Abdul-Rahman v WorkCover Authority of NSW

FACTUAL BACKGROUND AND CHRONOLOGY

1. The statement of claim asserted that the appellant failed to maintain a current policy of workers compensation insurance for the period between 30 June 2007 and 31 March 2012. If established, that failure constituted a breach of s 155(1) of the 1987 Act.
2. Such a breach has a variety of legal consequences for an employer. Section 155(1) itself creates an offence attracting a maximum penalty of 500 penalty units or imprisonment for 6 months or both. Section 155(4) provides that the Authority may undertake not to prosecute on the condition that the employer pays to the Authority amounts to which the Authority is entitled pursuant to the provision in s 156. Further, s 156(1) provides that where an employer fails to obtain or maintain a policy of insurance as required by s 155(1) in respect of any period: "the Authority may recover from the employer in a court of competent jurisdiction as a debt due to the Authority a sum equal to twice the amount of the premium that would have been payable for the issue of a policy in respect of the relevant period or such lesser amount as the authority may agree to accept in any particular case."
3. The Authority did not bring proceedings for an offence under s 155(1). As counsel for the appellant conceded in argument, the appellant was not exposed either to a fine or to imprisonment as provided for by s 155(1).
4. Further, and contrary to the submission of counsel for the appellant, no undertaking was made or given by the Authority under s 155(4). The appellant did not agree to pay any sum as a condition of an undertaking by the Authority not to prosecute.
5. On 10 April 2014, the Authority executed a certificate pursuant to s 156(4) of the 1987 Act certifying that the sum of $58,515.48 is an amount equal to twice the amount of premium that would have been payable for a policy of insurance for the relevant period. On some earlier date, the Authority had determined that this was the amount of the debt due under s 156. Counsel for the Authority told the Magistrate that this occurred in July 2013 but this was neither alleged in the pleadings nor proved in the evidence. There was an attempt in the Local Court to prove this date but the tender was not pressed following a spirited debate as to the admissibility of the evidence.
6. On 28 May 2014, the Authority filed its statement of claim.

Relevant Limitation periods

1. In this Court, the appellant relied primarily on the provision in s 247 of the WIM Act: "Time for instituting proceedings (1) Proceedings for an offence against this Act, the 1987 Act or the regulations under those Acts may be instituted within the period of 2 years after the act or omission alleged to constitute the offence. (2) Any such proceedings may be instituted by (but not only by) the Authority. (3) Despite subsection (1), proceedings for an offence under section 144 of this Act or 155 of the 1987 Act (Compulsory insurance for employers) may be instituted by the Authority: (a) within 2 years after the act or omission alleged to constitute the offence, or (b) in a case where the Authority first becomes aware of the act or omission alleged to constitute the offence because of a claim made by a worker of the employer concerned under Division 6 of Part 4 of the 1987 Act or Part 9 of Chapter 5 of this Act-within 6 months after the Authority pays compensation or makes any other payment to the worker in respect of the claim under that Division of the 1987 Act or that Part of this Act or the Commission determines the claim (whichever occurs later), whichever provides the longer time for proceedings to be instituted."
2. In the Local Court, the appellant put (as an alternative) that this provision applied and that "the act or omission alleged to constitute the offence" was the failure to maintain workers compensation insurance. That act or omission occurred between June 2007 and March 2012. Accordingly, the action commenced on 28 May 2014 was outside of the limitation period.
3. In this Court, counsel for the appellant relied on the fact that the Magistrate said in his reasons that "section 247 of the Act applies". It was contended that this was a legal conclusion that s 247 prescribed the applicable limitation period. Counsel then submitted that the present appeal must proceed on that basis because the Authority had not challenged this finding by the Magistrate. According to counsel, this was so even if I concluded as a matter of law that the section had no application.
4. I reject these submissions. Section 247 did not apply because the proceedings were not "proceedings for an offence". Further, read in context, the Magistrate did not apply s 247 or accept a submission that it contained the relevant limitation period. In the very next paragraph of the Judgment, his Honour said "section 18(1) rather than section 14 of the Limitation Act applies." In resolving the date from which the limitation period commenced to run, his Honour applied what he took to be (erroneously on the joint position of the parties) the date upon which the cause of action accrued rather than the date of the act or omission alleged to constitute the offence. That is an application of s 18, not s 247.
5. The appellant's reliance on s 247 was misconceived. The proceedings brought by the statement of claim were not "proceedings for an offence under this Act or the 1987 Act". It is unfortunate that s 247 was introduced into the debate in the Local Court, even as an alternative.
6. Further, the action brought by the Authority was not an action arising as a result of any undertaking not to prosecute pursuant to sub-s 4 of s 155. Again, the introduction into the debate of the provision in sub-s (4) merely served to confuse the proceedings both in the Local Court and in this Court.
7. Section 18 of the Limitation Act provides: "18 Penalty and forfeiture (1) An action on a cause of action to recover a penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of an enactment, is not maintainable if brought after the expiration of a limitation period of two years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims. (2) In this section "penalty" does not include a fine to which a person is liable on conviction for a criminal offence."
8. On the hearing of the appeal, and in its supplementary written submissions, the Authority submitted that s 18 was the applicable provision. This was the primary position taken by the appellant in its notice of defence in the Local Court.
9. To complicate the matter as it was argued before the Magistrate, the Authority put a submission that the "harmonious" construction of the Act was "very much at odds with the suggestion that there is indeed any real limitation period." That submission is without substance and was not pressed on appeal. The basis upon which that submission was made concerned a contrast being made between the provision in s 156 with subsequent provisions in the Act and specifically s 175(4AB) which provides that: "For the purposes of the application of the Limitation Act 1969 to an action on a cause of action to recover an amount under subsection (4) or (4AA), the cause of action first accrues to the Authority when the Authority makes the finding referred to in those subsections."
10. As I have said, the Authority initially filed written submission on this appeal which included the proposition that: "Whether the correct provision is section 247 of the Workplace Injury Management and Compensation Act 1998, section 18(1) of the Limitation Act 1969 or some kind of combination of the two sections, the relevant limitation provision is entirely academic or without practical consequence because both sections provide for an identical limitation period of 2 years and critically, neither party is challenging the learned Magistrate's conclusion that the applicable limitation period is 2 years".
11. That submission was withdrawn at the commencement of the hearing. The Authority's final position was that the provision in s 18 of the Limitation Act was the correct provision.
12. Neither party suggested that the provision in s 14 of the Limitation Act applied. That section provides a general limitation period of 6 years for a variety of actions including by s 14(1)(d): "(d) a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture."
13. Both parties appeared to accept that the debt created by s 156(1) constituted a "penalty or forfeiture". Presumably, this was on the basis of the manner by which the debt is to be calculated. In the absence of any argument to the contrary, I am prepared to proceed on the basis that the debt created by s 156 is a penalty or forfeiture. The definition of penalty in s 21 of the Interpretation Act 1987 (""penalty" includes forfeiture and punishment") does not assist. The fact that the calculation of the "debt" created by s 156(1) may be as much as double the amount of the relevant premium has the hallmarks of a penalty. However, if a contrary position was pressed, I suspect that the matter is not one that is free of controversy.
14. On an acceptance that the debt created by s 156(1) is a penalty or forfeiture, the applicable limitation is provided by s 18 of the Limitation Act. Once that proposition is accepted, the question becomes "when the cause of action first accrues to the plaintiff". It is a resolution of that question which is truly at the heart of the dispute between the parties.

The Magistrate's reasons and a belated notice of contention

1. The reader will readily appreciate that the Magistrate was placed in an invidious position as a result of the submissions being put to him. On the one hand, the appellant raised s 247 and s 155(4), neither of which was relevant to the question of whether the proceedings before the Local Court were barred by operation of the relevant limitation period. On the other hand, the Authority attempted to mount a submission that there was no limitation period at all. It is not surprising then that the reasons given by the Magistrate are at times difficult to comprehend and somewhat opaque. For example, two successive paragraphs appear to be mutually inconsistent. Paragraph 18 reads: "18. Section 247 of the Act applies, by virtue of the combined operation of sections 155 and 156 of the act so that proceedings may be instituted within a period of 2 years after the act or omission, unless s 247 (3) (B) applies."
2. In the following paragraph is Honour said: "19. Section 18(1) rather than section 14 of the Limitation Act applies. The relevant date is the date on which the cause of action first accrues to the plaintiff, which date is the date that the employer is notified of the assessment or the substituted assessment made by WorkCover."
3. Those two paragraphs suggest that there are two different limitation periods applying to a cause of action under s 156. I accept the Authority's submission that the reference to s 247 was merely part of a survey of the legislation to which the Magistrate had been referred. I do not accept the appellant's submission that paragraph 18 represented a concluded view as to the applicability of s 247 to the present proceedings.
4. Further, there is nothing in the legislation that justifies the assertion (in paragraph 19 of the Judgment) that the cause of action accrues on the date that the employer is notified of the assessment made by the Authority. The Authority accepts that this part of the Magistrate's reasons is wrong.
5. Further, there was a lack of precision in the evidence as to precisely when a "determination" was made by the authority, it being the Authority's position both before the Local Court and in this Court that the cause of action did not accrue until a "determination" as to the amount (and fact) of the debt.
6. Counsel engaged in a somewhat unedifying debate as to the reason for the lack of evidence. Counsel for the appellant contended that there was no evidence because the Authority had failed to produce any evidence. Counsel for the Authority pointed to the fact that when an attempt was made to put evidence before the Local Court as to that issue, objection was taken. A perusal of the transcript, along with an assessment of the combative manner in which the case was conducted in this Court by counsel for the appellant, leaves me in a position where I am unable to determine precisely why there was no evidence before the Magistrate as to the date of the "determination".
7. Throughout the preceding two paragraphs I have placed the word "determination" in quotation marks. I have done this because the 1987 Act does not in terms provide for the Authority to make a determination as such. However, s 156(5) contemplates that a determination would be made where there was accurate information available and, where such information is not available, the Authority is entitled to make an estimate of the amount of premiums that would have been payable.
8. Once again, the manner in which the proceedings were conducted and the lack of evidence on this point placed the Magistrate in a difficult position. His Honour went on to conclude in the following terms: "21. On 10/04/2014, WorkCover issued a certificate pursuant to s 156(4) of the Act. The action to recover the debt in a court of competent jurisdiction was filed on 28/05/2014. As the period between the issue of the certificate and the filing of the statement of claim is less than two years, the court has jurisdiction to hear and determine the claim. 22. On 10/04/2014, WorkCover issued a certificate pursuant to s 174A(4) of the Act. The action to recover the debt was filed on 28/05/2014. As the period between the issue of the certificate and the filing of the statement of claim is less than two years, the court has jurisdiction to hear and determine the claim."
9. In a rare and refreshing moment of concurrence, both counsel accepted that the only sensible reading of this passage was that the Magistrate determined that the cause of action accrued on 10 April 2014, which was the date upon which the Authority issued the certificates pursuant to s 156(4) and 174A(4) of the 1987 Act.
10. Both parties agree that this approach is erroneous. The Authority submits that the cause of action accrued when it made a determination of the fact and quantity of the debt. The appellant submits that the cause of action accrued when it is alleged that he failed to maintain the insurance policy.
11. In view of the Authority's submission that the Magistrate's reasoning was wrong in at least two (and possibly more) significant respects, the Authority sought to file a notice of contention under Part 50 rule 11 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The position was taken in the course of submissions and under some pressure arising from questions put by me. Counsel for the plaintiff stridently opposed the granting of leave to file the notice of contention. It was put that: "It's reopening the whole case which we did not come here today to do. We have had no notice."
12. Further, the following exchange occurred: "BECK: Can I say one more thing. I spoke to my learned friend this morning and I said 'I'll let you put those submissions on as long as there is no other accompanying application with it'. And he said 'What kind of application?' And I said 'Any application'. And he assured me there would be no application. RAYMENT: I object to that. BECK: Well it's true, isn't it? RAYMENT: It's not true. BECK: And I would not have let those submissions go in if I did not have that undertaking from my learned friend. RAYMENT: There was no undertaking. I asked what application she had in mind and I agreed not to read an affidavit which rather pointed to the fact --- BECK: Rubbish. RAYMENT: --- permit us to bring this before the Court earlier."
13. The position taken by counsel for the appellant (T pp 4-8) was that I was required to decide the case on the basis that s 247 was the applicable limitation period because that is what the learned Magistrate found and because the Authority had not put on a notice of cross-appeal or notice of contention. She relied on the alleged unfairness to the plaintiff and the fact that I repeatedly asked counsel for the Authority whether he was content to proceed without a notice of contention (or cross-appeal). It was put that the case "should have been simply left to counsel to run as it was on the pleadings". It was "delicately" (if implicitly) suggested that I had entered the fray.
14. Counsel purported to rely on s 56 of the Civil Procedure Act 2005 (NSW) although her submissions relying on that section (and ss 57-59 which follow) appeared to be seen through the subjective prism of her client's interests. The approach that she urged required me to proceed on an approach to the law which is plainly erroneous (that is, the case against her client constituted proceedings for an offence and was therefore subject to the limitation period in s 247). The approach also appeared to ignore the fact that counsel had made helpful and cogent submissions as to why the action was statute barred by the provisions in s 18 and that this was the primary position taken before the Local Court and in paragraph 14 of the Further Amended Defence. Counsel conceded (wrongly) that if I was against the appellant on the applicability of s 247: "I cannot see your Honour being able to do anything but send this back down to the Local Court, which is very distressing to Mr Abdul-Rahman".
15. That concession ignored the true issue between the parties, that is the correct application of s 18 of the Limitation Act in the light of a proper construction of s 156(1) of the 1987 Act. It also disregarded the fact that if the Appellant's submissions on those issues were accepted, the matter would be resolved favourably to the Appellant in this Court.
16. All of the submissions available to be put on the true issue between the parties were put both in the Local Court and this Court. There is no substantial disadvantage, prejudice or injustice arising from the belated filing of, and reliance upon, the notice of contention. Its filing merely allows the Court to determine the true issue between the parties and to avoid engaging in an academic exercise as to the proper application of s 247 in circumstances where that section is not applicable.
17. For those reasons, I will grant leave to the Authority to file and rely on its notice of contention out of time. The notice of contention is in the following terms: "1. On the true construction of the Workers Compensation Act 1987, the cause of action under section 156 of the Workers Compensation Act 1987 first accrued to the Defendant upon it determining the amount of premium that would have been payable to the Plaintiff. 2. Section 247 of the Workplace Injury Management and Workers Compensation Act 1998 had no relevant application because the proceedings below were not "for an offence" but for a debt arising under section 156 of the Workers Compensation Act 1987. 3. Section 155(4) of the Workers Compensation Act 1987 also had no relevant application for the same reason identified in Ground 2 and, in addition, there were no facts before the learned magistrate relevant to the application of that section."

WHEN DID THE CAUSE OF ACTION ACCRUE TO THE AUTHORITY?

1. To recap, the applicable limitation period is that provided in s 18 of the Limitation Act. This is based on the agreement between the parties that the debt created by s 156 is in the nature of a penalty or forfeiture recoverable by virtue of an enactment. The difficult question at the core of this litigation is when the cause of action accrued to the Authority.
2. The Authority contends that the cause of action accrued on the date that it came to its determination contemplated (at least implicitly) by s 156(5) to which I referred in paragraph [34] above. There was no evidence as to precisely what that date was. However, it appears to be common ground that the determination was made within the two-year limitation period provided for in s 18.
3. The appellant maintains that the cause of action accrued when he committed the acts or omissions giving rise to his liability. That is to say, from 2007 through to 2012.
4. The Authority relies on two main arguments for its interpretation. The first is by way of contrast to s 247 of the WIM Act. It is argued that the difference in the limitation periods reflects the different nature of the proceedings. Section 247 attaches to the date of the act or omission of the appellant giving rise to criminal liability. By contrast, s 18 applies to civil penalties and attaches to the act of the Authority in determining both the fact of the breach and the quantum of the debt it is due. There is some force to this submission but it is not determinative of the interpretation of the provision.
5. The second argument concerns the provisions in s 174(2) which require an employer to maintain relevant records of insurances and wages for a period of 5 years. It is argued that those provisions would be unnecessary or otiose if a limitation period of 2 years commenced from the date of the breach by the relevant employer. However, the appellant contends that this submission ignores the proviso to the limitation period in s 247 (for offences) which allows the Authority to commence a criminal prosecution outside of the limitation period if it becomes aware of the act or omission as a result of a claim made by a worker. He also submits that there are many reasons why an employer is required to keep such records. I am unable to conclude that the requirement to keep records in sections such as s 174 is determinative of the question of when the cause of action (or debt) created by s 156(1) accrues.
6. The appellant contends that a debt may accrue before it is quantified: see for example London Borough of Hillingdon v ARC Limited [1998] 3 WLR 754 at [25]. While I accept that it is not necessary for a cause of action to accrue for the quantum to be identified, the structure of the relevant provisions of the 1987 Act appear to contemplate that the Authority will make a determination both as to the amount it will seek to recover and also whether there has been a breach at all.
7. The appellant also relies on the observations of Gleeson CJ (as his Honour then was) in R v Hull (1989) 16 NSWLR 386 where his Honour said: "Time bars in relation to the prosecution of indictable offences may, as was submitted on behalf of the Crown, be relatively rare, but they are by no means unknown. What must be extremely rare, however, are time bars which operate at the discretion of prosecuting authorities."
8. The Authority correctly points out that Gleeson CJ was referring to criminal proceedings. However, in a case where a regulatory authority is empowered to enforce a debt such as this, the same reasoning applies in the absence of clear statutory language (such as that contained in s 175(4AB), as to which see below at [55]).
9. The Appellant also relied on the decision in WorkCover Authority of NSW v Edwards Madogan Torzillo Briggs, Ove Arup Consult & Ors [2003] NSWIRComm 452 where Haylen J said at [85]: "Regard has to be had to the purpose of the amendments to s 49 which extended the limitation period from a period of two years after the act or omission alleged to constitute the offence. Sub-sections 2 and 3 provided a generous period within which a prosecution may be commenced, that is, within six months of the act or omission becoming known to the Authority. Section 49(4) was introduced at the same time and extended the period for initiation of proceedings where it appeared from the Coroner's Report or proceedings before the Coroner that an offence had been committed. The language of the provision is general and there is no warrant to read into it the requirements proposed by the defendants (namely, the need for the defendant to be identified, the need for evidence admissible in a criminal proceeding to support the alleged breach, and the requirement that a prima facie case be established). These propositions are so detailed and amount to such important and particular requirements that they cannot be simply inferred as necessary requirements. The legislature has not specified these requirements and it is contrary to the usual cannons of construction to infer such provisions in the absence of clear words to that effect appearing in the sub-section."
10. Reference must also be made to s 175(4AB) of the 1987 Act which makes the following specific provision: "For the purposes of the application of the Limitation Act 1969 to an action on a cause of action to recover an amount under subsection (4) or (4AA), the cause of action first accrues to the Authority when the Authority makes the finding referred to in those subsections."
11. The existence of that specific provision in s 175 and the absence of any similar provision in s 156 suggests that the legislature either did not contemplate, or did not intend, that the accrual of a cause of action under s 156(1) would turn on the date upon which the Authority "determined" the fact of a breach of s 155(1) and the amount of the debt that the Authority would seek to recover. This approach is not very far removed from an application of the maxim expressio unius est exclusio alterius. It has been said many times that reliance on this maxim must be treated with considerable caution: see, for example, Houssein v Under Secretary, Department of Industrial Relations and Technology (NSW) [1982] HCA 2; 148 CLR 88 at 94. Such caution is particularly apposite when, as here, the express provision was added by separate enactments: R v Wilcox: Ex parte Venture Industries Pty Ltd (1996) FCR 511 at 530-531. Section 175(4AB) was inserted in the 1987 Act by amendments in 2002 and 2006.
12. Nevertheless the existence of the specific provision in s 175 militates against the interpretation of s 156 urged by the Authority.
13. There are three other factors militating in favour of the appellant's submission as to when the action accrues. First, the provision exposes the plaintiff to a penalty of sorts. Secondly, on the Authority's argument the action could be brought many years after the breach provided it had not made the kind of determination implicit in s 156(5). Thirdly, the approach contended for by the appellant provides a degree of certainty that is lacking from the approach urged by the Authority.

CONCLUSION

1. The question at the heart of the dispute - when the debt under s 156(1) accrued to the Authority for the purpose of the application of s 18 of the Limitation Act - is difficult to resolve. That difficulty arises as a result of the ambiguity in the sections and the existence, in the same part of the 1987 Act (Part 7), of a clear provision as to the approach to be taken to the Limitation Act. Considering the purpose of the legislation, reading it as a whole, and taking into account the various matters referred to above I have concluded that the approach urged by the appellant is to be preferred. In reaching that conclusion I have been particularly persuaded by the matters referred to in paragraphs [50]-[57] above.
2. If the legislature intends that such a cause of action does not accrue until a determination is made by the Authority, section 156 might be amended so that it is similar terms to s 175(4AB).
3. The cause of action accrued when the appellant (allegedly) committed the breach of s 155(1). That was, at the latest, 31 March 2012. The cause of action was not maintainable if brought after 31 March 2014. The statement of claim filed on 28 May 2014 was filed outside of the limitation period. Accordingly, the Magistrate should have entered a judgment for the appellant. In spite of the approach taken by counsel for the appellant, the Authority should pay the appellant's costs. If either party seeks to be heard further as to costs, I give leave to approach my Associate within 72 hours.
4. Subject to further submissions as to costs, I make the following orders: 1. Leave to appeal under s 53 Crimes (Appeal and Review) Act 2001 (NSW) is granted to the plaintiff. 2. Leave to file and rely on a Notice of Contention under Part 50.11 Uniform Civil Procedure Rules 2005 (NSW) is granted to the Defendant. 3. The appeal is allowed. 4. The decision of the Local Court is set aside and in lieu thereof there will be a judgment for the plaintiff (that is, judgment for the defendant in the Local Court). 5. Subject to any further submissions on the issue of costs, the defendant is to pay the costs of the plaintiff in both this Court and the Local Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 October 2015