Overview

On 16 October 2023, Principal Member John Harris of the Personal Injury Commission (‘PIC’) determined that the defence raised by the respondent, being that the relevant dispute of liability was subject to federal jurisdiction, was arguable. The proceedings were dismissed pursuant to section 54 of the Personal Injury Commission Act 2020 (NSW).

In making such orders, Principal Member Harris found, in observing Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16, that the question for his determination was whether a defence that federal jurisdiction exists is arguable, colourable or the argument amounts to judicial nonsense and in that respect, determined that it was arguable.

Federally Impacted Workers Compensation Disputes Generally

It is arguable that the PIC is not a ‘court of a State’, and as such does not possess the jurisdiction to exercise judicial power in respect of disputes caught under section 75(iv) of the Constitution. This issue commonly arises in matters between ‘a State and a resident of another State’; i.e. where a claimant resides outside of the State of NSW, and the subject employer is the State of NSW for the purpose of section 75 of the Constitution, at the time of commencement of proceedings.

The NSW Court of Appeal recently considered whether the resolution of a dispute arising under section 11A of the Workers Compensation Act 1987 (‘the 1987 Act’) involved the exercise of judicial power in the decision of Kanajenahalli v State of New South Wales (Western New South Wales Local Health District) [2023] NSWCA 202. Determination of that matter involved a dispute as to whether the ‘whole or predominant’ cause of the claimant’s psychological injury was the reasonable actions taken by the employer with respect to the categories identified under section 11A.

It was the determination of the plurality at [9] that ‘the only issue was whether a statutory prohibition, framed on whether reasonable action taken by the employer was the whole or predominant cause of the injury prevented [the worker’s] entitlement to statutory benefits’, advising ‘This is considerably removed from traditional aspects of judicial power.’

The reasoning was given that ‘There is no close analogy to any issue arising at general law. The closest analogy would be a claim for negligence. But in order to obtain the statutory benefits he seeks, [the claimant] does not have to prove duty, or breach, or causation, and not only does he not have to prove loss, but the statutory benefits he claims do not necessarily have a close relationship with any loss he has suffered.’

The Court, at [13] elected not to comment further as to the nature of the powers exercised by the Commission in a more general respect:

‘There is no occasion in determining the present appeal (which lacks any contradictor) to resolve any more general question as to the nature of the powers exercised by the Commission, or to seek to reconcile the statements in Orellana-Fuentes or Searle [cases previously discussed which offer contradictory views on that issue] mentioned above… It is sufficient to observe that in the case of the particular dispute involving these parties, where the only issue was that arising under section 11A, the Commission was exercising administrative power.’

The Court did not consider the greater statutory provisions of the relevant workers compensation Acts in a more general sense, or whether the application of each specific section under which liability can be disputed would result in the exercise of judicial power.

One potential implication of that decision, however, is that in considering that application of any statutory provision which acted to prevent a claimant’s entitlement to statutory benefits under the relevant legislation, the PIC would merely be exercising administrative powers. Principal Member Harris has now given insight as to the potential application of Kanajenahalli by the PIC in the context of a dispute arising under section 4 of the 1987 Act.

Background of the Dispute

The subject claim was made in respect of an injury deemed to have occurred on 8 April 2022. The applicant alleged that, as a result of the nature and conditions of her employment over a period of 5 months, she developed a psychological injury diagnosed as major depressive disorder with anxious distress.

The applicant’s claim for injury was disputed on the on the basis that the claimed injury was not contracted in the course of employment pursuant to section 4(b)(i) of the 1987 Act, or alternatively that employment was not the main contributing factor to the aggravation, acceleration, exacerbation or deterioration of a disease within the meaning of section 4(b)(ii) of the 1987 Act.

In responding to proceedings lodged by the applicant, the respondent further raised a defence on the basis that the proceedings were potentially federally impacted and should be dismissed, and ought to be commencement in the District Court.

In this respect, there was no dispute that at the date of filing of the application, the applicant was a resident of the State of South Australia, and that the respondent was the State of New South Wales.

Findings of Principal Member Harris

Concerning the defence pleaded by the respondent, Principal Member Harris referred to authority of Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16, confirming that if a matter is potentially federally impacted, it is for a Court of a State to decide whether the determination does in fact involve such an exercise.

Specifically, the Principal Member cited the Plurality of the High Court at [35]-[37], from which we repeat that ‘it is enough that the claim or defence be genuinely in controversy and that it give rise to an issue capable of judicial determination. That is to say, it is enough that the claim or defence be genuinely raised and not incapable on its face of legal argument.’ On this basis, at [12], the Principal Member confirmed that ‘it is for a Principal Member to decide whether the defence that federal jurisdiction exists is arguable, colourable or the argument amounts to judicial nonsense.’ (emphasis added)

In the context of concluding whether the respondent’s defence was arguable, Principal Member Harris came to consider the findings of the Court of Appeal in Kanajenahalli. Principal Member Harris laid out paragraphs [9], [12] and [13] of that decision in full (as we have summarised in the section above).

In opposition to the position of the applicant that Kanajenahalli is of general application, the Principal Member advised that such submission ‘lacked merit’, referring the comments of the Court at [13] (as above).

The Principal Member at [26] advised there were causation issues evident in the application of section 4(b) citing Australian Padding Co Pty Ltd v Zarb (1996) 13 NSWCCR 365, AV v AW [2020] NSWWCCPD 9, the discussions of Meagher JA in CSR Timber Products Pty Ltd v Weathertex Pty Ltd [2013] NSWCA 49.

Principal Member Harris advised at [29] that he was not required to make positive findings, though that ‘it is difficult to accept the applicant’s submissions that s 4 is analogous to s 11A due to the absence of considerations of breach, duty or causation. Issues of causation of injury, albeit in a statutory context, require determination in a s 4 dispute. To the extent that I am required to form an opinion, it is at least arguable that there are significant differences between findings under s 4(b) and s 11A.’ (emphasis added).

The Principal Member ultimately went on to involve a greater general discussion of whether determinations made by the Workers Compensation Division of the PIC involve the exercise of judicial power, by reference to a number of issues. Briefly, Principal Member Harris considered the existence of a worker’s independent cause of action under the State legislation, the ‘final and binding’ nature of decisions, with finality of the decision subject to appeal based on errors of fact, law or discretion, that parties are generally legally represented with a focus on legal principles, and finally, that orders of the Commission are enforceable in a Court having jurisdiction to give judgment for a debt.

The Principal Member ultimately concluded that ‘there is an arguable basis that the Commission exercises judicial power in these proceedings.’

Implications

The determination in Chetty adds to what has been somewhat of an unknown as to how these types of matters ought to be approached and the appropriate forum in which decisions are to be made. The comments provided by Principal Member Harris provide insight into the application of the Court of Appeal decision in Kanajenahalli and the issues that remain outstanding for determination. We note the following ‘key takeaways’:

• The relevant question for determination by the PIC in considering whether determination of a dispute would involve the exercise of federal jurisdiction is whether a defence that federal jurisdiction exists is arguable, colourable or the argument amounts to judicial nonsense.
• The decision of the NSW Court of Appeal in Kanajenahalli v State of New South Wales (Western New South Wales Local Health District) [2023] NSWCA 202 is not necessarily applicable to statutory measures of the NSW workers compensation scheme generally, and there remains argument for determination as to whether it is limited to the application of section 11A of the 1987 Act as a defence to a psychological injury or whether it can be applied to all liability disputes generally.
• Section 11A is not analogous to provisions of the 1987 Act concerning liability for an alleged injury, under section 4, on the basis that such provisions contemplate the issue of causation.
• We expect that the question will need to be ventilated in and determined by the Court.