L & B Linings Pty Ltd v WorkCover Authority of New South Wales

Court of Appeal (NSW)|2012-02-13|Before: McColl JA, Basten JA, Whealy JA

fairs; Ex parte Palme [2003] HCA 56; 216 CLR 212 Saville v Health Care Complaints Commission [2006] NSWCA 298 Sherlock v Lloyd [2010] VSCA 122 Staging Connections Pty Ltd v WorkCover Authority (NSW) [2004] NSWCA 357 Waterford v The Commonwealth [1987] HCA 25; 163 CLR 54 Category: Principal judgment Parties: L & B Linings Pty Ltd - Appellant WorkCover Authority of New South Wales - Respondent Representation: Counsel:

Mr S D Epstein SC/Mr L T Livingston - Appellant Mr S B Lloyd SC/Ms A M Mitchelmore - Respondent Solicitors:

Thompson Eslick Solicitors - Appellant Director, Legal Group, WorkCover Authority of NSW - Respondent File Number(s): CA 2010/258252 Decision under appeal Jurisdiction: 9111 Citation: L&B Linings Pty Ltd v WorkCover Authority of New South Wales [2011] NSWSC 474 Date of Decision: 2011-05-24 00:00:00 Before: Rothman J File Number(s): SC 2010/258252

HEADNOTE [This headnote is not to be read as part of the judgment] On 28 January 2009 the appellant's workers' compensation insurer issued a demand for additional premiums in relation to the appellant's workers' compensation insurance policy. This demand was made as a result of the respondent's determination that a number of the appellant's contractors constituted "workers" for the purpose of the Workers Compensation Act 1987 (NSW) ("the Act") Part 7. The appellant was dissatisfied with the respondent's determination and sought judicial review in the Common Law Division pursuant to s 69 of the Supreme Court Act 1970 (NSW). Rothman J dismissed the proceedings. The appellant appealed to this Court. The issues for determination on appeal were whether the respondent erred in: (i) determining the status of the relevant contractors in circumstances where there was no evidence to support that determination, (ii) imposing on the appellant the onus of persuading the respondent that the relevant contractors were not workers, (iii) denying the appellant procedural fairness by failing to identify the case in support of the conclusion that the relevant contractors were workers, (iv)failing to provide adequate reasons for its determination, and (v) determining the appellant's liability in circumstances where the appellant's application for a review of those premiums had been upheld. The Court held (per Basten JA, McColl and Whealy JJA agreeing), dismissing the appeal: In relation to (i)

The "no evidence" ground of judicial review depends not on the reasoning of the decision-maker, but on a comparison between the material available to the decision-maker and the conclusion reached. An administrative decision-maker is usually entitled to take into account material which would not count as "evidence" in a judicial context. The decision-maker may be entitled to seek support for a particular inference from the absence of material supportive of a contrary view. Where an evaluative judgment is to be formed on the basis of conflicting indicators, it will be difficult if not impossible to establish a "no evidence" ground of review: [34] Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 applied. In relation to (ii)
If a review body indicates its proposed determination after carrying out an appropriate factual investigation, it does not thereby impose any legal onus on the applicant: [42]
The Act does not impose a legal onus on either the applicant to demonstrate, or the WorkCover Authority to disprove, error in a previous determination: [43] Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 [2006] HCA 53; 231 CLR 1 applied. In relation to (iii)
The WorkCover Authority is required to disclose to an applicant any information or other material on which it intended to rely which might support an inference adverse to the interests of the applicant. If the material is equivocal, or might be used in a way which the applicant could not reasonably expect it to be used, it may also be necessary for the Authority to reveal the proposed use: [48] Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 applied. In relation to (iv)
Administrative decision-makers are not, under the general law, required to give reasons for their decisions: [52] Public Service Board of New South Wales v Osmond [1986] HCA 7; 159 CLR 656; Sherlock v Lloyd [2010] VSCA 122; 27 VR 434 referred to.
The minimum content an implied obligation to give reasons, and the consequences of non-compliance with any such obligation, should be derived from the relevant statutory scheme: [61] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 applied.
Matters of evaluative judgment in both judicial and administrative decision-making do not readily lend themselves to precise reasoning leading to the ultimate conclusion: [66] Dinsdale v The Queen [2000] HCA 54; 202 CLR 321; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56; 216 CLR 212; Saville v Health Care Complaints Commission [2006] NSWCA 298 applied. In relation to (v)
Section 170 of the Act does not expressly preclude a further premium adjustment in the light of information which becomes available to the insurer or the WorkCover Authority after a prior determination has been made. There is no manifest reason to imply such a limitation. There is also no reason to imply a constraint on an insurer making a further demand while the s 170 review process is proceeding: [20], [24]

Judgment 1McCOLL JA : I agree with Basten JA's reasons and the orders his Honour proposes. 2BASTEN JA : The premium required to be paid by an employer in respect of workers' compensation insurance is calculated, on an annual basis, by reference to the wages paid by the employer to its "workers". Those who comprise "workers" are not limited to those who would be considered employees under the general law, but include certain categories of contractors. 3Where an employer takes issue with the premium determined by its insurer for a particular year, it may seek a review of the premium by the WorkCover Authority ("the Authority"). The appellant sought review by the Authority of the premiums demanded for the years ending September 2004, September 2005 and September 2006. The appellant was dissatisfied with the determination of the Authority and sought judicial review in the Common Law Division, pursuant to s 69 of the Supreme Court Act 1970 (NSW). On 24 May 2011, Rothman J dismissed the proceedings: L&B Linings Pty Ltd v WorkCover Authority of New South Wales [2011] NSWSC 474. 4The subject matter of the review by the Authority was a letter of demand issued by the appellant's workers' compensation insurer, Allianz Australia Workers' Compensation (NSW) Ltd ("Allianz"), dated 28 January 2009. The amount of the additional premiums was $178,000, with the largest amount, for the 2005-2006 year, being an additional premium of $77,000. (The precise amounts being irrelevant for present purposes, approximate figures are used.) Each year involved a separate and independent premium liability and, despite the form of the pleadings, it is arguable that the amount in issue exceeded $100,000 only because three independent causes of action were accumulated. In any event, the appeal has proceeded as of right and should be dealt with on that basis: cf Supreme Court Act , s 101(2)(r). 5The manner in which each premium was calculated involved a determination as to whether each of a number of contractors constituted a "worker" for the purposes of the legislative scheme in each year. To the extent that the appellant complained that there was "no evidence", or other material, available to support the conclusion that a particular contractor was a "worker", that matter needed to be assessed on an individual basis. No such assessment was identified in the amended summons commencing the proceedings, in the submissions in the Common Law Division, nor in the submissions to this Court. 6The relief sought in the Common Law Division was a declaration that the review determination by the Authority was "invalid" and a mandatory order requiring the Authority to determine the review application according to law. The appellant appears to have drawn the relief sought from the precedent provided by Staging Connections Pty Ltd v WorkCover Authority (NSW) [2004] NSWCA 357 at [3]. Further, its assertion that it was sufficient to demonstrate "an error of law in the course of considering and making the determination", without reference to the nature of the error of law, nor to the basis of its identification, was derived from the statement in Staging Connections at [29] (Bryson JA; Spigelman CJ and Beazley JA agreeing). That statement appears to have served for the purposes of that case, although it may be considered elliptical. 7In this Court, the appellant acknowledged that the declaration as to invalidity was, in effect, an alternative form of relief to a quashing order. It submitted that it was entitled to such relief if it could demonstrate jurisdictional error on the part of the Authority, or error of law on the face of the record, pursuant to s 69(3) of the Supreme Court Act . For that purpose, it was assumed that the Authority was a "court or tribunal" and that the record included its "reasons", pursuant to s 69(4). It was also contended for the appellant that the "reasons" were to be identified as "the totality of the documents and correspondence between" the appellant and the Authority: see judgment below at [110]. Although each of these assumptions might have been considered contentious (to varying degrees), the respondent was content to approach the matter on the basis that each of the alleged errors involved a jurisdictional error which would, if made good, invalidate its decision. Because, for the reasons set out below, the appeal must be dismissed, it is not necessary to consider any of these issues further.

Issues on appeal 8The appellant identified five grounds in its notice of appeal, which may be paraphrased as follows: (1) there were no "facts or evidence" to support the conclusion that the relevant contractors were deemed workers; (2) the Authority imposed on the appellant the onus of persuading it that the original calculation of premium was wrong; (3) the appellant was denied procedural fairness because the respondent failed to identify "the case propounded in support of the conclusion that the relevant workers were deemed workers"; (4) the respondent failed to provide "comprehensible reasons" for its determination, and (5) the insurer had no power to reassess the appellant's liability for the relevant years, the appellant having been successful in a review by the Authority of an earlier assessment of those premiums. 9The grounds of appeal were, correctly, formulated in terms which alleged that the primary judge had erred in failing to uphold the grounds: that formulation was correct, but the matter proceeds in this Court on the basis of a rehearing: Supreme Court Act , s 75A. The appellant addressed ground 5 first. It is convenient to adopt that course here, as, if accepted, it removed the basis for the review under challenge; further, it provides an opportunity to set out the procedural background to what was in fact the second review undertaken in relation to these premiums. The other grounds will then be addressed in numerical order.

(1) Legal basis for second review 10With exceptions not relevant to present purposes, each employer is required to obtain a policy of insurance for the full amount of its liability for workers' compensation in respect of "all workers employed by the employer": Workers Compensation Act 1987 (NSW), s 155(1). Failure to maintain such a policy permits recovery by the Authority of twice the amount of the premium that would have been payable: s 156. Failure to pay an adjusted premium within one month of service of a notice of demand on the employer renders the employer liable to proceedings for recovery of the unpaid amount, together with a late payment fee: s 172. (Except where otherwise indicated, reference to statutory provisions is to those in force in September 2003.) 11The Workers Compensation Act also provided for the promulgation of instruments known as "insurance premiums orders", fixing the manner in which a premium payable by an employer was to be calculated: s 168(1). It is sufficient for present purposes to note that each premium was to be calculated by reference to a percentage rate applied to a defined part of the total wages paid to workers in respect of the period of insurance. 12In the judgment under appeal, Rothman J stated that the insurer "issues the employer with a premium demand and must adjust that premium when information is made available that will affect the premium and, once adjusted, notifies the employer": at [26]. No issue was taken with that statement of the operation of the legislation. Moreover, it is clear that such adjustments took place, without objection, in the present case. On 1 September 2007, Allianz notified the appellant that, "[i]n accordance with legislative requirements a wage and business activity inspection is to be undertaken to verify the wages and classification details applicable to" the three years in question. The identity of the inspector (AEA & Associates, referred to as an auditor) was also provided, together with a reminder that the employer would be required to produce wage records, contracts and other documents kept by it in accordance with s 174 of the Workers Compensation Act . 13It appears to have been as a result of that audit that, on 27 February 2008, Allianz notified the appellant that further premiums, totalling $102,000, were required to be paid. On 26 March 2008, the appellant sought review of the fresh demands in respect of each year on the basis that, with one small exception, the attribution of additional wages as payments to "workers" was not supportable. 14On 15 August 2008 a further adjustment was made by Allianz, providing revised details, which reduced the premium demand by some $4,300. How the adjustment came to be made is not clear, but by 16 December 2008, it appears that the Authority was dissatisfied with the standard of the audit. On that date, it wrote to the appellant in the following terms: "As a result of my investigations and in consultation with Emma of Clark Pacific Insurance Brokers it was agreed to reverse the findings of the audit conducted by AEA & Associates in 2007 and have a different auditor review the same policy periods. As such, your appeal is no longer required and has been closed. I understand that WorkCover's Compliance Branch has arranged for a new audit to take place in near future. In the event that you are not satisfied with the outcome of this audit, in the first instance, please liaise with the auditor and agent to resolve any issues. Failing this, please lodge a new Appeal with the WorkCover Appeals Branch." 15On 12 February 2009, after completion of the second audit, a WorkCover file note referred to further contact with the appellant's brokers and stated: "They were advised that as per our letter of 16/12/08, the original audit results were reversed and new auditor appointed (as agreed) to audit same period. They were also informed that no determination had been made by WorkCover Appeals Branch in relation to the status of deemed workers for either the initial or new audits." 16The results of the second audit were unfavourable to the appellant. On 28 January 2009 Allianz advised that the adjusted premiums required a payment of $178,000. On 30 April 2009 the appellant sought a further review under s 170 of the Workers Compensation Act . On the second page of that application, after referring to the letter of 16 December 2008 in respect of the first audit, the appellant continued: "The employer says that the Authority was not entitled to reverse the findings of the audit and engage a 'different auditor', but was required to either dismiss the employer's application or in the alternative, determine the disputed aspects contained within the employer's application for review. In the circumstances, the employer says that the Authority has determined the matter by accepting the employer's submission of 26 March 2008 that the Agent had erred in demanding the payment of an additional premium for the Audited years ending 13 September 2004, 13 September 2005 and 13 September 2006 respectively. It is not open to the agent to issue further demands for payment of additional premiums regarding those periods. Further, it is not open to the Authority to make a determination in respect of the disputed aspect." 17It was this last passage which encapsulated the fifth ground of appeal now before this Court. It may also be accepted that this issue was raised as the first ground of the amended summons in the Common Law Division. The initial task in determining the ground is to identify the legal premise upon which it was based. 18For this purpose, it is necessary to refer to the relevant parts of s 170, as at the date of the first application for review, namely 26 March 2008. At that time s 170 relevantly provided: " 170 Action by employer where premium not in accordance with insurance premiums order (1) An employer from whom an insurer has demanded a premium for the issue or renewal of a policy of insurance may dispute an aspect of the insurer's determination of that premium on the basis that it is not in accordance with the relevant insurance premiums order. The employer may apply to the Authority for a review by the Authority of that aspect ( the disputed aspect ) of the insurer's determination. ... (3) When any such application is made, the Authority: (a) shall notify the insurer of the making of the application, (b) shall consider the application and may have regard to such oral or written evidence or representations as it thinks fit, (c) must dismiss the application if the Authority decides that: (i) ..., or (ii) the disputed aspect was determined by the insurer in accordance with the relevant insurance premiums order, or must in any other case determine the disputed aspect in accordance with the relevant insurance premiums order, and (d) shall, in such manner as it thinks fit, inform the employer and the insurer of its dismissal of the application or its determination, as the case may require. (3A) The Authority's determination of the disputed aspect is to be made as a review of the insurer's determination and accordingly is to be made as if it were the determination required to be made by the insurer at the time of the determination of the premium concerned. (3B) When the Authority makes a determination on a review under this section, the insurer must redetermine the relevant premium in accordance with the Authority's determination. ... (5) Where: (a) the Authority makes a determination, (b) the insurer does not within 1 month after the date of the determination of the Authority: ... (ii) in the case of the renewal of a policy of insurance - effect the renewal of the policy for such period (not exceeding 1 year) as the Authority determines from the date of expiry referred to in subsection (2)(b), at such premium as would result from a redetermination by the insurer of the premium in accordance with the Authority's determination, and (c) the employer does not otherwise agree or request, the insurer shall be deemed to have issued to the employer a policy of insurance at that premium and having effect for the period and from the date ...." 19The appellant's primary case was that the Authority upheld the first review application and set aside the amended premium demand. However, it also presented submissions on the alternative basis, namely that the notification of 16 December 2008 did not involve a determination of the first review application, which therefore remained open. On either view, it claimed that the further premium demand made by Allianz following the second audit was invalid. It is the basis for that submission which needs to be identified. 20The submission turned upon acceptance of the power of the insurer to reassess premiums when further information became available and the implication of a limitation on the power in circumstances where a premium had been determined by the Authority. The limitation was sought to be implied from the terms of s 170. The section envisaged that a demand for a premium may be made after the period of insurance has ended (at which stage the wages in respect of workers for that period will presumably be capable of calculation): s 170(2). It also envisaged that the Authority will either dismiss the review application or determine the premium payable by the employer in accordance with the insurance premiums order: s 170(3)(c). However, there is nothing in the section which expressly precludes a further premium adjustment in the light of information which becomes available to the insurer or the Authority at a later date, nor is there any manifest reason to imply such a limitation. 21The appellant's primary contention was that the Authority had dismissed the first review application, reasoning by way of three steps. The first step was that the Authority had no power to do otherwise than determine the premium payable, or dismiss the application: the latter step would leave unaffected the premium stated in the notice of demand issued by the insurer. The second step in the reasoning was that the findings of the first audit were "reversed", thereby removing the basis of the adjusted premium calculation. The third step was that the Authority envisaged that there would be a new audit and, if warranted, a further adjustment of the premium, which could be challenged by the appellant, if so minded, by way of a fresh appeal. 22That analysis of the decision conveyed to the appellant on 16 December 2008 may be accepted: however, it raises, without answering, the critical assertion that no further adjustment could be made to the premium once the first adjustment, challenged on review, had been set aside. Beyond the assertion that that was in fact the case, the appellant failed to identify any basis in the statutory scheme for implying such a limitation on the power to adjust premiums. Nor did it identify any policy consideration which would preclude the insurer issuing a further demand based on further information as to, for example, the amount of wages paid to "workers" within the relevant period. In these circumstances, the supposed limitation on the power to adjust premiums should be rejected. 23An alternative understanding of the Authority's response to the first review application was that there was in fact no final determination of the premiums payable, but rather the appeal process was suspended whilst the further audit was carried out. On that understanding, the appellant's argument could have been either that there was no power in the insurer to make a further demand during the appeal process, or that the Authority was not able to determine the appeal by assessing the premiums at a higher rate than those identified in the notice of demand the subject of the review. The former argument was relied on. 24To the extent that some kind of administrative res judicata was said to arise from a determination of a review, that argument had no application in circumstances where the review had not been determined. If a further demand could be made after a determination by the Authority, it is difficult to see any implied constraint on the insurer making a further demand whilst the process of review was proceeding. If that step could be taken by the insurer, there was no suggestion that the employer did not have a further right of review under s 170 in respect of that subsequent demand. As that was the process adopted in the present case, it is not necessary to consider further the possibility that the Authority could determine that the premium payable was higher than that assessed by the insurer and challenged by the employer. 25The submissions of the appellant were based on the premise that the Authority could take only one of two steps under s 170, namely to dismiss the review application or to determine the relevant insurance premiums. On that approach, it was necessary, as considered above, to identify what the Authority had in fact done and then identify the consequences of such action. However, other possibilities may arise, including the possibility that the employer could withdraw its application on an agreed basis, which might allow for a further audit and determination of premiums. Whether that was in fact what happened in the present case need not be considered further, because the consequences would not be better than those flowing from the alternatives proposed by the appellant. 26The appellant challenged the proposition that it had agreed with the course undertaken by the Authority, "in consultation with" its brokers. That proposition involved a factual question, which need not be resolved. Once it be accepted that the insurer and the Authority had the power to take the steps which were taken thereafter, the agreement of the employer (or not, as the case may be) would only be relevant to a claim of administrative estoppel. That claim was not made. Apart from legal difficulties with such an objection, there would have been factual difficulties. It appears that the appellant did not object to the fresh audit, or suggest that no fresh demand could be made, until after the demand had been made. The objection it then raised was one as to the power of the Authority, and did not involve any denial of earlier agreement to the process: see second application for review dated 30 April 2009 and the letter from the appellant's accountant of 1 December 2009, par 10. 27Before the primary judge, the appellant apparently relied on a "failure" by the Authority to determine the first review application: at [83]. His Honour concluded that the appeal had been successful and the Authority had fulfilled its obligation under s 170. He did not expressly deal with the argument that no further determination of the premiums could be made in those circumstances. However, that argument (and thus ground 5) must be rejected for the reasons identified above.

(2) Absence of evidence to support findings 28The submissions with respect to the remaining grounds tended to overlap each other. That was in part because the "no evidence" ground (ground 1) was addressed at a high level of generality, a point to which it will be necessary to return. The facts in issues which were said to be unsupported by the evidence were identified by reference to the definition of deemed workers in Sch 1 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the 1998 Act"), cl 2 of which provided: " 2 Outworkers and other contractors (1) Where a contract: (a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor's own name, or under a business or firm name), or (b) to perform any work as an outworker, is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor." 29This definition changed during the period of the policies in question, to delete reference to "outworkers" but nothing turned on that aspect for this case. Rather, the focus of the analysis, undertaken by the primary judge and not questioned in this Court, was the scope of the two critical exceptions, being, first, the words in parenthesis in paragraph (a), and second, the requirement that the contractor neither "sublets the contract nor employs any worker". The primary judge identified the scope of these exclusions with some care at [54]-[68]. He noted that the circumstances of particular cases might well be relevant to both exclusions, stating at [64]: "The second exclusion does not exempt persons who have the ability or capacity to sublet or employ, or carry out the work through another, but exempts only those that have sublet the contract, or employed any worker in performing work to which the contract relates. Thus, a contractor may carry out work under 25 separate contracts in one of which another person is employed or the work is subcontracted. That would exempt, under the second exclusion, only that one contract, not all 25 contracts. However, if subletting or employing, or both, were a regular feature of the conduct of the contractor's undertaking, then it is more likely that the contractor is engaged in a business regularly carried on by it, and, thereby exempt under the first exclusion." 30In relation to the first exclusion, the primary judge referred, in a passage not questioned on the appeal, to the exegesis provided by Dixon J, with respect to a similar provision in Victorian legislation, in Humberstone v Northern Timber Mills [1949] HCA 49; 79 CLR 389 at 401-402: "I think that the purpose of the exception or exclusion expressed by the words in question was to confine the benefit of the conclusive presumption which it establishes to persons who do not conduct an independent trade or business, who are not holding themselves out to the public under their own or a firm or business name as carrying on such a trade or business and who do not in the course of that trade or business, as an incident of its exercise, undertake the work by entering into the contract. The provision will thus cover men who work for the principal but have no independent business or trade and men who though carrying on an independent trade or business undertake a contract outside the scope or course of that trade or business. The word 'trade' is capable of including any handicraft and in that sense it may seem to lack the element of systematic practice or holding out which the idea of openly conducting a distinct or independent trade or business and seeking custom implies. But a consideration of the policy of the provision as well as of its text appears to me to show that the distinction it seeks to draw is between on the one hand an independent contractor whose relation with the principal is special or particular either because it is outside the course of the general business of the contractor or the general practice of his trade or because he has no such general business or is not a general practitioner of his trade, and on the other hand an independent contractor who performs work successively or perhaps concurrently for his customers or others in the course of a definite trade or business carried on systematically or who holds himself out as ready to do so." 31That part of the provision identified by the primary judge as the "second exclusion" might in some circumstances better be identified as the second and third exclusions. Whether there is one exclusion or two, the focus identified by the primary judge was the carrying out of the work under the contract. No emphasis was placed upon the distinction between subletting the contract and employing workers, nor whether these two possibilities covered the field of the means by which the contract could be carried out, other than directly by the contractor. 32The relevance of this exegesis on the statutory text was that it helped to identify indicia by which the status of individual contractors could be assessed. The evidence included a document produced by the Authority in October 2003 entitled "Wages Definition Manual". The manual contained a list of indicators used by the Authority in assessing whether a contractor was a deemed worker and, if so, the proportion of the payments made to the contractor which were treated as wages: pp 31-32. 33The respondent relied upon the discussion of the "no evidence" ground, under the general law, in the judgment of Mason CJ in Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 at 356. Mason CJ noted that there was "no error of law simply in making a wrong finding of fact" - referring to Waterford v The Commonwealth [1987] HCA 25; 163 CLR 54 at 77 (Brennan J); noting that "want of logic is not synonymous with error of law", he continued: "So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place." 34Four points of caution should be made. First, this passage indicates that the "no evidence" ground of judicial review depends not on the reasoning of the decision-maker, but on a comparison between the material available to the decision-maker and the conclusion reached. Secondly, care must be taken with the term "no evidence", as an administrative decision-maker is usually entitled to take into account material which would not count as "evidence" in a judicial context. In what is essentially an inquisitorial inquiry, that material is not necessarily limited to the material placed before the decision-maker by the applicant for review. Thirdly, it is important to bear in mind that the decision-maker may be entitled to seek support for a particular inference from the absence of material supportive of a contrary view. Fourthly, where an evaluative judgment is to be formed on the basis of conflicting indicators, it will be difficult if not impossible to establish a "no evidence" ground of review. 35The appellant faced a further difficulty which it did not squarely face up to in the course of its submissions. The disputed wages were said to relate to some 47 contractors, identified in a letter from the Authority to the appellant's accountants, dated 30 October 2009. Not all contractors received payments in each of the three relevant years, but it may be that the circumstances of individual contractors were the same in each year in which they received payments (although it was part of the appellant's case that the amount of particular payments was itself significant). Nevertheless, there were, in effect, at least 47 separate assessments made by the Authority, being one in respect of each contractor. In order to establish that there was "no evidence" to support the findings of the Authority, it was necessary to demonstrate an absence of such evidence in respect of each individual about whom a finding was made. The appellant did not assay that task. All of the relevant information was contained on a compact disc, provided by the Authority to the appellant. However, very limited material was put before this Court in respect of the contents of the disc. Rather, the appellant sought to establish its case by reference to one particular contractor, which, it may be assumed, was its strongest case. 36The contractor in question, Mr Zhao, a plasterer, operated under the business name ZJ Plastering. He had an ABN and was registered for GST purposes. He received payments from the appellant in the 2004/05 and 2005/06 years. The payment in the first year was $82,533; in the second year, $183,172. He did not hold a licence under the Home Building Act 1989 (NSW), nor did he hold workers' compensation insurance in respect of his business. 37As the Authority explained to the appellant in a letter dated 11 December 2009, it looked to see whether a contractor was a proprietary company, in which case it was excluded. Mr Zhao was not. It also looked to see whether a contractor had a workers' compensation policy. A form completed by Mr Zhao suggested that he had, but WorkCover was satisfied that he did not. WorkCover also considered whether a contractor held a licence which was necessary if residential building work were to be undertaken as an independent contractor: Home Building Act , s 12. Other factors, such as holding an ABN and being registered for GST, were treated as neutral. Consistently with Humberstone , the Authority also looked to see whether the contractor advertised the business, either to other parties operating in the trade or to the general public and to any indication that the contractor employed workers. The auditor, upon whose report the Authority was entitled to rely, undertook site visits and noted when subcontractors were displaying names or logos of their business. It also observed how the work was being undertaken. The auditor obtained statements from subcontractors as to whether they employed staff or engaged subcontractors. They sought to identify other forms of advertising by reference to the Yellow Pages and trade journals. 38The case of Mr Zhao was expressly addressed in communications between the appellant and the Authority. An email from the appellant's accountant of 11 November 2009 noted that he was paid $180,000 in one year which, it was asserted, he "could not have possibly earned ... as an employee". The note further asserted that he was "running a business, with sufficient indicia other than the quantum of income confirming such status". (These were factual allegations to be assessed by the Authority.) The Authority responded noting that it had "no documentary evidence ... to support that he was operating an independent business": email of 11 November 2009. A month later, on 11 December 2009, the Authority wrote again to the appellant's accountant, noting the contention in respect of Mr Zhao and stating that "no direct evidence has been provided to verify that he was an employer or subcontracted the work during the relevant periods": letter, par 6. On each occasion, the Authority agreed to reconsider his status if further evidence were available. 39The appellant did not assert, in relation to Mr Zhao or any other individual case, or generally, that the determinations of the Authority were such that no reasonable Authority could have reached them. There was undoubtedly material available upon which an inference could be drawn that Mr Zhao was a deemed worker. He was paid by the appellant for work done; he did not hold a licence to carry out residential building work in his own name; he did not hold workers' compensation insurance in his own name. The volume of work undertaken by him may have indicated that he did not work for anyone other than the appellant. The apparent inability of the appellant to supply any direct evidence that Mr Zhao had employees or sublet the work, tended to support the view that he had none and did not sublet. A different view to that reached by the Authority was no doubt open, but it was not the only conclusion open. There was some material which supported a different view. Accordingly, even in what appears to have been the strongest available case, this ground fails.

(3) Reversal of onus of proof 40The appellant next asserted that the Authority had erred in law by acting on the basis that it was "necessary for the appellant to produce material to persuade the respondent that the original calculation of premium was wrong, before it reviewed that calculation in favour of the appellant": ground 2. This ground was described by the primary judge as a complaint of reversal of onus of proof: at [117]. How the complaint arose has been partly adverted to above. On 30 October 2009, the Authority wrote to the accountant for the appellant indicating the factors which had been taken into account, noting that 17 contractors included by the auditor had been excluded, but confirming that the remaining 46 (or 47) contractors fell within the definition of deemed workers. The letter concluded with an invitation to provide further information, should the appellant desire to do so and concluded: "In the absence of any further written information, WorkCover will determine the wages as detailed above are to be used to calculate the basic tariff premium ...." 41The appellant relied upon other parts of the correspondence, including that relating to Mr Zhao, in which the Authority invited it to provide further information. It also referred to the reasons for the final determination which included the following passage: "However, the evidence as detailed above on its own is not sufficient to support that the contractors deemed to be workers were conducting independent business." 42As will be seen in the next section, much of the exercise here complained of was undertaken in accordance with the Authority's obligations to provide procedural fairness. To foreshadow particular concerns, or even a proposed determination, is to provide an opportunity to the other party to make submissions and supply material which may persuade the decision-maker to a contrary view. Compliance with the legal obligation (and even steps which exceed such a minimum obligation) should not readily be characterised as involving error of law, let alone jurisdictional error. If, after carrying out an appropriate factual investigation, the review body indicates its proposed determination, it does not thereby impose any legal onus on the applicant. It merely indicates, in a practical way, the likely outcome, absent persuasion to the contrary. 43As the High Court explained in relation to the Refugee Review Tribunal, the proceedings before it "are administrative in nature, or inquisitorial, and ... there is an onus upon neither an applicant nor the Minister": Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 [2006] HCA 53; 231 CLR 1 at [40]. Arguably there is even stronger support for such a view in the present statutory scheme. If, before undertaking any inquiry, the Authority had required the applicant to persuade it that the assessment of the premium was in error, the present complaint might have been reasonably arguable. However, that was not what happened in this case. The evidence demonstrated that the Authority conducted an extensive inquiry, including by instigating an independent audit of the circumstances for each year. Nor can it be said that, because the auditor reported discussions with the appellant concerning "possible ways to provide solid evidence that the 'subcontractors' had their own employees", some legal onus was imposed upon the appellant. 44Furthermore, this complaint must be evaluated in circumstances where the appellant had statutory duties in respect of keeping correct records of the wages paid to workers and the trade, occupation or calling of each worker: s 174. In addition, the appellant, as an employer, had an obligation to provide "a full and correct declaration of the wages that were actually paid ... to workers employed by the employer": Workers Compensation Regulation 2003 (NSW), cl 130(2) (since repealed). To undertake that obligation, the employer must hold all relevant information in respect of contractors who may be deemed workers. 45The ground of appeal is without substance and must be rejected.

(4) Denial of procedural fairness 46The Authority accepted that a review under s 170 must comply with obligations of procedural fairness to the employer, which is also the applicant. In its written submissions, the appellant described WorkCover as "both contradictor and decision-maker": par 53. It was certainly the decision-maker; to characterise it also as a "contradictor" is inapt and inconsistent with the inquisitorial nature of the process. 47The submissions in support of this ground tended to blur into the complaint under the next ground, namely that the Authority had failed to provide adequate reasons for its determination. In this regard, the appellant asserted an entitlement to forewarning as to the precise manner in which the Authority proposed to rely upon specific aspects of the material before it and the conclusions which it sought to base on that material. In short, the appellant asserted not merely a right to reasons for the final determination involving the degree of precision expected in the judgment of a court, but a draft of the reasons containing such detail, before a final conclusion was reached. It referred to no authority which would support such an approach. 48There is no dispute that the Authority was required to disclose to the appellant any information or other material on which it intended to rely which might support an inference adverse to the interests of the appellant. However, there was also no challenge to the proposition that the compact disc, supplied to the appellant in advance of the final determination, contained all that material. If the material were equivocal, or might have been used in a way which the appellant could not reasonably have expected it to be used, it may also have been necessary for the Authority to reveal the proposed use: Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 at [142] (McHugh J). 49In the present case, both the Authority and the appellant were experienced operators; there was no reason for the Authority to suppose that the appellant did not understand the statutory scheme for calculation of insurance premiums. For the benefit of those less well informed, the Authority had produced documentation (some of which is referred to above) explaining how the scheme operated. No indication was contained in the correspondence in the evidence before this Court that the appellant did not have an adequate understanding of the issues, or how the evidence might be used. There were undoubtedly differences of opinion as to the proper use of particular aspects of the evidence (such as the size of the payment to Mr Zhao) which were addressed in the correspondence. Nothing in the evidence demonstrated that the appellant was not given a reasonable opportunity to address material adverse to its interests upon which reliance might be placed by the Authority in reaching its determination of the review application. 50There was no denial of procedural fairness: ground 3 must be rejected.

(5) Failure to provide adequate reasons 51In Sherlock v Lloyd [2010] VSCA 122; 27 VR 434, the Victorian Court of Appeal (Maxwell P, Ashley JA and Byrne AJA) noted at [15]: "Whether a statutory tribunal is obliged by its jurisdiction-conferring statute to give reasons for its decision, and what consequence flows from a failure to do so, are often difficult questions. In the modern environment there is a general expectation that a decision which affects the rights of parties should be reasoned. This serves to assuage any sense of grievance in the losing party and as a discipline for the tribunal; and renders the decision less likely to appear to have been an arbitrary one or affected by extraneous considerations." 52As their Honours also noted, any such "general expectation" must, in Australia, give way to the legal principle that administrative decision-makers are not, under the general law, required to give reasons for their decisions. That rule may, of course, be varied by statute, either expressly or by implication. However, attempts to undermine or overthrow the general principle should have an understanding of the potential consequences for administrative decision-making generally and assess the desirability of adopting an approach familiar to judicial decision-makers. 53The general law principle, reflected in the reasoning of the High Court in Public Service Board of New South Wales v Osmond [1986] HCA 7; 159 CLR 656, requires that the exercise of a particular power be characterised as either administrative or judicial. (Exercises of legislative power may be put to one side for present purposes.) That is because the giving of reasons is commonly treated as a feature of the exercise of judicial power, absent any statutory indication: Campbelltown City Council v Vegan [2006] NSWCA 284; 67 NSWLR 372 at [104]-[105]. The absence of a general law obligation for an administrative decision-maker to give reasons affects: (a) the process of implication of a statutory obligation; (b) the extent of any implied duty; (c) the approach of a court exercising supervisory jurisdiction in reviewing the reasons given, and (d) the consequences of failure to give reasons. 54In respect of (d), the consequences of failure will also be determined, in principle, by a process of statutory implication: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355. Those consequences may be: (a) jurisdictional error entailing the invalidity of the decision; (b) error of law on the face of the record, entitling an aggrieved party to a quashing order; (c) failure to complete the function reposed in the decision-maker, not entailing invalidity of the decision, but attracting a mandatory order to give reasons, or (d) no direct legal consequence other than an available inference that the body had no good reasons for its determination. 55The last possibility, noted by Gummow ACJ and Kiefel J in Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611 at [34], referring to Osmond , at 663-664 (Gibbs CJ), was not the consequence proposed by the appellant in the present case. Because there was no application for certiorari, it appeared to follow that the appellant suggested an inadequacy of reasons constituted jurisdictional error warranting a declaration of invalidity. 56Although there was an element of ambivalence in the position of the Authority as to whether it was required to give reasons, the focus of its resistance was based on the adequacy of the reasons which it in fact gave. The matter may therefore be determined on that basis. 57That requires consideration of the content of the obligation, the existence of which is assumed. The obligation to give reasons is often accompanied by a qualifier, such as "proper" or "adequate" reasons. In principle, the giving of the real reasons for decision does not constitute legal error: rather, just as their absence may give rise to an inference of error, so the reasons may reveal error, such as an error in the identification of the legal principles to be applied. On the other hand, reasons which demonstrate factual error will not allow a court to intervene in the exercise of the supervisory jurisdiction. It follows that, if illogicality of reasoning is not a basis for intervention, the fact that the reasons reveal illogicality will not render the decision invalid, nor the reasons inadequate or improper. 58Nor will the mere existence of reasons necessarily demonstrate whether they satisfy the obligation or not. Thus, a failure to address a particular issue, at least in adversarial proceedings, will be legitimate where the issue was not presented for determination by the parties. To determine this issue, reference may be needed to other parts of the record: the "record" will include the initiating process and thus identify (with degrees of precision and accuracy) the issues in dispute. If, on the other hand, a failure to give reasons entails the invalidity of the decision, for jurisdictional error, a wider inquiry may be available. 59In considering any implied obligation to provide reasons for the determination of a review under s 170 of the Workers Compensation Act , two matters are significant by way of context. First, it was not suggested that the original calculation by the insurer was required to be supported by reasons of the kind sought from the Authority. Secondly, the determination of the Authority was not subject to any form of statutory appeal. The former characteristic distinguishes the case from Vegan , where the obligation of the Appeal Panel was coloured by the fact that the medical specialist from whom the appeal was brought was obliged to give reasons, giving rise to the inference that the Appeal Panel, in correcting error, should do what the specialist should have done: Vegan , at [26] (Handley JA, McColl JA agreeing). The second point of distinction was that the determination of the Appeal Panel in Vegan was not necessarily the end of the matter: a further assessment might be directed by a court or the Commission, pursuant to s 329(1) of the 1998 Act: at [27] (Handley JA). 60The statutory provisions contain no express requirement that the Authority give reasons. The only relevant obligation is that the Authority "shall, in such manner as it thinks fit, inform the employer and the insurer of its dismissal of the application or its determination, as the case may require": s 170(3)(d). Further, the Authority is required to, in effect, stand in the shoes of the insurer: s 170(3A). That provision is not indicative of any obligation to give reasons, beyond whatever obligation (if any) may be imposed on the insurer: none was identified. 61The appellant submitted that the reasons of an administrative decision-maker must provide a sufficient explanation for the decision to enable review by a court. It relied, in that regard, on a comment by Ashley JA (with whom Hansen and Emerton AJJA agreed) in Byrne v Legal Services Commissioner [2010] VSCA 162; 27 VR 674 at [58], where he stated, "her counsel accepted, as I have said, that the reasons which she gave needed to provide a sufficient explanation for the impugned decisions as to enable review by a court - whether under the [ Administrative Law Act ] or otherwise". That is not a statement of principle, but acceptance of a concession: understandably in that context, there was no reference to supporting authority. However, since the need for reasons for the exercise of the supervisory jurisdiction does not justify a general obligation to give reasons, it is not clear why that must be the test of sufficiency of reasons when, by implication, they are required. The preferable course, in conformity with the principles set out in Project Blue Sky, is to ask what minimum content may be derived by implication from the statutory scheme, just as it will be necessary to ask what the consequences of non-compliance are, by reference to the statutory scheme. 62The appellant compounded the error of its approach by failing to distinguish between the character of the reasons required of a judicial officer and those required of an administrative decision-maker. At its heart, the complaint was that the reasons of the Authority, while setting out the considerations it took into account and asserting that it had had regard to all of the material before it, did not provide reasons in respect of each of the 47 contractors in dispute. 63The determination of the Authority was conveyed to the appellant's accountant by letter dated 14 May 2010. It is clear from the terms of that letter that, beyond informing the appellant of the determination, it constituted a final response to issues which had been in debate over a number of months. It identified the correspondence, commencing with the issue of the proposed determination on 30 October 2009 and culminating in the letter from the accountants dated 12 March 2010. If that correspondence is to be treated as part of the "reasons" for the determination, an approach adopted by both parties both here and below, that discussion included reference to individual contractors. Further, the relevant information in respect of some of the contractors, set out before this Court in what was described as a "sample" or "extract" from the compact disc. It may be assumed that similar information was provided in respect of each of the 47 contractors in dispute. The extract also contained a heading "Contractor statements" with the notation "see comments" in respect of a number of individuals. Those comments were not before the Court. 64Overall, the material identified the indicators which were taken into account and, to the extent that information was known in relation to individual contractors, what that information was. The reasons of 14 May 2010 also stated: "On the basis that the decision of whether a contractor is deemed to be a worker is based on common law principles, and that case law does not provide any indication of the weighting applied to particular indicia, it is not appropriate for WorkCover to attempt to do so. Nevertheless, we accept that for the majority of the 47 contractors that WorkCover has included as deemed workers, you provided an ABN and copies of invoices. Also, for a limited number, you provided additional documentary evidence in relation to advertising and other insurances (ie Sickness & Accident and Public Liability). In addition, WorkCover, through its research was able to establish that most held an ABN, were registered for GST, but did not hold workers compensation policies nor contractors licences. However, the evidence as detailed above on its own is not sufficient to support that the contractors deemed to be workers were conducting independent businesses." 65The reasons indicated that certain material including "Contractors Questionnaires" completed by the auditor, had not been relied upon and that the parts of the auditor's report which were relied upon involved the figures for wages, which were not in dispute. The reasons referred to an earlier expression of opinion on the part of the accountants that WorkCover had legislative power to compel an uninsured person to give information, a view which it sought to dispel. It also noted the employer's responsibility under the legislation to provide correct information in respect of the calculation of wages, and hence the status of contractors to whom payments were made. References to relevant indicia set out in earlier documents were reiterated. 66The appellant did not assert any error of law revealed by the reasons which were given, nor in the incorporated correspondence. Yet that material set out not only the findings of primary fact, but the applicable legal principles. It noted, in substance, that the application of those principles involved the identification of certain indicators, upon which an evaluative judgment was to be based. Even in relation to judicial decision-making, it is frequently noted that matters of evaluative judgment do not readily lend themselves to precise reasoning leading to the ultimate conclusion: see Dinsdale v The Queen [2000] HCA 54; 202 CLR 321 at [9] (Gleeson CJ and Hayne J); and, in relation to administrative decision-making, Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56; 216 CLR 212 at [40]; Saville v Health Care Complaints Commission [2006] NSWCA 298 at [52]. 67Assuming that there was an implied obligation to give reasons, that obligation would not extend to a requirement to give weighting to particular indicators, or combinations of indicators; nor would it extend to a requirement to identify individual workers (of whom there may be a significant number in relation to some employers) in order to explain why they were treated as deemed workers for the purposes of calculating workers' compensation insurance premiums. Beyond this, it is not necessary to comment on the scope of the obligation imposed on the Authority in relation to the giving of reasons. Nor, given the outcome, is it necessary to assess the consequences of failure. Ground 4 is not made out.

Conclusions 68Each of the grounds of appeal having failed, the appeal should be dismissed; the appellant should pay the respondent's costs of the appeal. 69WHEALY JA : I agree with Basten JA.

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: 20 February 2012

Workers Compensation Regulation 2003(NSW)

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