ZKM Pty Ltd v Chen

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	ZKM Pty Ltd v Chen [2022] NSWPIC 108
APPLICANT:	ZKM Pty Ltd
RESPONDENT:	Zhu Chen
MEMBER:	Rachel Homan
DATE OF DECISION:	17 March 2022
CATCHWORDS:	WORKERS COMPENSATION - Claim for apportionment of lump sum death benefit and orders with respect to payment; adult children of deceased worker elected not to claim a portion of the lump sum; identification of other dependants; application for orders for payment of interest pursuant to section 109 of the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act); when was the claim duly made; delays in making the claim due to difficulties identifying the correct employer; allegation of fraud in concealing the employer’s identity; request in the alternative for orders pursuant to section 235B of the 1998 Act; Held- the respondent was the sole dependant of the deceased worker; orders for payment of the lump sum pursuant to sections 29(1A) and 85A(1) of the Workers Compensation Act 1987; interest to be paid from date Application lodged until initial teleconference at 2% above the Reserve Bank of Australia cash rate; no order made pursuant to section 235B of the 1998 Act.
DETERMINATIONS MADE:	1. The deceased worker, Deyun Xue, died on 23 June 2016 as a result of an injury sustained in the course of or arising out of employment with the applicant. 2. The respondent, Zhu Chen, was a dependant of the deceased worker who was wholly or partly dependent for support upon him at the date of his death. 3. Ailing Xue and Wang Xue have elected not to pursue or have waived any entitlement to any portion of the lump sum death benefit. 4. There were no other persons wholly or partly dependent for support upon the deceased worker at the date of his death. 5. The lump sum death benefit payable in accordance with s 25(1)(a) of the Workers Compensation Act 1987 is $760,000.
ORDERS MADE:	1. The applicant to pay the lump sum death benefit of $760,000 to the respondent, Zhu Chen, pursuant to ss 29(1A) and 85A(1)(a) of the Workers Compensation Act 1987. 2. The applicant to pay interest on the lump sum death benefit pursuant to s 109 of the Workplace Injury Management and Workers Compensation Act 1998 at the rate of 2.1% for the period 6 December 2021 to 27 January 2022. 3. The Personal Injury Commission declines to make any order pursuant to s 235B of the Workplace Injury Management and Workers Compensation Act 1998.

STATEMENT OF REASONS

BACKGROUND

Mr Deyun Xue (the deceased worker) was employed by ZKM Pty Ltd (the applicant) when he contracted Klebsiellas Pneumonia leading to his death on in June 2016. The deceased worker was 40 years old at the time of his death.
Solicitors acting for Ms Zhu Chen (the respondent) made a claim for compensation in respect of the deceased worker’s death. The respondent is the deceased worker’s spouse.
On 1 December 2021, the applicant’s insurer wrote to the respondent advising that liability to pay compensation in respect of the deceased worker’s death had been accepted.
An Application in Respect of Death of Worker was lodged in the Personal Injury Commission (the Commission) on behalf of the applicant on 6 December 2021, seeking orders for apportionment of the lump sum death benefit payable under s 25(1)(a) of the Workers Compensation Act 1987 (the 1987 Act).

PROCEDURE BEFORE THE COMMISSION

The parties appeared for teleconference on 27 January 2022. The applicant was represented by Mr Stephen Harris, legal practitioner. Representatives from the applicant’s insurer were also present. The respondent was represented by Mr Joseph Hallion of counsel, instructed by Mr Chang Liu and assisted by an interpreter in the Mandarin language.
The applicant confirmed that liability to pay compensation had been accepted and that orders for apportionment and payment of the lump sum death benefit were required. It was agreed that the applicable death benefit was $760,000.
The respondent’s counsel made an application for interest on the lump sum death benefit pursuant to s 109 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). To the extent that it was required, leave to make the application was granted and a timetable was established for written submissions addressing whether the discretion to award interest should be exercised, and if so, the appropriate rate and period in respect of which interest should be paid.
The Commission also noted that the deceased worker had two adult children and siblings in China, all of whom had prepared statements in respect of earlier proceedings before the Commission stating that they were dependent on the deceased worker but did not wish to make a claim for any portion of the death benefit.
Observing that there had been a material passage of time since the previous proceedings and changes in circumstances, including acceptance of liability, a direction was made to the respondent to serve and lodge evidence of updated correspondence to all potential dependants, advising them of the new proceedings, the acceptance of liability, the death benefit amount and their ability to access free legal advice with regard to any potential entitlement to a portion of the death benefit.
The respondent requested that payment of the lump sum death benefit be made to her personally pursuant to s 85A(1)(a) of the 1987 Act.
Additional evidence and written submissions were lodged by the respondent on 31 January 2022 and 15 February 2022. Written submissions on behalf of the applicant were lodged on 22 February 2022.

ISSUES FOR DETERMINATION

The following matters require determination:
(a) identification of any family members who were wholly or partly dependent for support on the deceased worker in accordance with s 4 of the 1998 Act;
(b) orders in relation to payment of the lump sum death benefit; and
(c) orders in relation to the respondent’s application for interest pursuant to s 109 of the 1998 Act.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:
(a)    Application in Respect of Death of Worker (the Application) and attached documents;
(b)    Reply and attached documents;
(c)    documents lodged pursuant to the Commission’s direction by the respondent on 31 January 2022;
(d)    written submissions and other documents attached to an Application to Admit Late Documents lodged by the respondent on 15 February 2022; and
(e)    written submissions lodged on behalf of the applicant on 22 February 2022.
The evidence before me includes the New South Wales Death Certificate of the deceased worker, which identified the respondent as his widow. A certified and translated copy of the respondent’s marriage certificate is also in evidence.
The death certificate indicated that the deceased worker had two children at the date of his death, Ailing Xue, aged 20 years and Wang Xue, aged 18 years. Certified and translated copies of the children’s birth certificates are in evidence.
The deceased worker’s parents were identified in the death certificate as Meiyu Yu and Yueshun Xue.

Respondent’s evidence

The respondent has provided a translated written statement, dated 26 February 2018. The respondent stated that she registered her marriage with the deceased worker on 21 February 1998. After the marriage, the respondent gave birth to one daughter, Ailing Xue, and one son, Wang Xue. The family’s living costs were met by the deceased worker. The deceased worker travelled to Australia in order to earn money and support the family in June 2015. The deceased worker sent money for the family’s living costs before his death and often called home during his stay in Australia.

Correspondence from other family members

Signed and translated written statements, dated 29 January 2022, together with correspondence from the respondent’s lawyers addressed to the deceased worker’s family members, have been lodged by the respondent.
The correspondence from the respondent’s lawyers informed the recipients that the respondent had made a claim for the lump sum death benefit of $760,000. The applicant had accepted liability to pay compensation to eligible dependants of the deceased worker. The recipients were informed of the current Commission proceedings and advised of their ability to seek legal advice free of charge. They were provided with the contact details of the Workers Compensation Independent Review Office. The recipients were asked to confirm their intentions in this regard and advise of any intention to claim a portion of the lump sum death benefit by 10 February 2022.
The deceased worker’s daughter, Ailing Xue, confirmed in her statement that she had received the correspondence from the respondent’s solicitors. Ms Xue indicated that she understood the meaning of “dependant” in s 4 of the 1998 Act and confirmed her relationship to the deceased worker. Ms Xue indicated that she was dependent on the deceased worker at the time of his death on the 23 June 2016 but did not intend to make a claim for compensation.
A statement to the same effect was received from the deceased worker’s son, Wang Xue.
The deceased worker’s sister, Meizhu Xue, his brothers, Deming Xue and Dehui Xue, and his nephew Ming Xue, provided similar statements but indicated that they were not dependent on the deceased worker at the time of his death and did not intend to make a claim.
Certified and translated copies of certificates of household register cancellation have been provided confirming the death of the deceased worker’s father, Yueshun Xue, on 24 May 2012 and the death of his mother, Meiyu Yu on 11 August 2005.

FINDINGS AND REASONS

Dependants and apportionment

The term, ‘dependants’ is defined in s 4 of the 1998 Act as:
“the members of the worker’s family as were wholly or in part dependent for support on the worker at the time of the worker’s death, or would but for the incapacity due to the injury have been so dependent.”
The expression “member of a family” is defined in s 4 of the 1998 Act to mean:
“… spouse (including wife or husband), father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister.”
I am satisfied on the uncontradicted evidence before me that the respondent in these proceedings was the deceased worker’s spouse and was, at least in part, dependent for support on the deceased worker at the time of his death.
I am further satisfied that the deceased worker had a son and a daughter. I am satisfied on the evidence before me that appropriate steps have been taken to bring the current proceedings to the attention of the deceased worker’s son and daughter. I am satisfied that they have been advised of their potential entitlement to a portion of the lump sum death benefit, the sum of the death benefit in respect of which liability has been accepted, and have been provided with appropriate information in order to access legal advice and make a claim should they wish to do so.
I am further satisfied that, armed with that information, the deceased worker’s children have made an informed decision not to make a claim for a portion of the lump sum death benefit.
Although the deceased worker’s children have indicated that they were dependants as defined in s 4 of the 1998 Act, it is noted that they were over the age of 18 at the time of his death. Other than the statement from the respondent, there is no evidence as the nature of any support provided to them at the time of the deceased worker’s death. Given that both have in effect waived any entitlement to a portion of the death benefit, however, it is not necessary for me to make a determination as to whether Ailing Xue and Wang Xue were wholly or in part dependent for support on the deceased worker at the time of his death.
I am satisfied on the evidence of the certificates of household register cancellation that the deceased worker’s parents were both deceased at the time of his death.
I also have before me evidence from the deceased worker’s three siblings and his nephew that they were not, at the date of his death, wholly or in part dependent for support on the deceased worker.
I am further satisfied that appropriate enquiries have been made and there is no evidence of any other person, apart from the family members identified above, who may have been dependent on the deceased worker at the time of his death.
I am satisfied for the purposes of s 29(1A) of the 1987 Act that the deceased worker left only one dependant. The whole of the lump sum death benefit is to be paid to that one dependant, the respondent.
The respondent has requested that payment be made to her directly, pursuant to s 85A(1)(a) of the 1998 Act. I am satisfied that is an appropriate course.

Interest

An application for interest was first made by the respondent at the teleconference on 27 January 2022. In the respondent’s written submissions, dated 15 February 2022, interest was claimed from 9 October 2016 to 27 January 2022 at a rate 4% above the cash rate last published by the Reserve Bank of Australia, consistently with the approach taken in Haidary v Wandella Pet Foods Pty Ltd[1].
The power to order interest pursuant to s 109 of the 1998 Act is discretionary. Section 109 of the 1998 Act provides:
“109   Interest before order for payment (cf former s 113)
(1)    In any proceedings before the Commission, the Commission may order that there is to be included, in any sum to be paid, interest at such rate as the Commission thinks fit on the whole or any part of the sum for the whole or any part of the period before the sum is payable, subject to the limitations imposed by this section.
(2)    Interest cannot be ordered under this section:
(a)on any compensation payable under Division 4 of Part 3 of the 1987 Act, or
(b)   on any compensation payable under this Act for any period before a claim for the compensation was duly made, or
(c)on any compensation payable under this Act for any period during which proceedings before the Commission were adjourned on the application of the claimant for the compensation or pursuant to section 102.
(3)    This section does not:
(a)authorise the giving of interest upon interest, or
(b)apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise.”
In Brambles Australia Ltd t/as Gardner Perrott Industrial Services v Hamilton & Monier Ltd[2] Harrington ADP at [43] stated that an exercise of the discretion to order interest would depend on the evidence before the Commission, and relevant evidence may include reasons for a delay in the determination of the claim.
[2] [2006] NSWWCCPD 169.
In Pheeney v Doolan (No. 2)[3] the Court of Appeal said that it was necessary to determine in what respect the plaintiff has been financially disadvantaged by delay in the payment of damages so as to make an appropriate allowance of interest. Reynolds JA, Moffitt P and Mahoney JA agreeing on point, said of the interest provision:
“It provides an ancillary power akin to an order for costs, and its purpose is to aid the court to do more complete justice between the parties that is otherwise possible … It is not designed to compensate a plaintiff for loss arising out of the cause of action, but to provide compensation where it is otherwise appropriate to do so for the circumstance that a sum of money has been outstanding to him for a period of time.”
[3] [1977] 1 NSWLR 601.

Respondent’s submissions

The respondent alleges that interest should be awarded from 9 October 2016 when the respondent’s solicitors wrote to a person identified as “Rui Lin” asking him to identify the deceased worker’s employer. The respondent says Rui Lin misrepresented himself as the employer. No policy of insurance in respect of Mr Lin could be identified and Mr Lin could not subsequently be identified as a director of any of the companies subcontracted to work at the relevant worksite. Mr Lin failed to cooperate with the respondent’s further enquiries with respect to the matter.
It was not until a “serendipitous receipt of anecdotal information” in the course of the respondent’s solicitors acting in another matter that it was identified that the applicant was the possible employer and held a statutory policy of insurance. Mr Lin’s wife was identified as a director of the applicant.
The respondent’s solicitors wrote to the Workers Compensation Nominal Insurer on 23 September 2021 identifying Mr Lin as the putative employer, advising that he was potentially linked to the applicant, being a company deregistered on 3 September 2019.
Further correspondence was forwarded to the applicant’s solicitors on 24 September 2021 explaining the relationship between Mr Lin and the applicant.
An email forwarded to the respondent’s solicitor on 13 October 2021 indicated that a statement from Mr Lin was to be taken.
A decision to accept liability for the claim was notified on 1 December 2021.
Prior to these events, various proceedings were brought and subsequently discontinued in the Commission and the former Workers Compensation Commission against other entities, including most recently, proceedings commenced against JA Crockett Pty Ltd, in which
Mr Lin and the Workers Compensation Nominal Insurer were also joined. The applicant was not joined to the previous proceedings.
The respondent submits that Mr Lin, on behalf of the applicant, ignored the respondent’s request for information and failed to notify the insurer of the claim when given notice on 9 October 2016. The respondent submits that Mr Lin’s conduct involved unlawfully concealing the identity of the employer in order to prevent the applicant from duly making the claim. The respondent submitted that it could be inferred from the evidence and the admission of liability after a statement was to be obtained from Mr Lin, that Mr Lin acted with the actual or implied authority of the applicant. The respondent submitted that the conduct of Mr Lin, including an apparent conspiracy between Mr Lin and the other sub-contractors upon whom claims were made, to conceal the identity of the correct employer, was to be imputed to the applicant and its insurer.
The respondent submits that the prohibition in s 109(2) on orders being made for interest on any compensation payable under this Act for any period before a claim for the compensation was duly made was not absolute and should not be given a literal construction. To hold otherwise would lead to an absurd result whereby the employer was advantaged by reason of its own unlawful conduct. Any prejudice to the applicant was the result of its own misconduct and failure to comply with its statutory obligations.
The respondent submitted that she was kept out of money she was entitled to for 5.5 years, during which period the insurer accrued a financial benefit through possession of the benefit monies.
In the alternative, the respondent seeks an order under s 235B of the 1998 Act on the basis that for the purposes of obtaining a financial advantage, the insurer did or omitted to do something with knowledge that the doing of the thing or the omission was false or misleading. The respondent submits that she is entitled to recover from the insurer as a debt the amount of financial advantage obtained by the insurer and any costs incurred in connection with the claim.

Applicant’s submissions

The applicant submits that a claim was not “duly made” until a letter of claim and all relevant particulars, including particulars of dependency, were provided.
The applicant submits that the parties joined in the previous proceedings were not relevantly connected to the applicant. What transpired in those proceedings could not be relevant to the claim for interest in the present proceedings as the applicant was neither a party to or involved in the previous proceedings and had not at the time of those proceedings in the subject of a claim in respect of the death of the deceased worker.

The applicant submitted that a claim was not made against the applicant until the letter dated 24 September 2021 but even then, the claim was not “duly made” as required by s 109 due to the absence of complete particulars of dependency.
It was not possible for the applicant to pay the lump sum compensation until the Commission had made a determination of the persons dependent for support upon the deceased and made the necessary orders with regard to payment.
The applicant submitted that the Commission should decline to order that any interest be paid.
If it were determined that interest should be ordered, the applicant submitted that consistently with Kaur v Thales Underwater Systems Pty Ltd[4] (Kaur) and the approach taken in a number of arbitral decisions cited, the claim was not duly made until all particulars of dependency had been provided. The need to lodge further evidence of dependency was identified at the teleconference on 27 January 2022, on which date the proceedings were adjourned to enable the respondent to provide such evidence. Had that evidence been provided with the Reply, the proceedings could have been finalised at the teleconference. In those circumstances, no interest should be awarded.
[4] [2011] NSWWCCPD 6 at [139].
In the alternative, if the Commission were minded to award interest, the applicant submitted that a rate of no more than 2% per annum would be appropriate. The actual rate of interest offered by banks in Australia would have at all relevant times been 0.10%. The applicant referred to several arbitral decisions in which a rate lower that the Supreme Court rate was awarded.
The applicant noted that no evidence of the rates offered by Chinese retail banks had been provided by the respondent.

Consideration

The discretion to award interest is subject to the limitations set out in ss 109(2) and (3). Relevantly, subsection (2)(b) provides that interest cannot be ordered on any compensation payable for any period before a claim for the compensation was duly made.
There appears to be no dispute between the parties that a claim for compensation was not made upon the applicant in these proceedings prior to the correspondence from the respondent’s solicitors dated 24 September 2021.
Although claims had been made in respect of other persons or entities, the deceased worker’s employer was not able to be identified. In particular, it does not appear to be alleged that Mr Lin was personally the deceased worker’s employer notwithstanding his initial indications that he was.
Although Mr Lin appears to have been married to a former director of the applicant, there is insufficient evidence before the Commission to satisfy me that he was connected to the applicant in a way such that at any material time he can be taken to have been acting for or on or behalf of the applicant in his dealings with either the respondent’s solicitor or the deceased worker. The timing of the acceptance of liability and the applicant’s solicitors’ indication that a statement would be obtained from Mr Lin also falls short of establishing the relevant relationship. I do not accept that a claim for compensation was made in respect of employment with the applicant in the course of the respondent’s solicitor’s dealings with
Mr Lin in October 2016.
In support of its argument that interest should be awarded commencing from 9 October 2016 when the respondent’s solicitors wrote to Mr Lin, the respondent asserts that the restriction in s 109(2) is not absolute and the provision should not be given a literal construction. Other than the assertion that in the circumstances of the present case it results in the applicant being advantaged by reason of allegedly unlawful conduct that ought to be imputed to it, no basis in law for giving the subsection a meaning other than its ordinary and grammatical meaning has been put forward by the respondent.
The approach advocated by the respondent is also inconsistent with that taken in numerous cases including in Kaur, where President Keating J stated at [139]:
“Section 109(2)(b) of the 1998 Act prohibits interest on any award of compensation payable under the Act for any period before a claim for the compensation was duly made. I accept the submission that the claim for compensation on behalf of the appellants was not duly made until the day of the arbitration. I therefore accept Thales’s submission that, as at the arbitration, the appellants could not be entitled to interest pursuant to s 109 of the 1998 Act.”
Section 260 of the 1998 Act provides that a claim for compensation must be made in accordance with the Workers Compensation Guidelines. Section 3.1 of the Guidelines provides that as a minimum, a claim for compensation must, amongst other things, provide the insurer with the name and contact details of the employer. Section 31 of the Guidelines, however, sets an expectation that if an insurer becomes aware of a death that may be work-related, the insurer is to proactively investigate the circumstances of the death, including in cases where the death occurred some time after a work-related injury.
While there is evidence of factual investigations being procured in December 2016 and September 2019, the identity of the deceased worker’s employer was not able to be established. It was not until the “serendipitous” receipt of information in connection with another matter that the identity of the employer came to light.
No claim was made in respect of the applicant at any time prior to the correspondence of 24 September 2021 when particulars sufficient to enable identification of the applicant as the deceased worker’s employer were provided.
Following the receipt of that information the evidence before me indicates that the insurer acted relatively promptly by obtaining statement evidence from Mr Lin or making other inquiries which ultimately led to the decision to accept liability. That decision was notified to the respondent in correspondence dated 1 December 2021. Less than a week later, on 6 December 2021, proceedings were commenced in the Commission by the applicant for orders with respect to apportionment and payment of the lump sum compensation.
The applicant submits, consistently with Kaur and a number of arbitral decisions made in the Commission that the claim was not “duly made” until full particulars of dependency had been provided. Those particulars were said to have been unavailable until after the proceedings were effectively adjourned on the respondent’s application on 27 January 2022.
Whilst the Commission determined on that date that updated evidence was required in order for it to make the necessary determinations, the facts of this case can be distinguished from the decisions referred to in the applicant’s submissions insofar as particulars of dependency had already been made available to the insurer as a result of the previous Commission proceedings. Evidence from all potential dependants was in fact attached to the Application.
It is not apparent when these particulars came to be in the possession of the applicant or the insurer. The precise course of events following the receipt of the respondent’s letter of 24 September 2021 is unclear.
I am satisfied, however, that at least as at the date of lodgement of the Application, being 6 December 2021, the claim was sufficiently particularised and therefore “duly made”.
For the reasons above, I am not satisfied that the Commission has any discretion to order interest pursuant to s 109 for any period before 6 December 2021.
It remains to be determined whether the Commission should order that interest be paid in the period from 6 December 2021 to 27 January 2022.
The relative speed with which the insurer acted upon receipt of the letter dated 24 September 2021 and applied to the Commission for orders is relevant but not determinative of the decision whether to exercise the Commission’s discretion to order that interest be paid.
A paramount consideration in the exercise of the discretion to award interest is the fact that the insurer has had the use of the compensation and a person entitled to the compensation was denied the use of the compensation during the relevant period.
In all the circumstances of this case, I am satisfied that interest should be paid on the whole of the lump sum death benefit for the period 6 December 2021 to 27 January 2022.
The parties disagree on the rate at which interest should be paid. I accept the applicant’s submissions that the rate proposed by the respondent is no longer reasonable or realistic having regard to the current economic climate.
I find that the appropriate rate of interest is 2% above the cash rate of 0.10% set by the Reserve Bank.
I order the applicant to pay interest on the sum payable under s 25 of the 1987 Act from 6 December 2021 to 27 January 2022 at the rate of 2.1%.

Section 235B of the 1998 Act

It is necessary to address briefly the submission made by the respondent in the documents lodged on 15 February 2022 that an order should be made under s 235B of the 1998 Act on the basis that for the purposes of obtaining a financial advantage, the insurer did or omitted to do something with knowledge that the doing of the thing or the omission was false or misleading. The respondent submits that she is entitled to recover from the insurer as a debt the amount of financial advantage obtained by the insurer and any costs incurred in connection with the claim.
An application for a remedy pursuant to s 235B of the 1998 Act had not previously been made or disputed. To the extent that the respondent’s submissions seek leave to have the matter dealt with by the Commission, I am not satisfied that it is in the interests of justice to do so. The respondent makes serious allegations against Mr Lin and a number of other entities and seeks to impute their conduct to the insurer. Those other persons are not party to these proceedings and I am satisfied that there would be a significant denial of procedural fairness were the Commission to entertain the respondent’s submissions in the absence of an opportunity for those persons to respond to the allegations.
I decline to make any order pursuant to s 235B of the 1998 Act.

1. [2005] NSW WCCPD 9.

[2022] NSWPIC 108

17 March 2022

Key Legal Topics

Areas of Law

Workers Compensation

Legal Concepts

Compensatory Damages

Identification of Dependants

Claim for Apportionment

Interest Payment

Fraud Allegation