Labourpower Recruitment Services Pty Limited v Nolland

Supreme Court of NSW|2019-05-02|Before: Adamson J

Solicitors: K&L Gates (Plaintiff) Keen Lawyers (Defendant) File Number(s): 2018/317182 Decision under appeal Court or tribunal: Local Court Jurisdiction: Civil Date of Decision: 20 September 2018 Before: McKeogh LCM File Number(s): 2018/158332

Introduction

By summons filed on 19 November 2018, Labourpower Recruitment Services Pty Limited (the plaintiff), appeals against the decision of Keogh LCM to dismiss proceedings commenced by the plaintiff in the Local Court to recover an alleged overpayment to Brent Nolland (the defendant). The plaintiff is a labour hire company which employed the defendant from August 2015 until his employment was suspended on 11 April 2018.
The appeal is brought pursuant to s 39 of the Local Court Act 1970 (NSW) which provides that an appeal lies to this Court "only on a question of law". It is common ground that the question raised by the summons is a question of law and that leave to appeal is not required.
The plaintiff appealed on two grounds: first, that the Court below erred in holding that it had no jurisdiction to hear the proceedings; and, secondly, that the magistrate gave no, or insufficient, reasons for her Honour's conclusion.

The pleadings and evidence

By statement of claim filed on 21 May 2018 the plaintiff claimed to be entitled to recover certain monies from the defendant. The defendant filed a defence on 21 June 2018 in which he denied that he was liable to the plaintiff.
The defendant filed a motion to strike out the proceedings on the ground that the Local Court did not have jurisdiction with respect to the plaintiff's claim. The magistrate accepted the defendant's arguments and dismissed the proceedings.
Because of matters raised on the appeal it is necessary to set out in some detail the content of the pleadings and the evidence in the Court below as revealed by the Court book, an agreed exhibit which I marked "A". The proceedings in the Court below were not sound-recorded because of some malfunction. Accordingly resort must be had to the transcribed notes of the plaintiff's solicitor for this purpose.
The statement of claim alleged: "1. The Plaintiff is and was at all material times a corporation and as such is able to sue in and by its corporate name. 2. The Plaintiff employed the Defendant from 1 December 2016 until 10 April 2018 as a casual employee. 3. The Defendant claims to have sustained a work related injury on 21 August 2017. 4. The Plaintiff was obliged under section 33 of the Workers Compensation Act 1987 (NSW) to make compensation payments to the Defendant in consequence of the alleged work related injury totalling an amount of $25,929.18 5. The Defendant's injury was not in fact work related but rather he sustained the injury in circumstances entirely unconnected with his employment by the Plaintiff. 6. Further, and in consequence of the matters pleaded at paragraph 6 above, the defendant was not lawfully entitled to the compensation paid by the plaintiff to the defendant. 7. The Plaintiff claims recovery of the monies had and received by the Defendant: (a) the sum of $25,92918; (b) interest pursuant to section 100 of the Civil Procedure Act 2005 at the prescribed rate from 1 May 2018 to 21 May 2018 being $82.05 and continuing at the daily rate of $5.33 until payment or judgment; and (c) costs."
The defence alleged: "1. The Defendant admits paragraphs 1 & 2 of the Statement of Claim. 2. As to paragraph 3 the Plaintiff states that he sustained two injuries working for the Plaintiff. The first being on the 4th August 2017 and the second being on 21st August 2017. 3. The Defendant admits paragraph 4 of the Statement of Claim. 4. As to paragraph 5 the Defendant says that both injuries were work related. 5. The Defendant denies paragraph 6 and paragraph 7 of the Statement of Claim."
The defendant swore an affidavit on 10 August 2018 in which he deposed that he was employed by the plaintiff from August 2015. In August 2017 he was allocated to a waste recycling company. He deposed that he sustained a work-related injury to his right knee on 4 August 2017. He remained off work until 10 August 2017, when he returned to work. On 21 August 2017 he sustained another work-related injury, as a consequence of which he remained off work until mid-January 2018. He continued to work until 11 April 2018 when his employment was suspended by the plaintiff.

The reasons of the Court below

As referred to above, the reasons of the Court below were delivered ex tempore but not recorded. The following is my paraphrase of her Honour's reasons from Ms Baartz's notes: The defendant seeks dismissal of the statement of claim. The statement of claim seeks re-payment of $25,000. The payments were made pursuant to s 33 of the Workers Compensation Act 1987 (NSW) in consequence of an alleged work-related injury, which the plaintiff alleges were not so sustained and were sustained while the defendant was playing sport. The statement of claim indicates that it is a money claim. The defendant submitted that the plaintiff's claim can only be dealt with by the Workers Compensation Commission. Section 105 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) provides: [read out] Section 105(1) is pertinent and provides that the Commission has exclusive jurisdiction to examine, hear and determine all matters under this Act and the 1987 Act. The defendant submitted that this Court would need to examine, hear and determine a matter under the Act in these proceedings. The plaintiff submitted that this Court would not be determining an entitlement under the Workers Compensation Act but rather a fact: whether the defendant was at work or not when he suffered the injury. But, as the defendant submitted, the Commission has exclusive jurisdiction to determine whether the injury was suffered in the workplace. Although the monies were paid by the plaintiff and not by the workers compensation insurer, that does not give the Local Court jurisdiction. The plaintiff accepted that the payments were made under a Return To Work plan. A Return To Work plan is required by the Workers Compensation Act. A factual determination would be required as to whether compensation was payable under the Workers Compensation Act. In effect, I am asked to determine whether there has been an overpayment under s 235D of the Workplace Injury Management and Workers Compensation Act. I note that s 235D(2) provides that the Authority may order a person to repay money. It is not for me to trawl through the Act to find out how the Authority does that. If the Authority makes an order, then this creates a civil debt which would entitle the plaintiff to come to this Court to enforce the debt. In my view, the Commission has jurisdiction over this matter and this Court has no jurisdiction. Accordingly, I uphold the notice of motion. The matter can be determined in the Workers Compensation Commission.
The Court below ordered also the plaintiff to pay the defendant's costs of the proceedings.

The Appeal

At the commencement of the hearing in this Court, Mr Barry, who appeared on behalf of the plaintiff, indicated that the statement of claim did not accurately reflect the plaintiff's claim in important respects. He submitted that the plaintiff's real claim was for restitution of monies it had paid to the defendant as wages for the periods during which the defendant had come to work following the two alleged work-related injuries. On the defendant's evidence referred to above, the relevant periods were 10-21 August 2017 and mid-January 2018 to 11 April 2018.
On this basis Mr Barry foreshadowed that the plaintiff's real case required the following amendments to the statement of claim: "1. The Plaintiff is and was at all material times a corporation and as such is able to sue in and by its corporate name. 2. The Plaintiff employed the Defendant from 1 December 2016 until 10 April 2018 as a casual employee. 3. The Defendant claims to have sustained a work related injury injuries on 4 and 21 August 2017. 4. The Plaintiff was obliged under section 33 of the Workers Compensation Act 1987 (NSW) to make compensation payments to the Defendant in consequence of the alleged work related injury totalling paid to the Defendant amounts which totalled an amount of $25,929.18 by way of income. 5. The Defendant's injury injuries was were not in fact work related but rather he sustained the injury in circumstances entirely unconnected with his employment by the Plaintiff. 6. Further, and in consequence of the matters pleaded at paragraph 6 above, the The defendant was not lawfully entitled to the compensation amount paid by the plaintiff to the defendant referred to in paragraph 4 above. 7. The Plaintiff claims recovery of the monies had and received by the Defendant: (a) the sum of $25,92918; (b) interest pursuant to section 100 of the Civil Procedure Act 2005 at the prescribed rate from 1 May 2018 to 21 May 2018 being $82.05 and continuing at the daily rate of $5.33 until payment or judgment; and (c) costs." [Words struck through are to be deleted, words in bold are to be added and words in plain type are as in the statement of claim as filed.]
Mr Barry identified paragraphs 3 and 5 as "background facts", which, while true, were not material facts and did not need to be in the pleading.
He submitted that the result of the proposed amendment was that payments made by the plaintiff to the defendant were properly to be characterised as payments of income, rather than payments of compensation although he accepted that they were made during periods in which the defendant had been engaged in "suitable duties" because of alleged work-related injuries.
Mr Barry submitted that the plaintiff was required to bring proceedings in this Court to set aside the orders of the Court below because there would otherwise be an issue estoppel, or res judicata, against the plaintiff if it sought to recover monies from the defendant on the amended basis.
This Court's jurisdiction under s 39 of the Local Court Act would not appear to extend to allowing amendments to pleadings. However, it is important that the question of law raised in the summons be addressed on a proper basis so as to avoid a multiplicity of applications to this Court. Accordingly, I propose to decide the appeal on the basis of the claim as pleaded, this being the pleading which was struck out by the Court below, and also address, if necessary, the proposed pleading.

Local Court Act

The Local Court relevantly has jurisdiction over money claims up to $100,000: s 29 of the Local Court Act. The term "money claim" is defined in s 29A of the Local Court Act to mean: "a claim for recovery of any debt, demand or damages (whether liquidated or unliquidated)."

Workers Compensation Act

The term "injury" is defined in the Workers Compensation Act 1987 (NSW) as "personal injury arising out of or in the course of employment": s 4 of the Workers Compensation Act. Section 9 of the Workers Compensation Act provides that a worker who has "received" an injury shall receive compensation from the worker's employer in accordance with the Act. Section 33 of the Workers Compensation Act provides: "If total or partial incapacity for work results from an injury, the compensation payable by the employer under this Act to the injured worker shall include a weekly payment during the incapacity."
Section 58 of the Workers Compensation Act relevantly provides: "(1) If, because of a worker's return to employment or a change in employment that affects the worker's earnings: (a) the worker is not entitled under this Act to any weekly payments of compensation that have been paid to the worker, or (b) the amount of any weekly payments of compensation that have been paid to the worker exceed the amount to which the worker is entitled under this Act (including under the former Act), the Commission may order the worker to refund to the person who made the payments any amount to which the worker is not entitled in respect of payments during any period not exceeding 2 years (or such shorter or longer period as the Commission considers to be appropriate) from the date of payment."

Workplace Injury Management and Workers Compensation Act

Section 49 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) imposes an obligation on an employer of a worker who has been totally or partially incapacitated for work as a result of an injury to provide suitable work for a worker who is able to return to work.
Section 105(1) of the Workplace Injury Management and Workers Compensation Act provides: "Subject to this Act, the Commission has exclusive jurisdiction to examine, hear and determine all matters arising under this Act and the 1987 Act."
It was common ground that none of the exceptions in the other sub-sections in s 105 is relevant in the present case. The "Commission" is defined by s 4 of the Workplace Injury Management and Workers Compensation Act as meaning the Workers Compensation Commission of New South Wales established by that Act.
Section 235A creates offences relating to obtaining financial advantage in connection with the workers compensation scheme. Section 235C creates offences relating to false claims.
Section 235B provides for civil remedies for fraudulent claims, relevantly as follows: "235B Remedy available where claim fraudulent (1) This section applies to a claimant or insurer if it is established that, for the purpose of obtaining a financial advantage, the claimant or insurer did or omitted to do anything (including the making of a statement) concerning an injury or any claim relating to an injury with knowledge that the doing of the thing or the omission to do the thing was false or misleading. (2) If this section applies to a claimant: (a) a person who has a liability in respect of a payment, settlement, compromise or judgment relating to the claim is relieved from that liability to the extent of the financial advantage so obtained by the claimant, and (b) a person who has paid an amount to the claimant in connection with the claim (whether under a settlement, compromise or judgment, or otherwise) is entitled to recover from the claimant the amount of the financial advantage so obtained by the claimant and any costs incurred in connection with the claim. (3) If this section applies to an insurer, the claimant is entitled to recover from the insurer as a debt the amount of the financial advantage so obtained by the insurer and any costs incurred by the claimant in connection with the claim."
Section 235D provides: "235D Order for refund of overpayments of compensation (1) This section applies to a payment to a person, purportedly made pursuant to an obligation arising under this Act, to which the person is not entitled under this Act. Such a payment is referred to in this section as an overpayment. (2) If the Authority is satisfied that a person has received an overpayment as a result or partly as a result of an act that constitutes a contravention of section 235A or 235C (whether or not the person has been proceeded against or convicted for an offence in respect of the contravention), the Authority may order the person to refund the amount of the overpayment to the person who made the payment. (3) Any such refund may, in accordance with the terms of the Authority's order, be deducted from future payments of compensation, but not if it is payable under an award of the Commission. (4) An order under this section is enforceable as a civil debt and may be recovered as such in any court of competent jurisdiction by the person to whom the order requires payment to be made. (5) This section does not limit any other right of recovery that a person may have against another person in respect of any overpayment to that other person. (6) A person against whom an order is made under this section may apply for a review of the order by the Commission."
Section 4 of the Act defines "Authority" as meaning the State Insurance Regulatory Authority (the Authority) constituted under the State Insurance and Care Governance Act 2015 (NSW).

Consideration

Mr Barry submitted that s 105 of the Workplace Injury Management and Workers Compensation Act did not exclude the jurisdiction of the Local Court to determine a money claim by an employer against a worker for overpayment of income, whether the monies amounted to compensation or income for a worker who had suffered and injury and was not fit for full duties. He relied on Melesco Manufacturing Pty Ltd v Thompson (1996) 40 NSWLR 525 (Melesco) in support of the proposition that s 105 was insufficient to divest the Local Court of the jurisdiction which it would otherwise have in respect of money claims such as the one brought by the plaintiff in the present case. He submitted that, although s 235D of Workplace Injury Management and Workers Compensation Act provided the plaintiff with an avenue of recovery, other rights of recovery were expressly preserved by s 235D(5) and that it could, accordingly, sue for the monies claimed in the Local Court.
Mr Tiliakos, who appeared on behalf of the defendant, argued that Melesco could be distinguished from the present case, since Melesco concerned the variation of an award by the Compensation Court which had the effect of decreasing the amount of weekly compensation payable to a worker. He submitted that the present case turned on an allegation that the worker was not entitled to workers compensation for a period because of his own misleading or fraudulent conduct. He contended that, in these circumstances, it would be necessary for the tribunal which determined the claim to determine the question of the defendant's entitlement to workers compensation. He submitted that this issue was a matter squarely within the jurisdiction of the Workers Compensation Commission (the Commission) and, accordingly, s 105 of the Workplace Injury Management and Workers Compensation Act applied to exclude the jurisdiction of any other court or tribunal, including the Local Court.
Mr Tiliakos submitted that the plaintiff had a right under s 235D of the Workplace Injury Management and Workers Compensation Act to apply to the Authority for an order that the defendant refund the amount of any overpayment to the plaintiff and pointed out that, if the plaintiff did not obtain the order sought, it would be open to the plaintiff to seek review of the order by the Commission.
I reject Mr Tiliakos's submission that the factual differences between Melesco and the present case render the analysis in Melesco inapposite to the present case. In Melesco, the Local Court was found to have jurisdiction to hear and determine the employer's money claim against the worker, which arose from a variation in an award made by the Commission and resulted in an overpayment. In the present case, the plaintiff seeks recovery of an alleged overpayment made as a consequence of alleged false or misleading conduct by the defendant worker. In neither case does s 58(1) of the Workers Compensation Act provide the employer with an avenue for recovery in the Commission, as was common ground in the present case. It was also common ground that there was no other provision in the Workplace Injury Management and Workers Compensation Act which gave the plaintiff a right to commence proceedings in the Commission to recover what it alleged to have been an overpayment to the defendant.
The only material difference in the law which applied in Melesco and the law that applies in the present case is that ss 235B and 235D have been added to the Workplace Injury Management and Workers Compensation Act and, potentially, provide an avenue for the recovery of overpayments of workers compensation. It is plain from the wording of s 235D(5) that the section does not intend to exclude other rights of recovery and, indeed, contemplates that there may be other rights of recovery. Section 235D(5) would have no work to do if there were no other rights of recovery which inured in an employer such as the plaintiff. Mr Tiliakos was unable to identify any purpose for s 235D(5) of the Workplace Injury Management and Workers Compensation Act if there was no right of recovery to an employer other than that provided in s 235D itself.
Section 235B(2)(b) would appear to apply to the present case because it confers a right to recover on a person who has paid an amount to the claimant in connection with the claim if it is established that, for the purposes of obtaining a financial advantage, the claimant made a statement concerning an injury with knowledge that the statement was false or misleading within the meaning of s 235B(1). Unlike s 235B(3), which applies where the claimant seeks to recover an amount from the insurer, s 235B(2) does not include the word "debt" and does not provide that the amount can be recovered as a "debt". There is no indication in the Explanatory Memorandum or the Second Reading Speech as to why this is so.
Neither party contended that the Commission had jurisdiction under s 235B(2)(b) to order a worker such as the defendant to repay to the employer the amount of a financial advantage. As the Commission is a body created under statute, it has no general powers other than those specifically conferred. Section 105(1) confers exclusive jurisdiction to hear and determine all matters arising under the Workplace Injury Management and Workers Compensation Act and the Workers Compensation Act. It operates to limit the jurisdiction of other courts and tribunals. The jurisdiction it confers on the Commission is limited by the wording of s 105(1), as the Court of Appeal held in Melesco. The Commission has no inherent jurisdiction but only has such powers as are necessary and incidental to the exercise of its statutory jurisdiction.
It would appear that a claim for recovery referable to s 235B could be the subject for an application for an order under s 235D. Had the legislature intended that the recovery claim under s 235B be brought directly to the Commission, it would have expressed its intention in clearer words. That the Commission's role under s 235D is only supervisory, the principal decision being one for the Authority, is further evidence that the legislature did not intend that s 235B would give rise to a claim that could be brought directly by an employer in the Commission.
It follows that the legislature, by enacting ss 235B and 235D, has not excluded the plaintiff's right to recover payments alleged to be overpayments of workers compensation, which is a common law right to recover monies had and received. The removal of a common law right to sue to recover an overpayment requires express words or necessary intention: Coco v The Queen (1994) 179 CLR 427; [1994] HCA 15; cited in Carricks Ltd v Pizzaro (1995) 38 NSWLR 274 at 280 (Cole JA) and Melesco at 532 (Sheller JA) and 541 (Powell JA). Nor is s 105(1) sufficient to remove the jurisdiction of the Local Court to determine money claims within its jurisdictional limit: Melesco. The claim which the plaintiff brought in the Local Court was for monies recoverable at common law and was not a matter arising under the Workers Compensation Act or the Workplace Injury Management and Workers Compensation Act.

Conclusion

I am satisfied that the Court below was in error in dismissing the claim. Accordingly, the first ground has been made out. I note that it was common ground that neither of the parties had given her Honour the benefit of Melesco, which, in my view, determines the question in favour of the plaintiff, given the consideration of the effect of ss 235B and 235D referred to above.
As the first ground has been made out, it is not necessary to consider the second ground which concerns the sufficiency of her Honour's reasons.
It follows that the orders made by the Court below ought be set aside on the basis of the current pleading.
I have referred above to the proposed revised basis for the plaintiff's claim. The plaintiff's position with respect to the jurisdiction of the Local Court to decide a claim based on its proposed pleading is no worse than with the existing pleading. I do not regard it as appropriate for this Court, even if it had the power, to grant leave to the plaintiff to amend the statement of claim as foreshadowed by Mr Barry, as this is a matter for the Local Court.
I confirm for completeness that my reasons are not to be understood as expressing any view as to the merits of the plaintiff's claim. The only issue which arises in the proceedings before this Court is the Local Court's jurisdiction to hear the plaintiff's claim.

Costs

I raised the question of costs at the conclusion of the oral hearing. Mr Tiliakos asked for costs to be reserved in order that my reasons could be considered before submissions were made. Mr Barry indicated that his instructions were that, if the plaintiff were successful in this Court, it would seek orders that there be no order as to costs in this Court or in the Local Court. He referred me to Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691, in which, as here, the appellant was required to appeal to the Court of Appeal against orders made by Cole J lest he later be confronted with issue estoppels: see Handley JA at 702. Mr Barry acknowledged that the plaintiff had not drawn the attention of the Court below to Melesco and that, had it done so, the error made by the Court below could have been avoided. Mr Barry accepted that, in these circumstances, the plaintiff would not be entitled to its costs and that the orders should therefore be as I have set out above.
As Mr Tiliakos indicated that he wished to be heard on costs, I will not finally determine the costs of the defendant's notice of motion in the Local Court or the costs of the proceedings in this Court. However, the orders will make provision for a timetable for costs, if the defendant wishes to apply for a different order.

Orders

For the reasons given above, the Court orders: 1. Allow the appeal. 2. Set aside the whole of the decision of McKeogh LCM made on 20 September 2018, including the order. 3. In lieu thereof, order that the notice of motion filed by the defendant in the Local Court on 20 September 2018 be dismissed. 4. Unless an application for a different order is made by the defendant within 7 days hereof by application in writing to my Associate, together with any evidence or submissions in support, order that there be no order as to the costs of the notice of motion in the Court below or the costs of the proceedings in this 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: 07 May 2019

Local Court Act 1970(NSW)

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