Monroe Australia Pty Ltd v Hill [2003] SAWCT 59

3 The employer resisted the making of the order on the grounds that first, it had an order for costs in its favour as a consequence of an unsuccessful appeal that had been made by the respondent, Peter Hill ("the worker") to the Full Bench of the Tribunal and secondly, that pursuant to orders made pursuant to s 36(4) the worker received some $11987.93 by way of income maintenance that it was subsequently determined that he was not entitled to. It was contended that either individually or collectively these facts compelled the rejection of the application of the worker's solicitors.

4 Because of his timely lodgement of the Notice of Dispute and subsequent applications made by him thereafter pursuant to s 36(4) of the Act, the worker continued to receive weekly payments of income maintenance until the learned Deputy President handed down his decision. Section 36(4) provides:-

"If a worker lodges a notice of dispute disputing a decision by the Corporation to discontinue or reduce weekly payments under this section within one month after the worker receives notice of the decision -

(a) the operation of the decision is suspended, and the weekly payments must continue or, if the decision has already taken effect, be reinstated (to their previous level), until the dispute first comes before a conciliator; and

(b) the Tribunal may further suspend the operation of the decision (from time to time) to allow a reasonable opportunity for resolution of the dispute by conciliation, arbitration or judicial determination (as the case requires) without prejudice to the worker's financial position in the meanwhile."

5 The appellant contended before the learned Deputy President that it was entitled to rely upon s 36(5) of the Act to have these payments taken into account and to off set it against its liability to pay costs to the worker. That sub-section provides:-

"(5) If the dispute is ultimately resolved in favour of the Corporation, the Corporation may, at the Corporation's discretion (but subject to the regulations) -

(a) recover amounts that were paid because of suspension of the operation of the Corporation's decision from the worker as a debt; or

(b) set off the amounts against liabilities of the Corporation to make payments to the worker under this Act."

6 Regulations dealing with the recoveries and set offs contemplated by s 36(5) are contained in reg 8 of the Workers and Rehabilitation and Compensation (General Regulations) ("the regulations"). For relevant purposes the regulations impose time constraints upon when it is that the Corporation can exercise its right of set off.

7 By letter dated 25 October 2001 the appellant's solicitors advised the worker's solicitors that it intended to exercise its right of set off. This was within the time limit prescribed.

8 Put bluntly, the employer contended that it was unfair for it to have to pay the full measure of the worker's entitlement to costs of the judicial determination to his solicitors and then stand in line with the rest of the worker's creditors hoping to recover some of the money that he owed it.

9 In making the order, the learned Deputy President followed Smith v WorkCover Corporation/MMI Workers Compensation (SA) Ltd (Underdale Metal Processors) [1999] SAWCT 32 in which it was held that the words "advice" and "assistance" as they appear in the sub-section are sufficiently broad to include solicitor and counsel fees associated with the representation of a party.

10 The learned Deputy President explained his reasons for exercising his discretion to grant the worker's solicitors the relief that they sought at par 13 to 18 of his reasons. He said:

"In enacting s 95(4) Parliament has empowered the Tribunal to make an award of costs in favour of the service provider where that is considered `appropriate'.

If the service provider's remuneration for its work is at risk, at least in circumstances where it is not suggested that they or their client have acted unreasonably, frivolously or vexatiously, I think it is appropriate to grant them the relief offered by s 95(4).

The respondent here does not suggest that the worker acted unreasonably, frivolously or vexatiously in pursuing the disputes to either judicial determination or on appeal. Had it been otherwise, or had the worker's solicitors been shown to have encouraged a frivolous or unreasonable appeal, other considerations might arise, but there is nothing to suggest that that was the case here and any adjudication on the consequences of such conduct can be left to another day.

If the respondent was permitted by s 36(5)(b) to set off the weekly payments it has made to the worker pursuant to s 36(4) of the Act against its liability to the worker for his costs at first instance, the worker's solicitors would likely be left to join the chase after their client for payment for their services. Such an outcome is out of step with s 95's specific rejection of outcome as a relevant consideration for the payment of costs by the compensating authority, and the section's clear encouragement of the parties to be represented at Tribunal hearings by the assurance that, provided that they do not act unreasonably, frivolously or vexatiously, their costs of representation (subject to the limitations provided by s 95) will be met by the compensating authority. I think that both the party and those representing the party are entitled to act on that assurance.

I do not agree that s 36(5) of the Act gives the compensating authority a statutory right of set-off in such circumstances, nor do I think that the discretion given to the Tribunal by s 95(4) should be seen to be fettered in any way by s 36(5).

I am, moreover, inclined to the view that the Corporation's `liabilities to make payments to the worker under this Act' as appears in 36(5)(b) do not include the Corporation's liabilities in respect of costs awarded by the Tribunal. `Payments to the worker' in this context implies the payment of benefits under the Act, as distinct from an entitlement to costs which is dependent on the intervention of the Tribunal, the Tribunal exercising its discretion and, in the language of s 95, making an award of costs. Clearly, s 36(5)(b) cannot apply in respect of the compensating authority's liability in respect of a costs order made in favour of the worker's solicitors."

11 This case seems to have been argued before the learned Deputy President on the basis that Smith (supra) declares the legal principles by which the discretion conferred by s 95(4) is to be exercised.

12 As we understand it, there are two aspects to the appellant's appeal.

13 The first, is that the principles declared in Smith were wrong and that the learned Deputy President erred in law in adopting the approach that was suggested in that case.

14 The second submission is that in any event, the learned Deputy President erred in law in construing the words "payments to the worker" as they appear in s 36(5), as only including payments of benefits under the Act and that contrary to the view taken by the learned Deputy President, that expression is sufficiently wide in its terms to include a liability on the part of the compensating authority to pay the cost of the worker's solicitors.

15 In putting these submissions the appellant seemed to initially assert that if it had the right to set off an entitlement to costs or other payments the learned Deputy President should have declined to make any order in favour of the worker's solicitors. It subsequently seemed to accept that in either case what might have been appropriate was for the learned Deputy President to reduce the amount to be paid in favour of the worker's solicitors to reflect the set off.

An appeal on a question of law involving the exercise of a discretion

16 This appeal is limited to a question of law and it involves the exercise of a discretion. That being so, the only basis upon which we could interfere with the learned Deputy President's ruling is if we identified an error of law in the principles that he applied in determining how his discretion should be exercised.

17 We now turn to consider the first ground of complaint.

18 We do not understand the learned Deputy President to contend that Smith prescribes the way in which the discretion conferred by s 95(4) should be exercised. In any case, the Tribunal in Smith did not declare that to be so, nor could it. The discretion conferred by s 95(4) is clearly a general one. Parliament has given no directions or imposed any limitations as to how it should be exercised. It follows that all relevant circumstances have to be taken into account and that there cannot be an encyclopaedic list of what must be considered nor can there be a prescription as to how much weight should be given to any particular factor. See: Santos Ltd v Workers Rehabilitation and Compensation Corporation (1998) 199 LSJS 83. It is trite to say it, but in each case the decision will depend upon its own facts and circumstances.

19 What was decided in Smith is that the proper construction to be given to the words "advice" and "assistance" includes the cost of legal representation at a judicial determination and that in approaching the exercise of the discretion conferred by s 95(4) the Tribunal should proceed from the premise that this provision reflects the general philosophy of the costs provisions in the Act which encourages workers to be represented by a legal practitioner or an officer or employee of an industrial association. Other than that Smith provides no more than an example of the way in which the discretion conferred by s 95(4) might be exercised.

20 We did not understand Mr Swan, counsel for the employer, to contend that the construction given to the words "advice" and "assistance" in Smith was wrong. With respect we think that the construction given there was correct.

21 As to the statement in Smith about the philosophy of the costs provisions in the Act, with respect, we agree with it. But, that said, in the end, whether or not an order should be made pursuant to s 95(4) depends upon whether in all the circumstances it is just and reasonable to do so.

22 No error of law has been identified in respect of the learned Deputy President's reference to and application of Smith.

23 We now turn to consider the complaint about the learned Deputy President's construction of the expression "payments to the worker' as it appears in s 36(5).

24 The learned Deputy President concluded that the issue of set off was not a factor that he needed to consider in respect of his discretion because he found that the issue did not arise. The learned Deputy President held that the expression "payments to the worker" as it appears in s 36(5) relates to payments of benefits under the Act as distinct from an entitlement to costs.

25 With respect we disagree with the learned Deputy President's approach to the proper construction of s 36 (5).

26 The liability imposed upon a compensating authority to continue to pay weekly payments whilst the matter progresses through the Tribunal "without prejudice to the worker's financial position in the meanwhile" is an onerous one. If a worker is in poor financial circumstances he or she could be expected to have great difficulty in repaying compensation received pursuant to the relief granted by s 36(4). Accordingly, a compensating authority will often have little hope of recovering weekly payments made by it following a s 36 reduction or discontinuance notwithstanding the fact that its decision to reduce or discontinue has been subsequently vindicated. In our view the right of set off granted by s 36(5) clearly recognises that fact.

27 Parliament, having gone to the trouble of providing a means by which a compensating authority can recoup money paid to a worker subsequently found not to be entitled to it, ought not, in our respectful opinion, be assumed to have intended for that right to be read down.

28 With respect we see no grounds for construing the expression "payments under the Act" as being limited to payments of specific types of compensation provided for by the Act , such as s 32 expenses, weekly payments or lump sum compensation under ss 42 or 43. In our respectful opinion the expression applies to any payment made pursuant to the Act, and that includes a liability to pay costs. It is notable that in the definition section of the Act the word "compensation" is defined as "including any monetary benefit payable under this Act". A contribution towards costs irrespective of the outcome of the trial (unreasonable, frivolous or vexatious conduct excluded) is plainly a benefit.

29 We do not, with respect, find the argument that costs do not fit within the definition of "payments under the Act" because an award of costs is dependent upon the intervention of the Tribunal in the exercise of its discretion, persuasive. Once the discretion has been exercised and a liability to pay costs has been created that liability should in our respectful view be properly characterised as a payment made under the Act.

30 Accordingly, in concluding otherwise, in our respectful opinion, the learned Deputy President fell into error. He was with respect obliged to take into account the fact that the employer had the right to set off against its liability to pay the worker his costs of the judicial determination, the payments it had made pursuant to s 36 (4).

31 Ordinarily such a conclusion would require an order remitting the matter back to the learned Deputy President to reconsider the matter in light of these reasons. Whether this further fact alters the way in which the discretion is to be exercised is a matter for the learned Deputy President.

32 That, however, is not an appropriate order to make at this time.

33 A decision made by a compensating authority to invoke its powers of set off is clearly a discretionary one. It is also arguably a reviewable decision.

34 It appears that the compensating authority gave appropriate notice of its intention to exercise its right of set off. As far as we are aware, the worker has not formally lodged a Notice of Dispute challenging the correctness of that decision. But, that said, the appellant has been on notice for some time that the worker does not agree with the appellant's decision. As such, assuming that no Notice of Dispute in respect of this has been lodged, although an extension of time would need to be obtained for this issue to be pursued, a Member of the Tribunal, in the exercise of his or her discretion, might, in all the circumstances, grant that extension.

35 If the appellant's decision to exercise its right of set off is reviewable and if this matter by one means or another comes before the Tribunal, it is possible that its decision in relation thereto might be varied or set aside.

36 In all the circumstances, we think that as a matter of fairness, the appropriate order for us to make at this time is simply adjourn further consideration of this appeal to enable the worker to consider his position in respect of the appellant's asserted right of set off, and to grant the parties liberty to apply.