Western Australian Coastal Shipping Commission v Wallner

(1) An employer shall not, except in accordance with this Ordinance, an Act or determination of the Tribunal, discontinue, withhold or diminish a weekly or other payment due under this Ordinance to a person.

(2) The onus of proving that a weekly or other payment was discontinued, withheld or diminished in accordance with this Ordinance, an Act or a determination of the Tribunal shall be on the employer.

The respondent worker received weekly payments calculated in accordance with the Ordinance from 28th March 1974 until 15th September 1978. The payments were made voluntarily by the employer, there being no agreement or award determining its liability. On or about 15th September 1978 the employer unilaterally discontinued the payments. The respondent thereupon made application to the Workmen's Compensation Tribunal for an award of compensation, and also sought an interim award of weekly payments from 15th September to the date of determination of his application. The Tribunal made the interim award, believing that it had jurisdiction to do so by virtue of s. 7A.

The appellants challenged the interim award by appeal to the Supreme Court of the Northern Territory, but Forster C.J. decided against them. They then appealed to the Federal Court of Australia, but by majority (Brennan and Gallop JJ., Lockhart J. dissenting) the appeal was dismissed [1] . They now appeal, by special leave, to this Court.

It will be helpful to note some legislative precedents of the type of enactment found in s. 7A. The original workers' compensation legislation did not make any provision expressly limiting the power of employers to end or diminish weekly payments.

Section 14 of the Workmen's Compensation Act, 1923 U.K. provided that "An employer shall not be entitled otherwise than in pursuance of an agreement or arbitration to end or diminish a weekly payment under the principal Act except in the following cases " and the section proceeded to deal exhaustively with the circumstances in which a termination or diminution might occur. The meaning and effect of this provision was clarified in two important respects by the majority decision of the Court of Session in 1925 in the case of Lindsay v. Glasgow Iron and Steel Co. Ltd. [2] . It was held "(1) that the prohibition was not limited to payments made under an award or a recorded or immediately recordable agreement, but extended to any payments de facto made by the employer and accepted by the workman as statutory compensation" and that in the event of a breach of the section "(2) the arbitrator acting in an application for an award of compensation at the instance of the workman was entitled to make an interim award of compensation at the rate which had formerly been paid by the employers pending the decision of the question at issue between the parties." Section 14 of the 1923 Act was re-enacted in the same form as s. 12 of the Workmen's Compensation Act, 1925, save for the omission of the phrase "under the principal Act".

The construction placed upon s. 14 of the 1923 Act by the Court of Session was adopted, in relation to s. 12 of the 1925 Act, by the House of Lords in the cases of Ocean Coal Co. v. Davies [3] and Anchor Donaldson Ltd. v. Crossland [4] . In the latter case, Lord Buckmaster summed the matter up thus [5] :

I do not entertain much doubt as to the meaning of s. 12. Its purpose is, to my mind, plain. It is to secure that if weekly payments are, in fact, being made to a workman, they shall not be ended apart from agreement or arbitration except in the cases that are specified. (emphasis added) Their Lordships reasoned that notwithstanding that the ultimate determination might be in favour of the employer, thereby giving rise to a right of recovery against the workman, the legislature should be taken to have preferred on the balance of convenience that the employer rather than the workman should be at risk during the interim period, with the consequence that the latter should stand possessed of a right to continue to receive the weekly payments pending such determination. 1. [1927] A.C. 271. 2. [1929] A.C. 297. 3. [1929] A.C., at p. 302.

In Edgar v. Pennell [6] , O'Bryan J. had occasion to consider cl. 7 of s. 9(2) of the Workers Compensation Act 1953 Vic.. This clause was in similar terms to the United Kingdom legislation, except that it provided for a penalty in the event of a breach by the employer. Notwithstanding the penal nature of the clause, O'Bryan J. followed the earlier precedents [7] :

Although cl. 7 is not couched in precisely the same language as the English s. 12 and although there are other differences in the two Acts I think I should hold in accordance with these decisions that the obligation cast upon the employer to continue weekly payments (except as provided by par. (1) of cl. 7) is an obligation which can be enforced not only by the penal provisions of par. (2) but also if the worker commences proceedings for an award under the Act, by an interim award for the continuance of the weekly payments pending the determination of the claim, if the Board sees fit to make such an interim award.

The presence of the penal provisions in par. (2) of cl. 7 does not in my opinion lead to the conclusion that the obligation cast on the employer to continue weekly payments does not carry with it a co-relative right in the worker to their continuance.

1. [1958] V.R. 450. 2. [1958] V.R., at p. 454.

Thus the law in this regard was firmly established in 1970 when the Legislative Council for the Northern Territory introduced s. 7A into the Workmen's Compensation Ordinance 1949 in the following form:

(1) An employer shall not, except in accordance with this Ordinance or a determination of the Tribunal, discontinue or diminish a weekly payment of compensation to an injured workman.

It was amended in 1974 to bring it into its present form which is set out at the beginning of these reasons. Sub-section (2) was not changed substantially.

It will be seen that as originally enacted, s. 7A was indistinguishable from the Victorian provision considered in Edgar v. Pennell. No reason appears for not according to that provision as it then was the same meaning and effect given to similar laws in Victoria and the United Kingdom. An employer who had commenced, albeit voluntarily, to make weekly payments could not terminate or diminish those payments at will. If he wished to do so he was required to take formal steps to that end prescribed by the relevant statutory provision. In the event that an employer offended the rule, then the worker might seek an interim award pending a determination on liability. We do not understand counsel for the appellants to have disputed that, in the form in which it was enacted in 1970, s. 7A had this effect.

The appellants base their arguments on the changes that were made to the section in 1974. It is said that there were four significant changes: the inclusion of the word "withhold" within the proscribed conduct; the extension of "payment" to include other than weekly payments; the substitution of "a person" for "the injured workman"; and the qualification of the word "payment" by the phrase "due under this Ordinance". It is argued that the changes give the section an entirely different structure, a structure which makes it clearly a penal provision and nothing more. The United Kingdom and Victorian sections refer to weekly payments that are being made de facto, without regard to why or how they are being made; the Ordinance is concerned now with payments that are due.

If s. 7A as amended in 1974 was considered in isolation both from the history of judicial interpretation of similar legislation elsewhere and from the context of the Ordinance as a whole the submissions of counsel for the appellants would appear to be very strong indeed. But it cannot be so construed. If one accepts that s. 7A in its original form is rightly construed as more than a penal provision and one which gives to a worker a right to an interim award of weekly payments based on no more than a voluntary payment by the employer, then is it possible to extract from the changes that were made in 1974 a legislative intent to abolish that right? Such a dramatic about-turn would seem to call for clear words to compel such a conclusion.

Some light is thrown on the legislative intent by the extended application of the section to cover payments other than weekly payments. Section 11 (amended in 1973) requires the employer to make payments direct to the person "lawfully entitled to payment" in respect of the costs of medical and surgical treatment and other services. Let us suppose that the draftsman set out to provide a sanction whereby to encourage an employer to fulfil his responsibilities in this regard. He might then say that an employer who withholds a payment due under this Ordinance to any person commits an offence. The decision is then made to utilise the vehicle already available in s. 7A, and all the textual changes effected by the amendment in 1974 are thereby explained. Of course such a process of reasoning must not be allowed to replace construction with conjecture; nevertheless, it does serve to expose the strong connection between the 1973 and 1974 amendments to the Ordinance.

However, even if the legislative intent were to be reflected in the process of reasoning that we have described, the appellants' argument as to the resultant effect of the amendment on the section as a whole must nevertheless be examined with care. It is the section in its totality as amended which must now yield its true meaning and effect.

We have come to the conclusion that s. 7A is not to be construed in the manner contended for by the appellants. We accept that the 1974 amendments to the section are to be explained by reference to s. 11. We cannot discover any inadvertent consequential reversal of the pre-existing right of the worker to an interim award of weekly payments. The section as amended is capable of operating according to its terms in relation both to weekly payments and other payments. It may be difficult to assign to the word "withhold" an operation with respect to voluntary weekly payments that is not already covered by the words "discontinue" and "diminish", but it could certainly apply to an employer's failure to comply with an award granting compensation by way of weekly payments. Counsel for the appellants argued that unless the words "due under this Ordinance" were construed to mean "due as agreed or determined by an award" an employer could be liable to a penalty if he denied liability in the first instance and consequently "withheld" weekly payments. We are unable to accept such a construction. It overlooks the history of judicial interpretation to which we have already referred and which makes it plain that it is the fact that an employer makes weekly payments that provides the starting-point for the operation of the section. The fact that weekly payments are made, with the consequent right in the worker to their continuance, leads necessarily to the conclusion that such payments, prima facie, are "due under the Ordinance". Given an incapacity from personal injury by accident, the employer is liable to pay compensation, and the Second Schedule prescribes the precise entitlement of the incapacitated worker. Such an entitlement is "due under the Ordinance". Of course, if the employer disputes any of the conditions precedent, then the payment is not "due" until his liability is determined pursuant to the legislation. The voluntary payment of compensation is not a binding admission of liability by the employer, but it is nevertheless proper to describe such a payment as "due under the Ordinance" because it is paid by reason of and by reference to the Ordinance. Once a payment is made, it represents the entitlement of the worker and hence he has a right to its continuance until the issue of the employer's liability is determined in the latter's favour. The weekly payments may cease to be "due under the Ordinance" upon a finding that the worker is no longer incapacitated. It may even transpire that none of the payments that were made could properly be described as made under the Ordinance at all, much less "due" under the Ordinance as for example if the Tribunal finds that the accident never happened at all: Ley v. Old Lodge Tinplate Co. [8] . But none of these possibilities alters the fact that if and when an employer makes weekly payments to a worker voluntarily he is doing so because he believes that the worker is entitled to such payments by virtue of the Ordinance. The fact of payment is sufficient to sustain a new right in the worker, the right to their continuance pending a determination in favour of the employer. In our opinion, it is not an abuse of language to describe the payments that are made as "due under the Ordinance".

It may be observed that the original provision, s. 14 of the 1923 Act in the United Kingdom spoke of a weekly payment "under the principal Act". In Lindsay v. Glasgow Iron and Steel Co. Ltd. [9] , their Lordships were confronted with the same argument as that which the appellants have advanced here. Lord Skerrington said [10] :

The suggestion is that a weekly payment of compensation made by an employer to a workman is not "a weekly payment under the principal Act" within the meaning of that expression as used in section 14 of the Act of 1923, unless the employer has come under a legally enforceable obligation, expressed either in a recorded award or a recorded memorandum of agreement, which requires him to continue to make that weekly payment for an indefinite period and therefore permanently, though subject to (review) The majority of their Lordships rejected the argument, refusing to draw any distinction between such a case and the "large class of cases where the parties have expressly or impliedly agreed that the employer is liable to pay compensation under the Workmen's Compensation Acts, and where a weekly payment of compensation has actually followed, but without any agreement, express or implied, that the same sum shall continue to be paid permanently, though subject to review." 1. 1925 S.C. 287. 2. 1925 S.C., at pp. 296-297.

Like their Lordships we also reject the distinction which the appellants in this appeal invite the Court to draw between the two classes of case. The argument, in seeking to identify the word "due" with a formal agreement or award, fails to have regard to the circumstance that the vast majority of compensation claims are settled not by formal agreement or award but simply by weekly payments by the employer of an amount which is calculated by reference to the legislation to be "due" to the worker.

In our opinion, therefore, the Tribunal, Forster C.J., and Brennan and Gallop JJ. were correct in their construction of the section. The appeal should be dismissed.

The relevant facts and the terms of the relevant legislation and amendments thereto with which this appeal is concerned are set out in the joint judgment of Mason, Murphy and Wilson JJ.

The problem which this case presents is that the words of s. 7A of the Workmen's Compensation Ordinance 1949 N.T. as amended, if viewed without regard to the form of earlier versions of the Ordinance and to the history of earlier legislation in other jurisdictions, would appear to be clear and unambiguous and to require that the "weekly or other payment" referred to should be "due" in the sense of being due in law on the facts in question. On such a view discontinuance would not constitute an offence unless it were established that the payment was in truth due at the relevant time. That seems to me to be the natural meaning of the words of s. 7A and there is nothing in the Ordinance in its present form to tend against that construction.

However the legislative history of the Ordinance and of comparable legislation elsewhere is relied on as demonstrating that a different construction is to be preferred. The history of the legislation in the United Kingdom and of the decisions of the courts there is set out in the joint judgment of Mason, Murphy and Wilson JJ., as is the effect of decided cases in the courts of the States and Territories. I do not need to repeat it.

Notwithstanding the strength of the words now used in s. 7A, I am prepared to join in the view that the history of this Act, and the history of like Acts in other jurisdictions and the decisions of various courts on such like Acts, warrants the conclusion that so considerable a change in legislative policy would require some more explicit indication of the legislative intent than is available in the adoption of the present s. 7A. I take this view notwithstanding that it appears to be an extreme example of what is sometimes miscalled a "benevolent construction". I think that the introduction of the reference to "other payments" provides a rational explanation of the change in language which does not require the abandonment of the settled construction of the words used in the earlier version of this section. Without that reference I would have regarded the new words as incapable of sustaining the meaning now attributed to them.

In result therefore I agree that the appeal should be dismissed.