Trask v Workcover/QBE Mercantile Mutual

WorkCover believes that you have dishonestly obtained payments to which you were not entitled. WorkCover will therefore cease all future payments on your claim immediately. This includes weekly payments, home help payments and payments of medical and like expenses. You may wish to notify your doctors of this decision.

WorkCover has the genuine belief that you have acted in a deliberately fraudulent manner. As such, WorkCover is not required to follow the procedure for discontinuing payments set out in section 36 of the Workers Rehabilitation and Compensation Act 1986. A person who dishonestly obtains payments from WorkCover has not done so in accordance with the Act, but rather has acted outside of it.

If you disagree with this decision you may apply for a review under Section 90 of the Workers Rehabilitation and Compensation Act. To apply, a completed Notice of Dispute must be lodged with the Workers Compensation Tribunal within one month from the date you receive this letter. Forms are available from the Registrar, Workers Compensation: 6th Floor Riverside Centre North Terrace Adelaide Phone (08) 8207 1089. A Notice of Dispute must be made on the prescribed form and should clearly set out the reasons for the dispute."

4 The solicitors for the worker filed a Notice of Dispute in relation to the decision on 18 November 2004. The decision was confirmed by QBE Mercantile Mutual Workers Compensation ("the compensating authority") on 29 November 2004. The respondent then filed a notice seeking to be heard.

5 The matter now comes before the Tribunal pursuant to an application for directions filed by the worker on 13 December 2004. The worker seeks an order that the decision be set aside, and that the compensating authority continue to make income maintenance payments to her until payments are validly discontinued or reduced in accordance with the Act. The application filed by the worker in effect seeks summary relief on the basis that the respondent has acted in breach of its statutory obligations in discontinuing the worker's payments.

6 The worker submitted that the respondent was in any event estopped from denying her ongoing entitlement to weekly payments of compensation due to the terms of a previous decision of this Tribunal relating to the worker. In the matter of Trask v WorkCover Corporation/QBE Mercantile Mutual Workers' Compensation [2002] SAWCT 104, Deputy President Judge Cawthorne decided on 23 October 2002 that the respondent was not entitled to discontinue weekly payments pursuant to a s 36 notice dated 13 January 1999. The learned Deputy President then found that the worker was and had been at all material times totally incapacitated for work as a result of a fybromyalgia condition that developed as a result of her primary injury.

7 The respondent opposed the application by the worker. In support of its position, it filed an affidavit of William Richard Comyns, an Account Manager of the respondent, who deposed to his satisfaction on the evidence of an investigation into the worker's ongoing claim that she had been dishonest in relation to it. Mr Schroeder, counsel for the respondent, indicated he was also representing the interest of the compensating authority in relation to the worker's application.

The respondent's submissions

8 The worker's actions in using the processes of the Act to obtain payments, and to seek continuing payments (including giving instructions for the filing of a notice of dispute), were said by the respondent to constitute a use of the Act as an instrument of fraud. This conduct by the worker, it was submitted, could not be permitted by the Tribunal in accordance with general equitable principles which the Tribunal was entitled to apply in the circumstances. It was contended that the Tribunal should not allow the worker to seek to enforce any alleged rights under the Act, or to take advantage of her wrong. The respondent submitted that no order should be made so as to require weekly payments to continue pending a determination of the issue of fraud, which determination could not be made by this Tribunal in the present proceedings on documentary evidence.

9 At the hearing of the application, the respondent raised for the first time the argument that the Tribunal had no jurisdiction in any event to determine any issue arising with respect to the decision, whether on the application for directions now before it or otherwise. It was submitted that the decision of the respondent to cease payments was not a decision to which s36 of the Act applied, as that section did not contemplate application in the circumstances of fraud. Rather the decision was to cease payments for a reason completely extraneous to the Act. It was contended that the jurisdiction of the Tribunal under s 89A of the Act was limited to a review of decisions made under specific provisions of the Act. As the decision in question was said not to have been made pursuant to s 36 of the Act, there was no jurisdiction to review the decision.

10 The respondent noted that in light of its jurisdictional argument, the advice to the worker in the last paragraph of the letter of 11 November 2004 as to her review rights was unnecessary, as she had no right of review.

11 It was not in dispute that the respondent, through a responsible officer, held a genuine belief on the basis of investigations of the worker's claim that the claim was fraudulent. It was not contended by either party that the Tribunal was in a position, or ever would be in the context of the proceedings now before it, to determine the issue as to whether there had been fraudulent conduct by the worker as the respondent alleged.

Jurisdiction of the Tribunal

12 The Tribunal has such jurisdiction as is conferred by statute (s 79 of the Act). The jurisdiction of the Tribunal with respect to reviewable decisions is set out in s 89A of the Act which provides as follows:-

"89A. (1) The following decisions are reviewable¾

(a) a decision on a claim for compensation including¾

(ii) a decision on a claim by the Tribunal, made in the exercise of the Tribunal's special jurisdiction to expedite decisions on claims2,

(b) a decision about the nature of rehabilitation services provided, or to be provided, for a worker3;

(c) a decision to vary, suspend or discontinue weekly payments;

(d) a decision on an application by an employer to have weekly payments payable to a worker employed by, or formerly employed by, the employer reviewed;

(e) a decision to disallow or reduce a charge for a medical service (unless the decision merely brings the charge into conformity with a rate of charge prescribed by regulation).

(2) However, a decision is not reviewable if declared not to be reviewable by or under this Act.

1 See section 53(7) & (7a).

2 See section 97B(3)(b).

3 Section 28B also provides for the review of a rehabilitation and return to work plan."

13 The respondent submitted that whilst s 89A(1)(a)(i) provides that a decision redetermining a claim is reviewable, the review jurisdiction is confined to decisions made under ss 53(7) and 53(7a) of the Act. Likewise, s 89A(1)(a)(ii) was said to relate back to decisions under s 97B, s 89A(1)(b) to decisions under s 28B as to the nature of rehabilitation services, and s 89A(1)(e) to decisions under s 32(6) of the Act. Further, subpars (c) and (d) of s 89A(1), which provide that decisions to vary, suspend, discontinue or review weekly payments are reviewable, were said to contemplate review only of decisions made under ss 36, 38, 38A, 39 and 41 of the Act.

14 Thus the respondent contended that the decision of 11 November 2004, based as it was upon a belief that the worker was engaged in fraudulent conduct, was not a decision to discontinue weekly payments taken under s 36 of the Act. Accordingly it was not a reviewable decision under s 89A(1) of the Act.

15 I do not accept the respondent's submissions in this regard. The decision of 11 November 2004 was a decision "to cease all future payments on your claim immediately". However it might be categorised by the respondent, it was a decision on the claim for compensation made by the worker, pursuant to which she was to that stage in continuing receipt of weekly payments.

16 Such a decision is a reviewable decision under s 89A(1) under two separate subparagraphs. The decision falls within the category of a decision "on a claim for compensation". Such a decision is reviewable pursuant to s 89A(1)(a) of the Act. What the submission of the respondent overlooks in this regard is the broad review jurisdiction encompassed by the introductory words to s 89A(1)(a) that allow review of "...a decision on a claim for compensation..." The generality of this jurisdiction is not to be read down by the subsequent inclusion within that broad concept of the particular types of decision on a claim for compensation specified in placita (i) and (ii) of s 89A(1)(a). To read down the scope of the jurisdiction as contended by the respondent is to suggest that the claims for compensation contemplated as reviewable under s 89A(1)(a) are exhaustively defined by the specified examples. I do not think this can be so. I consider the inclusive form has been used to avoid any uncertainty as to whether the specified types of decision in placita (i) and (ii) come within the broad scope of a decision on a claim for compensation - see par 6.59 Pearce and Geddes Statutory Interpretation in Australia (5th ed.)

17 The contention of the respondent that each subparagraph of s 89A(1) must be considered to specifically relate back to a decision under a particular section of the Act cannot be correct for the further reason that unless s 89A(1)(a) is given a broad scope, some decisions would not be reviewable.

18 Some examples can be given. A decision with respect to compensation payable on death under s 44 of the Act is not encompassed by any of subparagraphs (b) to (e) inclusive of s 89A(1) of the Act. Such a decision is reviewable because it is "a decision on a claim for compensation" under 89A(1)(a) of the Act. So too is a decision with respect to an assessment under s 42A of the Act. As Parsons DPJ said in Kostek v WorkCover/MMI Workers Compensation (SA) Ltd [2000] SAWCT 90 at par 36:-

"The Tribunal is a statutory body which possesses only that jurisdiction conferred upon it by statute (s 79). Pursuant to s 89A certain decisions are reviewable including a decision on a claim for compensation. A s 42A assessment is a decision on a claim for compensation. It is therefore reviewable pursuant to s 89A of the Act."

19 The narrow interpretation contended for by the respondent with respect to s 89A(1)(a) is also contrary to the liberal interpretation appropriate to remedial legislation of the nature in question, and to the principle adverted to by Mr Wells QC for the worker that an interpretation which grants rather than denies access to the jurisdiction of a Court or the Tribunal is to be preferred.

20 In addition, the decision of 11 November 2004 falls squarely within the type of decision that is reviewable under s 89A(1)(c) of the Act. On any analysis, it is "... a decision to ... discontinue weekly payments". The fact that the respondent chooses to categorise the decision as one made "outside the Act", and not pursuant to s 36 of the Act, cannot be determinative of the statutory jurisdiction conferred on the Tribunal to review a decision to discontinue weekly payments.

21 Accordingly I find that the decision by the respondent of 11 November 2004 is a reviewable decision under either subparagraph (a) or (c) of s 89A(1) of the Act.

22 Although the respondent's jurisdictional argument was put forward only in the general terms of whether the decision was 'reviewable', I add some comments as to the jurisdiction of the Tribunal to make the orders sought in the context of the application for directions under consideration.

23 The notice of dispute with respect to the decision to discontinue weekly payments is yet to pass through the dispute resolution process of the Tribunal. The application for directions seeks the intervention of the Tribunal before the completion of this process. The powers conferred on the Tribunal by the Act and the Workers Compensation Rules ("WCR") include the power to control its own proceedings and to prevent abuse of its processes. The Tribunal may act in this regard on appropriate grounds at any time during the course of proceedings. So much is apparent from the terms of WCR 3(6) which provides that:-

"... the Tribunal shall have power to act at any time to give effect to the purpose of the Rules, and may, for example ... do all or any acts or give any directions relating to the conduct of a proceeding as it thinks proper to dispose of that proceeding expeditiously".

24 A proceeding is defined in WCR 2 to mean "...any cause, matter, application, hearing, trial, reference, case stated, appeal or any other step whatsoever before the Tribunal however constituted..."

25 WCR 21(1) contemplates that a party may seek directions "as to the conduct of a matter" by the Tribunal on a directions hearing referred to a Presidential Member. Pursuant to WCR 21(5), the Tribunal may make "... any order reasonably required to facilitate the fair and expeditious hearing of a matter ...". Such orders may contemplate, among other matters, the granting of summary relief pursuant to WCR 21(5)(a)(xxii).

26 There are many instances in which the Tribunal has made orders in relation to matters or proceedings well before the review stage in order to grant summary relief or to otherwise control its own processes. One example to which the Tribunal was referred by counsel for the worker involved a finding on an application for directions that the cessation of payments by an employer constituted a breach of s 36 of the Act and an abuse of process, as a result of which the Tribunal made an order that payments continue - Cramer v Schefenacker Vision Systems Australia Pty Ltd [2003] SAWCT 9.

27 I am satisfied that the Tribunal has jurisdiction to hear the application that is before it, and to make the orders sought if otherwise appropriate.

Obligations of the respondent under the Act

28 The substantive submission of the respondent was that the Tribunal should decline to make the orders sought by the worker, even if it considered it had jurisdiction to do so. I have set out a summary of these submissions in par 8 above.

29 The respondent's submission involves an assumption on its part that it is entitled to decline to conduct itself in accordance with the processes of the Act if it unilaterally deems certain conduct by a worker to be outside the Act, and that it can elect whether or not to act in accordance with its statutory obligations.

30 The introduction to s 36(1) of the Act provides as follows:-

"Subject to this Act, weekly payments to a worker who has suffered a compensable disability must not be discontinued unless¾ ..." (my emphasis)

31 S 36(1) then sets out various grounds upon which a process for discontinuance of weekly payments may be initiated. It is clear that cessation of weekly payments otherwise than in accordance with the terms of s 36 is prohibited.

32 The respondent appeared to concede that it could have invoked the s 36 discontinuance procedure in the present circumstances, given that fraud could constitute a breach of mutuality. However, in the context of the respondent's averred obligation to avoid condonation of the alleged fraud, it appears to have elected not to invoke the discontinuance procedure under s 36. It took the view that the use of such a procedure was not appropriate, as it would necessarily involve the continuance of weekly payments at least until any dispute in relation to the decision to discontinue first came before a conciliator.

33 I do not think the reasons the respondent chose not to use the s 36 process are relevant. Whether or not the alleged fraudulent conduct of the worker would provide grounds for a s 36 discontinuance notice, I consider that in discontinuing weekly payments the respondent has acted in breach of the provisions of the Act.

34 Although made in the context of a different issue, namely an attempt by an exempt employer to discontinue weekly payments under s 35 of the Act without complying with the procedural stipulation of s 36, the remarks of King CJ in Mitsubishi Motors Ltd. v Sosa [1995] SASC 5084 at par 15 with respect to the protective procedure under s 36 of the Act are apt:-

"The construction of s35 advanced by the appellants carries with it the implication, in my opinion, that whenever the entitlement under s35 ceases or diminishes, the Corporation or exempt employer is entitled automatically to discontinue weekly payments. That is plainly contrary to the policy of the Act. 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 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. It is unthinkable that the legislature, having adopted those protective measures, would largely negate them by conferring in s35 a power on the Corporation or exempt employer to discontinue or reduce weekly payments unilaterally and without compliance with the protective procedures."

35 Comments supportive of the fact that the Act contemplates scrutiny of the actions of the respondent in discontinuing weekly payments, regardless of how the respondent may categorise its decision, were made by the Full Tribunal in the matter of WorkCover Corporation v Davidson [2000] SAWCT 32. In determining that a decision under s 36(1)(g) of the Act not to consent to a worker residing outside of the State was a reviewable decision for the purposes of the Act, the Full Tribunal said:

"30. The overall scheme of the Act contemplates that the compensating authority, in the first instance, determines the fate of an initial claim for compensation and in the case of weekly payments, that it thereafter determines whether it is appropriate to discontinue, reduce or increase those payments, in accordance with the Act. In making those decisions the Corporation or exempt employer is not undertaking a role akin to that of a private person who could be expected to consult only his or her own interests. It is expected to act in a fair and even-handed way that takes into account the rights, entitlements and interests of the worker. See, for example, Robins v Harbord and General Motors Holden [1994] SASC 4571; (1994) 62 SASR 229.

31. Notwithstanding Parliament's apparent trust in the capacity of a compensating authority to fairly determine a worker's rights and entitlements arising under the Act, Parliament has gone to great lengths to enable a compensating authority's determinations on such matters to be subjected to the upmost scrutiny. Workers, employers, and indeed any "person who has a direct interest in the dispute": s 89, have the right to dispute a decision that is declared to be reviewable pursuant to the Act."

36 To adopt the words of King CJ referred to above, it is unthinkable that the legislature, having put procedures in place to protect workers from arbitrary discontinuance of weekly payments, would have contemplated that the respondent could elect whether to comply with the same or not on the basis of its untested conclusion that there was evidence of fraudulent conduct by a worker. This proposition is reinforced by having regard to the functions of the respondent.

37 The respondent is established by the WorkCover Corporation Act 1994 (SA). S 14(1) of that Act provides that the respondent has "... the powers necessary for, or incidental to, the performance of its functions". Pursuant to s 13(1)(a)(ii) one such function is the administration of the Workers Rehabilitation and Compensation Act 1986. In this regard, I consider that a function of the respondent includes that of discharge of its statutory obligations under the Act.

38 There is no provision of the Act or the WCR of which I am aware, or upon which the respondent purports to rely, which allows the respondent to elect to relieve itself of its statutory obligations under the Act, and in particular of the obligation not to discontinue weekly payments other than in accordance with the procedures set in place by s 36 of the Act.

39 Accordingly, I do not accept the fundamental premise upon which the respondent has based its submissions in opposition to the application by the worker. I find that the respondent is bound by the provisions of the Act, and is not entitled to discontinue weekly payments other than in accordance with the process set out under s 36 of the Act.

The jurisdiction of the Tribunal to relieve the respondent of its obligations

40 The respondent's submission in opposition to the orders sought by the worker assumed that the Tribunal had an equitable jurisdiction to enable it to exercise powers to relieve the respondent of its statutory obligations. The submission that the Tribunal has an expansive jurisdiction in this regard does not sit well with the respondent's argument as to the confined nature of the Tribunal review jurisdiction under s 89A of the Act.

41 Be that as it may, although the jurisdiction of the Tribunal is limited to that conferred by statute, the power of the Tribunal is supplemented by jurisdiction arising by implication upon the principle that a grant of power carries with it everything necessary for its exercise - see Parsons DPJ in WorkCover Corporation v BAE Systems PLC [2004] SAWCT 126 at par 11 where she refers to Grassby v R [1989] HCA 45; (1989) 168 CLR 1 at 16. However, this does not mean the Tribunal possesses an inherent jurisdiction - it only has such jurisdiction as is necessary to allow it to properly discharge its statutory function: WorkCover Corporation v Blocki [2000] SAWCT 9 per Jennings PJ at par 9.

42 In this context the Full Tribunal in Mitsubishi Motors Australia Ltd v Kowalski [2003] SAWCT 100 at par 8 made reference to the core principles in an analysis of this type as set out in DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226. There the High Court analysed the jurisdiction of the Family Court created by the Family Court Law Act 1975, which, as with this Tribunal, was provided by express statutory provisions. The High Court stated that although a court exercising jurisdiction conferred by statute had such powers as were incidental and necessary to the exercise of the jurisdiction, it was "unable to draw upon the well of undefined powers" available to common law courts as part of their inherent jurisdiction.

43 The same may be said with respect to reliance upon general principles of equity - see Kostek (above) at par 8, where Parsons DPJ doubted the ability of a party to rely upon principles applying to a set off at law or equity.

44 I find that the Tribunal has no jurisdiction to allow the respondent dispensation of its statutory obligations in accordance with general equitable principles. I can find no provision of the Act or Rules that enables the Tribunal to relieve the respondent of its statutory obligations, and none was adverted to by the respondent.

45 I have considered whether the respondent may rely upon s 85 of the Act, which provides that the Tribunal must act according to equity, good conscience and the substantial merits of the case. However, as Mr Wells QC for the worker submits, this obligation refers only to the manner of the exercise of the jurisdiction conferred by statute on the Tribunal. The section does not empower the Tribunal to ignore the provisions of the Act, or allow the Tribunal to permit the respondent to ignore the Act. In the matter of Kostek (above), Parsons DPJ considered a submission that s 85 allowed the Tribunal to set off or adjust an amount to be awarded pursuant to s 42A, where not to do so would result in the Corporation paying more than it should to the worker, putting to one side the strict application of the Act. She said at par 51:-

"What the respondent seeks pursuant to s 85 is the application of considerations which are outside or extraneous to the jurisdiction of the Tribunal when determining a disputed s 42A assessment. A tribunal "is not empowered to disregard an absolute statutory directive which bears upon the subject matter and manifestly is not intended to be read down in light of a general power of conscience" (Walkley v Dairyvale Co-operative Ltd (Preliminary issues) 1972 39 SAIR Pt 1 327 at 358). Or to put it another way an equity good conscience provision does not empower a Tribunal to decline to give effect to a provision of an Act or to transcend the powers conferred upon it by the Act (Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 at 28-30, per Gleeson CJ and Handley JA; Thomas v Airlines of NSW Pty Ltd (1963-64) 64 SR NSW 176 at 185)."

46 The same approach is appropriate in the present matter. S 85 of the Act does not empower the Tribunal to disregard the respondent's obligation to comply with s 36 if it proposes to seek to discontinue the worker's weekly payments.

47 I mention the nature of some of the submissions put on behalf of the respondent as to why the Tribunal should decline to grant the orders sought by the worker. In contending that there was no principle of law or equity that required that a statute conferring a benefit should continue to have application until allegations that the statute was being used fraudulently were determined, the respondent submitted:-

1. Equity will not permit a statute to be used as an instrument of fraud. Although this principle originated from the law of property, it was submitted to be a principle of general application and in particular capable of application to the Act.

2. The Courts will not enforce rights indirectly resulting from a crime.

3. A person who obtains money by a fraud holds it on a constructive trust for the benefit of the true owner.

4. S 36 should not be interpreted to permit a person to take advantage of his or her wrong.

48 I do not consider it necessary to address the above submissions and others made by the respondent in this context, given my finding that the premise upon which they are made is fundamentally misconceived.

49 In any event, I accept the submission on behalf of the worker that even if the respondent was able to seek the equitable intervention of the Tribunal to relieve it of its statutory obligations, which I find it cannot, there would be no basis to do so in this case. Whilst there is no dispute as to the genuine nature of the belief held by the respondent that the conduct of the respondent has been fraudulent, there is no proof of fraud. There is a mere allegation, at this stage, without more. The submissions of the respondent set out above assume a level of satisfaction of fraud or criminality that are not made out.

50 In light of the above, I need not decide upon the submission of the worker that the action of the respondent in discontinuing the weekly payments of the worker would in any event contravene the finding as to incapacity previously made by the Tribunal in the earlier decision concerning the worker referred to above. Whether this is so or not will depend upon an analysis of the continuing effect of the findings as to incapacity made by Cawthorne DPJ when setting aside an earlier s 36 notice.

Conclusion

51 In the circumstances my findings and orders are as follows:-

1. The decision of the respondent to discontinue weekly payments is a reviewable decision pursuant to s 89A of the Act. Further the Tribunal has jurisdiction under the Act and the WCR to make the orders sought in these proceedings.

2. The decision of the respondent to discontinue weekly payments is in breach of its obligations to comply with the discontinuance procedure set out in s 36 of the Act.

3. The respondent is not entitled to unilaterally relieve itself of its obligations under the Act on the basis of its belief as to the fraudulent conduct of the worker however genuinely that belief may be held. Nor does this Tribunal have jurisdiction to afford such relief to the respondent.

4. I order that the decision made by the respondent on 11 November 2004 to discontinue the weekly payments to the worker be set aside.

5. I order that the compensating authority continue to pay income maintenance payments to the worker unless and until the same are validly reduced or discontinued in accordance with the Act.

52 I will hear the parties further as to the date the order for continuance of weekly payments will take effect. It is my intention that they continue with effect from the date upon which they ceased in accordance with the respondent's decision.

Parties are advised that if a party wishes to appeal against any part of this decision which is appealable pursuant to s 86(1) of the Act such appeal must be filed with the Registrar in accordance with the form titled Notice of Appeal within 14 days of the delivery of this decision and must be served on all parties.