Pengilly v Northern Territory of Australia (No 3) [2004] NTSC 1

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Pengilly v Northern Territory of Australia (No 3) [2004] NTSC 1

PARTIES: PENGILLY, Wendy

v

NORTHERN TERRITORY OF AUSTRALIA

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION

FILE NO: 8 of 2003 (20119869)

DELIVERED: 21 January 2004

HEARING DATES: 1 August 2003

JUDGMENT OF: MILDREN J

CATCHWORDS:

WORK HEALTH
Compensation - interest - circumstances under which interest is to run.

Work Health Act (NT), s 109
Passmore v Plewright (1997) 118 NTR 28, applied.
Wormald International (Aust) Pty Ltd v Ahern (Mildren J, 23/6/95), followed.

REPRESENTATION:

Counsel:
Appellant: J Waters QC
Respondent: P Barr

Solicitors:
Appellant: C Scicluna
Respondent: Povey Stirk

Judgment category classification: B
Judgment ID Number:
Number of pages: 7

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Pengilly v Northern Territory of Australia (No 3) [2004] NTSC 1
No. 8 of 2003 (20119869)


BETWEEN:

WENDY PENGILLY
Appellant

AND:

NORTHERN TERRITORY OF AUSTRALIA
Respondent

CORAM: MILDREN J

REASONS FOR JUDGMENT

(Delivered 21 January 2004)

[1] On 1 August 2003 I published my reasons for allowing an appeal in this matter from the Work Health Court: Pengilly v Northern Territory of Australia (No 2) [2003] NTSC 91. At the request of the parties, I directed that the parties bring in minutes of order and I granted liberty to the parties to speak to the minutes. I also directed that I would hear the parties as to costs.
[2] On 20 October 2003 I heard the parties further as to the orders to be made, and I made certain orders including orders as to costs. One further matter remained outstanding, namely the question of whether the respondent should be ordered to pay interest on the monies to which I found the appellant was entitled. I have since received written submissions from the parties on that issue.
[3] It is necessary to briefly recapitulate the essential facts. In my previous judgment I recorded that in 1997 the parties agreed that the appellant was entitled to a payment of $60,685.04 pursuant to s 71 of the Work Health Act. In late 2001, the appellant's condition changed as a result of which I found that the appellant was entitled to a further amount of $43,351.44, (less any other sums which the respondent was entitled to set off against that amount). The appellant seeks interest on that sum (or the balance outstanding from time to time) from 6 September 2001 at the rate of 20%.
[4] The appellant submits that interest is payable pursuant to s 109 of the Work Health Act which provides:
"109. Unreasonable delay in settlement of compensation
(1) If, in a proceeding before it, the Court is satisfied that the employer has caused unreasonable delay in accepting a claim for or paying compensation, it must -
(a) where it awards an amount of compensation against the employer - order that interest on that amount at a rate specified by it be paid by the employer to the person to whom compensation is awarded; and
(b) if, in its opinion, the employer would otherwise be entitled to have costs awarded to him or her - order that costs be not awarded to him or her.
(2) Where a weekly or other payment due under this Act to a person by an employer has not been made in a regular manner or in accordance with the normal manner of payment, the Court must, on an application in the prescribed form made to it by the person, order that interest at a rate specified by it be paid by the employer to the person in respect of the amount and period for which the weekly or other payment was or is delayed.
(3) Where the Court orders that interest be paid under subsection (1) or (2), it may, in addition, order that punitive damages of an amount not exceeding 100% of such interest be paid by the employer to the person to whom compensation is awarded or to whom the weekly or other payment due under this Act is payable."
[5] It was not suggested that the employer had caused unreasonable delay in accepting a claim for paying compensation under s 109(1), but that a payment due under the Act "had not been paid in a regular manner or in accordance with a normal manner of payment."
[6] Before construing s 109, it is necessary to refer also to s 89 of the Act which provides:
"89. Late payment of weekly payments
Where a person liable under this Part to make a weekly payment of compensation to a worker fails to make the weekly payment on or before the day on which he or she is required to do so, the worker shall, in respect of that weekly payment, be paid, in addition to any other payment required to be made under this Part, an amount represented by the formula -

A x the prescribed rate of interest x
where -
A is the amount of that weekly payment payable to the worker; and
B is the number of weeks (with a part of a week being counted as a whole week) occurring within the period commencing immediately after the day on which payment of that weekly payment was due and concluding at the end of the day on which payment of that weekly payment is made."
[7] It is apparent that an employer who fails to make a weekly payment due under the Act is exposed to making a payment under s 89 at the prescribed rate of interest (20%); is further exposed to payments of interest under s 109(1) or (2), and possibly also to punitive damages under s 109(3). Whilst s 89 operates only in relation to weekly payments, s 109 operates in relation to any compensation under the Act. Nevertheless, when considering s 109 and the meaning to be given to it in the context of any compensation under the Act, it is necessary to bear in mind the situation with respect to weekly compensation and the provisions of s 89, to ensure consistency.
[8] One is immediately struck by the wording of these provisions that what is not contemplated is that employers are liable to pay interest on compensation due under the Act as from the date it fell due under the Act. There is no power, similar to s 84(1) of the Supreme Court Act, to award interest on an amount of an award from the date the cause of action arose until judgment. In Passmore v Plewright (1997) 118 NTR 28 the Court of Appeal considered s 89 and its relationship to s 109. So far as s 89 is concerned, the court held that a payment of interest under s 89 falls to be made by force of that section and without any order of the court whenever a weekly payment which is required to be made is not made on or before the day it is so required. The court held that if the employer accepted or deferred its liability to make payments of weekly compensation or is deemed to have accepted its liability, s 85(2) required that the relevant payment be made within three working days of accepting liability, and s 89 required interest at the statutory rate if the payment was not paid on that date. The court also held that if the employer disputes liability, interest under s 89 is not payable until the court orders compensation to be paid. In particular, the court rejected a submission by counsel for the worker that this approach would encourage delay and procrastination on the part of employers faced with valid claims, and the court referred to s 109(1) and (3) of the Act. The court pointed out, at 39:
"The provision for an interest payment in cases of "unreasonable delay" is mandatory. No upper limit is placed upon the rate of interest which may be ordered to be paid by the Work Health Court under s 109(1)(a) and the court has a discretion under s 109(3) to double the total amount of interest ordered to be paid by an award of punitive damages. These provisions, coupled with the provision in s 109(1)(b) requiring the Work Health Court to deprive an employer of costs to which he would otherwise be entitled, provide more than adequate penalties to deal with recalcitrant employers."
[9] However, the court did not specifically refer to or consider s 109(2). An order under s 109(2) was upheld in Wormald International (Aust) Pty Ltd v Ahern (Mildren J, 23/6/95) where an interim payment ordered to be made was not made and the failure to make the payment was contumelious. I am not aware of any other case where s 109(2) has been discussed.
[10] In order to attract an award under s 109(2), in my opinion, something more than mere lateness in making a payment due under the Act must be proved. Where the payment has not been made because the employer has legitimately contested its liability I cannot see how, consistently with the analysis in Passmore v Plewright, an award of interest could be made under s 109(2). Clearly in the case of a weekly payment, no money would have been due until the court ordered it to be paid. In the case of some other kind of payment due under the Act, it is my opinion that it could not be said that the employer had failed to make the payment "in a regular manner or in accordance with the normal manner of payment." In my opinion s 109(2) is directed towards requiring employees to comply with the provisions of the Act as to the manner and time of payment under the Act. The manner of payment includes the method of payment. For example, if the employer were to require an injured worker now living interstate to personally attend its premises to collect his compensation this may amount to an irregular or abnormal manner of payment. Or, the payments might be made in an irregular manner if they were made monthly instead of weekly. I also consider that a payment which is not made at all, when it is required to be made, may fall within the subsection. However, if the reason for non-payment is that the liability or quantum of the payment was genuinely disputed, in my opinion the payment does not fall within the subsection as there is no regular or normal manner of payment in those circumstances.
[11] As there are no circumstances warranting an award of interest under s 109 of the Act, the application for interest is dismissed.
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