Litigation Notes No. 3

Number 3
31 May 1999

State Workers' Compensation Laws and
the Commonwealth

The High Court has decided that the Commonwealth is
not subject to state workers' compensation laws.

Telstra Corporation Limited v Worthing and Anor; Attorney-General
of the Commonwealth v Telstra Corporation Limited Anor

High Court of Australia, 24 March 1999
161 ALR 489

BACKGROUND TO THE LITIGATION

These appeals arose out of an application for workers' compensation
made by an employee of Telstra (formerly Telecom) in respect
of alleged injuries to his back sustained in 1986, 1988
and 1993. The employee made the application under the Workers
Compensation Act 1987 (NSW) ('the NSW Act') rather
than under the Safety, Rehabilitation and Compensation
Act 1988 (Cth) ('the Commonwealth Act') which contains
a workers' compensation scheme for employees of the Commonwealth
and of certain corporations, including Telstra.

Telstra argued before the NSW Compensation Court that
the Compensation Court did not have jurisdiction to determine
the application for workers' compensation because the NSW
Act and its predecessor (the Workers' Compensation Act
1926 (NSW)) did not apply to Telstra (or formerly to
Telecom).

The Compensation Court and, on appeal, the NSW Court of
Appeal found that the NSW Act validly applied to give jurisdiction
to the Compensation Court to determine the application
for workers' compensation. The result of the Court of Appeal
decision (if it had stood) would have been that, in respect
of its employees, the Commonwealth would have been potentially
subject to the workers' compensation schemes of each of
the states and territories as well as its own scheme, including
possible application to the Commonwealth of the provisions
of the state and territory schemes in relation to licensing
and insurance of employers.

A Commonwealth employee could have chosen whether to make his or her claim
for workers' compensation under the Commonwealth Act or under an otherwise
applicable state or territory workers' compensation statute.

The Commonwealth Attorney-General had intervened in the
hearing before the Court of Appeal to support Telstra's
argument that the NSW Act did not validly apply to give
jurisdiction to the Compensation Court. Both Telstra and
the Attorney-General appealed to the High Court from the
decision of the Court of Appeal.

THE HIGH COURTS' DECISION

The appeals were heard on 9 December 1998 and the High
Court gave judgment allowing the appeals on 24 March 1999.
A Full Court of 7 justices of the High Court unanimously
held that the Compensation Court did not have jurisdiction
to determine the workers' compensation application.

In relation to the 1986 and 1988 injuries (which were
sustained when the employer was Telecom) the High Court
held that the NSW Act did not as a matter of construction
apply to the Commonwealth, that Telecom, by force of Commonwealth
law, was not subject to any liability to which the Commonwealth
was not subjected (Telecommunications Act 1975 (Cth),
s.21(3)) and that there was therefore no liability which
passed to Telstra in relation to the 1986 and 1988 injuries.

In relation to the 1993 injury (when Telstra was the employer
and the NSW Act would otherwise have applied to it), the
High Court held that the NSW Act was inconsistent with
the Commonwealth Act to the extent that it provided for
the determination of a workers' compensation application
made by an employee to whom the Commonwealth Act applied.
The NSW Act and the Commonwealth Act provide different
regimes of workers' compensation entitlements, and application
of the NSW Act to the employee's claim would 'qualify,
impair and, in some respects, negate the application of
federal law, with the consequence that, to the extent of
the inconsistency thereby made out, the State law was invalid' (161
ALR at 498). (Section 109 of the Constitution provides
that '[w]hen a law of a State is inconsistent with a law
of the Commonwealth, the latter shall prevail, and the
former shall, to the extent of the inconsistency, be invalid.')

IMPLICATIONS OF THE DECISION

The effect of the decision is that an employee to whom
the Commonwealth Act applies cannot pursue a workers' compensation
claim under the NSW Act. The reasoning of the High Court
in relation to inconsistency between the NSW Act and the
Commonwealth Act would apply equally to the workers' compensation
schemes of the other states, the Northern Territory and
the Australian Capital Territory.

Contacts for further information:

Jenny Burnett, Principal Solicitor
Tel: 02 6253 7142, email: jenny.burnett@ags.gov.au

David Bennett, Deputy Government Solicitor
Tel: 02 6253 7063, email: david.bennett@ags.gov.au Constitutional
and Native Title Unit,
Office of Litigation.

State Mining Laws and the Commonwealth

This case concerns the application of the Mining
Act 1978 (WA) to land at Lancelin in Western Australia
that has been declared as a defence practice area under
the Defence Force Regulations (Cth).

Commonwealth v Western Australia

High Court of Australia, 11 February 1999
160 ALR 638

BACKGROUND TO THE LITIGATION

The third and fourth defendants were mining companies
who applied under the Mining Act for exploration licences
over land within the defence practice area. The defence
practice area includes freehold land held by the Commonwealth,
land held by the Commonwealth under a special lease from
Western Australia and State Crown land not vested in the
Commonwealth. The freehold land and the special lease are
subject to a reservation to Western Australia of the minerals
in the land.

The Commonwealth applied to the High Court for declarations
that:

  • Mining Wardens appointed under the Mining Act do not
    have jurisdiction to consider applications for mining
    tenements over land within the defence practice area;
  • the Mining Act is invalid to the extent that it purports
    to apply to the land within the defence practice area;
    and
  • the Mining Act does not bind the Commonwealth.

At the hearing before the High Court on 26 and 27 May
1998, a number of issues were argued including:

  • the extent of any constitutional immunity of the Commonwealth
    from the application of State mining laws (including
    further consideration of the High Court's decision in Re
    Residential Tenancies Tribunal of New South Wales;
    Ex parte Defence Housing Authority (1997) 190 CLR 410) (the Henderson
    case - discussed in Legal Briefing No. 36);
  • the extent of any inconsistency between the Mining
    Act and Commonwealth laws such as the Defence Force Regulations
    and Lands Acquisition legislation; and
  • if an inconsistency arose, whether the applicable Commonwealth
    laws were invalid on the basis that their operation gave
    rise to an acquisition of property for which (according
    to the submissions of Western Australia) just terms had
    not been provided as required by s.51(xxxi) of the Constitution.

THE HIGH COURT'S DECISION

The High Court based its decision on the construction
of the Mining Act. Apart from the question of inconsistency,
most of the justices did not find it necessary to deal
with the constitutional issues. The Court held that:

  • the Mining Act does not, as a matter of construction,
    apply to freehold or leasehold land vested in the Commonwealth
    and therefore does not apply to land of this kind within
    the defence practice area;
  • neither the Commonwealth Places (Application of
    Laws) Act 1970 (Cth) nor s.64 of the Judiciary
    Act 1903 (Cth) applies the Mining Act to that land;
  • accordingly, questions of inconsistency or immunity
    or acquisition of property do not arise in relation to
    the application of the Mining Act to the freehold and
    leasehold land vested in the Commonwealth.

These conclusions as to the application of the Mining
Act were not affected by the reservations of minerals to
the State. However, it might be that those reservations
confer rights on the State in relation to mining activities
undertaken by it or on its behalf (as opposed to authorisation
by the State under the Mining Act of mining activities
to be undertaken by others).

The parties agreed that the Mining Act applied, as a matter
of construction, to land within the defence practice area
that was not owned or leased by the Commonwealth (ie to
the State Crown land). It was therefore necessary for the
Court to consider the question of inconsistency in relation
to this land.

The Court held (by majority) that, in relation to the
land within the defence practice area that was not vested
in the Commonwealth, there is no 'covering the field' inconsistency
between the Defence Force Regulations and the Mining Act
such as would preclude the application of the Mining Act
at all. They contemplated that 'operational inconsistency' could
arise in some circumstances - for example, if a person
were authorised under the Mining Act to enter the land
for exploration purposes at a time when a defence practice
operation had been authorised. However, in that event it
would be necessary to consider whether the Defence Force
Regulations were themselves invalid as effecting an acquisition
on other than just terms. But as this situation had not
yet arisen, a majority of the Court did not deal with the
acquisition issue conclusively. As the Lands Acquisition
legislation did not apply to this land, no question of
inconsistency arose in relation to it.

IMPLICATIONS OF THE DECISION

The application of mining laws of other states to Commonwealth
land will depend in the first instance on whether those
laws are to be interpreted as applying to Commonwealth
land. If they are, then it would be necessary to consider
the other issues that were argued in this case but not
decided by the High Court.

Contacts for further information:

Jenny Burnett, Principal Solicitor
Tel: 02 6253 7142, email: jenny.burnett@ags.gov.au

David Bennett, Deputy Government Solicitor
Tel: 02 6253 7063, email: david.bennett@ags.gov.au Constitutional
and Native Title Unit,
Office of Litigation.

Liability of Co-defendants to Damages
Contributions

This case considers the question of whether a defendant
found liable in damages to the plaintiff can claim contribution
from a co-defendant under section 5(1)(c) of the Law
Reform (Miscellaneous Provisions) Act 1946 (NSW)
where that co-defendant has had a consent judgment entered
in its favour against the plaintiff.

James Hardie and Co Pty Limited v Seltsam Pty Limited

High Court of Australia, 21 December 1998
(1998) 159 ALR 268

Section 5(1)(c) of the Law Reform (Miscellaneous Provisions)
Act 1946 (NSW), in essence, provides that where damage
is suffered by any person as a result of a tort, any
tortfeasor liable in respect of that damage may recover
contribution from any other tortfeasor 'who is, or would
if sued have been, liable' in respect of the same damage.
The High Court's majority judgment carries warnings for
defendants whose rights to contribution are governed
by s.5(1)(c) or equivalent provisions. Also, the dissenting
judgment of Kirby J. contains instructive comment on
the literal and 'purposive' canons of statutory interpretation.

BACKGROUND TO THE LITIGATION

The proceedings arose out of a claim for damages in the
NSW Dust Diseases Tribunal for diseases attributed to the
inhalation of asbestos dust and fibre. The plaintiff sued
as concurrent tortfeasors three defendants, James Hardie
and Co Pty Limited ('James Hardie'), Seltsam Pty Limited
('Seltsam') and the Electricity Commission of NSW ('Elcom')
alleging that the first two had manufactured and supplied
products containing asbestos to which he was exposed in
the course of his employment with the third. During the
trial, James Hardie and Seltsam filed cross claims against
each other seeking indemnity or contribution under s. 5(1)(c)
in the event that either was found to be liable to the
plaintiff. Later on the same day as those cross claims
had been filed, settlements were reached with James Hardie
and Elcom under which judgments were to be entered against
each that required certain damages to be paid to the plaintiff.
Shortly afterwards, the plaintiff settled his claim against
Seltsam on the basis that Seltsam would have judgment against
him.

Both James Hardie and Elcom had the right to be heard
when draft orders giving effect to all these settlements
were submitted to the Tribunal for entry. At this point,
James Hardie's counsel told the Tribunal that James Hardie
did not want to be seen as consenting to a judgment against
the plaintiff in favour of Seltsam. Counsel said that this
judgment was not one in relation to which James Hardie
had any standing, and asserted that entry of such a judgment
would not impede James Hardie's claim for contribution.
The Tribunal proceeded to enter all the judgments, including
that in favour of Seltsam.

At a later date, Seltsam moved to strike out James Hardie's
contribution claim against it on the ground that the judgment
in favour of it against the plaintiff put an end to James
Hardie's right to contribution. Seltsam submitted that,
upon entry of the judgment, it ceased to be a tortfeasor
within s. 5(1)(c) 'who is, or would if sued have been,
liable' in respect of the relevant damage. The argument
drew on the decision in George Wimpey and Co Ltd v British
Overseas Airways Corporation [1955] AC 169. That decision
considered the then identically worded English counterpart
of s. 5(1)(c) (ie. s. 6(1)(c) of the Law Reform (Married
Women and Tortfeasors) Act 1935 (UK). The House of
Lords held that the word 'liable' in the phrase 'who is,
or would if sued have been, liable' meant 'liable by judgment'.
It is to be noted that Barwick CJ in Brambles Constructions
Pty Ltd v Helmers (1966) 114 CLR 213 at 219, declined
to endorse this view, regarding the question as still open.
However, notwithstanding this, the House of Lords' view
was shortly later adopted by a majority of the NSW Court
of Appeal in Castellan v Electric Power Transmission
Pty Ltd (1967) 69 SR (NSW) 159.

The Tribunal (differently constituted than before) acceded
to Seltsam's argument, relying on Castellan's case, and
struck out James Hardie's claim. An appeal against this
decision to the NSW Court of Appeal was dismissed. James
Hardie then obtained leave to appeal to the High Court.

THE HIGH COURT'S DECISION

The High Court appeal was dismissed by a majority. Before
the High Court, James Hardie argued that Seltsam had not
been sued to final judgment, so that it was still a person
who 'would if sued have been, liable' within the meaning
of s. 5(1)(c). There had not been a full trial on the merits.
Gaudron and Gummow JJ rejected this argument, as did Callinan
J in a separate judgment. The fact that a consent judgment
had been entered prior to any trial on the merits did not
stop the judgment from being a final order, to the effect
that Seltsam was not liable.

On the other hand, Kirby J (with whom McHugh J concurred)
disagreed, saying that the ascertainment of liability could
not be by private arrangement between only some of the
parties 'by which, unilaterally, they deprive others of
rights which for good purpose, Parliament has conferred
on them'.

On Kirby J's view, the consent judgment in its favour,
did not place Seltsam in the position of being a person
who was not liable to the plaintiff. To sustain Seltsam's
continuing amenability to James Hardie's contribution claim,
Kirby J contended that the words in s. 5(1)(c) 'would if
sued have been, liable' should not be confined to a situation
where, at the time the contribution claim is made, the 'target' tortfeasor
has not been sued by the plaintiff, but should cover any
alleged liability for the relevant damage (whether the
subject of suit or not at the time of claiming contribution)
which exists at any time prior to a determination on the
merits that that liability never existed. Kirby J supported
this argument by giving what he saw as a 'purposive' construction
to s. 5(1)(c), looking to the mischief the section was
directed against.

IMPLICATIONS OF THE DECISION

The High Court's decision will serve to draw further attention
to the flaws in s. 5(1)(c). Amendments have been made to
corresponding provisions in Victoria, South Australia and
Tasmania, some involving the insertion of the words 'at
any time' before the words 'if sued'. It would appear that
in the case of claims governed by s. 5(1)(c), or identically
worded provisions in other jurisdictions, defendants claiming
contribution against other defendants would do well, to
the extent possible, to oppose entry of consent judgments
between the plaintiff and other defendants pending a final
determination on the merits, and, in any settlement negotiations
to which they are party, require that the plaintiff refrain
from any step which might prejudice the defendant such
as exceeding to judgment in favour of another defendant.

Contact for further information:

Paul Sykes,
Principal Solicitor
Office of Litigation
Tel: (02) 6253 7050, email: paul.sykes@ags.gov.au

The Trade Practices Act and the States

The High Court has decided that Part IVA (Unconscionable
Conduct) and Part V (Consumer Protection) of the Trade
Practices Act 1974 (Cth) do not apply to the States.

Bass v Permanent Trustee Co Limited Ors

Conca v Permanent Trustee Co Limited Ors

Woodlands v Permanent Trustee Co Limited Ors

High Court of Australia, 24 March 1999
161 ALR 399

These appeals arose out of the NSW HomeFund low cost housing
loan scheme. The appellants took out loans under the scheme.
They claim that the respondents (the State of NSW and others,
such as co-operative housing societies, who participated
in the scheme) breached provisions in Parts IVA and V of
the Trade Practices Act 1974 and in the Fair
Trading Act 1987 (NSW) in the course of effecting transactions
under the scheme. They commenced proceedings in the Federal
Court seeking damages from the respondents.

The Full Federal Court considered a number of preliminary
questions. The Full Court decided that the State of NSW
is not bound by the relevant provisions of the Trade Practices
Act, and that the other respondents were not bound by the
Trade Practices Act to the extent that they were acting
at the direction or request of the State.

THE HIGH COURT'S DECISION

The appellants appealed to the High Court from the Full
Federal Court's decision. The appeals were heard on 2-3
September 1998 and judgment was given on 24 March 1999.
All 7 justices of the High Court held that the proceedings
under the Trade Practices Act against the State of NSW
could not be maintained (Gleeson CJ, Gaudron, McHugh, Gummow,
Hayne and Callinan JJ in a joint judgment; Kirby J agreeing
in this respect in a separate judgment). This was because
the relevant provisions of the Trade Practices Act were
not to be construed as applying to a state.

The High Court also rejected arguments that the relevant
provisions of the Trade Practices Act were applied to the
State of NSW by s.64 of the Judiciary Act 1903 (Cth)
or s.5(2) of the Crown Proceedings Act 1988 (NSW)
(provisions which seek to ensure that, in litigation to
which the State is a party, the rights of the parties are
as nearly as possible the same as in a suit between subject
and subject).

Other provisions of the Trade Practices Act (for example,
Part IV, Restrictive Trade Practices) apply to the states
when carrying on a business because they are expressly
made to apply.

The 6 justices who gave the joint judgment also held that
it was inappropriate for the Full Court of the Federal
Court to have answered the other questions that were before
it (Kirby J disagreed). They gave general guidance on the
question of when it is appropriate for preliminary questions
to be answered by a court where the facts of the case have
not been fully found or agreed (at least where the court
is exercising the judicial power of the Commonwealth).
The High Court therefore did not consider an issue of general
significance to the Commonwealth which was considered by
the Full Federal Court - that is, the question of the extent
to which laws which do not apply to the Commonwealth or
a state also do not apply to persons who contract with
or act as agents for the Commonwealth or a state.

Contacts for further information:

Jenny Burnett, Principal Solicitor
Tel: 02 6253 7142, email: jenny.burnett@ags.gov.au

David
Bennett, Deputy Government Solicitor
Tel: 02 6253 7063, email: david.bennett@ags.gov.au

Constitutional
and Native Title Unit, Office of Litigation

ISSN 1329-458X (Print)
ISSN 2204-6542 (Online)

For assistance with supply of copies, change of address
details etc Tel: (02) 6253 7052, Fax: (02) 6253 7313,
E-mail: ags@ags.gov.au.

The material in these notes is provided
for general information only and should not be relied
upon for the purpose of a particular matter. Please
contact AGS before any action or decision is taken
on the basis of any of the material in these notes.

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