WORKCOVER/ALLIANZ AUSTRALIA WORKERS COMPENSATION (SA) LTD (AIR INTERNATIONAL PTY LTD)

JUDGMENT OF: His Honour Deputy President Judge JP McCusker,

Her Honour Deputy President Judge HW Parsons,

His Honour Deputy President Judge BP Gilchrist

Appeal - Whether it is permissible for the Corporation to conduct more than one s 38 review per year - Held that it is - Whether the giving of a notice advising the worker of the proposed review is a necessary pre-requisite that must be undertaken prior to making a determination to adjust weekly payments - Purpose of the notice considered and discussed - Held allowing the appeal that a determination to adjust weekly payments that was made without giving the worker prior notice was invalid and that its invalidity could not be cured by a subsequent hearing determining the proposed adjustment on its merits - Ss 38,84, 85, 94 and 117 Workers Rehabilitation and Compensation Act 1986.

Macksville and District Hospital v Mayze (1987) 10 NSWLR 708

Smith v Allan, Secretary, Treasury of New South Wales (1993) 31 NSWLR 52

Project Blue Sky Inc and Others v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Epstein & Morton v The WorkCover Corporation of SA & Others [2003] SASC 231

Wang v Minister for Immigration and Multicultural Affairs [1997] FCA 70; (1997) 71 FCR 386

Mitsubishi Motors Australia Ltd v Sosa [1995] SASC 5084

Pagliacci v General Motors-Holdens Ltd (1980) 23 SASR 126

Queensland Newsagents Federation Limited v Trade Practices Commission (1993) 46 FCR 38

Matkevich v NSW Technical and Further Education Commission (No 3) (unreported, NSWCA, 2 February 1996)

Leary v National Union of Vehicle Builders [1971] Ch 34

Calvin v Carr & Ors (1979) 1 NSWLR 1 (PC)

Ackroyd v Whitehouse (Director of National Parks & Wildlife Service) (1985) 2 NSWLR 239

Twist v The Council of the Municipality of Randwick [1976] HCA 58; (1976) 136 CLR 106

Reid v Australian Telecommunications Commission (1988) 23 IR 96

Queensland Police Credit Union Ltd v Criminal Justice Commission (2000) 1 QdR 626

Nelson v Q-Comp [2004] QSC 164

Kairns v WorkCover Corporation/CGU Workers Compensation (SA) Ltd (Chateau Yaldara Pty Ltd) [2004] SASC 352

1 I have had the advantage of reading the reasons for decision of Parsons and Gilchrist JJ. I agree with their decision and their reasoning. I wish to add some further comments regarding the contention that failure to give notice under s 38(3) is "cured" by the availability of judicial determination. The decision appealed from states (judgment par 72): -

"72 It strongly favours the conclusion that the Tribunal structure affords an aggrieved applicant unfettered opportunity to ventilate the basis of his dissatisfaction with any alleged shortcoming in the s 38 Review process. The structure therefore compels the conclusion that it meets the criteria of the highest authority as being designed to overcome any lack of natural justice at the initial notice stage."

2 Firstly whether or not the obligation to give the notice in s 38(3) is mandatory and whether or not the subsequent appeal or review processes "cures" any failure to observe that requirement depends upon the intent to be ascribed to the legislature in the given circumstances: see Macksville and District Hospital v Mayze (1987) 10 NSWLR 708 at 720, Smith v Allan, Secretary, Treasury of New South Wales (1993) 31 NSWLR 52 at 58, Project Blue Sky Inc and Others v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 and Epstein & Morton v The WorkCover Corporation of SA & Others [2003] SASC 231 per Besanko J at pars 47, 48, 49 and 52. The word "must" appears five times in s 38 and it is used in a context which also uses the phrases "the Corporation is not required to comply" and "if a worker fails to comply". The use of "must" is in my opinion the key word for understanding the intent. S 38(3) is in the following terms:-

"(3) Before the Corporation begins a review under this section, the Corporation must give the worker notice, in the form prescribed by regulation-

(a) informing the worker of the proposed review; and

(b) inviting the worker to make written representation to the Corporation on the subject of the review within a reasonable time specified in the notice."

3 In Wang v Minister for Immigration and Multicultural Affairs [1997] FCA 70; (1997) 71 FCR 386 the Court was concerned with a provision in the Migration Act 1958 (Cth) which required a person refused a visa to lodge an appeal to the Court within 28 days. The applicant had not received the decision refusing his visa as it had been wrongly addressed. He became aware of the refusal after the 28 days had expired. A provision in the Migration Act required that when an application was refused, the Immigration Review Tribunal "must" provide to the applicant details of the refusal in writing within 14 days, (see the provisions of s 368 at p 390). Only then "must" the applicant lodge the appeal within 28 days (see the provisions of s 478 at p 390). Merkel J stated the general consequences of this usage as follows (at p 391):-

"In my view the use of the word 'must' in s 47(1)(b) and (2), in relation to the 28 day time limit, is not merely directory but 'is a word of absolute obligation': see Posner v Collector for Inter-state Destitute Persons (Vic) [1946] HCA 50; (1946) 74 CLR 461 at 490 per Williams J and Kosovich v Mancini (1982) 31 SASR 272 at 275-276 per Millhouse J. ..."

4 Approaching the matter from the standpoint of statutory construction Merkel J went on to say (at p 394):-

"The construction of s 478 must be based on its content, the context in which it appears and its role in the overall scheme for statutory review of IRT and RRT decisions. Many of those decisions may have fundamental consequences for the life and future well being of the individuals concerned. In such circumstances there is particular force in the comment in Bennion on Statutory Interpretation (2nd ed, 1992), p 725:

'A construction will not be allowed which would enable persons charged with a statutory power or function to act in such a way as to truncate or otherwise modify what the legislature intended.'

The real point being made is that where a judge concludes that the legislature could not have intended that a statute could operate in a manner which defeats its manifest object or purpose, then an alternative interpretation must be preferred. There is a substantial body of authority that supports that approach."

The Court proceeded to find in favour of the applicant. These remarks, indicating how the Court should approach the legislative intent in such a context, reflect the approach taken by King CJ in the context of workers compensation legislation in Mitsubishi Motors Australia Ltd v Sosa [1995] SASC 5084 as well as in Pagliacci v General Motors-Holdens Ltd (1980) 23 SASR 126 at 135.

5 It is important to make a distinction at the outset. That is before examining the other decisions which bear on this matter. The failure here is a failure to conform with express statutory requirements, as distinct from common law rules of procedural fairness ("natural justice") that may be imputed to the legislation: see Smith v Allan (above cited) at p 53. The question to be posed is whether the notion of "cure" should be ascribed to these circumstances and in the given context.

6 That imputation of "cure" is described suitably by Spender J in Queensland Newsagents Federation Limited v Trade Practices Commission (1993) 46 FCR 38. He did so in the following terms (at p 52):-

"In the earlier case of Twist v Randwick Municipal Council (1976) 136 CLR 196 there was a divergence of views between Mason J (as he was then) and Barwick CJ as to the meaning of the finding that a full de novo hearing remedied a defect in natural justice. Barwick CJ took the view that the existence of the de novo hearing meant that Parliament had impliedly excluded the duty to give natural justice at the initial decision-making level (see at 109-110). Mason J, however, adopted the view that while the provision of a de novo hearing did not exclude the duty to give natural justice, the provision of an effective review in the legislation in question meant that Parliament had intended the appeal procedure contained in the relevant Act to be the exclusive remedy for failure to give natural justice at the initial decision-making level (see at 115).

This question, however, was resolved by the decision in R v Marks; Ex parte Australian Building Construction Employees and Builders Labourers' Federation [1981] HCA 33; (1981) 147 CLR 471, as Wilcox J observed in Marine Hull & Liability Insurance Co Ltd v Hurford (1985) 10 FCR 234 at 245:

'... the decision [in R v Marks] stands as authority for the view that the effect of the full right of appeal is not - as Barwick CJ suggested - to exclude the obligation to give natural justice but rather to limit the available remedies for breach to a prosecution of the appeal.' "

7 However as the cases show, whether this is the only indication depends on the context and terms of the given legislation. For example in Matkevich v NSW Technical and Further Education Commission (No 3) (unreported, NSWCA, 2 February 1996), a teacher dismissed for alleged sexual harassment contended a denial of due process. He claimed certain matters, particularly on the question of penalty, were not provided to him and therefore he did not receive an opportunity to be heard in respect of them. He appealed against his dismissal to a Tribunal under the acronym GREAT. He argued the earlier decision was rendered void for the failure. The Tribunal decided that, as the hearing before it was as full and comprehensive as before the primary decision maker, any defect was "cured" (at 17). The matter was then taken by the teacher to the Court of Appeal.

8 In his decision, Kirby P made reference to the statement of Megarry J in Leary v National Union of Vehicle Builders [1971] Ch 34 that the right should be to a fair trial and a right of appeal, not an unfair trial and a fair appeal. Kirby P observed the remarks of the Privy Council in Calvin v Carr & Ors (1979) 1 NSWLR 1 (PC) to the effect that Megarry J's opinion was too broadly stated. Kirby P went on to say (21):-

"... Conformably with the line of authority analysed in Calvin v Carr and other decisions, in considering cases such as this, the courts have looked rather to such considerations such as: (a) the structure and imputed intention of the lawmaker as to the rights and duties of the primary decision-maker; (b) the nature of the breach of primary procedure alleged; (c) the composition of the appeal body; and (d) the power of the appeal body, e.g. to make a decision or merely a recommendation.

A person affected is ordinarily entitled to having a lawful, fair primary decision, especially where his employment, reputation and other rights are at risk. In the case of this Tribunal, to limit the appellant to a hearing on the merits before the Tribunal, would have the further practical disadvantages earlier mentioned: a reversal of the burden of proof and a deprivation of a right of further appellate review from a decision of the Tribunal, save on a question of law. Although the Tribunal would reach a decision, and not a recommendation, it would be a decision from which no further appeal on the merits would be available. Against the background of the other reservations about the course of the primary decision-making in this case and the grave consequences for an employee of twenty years service, it is my view that the only lawful response was to set the decision aside and to recommit the matter to redetermination by the primary decision-maker. ..."

These remarks of Kirby P have particular resonance in the case before us.

9 Another examination occurred in Smith v Allan (above cited). There the applicant was charged with a breach of discipline under the Public Service Management Act 1988 (NSW). He contended there was a failure to observe the appropriate regulations. There was a right of appeal from the decision. An issue arose about the legislative intention in the circumstances. In other words could irregularities and failures to observe due procedure set down in regulation be "cured" by the provision of a full appeal. Kirby P, with whom Clarke JA and Samuels AJA agreed, thought not. Kirby P stated (p 60):-

"... The requirements are not to be made a dead-letter by the mere provision of a facility of appeal. They are part of the law of the State. They must be complied with. At least in some circumstances, a failure to do so will invalidate the purported 'decision'. Prima facie, the Tribunal which hears an appeal from such 'decision' will have the power to say that there is no real 'decision' at all and that an appeal from it for that reason should be upheld. ... Otherwise, the 'appeal' determination becomes virtually the first or primary decision from which no further 'appeal' lies as of right. It is appropriate to test competing instructions of a statute against the inconvenient consequences which would follow preferring one construction to another: see e.g. Director-General of the Department of Corrective Services v Mitchelsen (1992) 26 NSLWR 648 at 657-658; Cole v Director-General of Youth and Community Services (1986) 7 NSWLR 541 at 546. Because Parliament has afforded the facility of appeal, that right should not be taken away in a case such as this by saying that the Tribunal can just as easily make the correct decision on appeal as the primary decision-maker could: see Calvin v Carr (1979) 1 NSWLR 1 at 8; (1980) AC 574 at 589f; Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 at 719, 729; Algoni Pty Ltd v Retail Trade Industrial Tribunal (1987) 23 IR 180 at 185. ..."

These statements recognise that people are normally entitled to have statutory authorities make decisions correctly in the first place: see Ackroyd v Whitehouse (Director of National Parks & Wildlife Service) (1985) 2 NSWLR 239 at 253; Twist v The Council of the Municipality of Randwick [1976] HCA 58; (1976) 136 CLR 106 at p 116 per Mason J).

10 The contention of the respondent, and the one accepted by the learned Deputy President in the decision appealed from, is that inter alia, the Tribunal is empowered to re-hear the matter in dispute and decide the dispute without regard to decisions taken in earlier proceedings (s 94(c)). Moreover that the Tribunal is free of some of the strictures of more formal court procedures: see ss 84, 85. That, so it is argued, satisfies the essential pre-condition of a full right of appeal to a Tribunal authorised itself to finally dispose of the matter and not subject to any "impotence": Reid v Australian Telecommunications Commission (1988) 23 IR 96 at 103. However those considerations are only part of the matters to be considered. They are to be weighed against countervailing considerations that indicate the intent of Parliament. In this regard the comments of McPhearson JA in Queensland Police Credit Union Ltd v Criminal Justice Commission (2000) 1 QdR 626 at 631 are relevant. He said:-

"... The question is not whether, by reporting to courts of law after the power has been exercised, a person so affected may be able to secure a belated measure of the justice or fairness to which he, she, or it was originally entitled, but whether such an opportunity was afforded, as it ought to have been, by the tribunal itself in the course of the proceedings before it. The opportunity of which the aggrieved party complains it was deprived is not that of being heard by a court (which has not been denied), but of being heard by the appointed tribunal before it exercises the statutory power vested exclusively in it to produce the result complained of. Judicial insistence that the rules be observed is prophylactic in character, for which the power of the courts to right a wrong after it has been done is not an adequate substitute. In practice, it would mean that procedural justice would be assured only to those who could afford to litigate the matter in a court."

It is in this context not without remark that a more adversarial context would substitute for an essentially non-adversarial process. This is a matter of relevance: viz Nelson v Q-Comp [2004] QSC 164 par 32.

11 In my opinion the examination of these authorities indicates the right of WorkCover to proceed and determine the matter in the case of s 38 is predicated on the giving of the due notice described in s 38(3). That is particularly so for the reasons expressed by Merkel J in Wang (above cited). In other words it is because Parliament has said that is what must happen. The contrary view ignores this command and the undoubted purpose in using such a word. It would contradict the undoubted considerations, objectives and the expectations of Parliament described in Matkevich, Smith v Allan and Queensland Police Credit Union, among others. Failure to give due notice in accordance with s 38(3) invalidates the process.

12 The appeal should be allowed.

13 This is an appeal that concerns a determination made by the respondent, the WorkCover Corporation ("the Corporation") pursuant to s 38 of the Workers Rehabilitation and Compensation Act 1986 ("the Act").

14 The appellant, Darryl Staines ("the worker") sustained a disability in compensable circumstances in respect of which he had sought and obtained compensation pursuant to the Act.

15 As the period of incapacity in respect thereof had continued for more than a year, the Corporation was obliged pursuant to s 38(1b) to conduct a review of the amount of weekly payments payable to the worker in respect of the accepted compensable disability.

16 On 21 March 2001, the Corporation, through its agent, gave the worker notice of such a review and on 5 April 2001 it notified the worker pursuant to s 38(7) that his weekly payments of income maintenance were to remain unchanged on the basis that he was currently totally incapacitated for work.

17 On 17 May 2001 a new Case Manager was appointed to assume conduct of the worker's claim and she resolved to conduct a further review of the amount of weekly payments payable to the worker, pursuant to s 38. She embarked upon a series of conferences in June, July and early August 2001 between a Job Targeting Consultant, the worker, and his treating doctors and she intended, by letter dated 28 August 2001, to give the worker notice of the proposed review and to invite the receipt of written submissions on the subject of the review. She said that she placed the letter in her out tray in the expectation that it would be posted.

18 The worker, and his solicitors, who had previously been corresponding with the Corporation's agent, asserted that they did not receive the letter of 28 August 2001.

19 On 28 September 2001 the Corporation proceeded to make a review pursuant to s 38(7) the effect of which, was to substantially reduce the amount of weekly payments that the worker was to then receive.

20 The worker lodged a Notice of Dispute challenging the correctness of that determination and amongst other things, he asserted, that the notice was invalid because "the section 38(3) notice referred to as being dated 28 August 2001 was not provided to the applicant's solicitors in circumstances where the claims agent was aware that the applicant was legally represented and where the applicant's solicitors had previously made submissions with respect to a section 38(3) notice dated 21 March 2001."

21 It is conceded by the Corporation, that if not at that stage, shortly thereafter, through the process of conciliation provided for by the Act, it was on notice that the worker was contending that neither he nor his solicitors received a letter advising of the proposed review.

22 The matter did not resolve at conciliation and was referred to a learned Deputy President for hearing. Amongst other grounds, the worker asserted at trial that the Act did not permit the making of this determination. He contended that because a s 38 review had been conducted in March 2001, a subsequent review could not be undertaken until a year later. In the alternative he contended that the Corporation's failure to inform the worker of the proposed review and to invite his provision of written submissions rendered the consequential determination invalid.

23 The relevant terms of s 38, for the purposes of these arguments are as follows:-

"38. (1) Subject to subsection (2), the Corporation may on its own initiative and shall of requested by a worker or an employer review the amount of the weekly payments made to a worker who has suffered a compensable disability.

(1a) If a period of incapacity continues for more than one year, the Corporation must conduct a review under this section in the second year of incapacity and in each subsequent year of the incapacity.

(2) The Corporation is not required to comply with a request for a review under subsection (1) if the request is made within three moths from the completion of an earlier review.

(3) Before the Corporation begins a review under this section, the Corporation must give the worker notice, in the form prescribed by regulation¾

(a) informing the worker of the proposed review; and

(b) inviting the worker to make written representation to the Corporation on the subject of the review within a reasonable time specified in the notice.

(4) If the Corporation finds on a review under this section that the worker's entitlement to weekly payments has ceased, or has increased or decreased, the Corporation must adjust or discontinue the weekly payments to reflect that finding."

24 Mr Rossi, counsel for the worker, submitted that the words in subsection (1a) "must conduct a review under this section in the second year of incapacity and in each subsequent year of the incapacity" reflect an intention by parliament that a review initiated by the Corporation, could only occur once per year.

25 In our view, that construction must be rejected.

26 Parliament has made it plain through s 38(2) that reviews pursuant to s 38 of the Act, may occur more frequently than on an annual basis. That must follow given that it has expressly relieved the Corporation from the obligation of conducting a review if a request is made within three months from the completion of an earlier review.

27 In our view, the proper construction of s 38(1a) is that the Corporation is obliged to conduct a review in the second year of incapacity and in each subsequent year thereafter but that that does not preclude it from conducting reviews on a more frequent basis.

28 The Tribunal's capacity to prevent abuses of its processes: Kairns v WorkCover Corporation/CGU Workers Compensation (SA) Ltd (Chateau Yaldara Pty Ltd) [2004] SASC 352 provides the Tribunal with the mechanism to protect a worker from unnecessarily frequent reviews.

29 In respect of the second submission it is not entirely clear whether or not the learned Deputy President made a finding that the worker had not received the letter of 28 August 2001. In the course of his reasons, he makes reference to s 117 of the Act. In par 89 of his reasons in response to an assertion that the worker did not get the notice he wrote:-

"The submission ignores s 117. There is a presumption created by s 117(1)(c) that service was effected. Hence Ms Jorgenson-Day's act of putting the letter into the out tray and thereby into the system that leads to posting is sufficient to raise the presumption in s 117(1)(c). The onus is then on the applicant to 'prove the contrary'."

"The contrary proposition is 'the document was not posted'. It is not 'the applicant didn't receive it'. An assertion that the letter was not received falls far short of proving that it was not posted."

30 Mr Warren, counsel for the Corporation, concedes that in expressing these views the learned Deputy President erred in his construction of s 117.

31 That provision relevantly provides:-

"(1) A notice or other document required or authorised by this Act to be served or given to any person may be served¾

(b) by leaving the notice or document at an address for service; or

(c) by sending the notice or document or a sealed copy of the notice or document by post addressed to the person at an address for service; or

(d) by such other method as is permitted by any Act."

(2) In any case to which subsection (1) applies, unless the contrary is proved, service of a notice or document shall be deemed to have been effected 2 business days after the date of posting. ..."

32 Had it been proved that the letter of 28 August 2001 been posted and addressed to the worker either at his home address or at the address of his solicitors the presumption created by s 117(2) would come into play, and that absent proof to the contrary it would have been deemed that the worker had received notice within two business days after the date of posting.

33 There was, however, no proof that the letter had been posted. Evidence establishing that the document had been placed in the case manager's out tray could not without more establish that the letter was posted and we did not understand Mr Warren to contend otherwise.

34 In light of the worker's evidence that he had not received the letter and in respect of which, his evidence was not challenged by the Corporation, the only finding that was reasonably available to the Tribunal was that neither the worker, nor his representatives, had received the letter of 28 August 2001.

35 As we understood Mr Rossi's submissions, it was to the effect that that fact alone was sufficient to defeat the determination that the Corporation subsequently made.

36 The proper approach to the construction of a provision that stipulates a procedure to be undertaken preparatory to a later act is as stated by the High Court of Australia in Project Blue Sky Inc and Others v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 390 - 1 where McHugh, Gummow, Kirby and Hayne JJ said:-

"In our opinion the Court of Appeal of New South Wales was correct in Tasker v Fulwood in criticising the continued use of the 'elusive distinction between directory and mandatory requirements' and the division of directory acts into those which have substantially complied with the statutory command and those which have not. These are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning. That being so, a Court, in determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provisions. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provisions should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purposes, regard must be had to "the language of the relevant provisions and the scope of the object of the whole statute"." (Footnotes omitted)

37 The giving of notice of a proposed review serves an important purpose. It enables a worker an opportunity to make some plans to deal with the contingency that his or her payments might be reduced or discontinued. These might include exploring with greater urgency opportunities for paid employment, or the obtaining of legal or medical advice.

38 In inviting the provision of written representations through a prescribed form which encourages amongst other things the provision of medical evidence about the worker's incapacity, parliament has clearly contemplated that this will be a meaningful process and that the compensating authority in conscientiously exercising its legal right to make a s 38 determination will take these representations into account and may arrive at a different conclusion than that tentatively suggested in its preliminary notice.

39 For reasons similar to those expressed by King C.J. in Mitsubishi Motors Australia Ltd v. Sosa (Supreme Court of South Australia (1995) S.5084) where he said:-

"The legislature in prescribing procedures for the discontinuance or reduction of weekly payments, has recognized that injured workers are dependent for livelihood upon the weekly payments. Arbitrary cessation or reduction could cause great hardship. Procedures are set in place to protect the injured workers against arbitrary cessation or reduction of their means of livelihood. The procedures in ss 36, 37, 38, 39 and 41 are designed for that purpose."

In our opinion it can be safely assumed that parliament intended to enforce the rights it created through s 38(3) by making it a condition on the exercise of the power to make an adjustment of a worker's weekly payments under s 38(4) that the procedures prescribed by s 38(3) be complied with.

40 It follows that the Corporation's failure to give notice has resulted in the subsequent determination being invalid .

41 With respect, we disagree with the conclusions reached by the learned Deputy President that the worker's capacity to participate in a full hearing before the Tribunal to determine the correctness or otherwise of the Corporation's s 38 review can cure the defect caused by its failure to provide the worker with notice.

42 In the first place, what is involved here is matter of statutory construction, and for the reasons expressed above, on the proper construction of the Act total non-compliance with s 38(3) disentitles the compensating authority from making an adjustment under s 38(4).

43 Moreover, what the worker was deprived of by the failure to give notice in accordance with s 38(3) was not the capacity to properly participate in a hearing, but the potential to plan for the future and to persuade the Corporation into reaching some other conclusion to that which it subsequently did in its review that it completed a month later.

44 Accordingly, in our respectful opinion, the learned Deputy President erred in not granting the worker the summary relief that he sought. We therefore allow the appeal, and set aside the Corporation's determination.