Al Othmani in the Consent Orders.
Senior Arbitrator Snell listed the matter for teleconference on 1 August 2012 when he heard submissions from the Nominal Insurer’s solicitor in support of the application. He delivered an ex tempore decision in which he referred to and applied the principles in Raniere Holdings Pty Ltd v Daley [2005] NSWCA 121; 66 NSWLR 594 (Raniere Holdings).
In Raniere Holdings, Tobias JA held (Hodgson JA and Stein AJA agreeing) that, where an injured worker and the WorkCover Authority of NSW settle a claim for compensation, and orders are made in accordance with that settlement, the former Compensation Court of NSW (the Compensation Court) had no power under s 144(5) of the Workers Compensation Act 1987 (the 1987 Act) to provide for the reimbursement of the WorkCover Authority Fund by the employer under s 145 “unless and until, absent agreement, it has determined that the employer is in fact liable to pay that compensation”.
The Senior Arbitrator said that, while there had been a determination of the issue of “worker”, there had been no “contested determination on the issue of quantum”. He also noted that the Massouds had not participated in any of the telephone conferences held by him since the matter had been returned from the Court of Appeal. On this issue he added, at T3.43:
“So far as can be ascertained on enquiry of the parties today, it does not appear that the uninsured First Respondents [the Massouds] were on notice, or served with material which would put them on notice, of the application which was to be made today. This raises some difficulties as regards procedural fairness.”

He felt that the “more substantive difficulty” was that which flowed from Raniere Holdings, namely, that in the absence of a determination of the liability of the Nominal Insurer to Mr Al Othmani, or in the absence of agreement by the Massouds as regards the appropriateness of the compensation (ordered to be) paid, it was not open to him to make orders for reimbursement.
The Senior Arbitrator added that the Nominal Insurer has a right to seek recovery from the Massouds under s 145 of the 1987 Act through the issue of an appropriate certificate under that section, should it wish to exercise such right.
Against this background, the Senior Arbitrator declined to make the orders sought.
The Nominal Insurer has appealed the Senior Arbitrator’s decision. The solicitor for Mr Al Othmani filed a letter on 10 September 2012 stating that he would not be filing any submissions. The Commission has received no correspondence or submissions from the Massouds, though it is noted that the appeal was said to have been served on them on by registered post on 5 September 2012.

ON THE PAPERS

Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) provides:
“(6) If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
Having regard to Practice Directions Nos 1 and 6, the documents that are before me, and the submissions by the appellant that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.

PRELIMINARY MATTERS

Monetary threshold

Section 352(1) of the 1998 Act provides that a “party to a dispute in connection with a claim for compensation may appeal to the Commission constituted by a Presidential member against a decision in respect of the dispute by the Commission constituted by an Arbitrator”.
There is no appeal under s 352 unless the “amount of compensation at issue on appeal” is both “at least $5,000” and “at least 20% of the amount awarded in the decision appealed against” (s 352(3)).
The Nominal Insurer has submitted:
“The Appellant appeals the decision of Arbitrator Snell in respect of the orders relating to the recovery of benefits paid by it to the injured worker, from Raymond Tannous Massoud and Antoine Tannous [sic]. Those benefits exceed the threshold in section 352(2) [sic] of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) and the Workers Compensation Commission (WCC) Practice Direction 6.”
While it is correct that the compensation ordered to be paid in the Consent Orders exceeds $5,000, the above submission has ignored the fact that, as the orders were made by consent, and as the Nominal Insurer has a statutory right to serve on the Massouds a s 145 notice requiring them to, within a period specified in the notice, reimburse the Insurance Fund an amount specified in the notice, it is doubtful that there is any compensation “at issue” on appeal.
In other words, the Nominal Insurer’s right of recovery does not depend on the Senior Arbitrator’s refusal to make the order sought. It has a statutory right in s 145. If the Nominal Insurer were to serve a s 145 notice and if, within the period specified in the notice, the Massouds were to apply to the Commission for a “determination as to their liability in respect of the payment concerned”, that would be a dispute “in connection with a claim for compensation” (Workers Compensation Nominal Insurer v Earl [2012] NSWWCCPD 61). However, that is not the current position before the Commission.
It follows that, without deciding it, I doubt that the appeal satisfies the thresholds in s 352(3).

Interlocutory

Except with leave of the Commission, there is no right of appeal against an interlocutory decision by an Arbitrator, and the Commission is not to grant leave “unless of the opinion that determining the appeal is necessary or desirable for the proper and effective determination of the dispute” (s 352(3A)).
The Nominal Insurer submitted:
“The orders made related to the recovery of benefits paid to the injured worker, from Raymond Tannous Massoud and Antoine Tannous [sic]. Arbitrator’s [sic] Snell determination that he declined to make those orders was not of an interlocutory nature.”
Whether an order is interlocutory depends on the nature of the order made. The test is whether the judgment or order, as made, finally disposes of the rights of the parties (Gibbs J in Licul v Corney [1976] HCA 6; 50 ALJR 439 at 443-444).
The Senior Arbitrator’s decision did not finally dispose of the parties’ rights because the Nominal Insurer is entitled to seek reimbursement by serving a s 145 notice and nothing in his decision has affected that right. It follows that the order is an interlocutory order and leave to appeal is required.
I am not of the opinion that determining the appeal is necessary or desirable for the proper and effective determination of the dispute.
If I am wrong on this issue, having regard to the Nominal Insurer’s submissions on the substantive matters on appeal, it is appropriate that I deal with those submissions.

ISSUES IN DISPUTE

The issue in dispute in the appeal is whether the Senior Arbitrator “erred in concluding that he lacked the power to make an order pursuant to section 145 of the Workers Compensation Act 1987 (the 1987 Act) directing the Respondents [the Massouds] to reimburse the Appellant in respect of payments made by the Appellant to Adnan Al-Othmani (the worker).”

SUBMISSIONS

The Nominal Insurer submitted that it was not in issue at the first arbitration that the Massouds were uninsured at the time of the accident, or that Mr Al Othmani suffered serious injuries when he fell. The only issue was whether Mr Al Othmani was a worker or deemed worker under the legislation. That issue was determined in favour of the Massouds at the first arbitration, but reversed on appeal.
The proceedings were remitted to the Commission for determination of Mr Al Othmani’s entitlements under the legislation and:
“Upon concession by the Appellant as to the worker’s entitlement to compensation, the Appellant applied for an order pursuant to section 145 of the 1987Act.”
Different circumstances prevail in this case to those in Raniere Holdings. In that case it was determined that a settlement between the WorkCover Authority of NSW and a worker “did not lead to a conclusion that the uninsured employer then had a liability to pay a sum equal to the settlement monies to the Authority”. The employer was not seen to be a party to the settlement.
In the present case, there was involvement by the Massouds in the proceedings “from the outset”. They were named as parties and participated in the initial proceedings and “were given notice of all subsequent proceedings”. It is clear that the Massouds “understood that the only issue in contention was that of the question of ‘worker’”.
It is clear that the Massouds “chose to take no further part in proceedings following the finding that the worker was indeed employed by them”.
There was no dispute that Mr Al Othmani suffered an injury. The “function of the Commission is to resolve disputes where those disputes exist, and in this manner the Commission functions differently from the former Court”.
In Raniere Holdings the Court of Appeal considered an order pursuant to repealed legislation relating to the former (Compensation) Court (and the operation of s 145 in that context).
In the circumstances, there was no inhibition on the Senior Arbitrator “making the awards [sic] sought”.
The Senior Arbitrator found that, for him to make an order pursuant to s 145, liability for each entitlement to compensation “needed to have been litigated in the absence of the Respondents”. Raniere Holdings “appears to be authority for that proposition excepting the matters noted above and the fact that Raniere [Holdings] involved a compromise on the part of the Authority”. In the present circumstances, there being no “liability” issues, the Nominal Insurer submitted that the calculation of entitlements “was not properly the subject of dispute”.
The Nominal Insurer has an obligation to the Commission “not to litigate matters that are not properly in dispute”. It added:
“It would be unusual, it is submitted, were the Appellant required to litigate non-contentious matters in the – entirely voluntary – absence of an uninsured employer in order to be entitled to an order for recovery from such an uninsured employer. This would be contrary to: the proper running of the Commission; the effective operation of the scheme; and, public policy.”

DISCUSSION

I reject the above submissions.
I accept that it was not in issue that the Massouds were uninsured at the time of the injury. However, that is not the issue on appeal. The substance of the order sought was that the Massouds repay to the Nominal Insurer the amount the Nominal Insurer voluntarily agreed to pay Mr Al Othmani.
I also accept that Mr Al Othmani suffered serious injuries when he fell on 26 June 2006. However, the fact that Mr Al Othmani suffered serious injuries does not determine the quantum of compensation to which he is entitled. Compensation is paid “in respect of death or total or partial incapacity resulting from an injury … not in respect of the injury itself” (Latham CJ in Ward v Corrimal-Balgownie Collieries Ltd [1938] HCA 70; 61 CLR 120 at 129).
The Nominal Insurer disputed Mr Al Othmani’s entitlement to compensation. Counsel for the Nominal Insurer identified the issues at the first arbitration as being “worker”, ss 4, 9 and 9A, and “the question of incapacity at [sic, and] quantum” (T2.6). Arbitrator Rimmer at [6] of her decision confirmed that quantum was in issue. In these circumstances, the Nominal Insurer’s description of the quantum issue on appeal as “non-contentious” was incorrect and contrary to its own counsel’s submissions.
The resolution of the “worker” issue determined the liability dispute but did not determine the quantum of compensation payable. That is why the matter was remitted to the Senior Arbitrator.
There is no valid basis to distinguish Raniere Holdings on the grounds submitted by the Nominal Insurer. In that case, the WorkCover Authority settled the claim without the employer’s consent or knowledge and before the court heard any evidence. It makes no difference that, in the present case, the Nominal Insurer settled the case after a contested hearing on liability. The quantum of compensation to which Mr Al Othmani was entitled still had to be resolved, either by settlement or by determination by the Commission.
If the Nominal Insurer wished to settle Mr Al Othmani’s matter without the consent of the Massouds, it put itself in exactly the same position as the WorkCover Authority in Raniere Holdings. The submission that the Massouds were a party to the proceedings “from the outset” misses the point. They were not parties to the settlement the Nominal Insurer reached with Mr Al Othmani and did not consent to it.
The submission that the Massouds “understood that the only issue in contention was that of the question of ‘worker’” was, for the reasons explained at [41] above, incorrect and demonstrates a surprising misunderstanding of the issues involved. Whether the Massouds “chose” to take no further part in the proceedings is not known. In any event, that is irrelevant.
The submission that there was no dispute that Mr Al Othmani suffered an injury ignores the fact that the quantum of Mr Al Othmani’s compensation remained in dispute, as indicated by the Nominal Insurer’s counsel before Arbitrator Rimmer.
The submission that the “function of the Commission is to resolve disputes where those disputes exist, and in this manner the Commission functions differently from the former Court” was specious. While it is true that there are several procedural differences between the Commission and the Compensation Court, the Commission serves the same primary function as that served by the Compensation Court.
The Commission’s statutory objective is to “provide a fair and cost effective system for the resolution of disputes under the Workers Compensation Acts” (s 367 of the 1998 Act). The Compensation Court was required to give effect to the overriding purpose of the Compensation Court Rules 1990, namely, to “facilitate the just, quick and cheap resolution of the real issues in any proceedings” (Compensation Court Rules 1.2A).
Moreover, provisions such as s 354 do not release the Commission from the obligation to apply rules of law in arriving at its decisions (South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16; 4 DDCR 421 McColl AJ at [88] (Tobias JA agreeing) citing Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 at 29 per Gleeson CJ and Handley JA). Unless Raniere Holdings can be validly distinguished, it is binding on the Commission and must be followed. The Nominal Insurer advanced no valid reason why the principles in Raniere Holdings should not apply in this case.
The submission that Raniere Holdings considered an order under repealed legislation relating to the Compensation Court, and the operation of s 145 in that context, was not developed with any reasoned argument and was unhelpful. While it is true that Div 6 of Pt 4 of the 1998 Act was amended in July 2007, and the Uninsured Liability and Indemnity Scheme (the Scheme) was repealed and replaced by the Nominal Insurer and the Insurance Fund, the substantive provisions from the repealed sections that are relevant to the issue before me have been retained, but with some modifications.
The power that previously existed in s 144 for the Compensation Court to hear and determine any application by a claimant under the Scheme is now found in ss 142A and 142B. However, rather than saying that the Commission may hear and determine any application by a worker and make “such orders in relation to the application as the Commission thinks fit”, as the repealed s 144(3) said, s 142A(1) provides that the 1987 Act and the 1998 Act apply to, and in respect of, a claim under Div 6 of Pt 4 “as if the Nominal Insurer were the insurer under this Act of the relevant employer at the relevant time”. The effect of the new provision is that the Nominal Insurer is directly liable to a worker, as if it were an insurer (s 159 of the 1987 Act).
The matters discussed in the preceding paragraph are consistent with the second reading speech on the introduction of the 2007 amendments, when the Parliamentary Secretary said on 12 November 2003:
“The bill changes the arrangements for workers whose employers are uninsured. Instead of uninsured claims being met by the Workers Compensation Authority Fund, it is proposed that these claims will now be met by the Nominal Insurer, drawing on the insurance fund. The Nominal Insurer will recover the costs of the uninsured claims from employers. The intention is to simplify the arrangements governing uninsured liability and place workers whose employers are uninsured on a similar footing to other workers making claims. Workers whose employers are uninsured will have access to benefits and the dispute resolution procedures of the Workers Compensation Commission as soon as their claim is verified. Uninsured employers will continue to have the right to participate in dispute resolution concerning uninsured claims and will be a party to any matters dealt with in the Workers Compensation Commission.
These arrangements will ensure that claims made by injured workers whose employers are uninsured are dealt with in a similar way to other claims, allowing these injured workers to receive benefits more quickly.”

The power that previously existed in s 144(5) for the Compensation Court to make an order providing for the reimbursement of the WorkCover Authority Fund is now found, with a subtle variation, in s 142B(2). Section 144(5) provided that “[a]n order under subsection (3) [of s 144] may provide for the reimbursement of the WorkCover Authority Fund under section 145”. Section 142B(2) provides that the “Commission may make orders providing for the reimbursement of the Insurance Fund under section 145”.
The subtle change in s 142B(2), compared to s 144(5), namely, the omission of the words “an order under subsection (3)”, suggests that reimbursements are now exclusively dealt with by notice under s 145 and that the general power for the Commission to order reimbursement in the absence of a s 145 notice has been removed.
This change makes good sense because it allows the Nominal Insurer the freedom to settle claims expeditiously, without the need to have a contested hearing, and without the need to obtain consent from the uninsured employer. The Nominal Insurer’s right to recover the compensation it has agreed to pay (or has paid) is not prejudiced by its actions because it has the right to issue a notice under s 145 seeking reimbursement.
The uninsured employer’s rights are protected because it has the right, within the period specified in the notice, to apply to the Commission for a determination as to its liability in respect of the payment. If the employer does not dispute that notice within the time specified, the Nominal Insurer may recover the amount specified in it as a debt in a court of competent jurisdiction (s 145(6)).
Sub-sections (3) and (4) of s 145 are in the same terms now as they were in Raniere Holdings, save that “the Commission” has been substituted for “the Compensation Court”. Sub-section (5) of s 145 is also in the same terms except that “the Nominal Insurer” has been substituted for “the Authority”.
Once the nature of the amendments to Div 6 of Pt 4 are understood, it is clear beyond doubt that, subject to one caveat, the principles discussed in Raniere Holdings apply to proceedings in the Commission and to the circumstances of this case. It was open to the Commission to make the orders in the Consent Orders (s 142A). However, applying Raniere Holdings, there is no power in the Commission to order reimbursement unless the employer’s liability to pay compensation to the injured worker has been determined or agreed (Raniere Holdings at [56]). Neither of those things happened in this case.
The caveat I alluded to in the preceding paragraph does not assist the Nominal Insurer. It is that, in light of the amendments introduced in 2007, it is now doubtful that, in the absence of a notice issued under s 145, the Commission has power to order reimbursement even after a determination of the employer’s liability to pay compensation to the worker. However, as it is not necessary to determine that issue to resolve the appeal, I express no concluded view save to note that it is arguable that, absent consent of the uninsured employer, reimbursement should normally be pursued by notice under s 145. Whichever view is taken of the new provisions, they do not support the Nominal Insurer’s position.
The submission that, there being no “liability” issues, the calculation of entitlements “was not properly the subject of dispute”, is incorrect. The determination of the “worker” issue did not determine all matters in issue and quantum was still to be determined. As the Nominal Insurer settled that part of the case, the Commission made no determination.
It is correct that the Nominal Insurer, and every other insurer that appears in the Commission, has an obligation not to litigate matters not properly in dispute. That obligation also applies to not bringing baseless appeals, which is the subject of further comment below.
The submission that it would be contrary to the proper running of the Commission, the effective operation of the scheme and public policy if the Nominal Insurer were required to litigate “non-contentious matters” is based on the false assumption that quantum was not in issue. Given that, as I have already noted, the Nominal Insurer’s own counsel informed the Commission that quantum was in issue, this submission was astonishing.
It follows that the Commission has no power to make the order sought and the Senior Arbitrator did not err in refusing to make the order.

OTHER MATTERS

The submissions on appeal have ignored the clear terms of binding Court of Appeal authority and have ignored the fact that the Nominal Insurer has a simple and cost effective remedy available to it. It is entitled to serve on the Massouds a notice under s 145 requiring them, within a period specified in the notice, to reimburse the Insurance Fund an amount specified in the notice.
The Nominal Insurer submitted, at [7] of its written submissions:
“The Appellant had served upon the Respondent a notice requiring of the Respondents that they make the reimbursement sought by the Appellant in accordance with section 145(1) of the 1998 Act.”
This was an extraordinary submission. There is no s 145 notice in the Commission’s files and no evidence that such a document was ever served on the Massouds. The letter from DLA Piper Australia dated 4 July 2012 in support of the application to Senior Arbitrator Snell made no reference to such a notice. If a s 145 notice had been served on the Massouds, the present appeal would have been otiose because the notice would take effect according to the terms of s 145. If no s 145 notice has been served, the submission was false and misleading.

CONCLUSION

The order sought in this matter was in direct conflict with applicable Court of Appeal authority and the appeal was misconceived and lacking in substance. It should not have been filed and is dismissed under s 354(7A) of the 1998 Act.
The appellant’s solicitors are reminded that the provision of legal services in an appeal that is without reasonable prospects of success is capable of amounting to unsatisfactory professional conduct or professional misconduct (s 345 of the Legal Profession Act 2004; Beale v Walgett District Hospital and anor [2009] NSWWCCPD 60 [52] to [54]).
This appeal had no prospects of success and the costs order made below is intended to ensure that the appellant’s solicitors do not recover costs in respect of it.

DECISION

The appeal is dismissed under s 354(7A) of the Workplace Injury Management and Workers Compensation Act 1998 as misconceived and lacking in substance.

COSTS

No order as to costs.

Bill Roche

Deputy President
31 October 2012

I, MARGOT UNDERCLIFFE, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE