Mt Ringwood Partnership v Starr [2001] NTSC 49

PARTIES:	MT RINGWOOD PARTNERSHIP

	v

	WAYNE ROGER STARR

TITLE OF COURT:	SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:	SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION

FILE NO:	LA11 of 2001 (20013543)

DELIVERED:	21 June 2001

HEARING DATES:	19 June 2001

JUDGMENT OF:	RILEY J

REPRESENTATION:

Counsel:
	Appellant:	I.M. Barker QC
	Respondent:	A.J. Lindsay

Solicitors:
	Appellant:	Hunt & Hunt
	Respondent:	Cridlands

Judgment category classification:	B
Judgment ID Number:	ril0110
Number of pages:	15

ril0110

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Mt Ringwood Partnership v Starr [2001] NTSC 49
No. LA11 of 2001 (20013543)

	BETWEEN:

	MT RINGWOOD PARTNERSHIP
	Appellant

	AND:

	WAYNE ROGER STARR
	Respondent

CORAM:	RILEY J

REASONS FOR JUDGMENT

(Delivered 21 June 2001)

[1]	On 29 October 1989 the respondent was injured in a motor vehicle accident.  As a consequence he suffered paraplegia and is now largely confined to a wheelchair.  His condition has stabilised and is not expected to improve or deteriorate in the future.  His rehabilitation is agreed to be complete.
[2]	At the time of suffering the injury the respondent was employed by the appellant.  Liability for the payment of compensation under the provisions of the Work Health Act has been accepted by the appellant and payments under that Act have been made over a period of time.  
[3]	In July 2000 the parties reached agreement as to payments of compensation that had been made and were to be made to the respondent in accordance with the Work Health Act.  The parties applied for the memorandum of agreement to be recorded pursuant to s 108 of the Act.  The effect of the memorandum of agreement being recorded is that it is then enforceable as if it were a determination of the Work Health Court. 
[4]	The agreement that the parties sought to have recorded was in the following terms:
“The Employer will pay to the Worker, upon approval of this agreement by the Work Health Court, the sum of $560,000 inclusive of costs, interest and charges/repayments to HIC and/or Centrelink.
The Worker will accept such lump sum in full satisfaction of his claim for past and future loss of earning capacity, home modifications, permanent disability, past entitlement pursuant to section 73(c), (e), section 76, section 77, and section 78 of the Work Health Act, interest and costs up to the recording of the agreement.”
[5]	When the matter came before the Work Health Court, the court with the agreement of the parties treated the application to record the memorandum of agreement as including an oral application for commutation under s 74 of the Act.  This was necessary because the terms of the agreement included a commutation of compensation payments being made to the respondent pursuant to s 65 of the Act.
[6]	The matter came before Mr Trigg SM who dealt with it in reasons for decision dated 6 April 2001.  His Worship acknowledged that he had received “detailed and helpful financial information” from the parties and expressed the view that the proposed agreement was in the best interests of the respondent.  He expressed “considerable sympathy” for the respondent.  However his Worship dismissed the application for commutation and declined to direct the Registrar to record the memorandum as he concluded that it did not comply with the requirements of the Work Health Act.
[7]	The parties have appealed those decisions.
The History
[8]	The respondent is now aged 46 years.  He suffered injuries on 29 October 1989 and those injuries were followed by numerous operations and extensive rehabilitation treatment at Royal North Shore Hospital and Moorong Hospital in New South Wales.  He was totally incapacitated from the date of the accident until approximately 1997.  Thereafter he has been partially incapacitated.  The work health insurer of the appellant has paid compensation and expenses to, and on behalf of, the respondent including all medical and rehabilitation expenses to date.  Payments made are as follows:
“(1)	weekly payments (s 65)				199,810.50
 (2)	hospital (s 73)					  88,730.65
 (3)	medical (s 73)					  28,477.07
 (4)	rehabilitation, travel, home modifications
 	etc. (s 76 and s 78)				  91,221.50
								       $408,239.72”
									 ========

[9]	In addition the appellant has paid to the respondent a sum for the permanent impairment suffered by the respondent assessed in accordance with the provisions of s 71 and s 72 of the Act.  That payment was made in 1994.
[10]	The appellant and the respondent reached agreement in the terms set out in paragraph 5 above.  The amount payable under that agreement is in addition to those sums already paid by the appellant to, or on behalf of, the respondent.  Each party pressed for the approval of the agreement contending that it was in the best interests of both the appellant and the respondent.  It was argued that the agreement would avoid a contested hearing as to the many matters in dispute, or capable of being disputed, between the parties and it would enable the respondent to get on with his life and have some financial independence, which he currently lacks.   A comprehensive investment plan had been prepared on behalf of the respondent and he had sought and received appropriate advice.  The plan analysed the present position of the respondent, identified appropriate investments for him and noted that if approved and implemented he would be better off in terms of cash and assets than he is at present. The respondent expressed the view that he wished to have control over his own future and not be dependent upon payments received from the work health insurer.
The Refusal
[11]	His Worship had a number of concerns with the proposed agreement and also with the application to authorise the commutation.  He delivered careful and detailed reasons for his decision.  In so doing he reviewed the history of the legislation and the relevant authorities. 
[12]	The first of the concerns related to the application to authorise the commutation and centred upon the interpretation of s 74 of the Act.  That section permits the court to authorise the commutation of future benefits payable to a worker under s 63 or s 65 of the Act.  Section 63 applies to children’s benefits and is not relevant here.  Section 65 applies to benefits payable to a worker in respect of long term incapacity.  In this case the parties seek to commute payments under s 65 and then incorporate the commuted amount into the agreement between the parties.  
[13]	Section 74 is in the following terms:
(1)	Where it appears to the Court on the application in writing - 
(a)	of or on behalf of the employer or the person to whom it is payable that, because of the small amount of regular payments of compensation under section 63 or 65, the administrative costs in calculating and paying the compensation is disproportionate to the benefit received; or 
(b)	of a worker receiving regular payments of compensation under section 65 that - 
(i)	his or her condition has stabilized; 
(ii)	rehabilitation is complete; 
(iii)	he or she is not totally incapacitated within the meaning of section 65(6); and 
(iv)	he or she has received financial counselling before so applying, 
 and, in either case, it is satisfied that the person to whom that compensation is payable is fully aware of the effects of the proposed commutation in relation to future benefits under this Act, the Court may, in writing, authorise the commutation of those section 63 or 65 payments at discounted present values and those payments may be commuted and, subject to subsection (3), the commuted amount paid accordingly. 
(2)	Compensation payments shall not be commuted except in accordance with this section and where payment of compensation is commuted as a result of an authorisation under this section, no person is entitled to any future payments under section 63 or 65 in respect of the injury to which the compensation relates. 
(3)	The maximum amount that may be paid as a result of a commutation under this section shall be not greater than an amount equal to 156 times average weekly earnings at the time the payment is made; but the Court is not prevented from authorising the commutation of a payment under this section to the maximum 156 times average weekly earnings level, where the calculated commutation exceeds that maximum, if it appears to the Court fair and equitable so to do.
[14]	At the time of the application the payments made to the respondent pursuant to s 65 of the Act were in the sum of $341 per week.  That figure was based upon the respondent having normal weekly earnings of $270 per week at the time of his injury. However there was disagreement between the parties as to the true entitlement of the respondent to payments under s 65 from that time and continuing.  The position of the respondent is that he is entitled to a much greater weekly payment when one takes into account non-monetary benefits which he received in the course of his employment such as housing, meat, electricity etc.  The respondent relied upon the reasons for decision of Bailey J in Palumpa Station Pty Ltd v Victor George Fox (1999) NTSC 144.  The appellant argued that the amounts paid were appropriate and, in the event any further payment was due, that the figure was not of the magnitude contended for by the respondent.
[15]	The concern expressed by his Worship arose because there was no agreement between the parties as to what the respondent’s normal weekly earnings were at the date of his injury nor as to the amount of his weekly entitlements under s 65 of the Act at the time agreement was reached. 
[16]	The concern of his Worship was that the reference to “the commutation of those section 63 or 65 payments” in s 74(1) meant that the “court could only authorise a commutation of an actual amount of regular payments of compensation under s 65 that a worker was actually receiving”.  His Worship went on to say:
“Turning to the facts in this case it is clear that the regular payments of compensation under s 65 that the worker has been receiving is in the sum of $341 per week.  However, it is not that amount that the parties seek to commute as there is no agreement between them that this (or any other amount) is the proper amount.  In my view, as this is the amount that is being received this is the only amount that the worker could apply to commute and he expressly declines to do so.  Therefore, in my view, there is no proper application for commutation in accordance with s 74 before the court.  I therefore dismiss the oral application for commutation.”
[17]	The purpose of s 74 is to permit commutation in certain specified circumstances. Compensation payments are not to be commuted except in accordance with the section (s 74(2)).  As was noted by Martin CJ in Sanders v Northern Territory of Australia (1996) 5 NTLR 149 “a commutation is a specially designed statutorily sanctioned means of obtaining compensation in a particular form”.  The effect of the commutation is that it changes the form of the benefit from periodic payments to a lump sum calculated in accordance with the Act.  It necessarily involves the payment of a lump sum in lieu of the right to receive future benefits under s 65. Once the commutation has been authorised “no person is entitled to any future payments under section … 65 in respect of the injury to which the compensation relates.”
[18]	Once the criteria set out in s 74(1)(b) have been satisfied the court has a discretion to commute payments at discounted present values.  Removing the reference to the criteria to be satisfied the section reads as follows:
“Where it appears to the Court on the application in writing … of a worker receiving regular payments of compensation under s 65 that (the criteria have been satisfied) the Court may, in writing, authorise the commutation of those section … 65 payments at discounted present values and those payments may be commuted … .”  
The respondent submits that there is no requirement within the section that the commutation must relate to the actual amount of the payments being made under s 65.  To do so, it is said, would be to place an unnecessarily restrictive interpretation upon the section.   The words used in s 74(1) are designed to identify the class of worker in relation to whom commutation is able to be sought.  The words “receiving regular payments of compensation” qualify the class of worker who is entitled to apply for commutation.  When such a worker is present and makes application, the court may, if the criteria have been satisfied, commute those payments.  It was submitted that there is no requirement that the commutation must be for the “amount” of the regular payments.  The words of the section do not restrict the commutation to a certain amount by reference to the actual amount then being paid under s 65 of the Act.  The respondent submitted that no purpose is served by adopting an interpretation that would require a pattern of payment at a particular rate before future loss of earning capacity can be commuted.  In circumstances such as apply in this case where, on any view of the amount to which the worker would be entitled, the maximum payment permitted under s 74(3) of the Act is exceeded, there can be no utility in having the precise amount agreed as between the parties or determined by the court. 
[19]	Whilst there may be some force in the submissions of the respondent regarding the utility of the section in some circumstances, it remains the fact that the right to commute is that spelled out in the statute and in particular in s 74(1).  The power to commute is expressed to be in respect of “those section 63 or 65 payments.”  It is only “those payments” that may be commuted.  In my opinion the reference to “those payments” in the section must (for present purposes) be to the “regular payments of compensation under s 65”.  It is those “regular payments” that are received by the worker that may be commuted.  The regular payments were in the sum of $341 per week.  As his Worship noted the respondent declined to seek commutation of those payments.
[20]	I was referred to the Second Reading Speech relating to Amendment Act 17 of 1995 that amended s 74 of the Work Health Act.  That speech included the remark by the Minister that “the only (payments) that may be commuted are those for regular weekly benefits”.  The speech does not provide further assistance in interpreting the words of the section.
[21]	In this matter there is no dispute that the criteria set out in s 74(1)(b) of the Act have been satisfied.  The court was also satisfied that overall the agreement was in the best interests of the respondent.  However in the absence of an application to commute the regular payments of compensation being received by the respondent no such authorisation was possible.  In my opinion the learned Magistrate was correct to dismiss the application.
Section 108 of the Work Health Act
[22]	The parties sought that the memorandum of their agreement be recorded under the provisions of s 108 of the Act.  That section is in the following terms:
(1)	Where an agreement is made - 
(a)	for the payment of an amount of compensation; 
(b)	for the variation of a weekly payment of compensation; or 
(c)	in respect of any other matter relating to compensation, 
 a memorandum of the agreement in the form prescribed by the Rules shall be sent, in the manner prescribed by the Rules, by the employer or worker to the Registrar. 
(2)	On receipt of the memorandum under subsection (1), the Registrar shall - 
(a)	submit it to the Court; and 
(b)	within 14 days, give notice in writing of the receipt of the memorandum to all persons who, in the opinion of the Court, have an interest in the agreement. 
(3)	After the expiration of 21 days after the giving of the last of the notices under subsection (2)(b), the Court shall consider the memorandum and shall - 
(a)	where it considers that by reason of - 
(i)	its inaccuracy; 
(ii)	the inadequacy of the amount; 
(iii)	the agreement having been obtained by fraud, undue influence or other improper means; 
(iv)	its being inconsistent with section 74; or 
(v)	for any other reason of justice, 
the memorandum ought not to be recorded – direct the Registrar not to record the memorandum; or 
(b)	in any other case - direct the Registrar to record the memorandum on such terms as the Court thinks fit. 
(4)	Where the Court gives a direction under subsection (3), it may make such order (including an order as to an amount already paid under the agreement) as it thinks fit. 
(5)	Subject to the Rules, the Registrar shall, on receiving a direction under subsection (3)(b) to do so, record the memorandum in a special register in accordance with the terms of that direction. 
(6)	A memorandum, on being recorded under subsection (5), is enforceable as if it were a determination of the Court. 
(7)	The Court may, at any time within 6 months after the recording of a memorandum under subsection (5), order that the record be removed from the special register on proof that the agreement was obtained by fraud, undue influence or other improper means, and the Registrar shall remove the record accordingly. 
(8)	Where the Court makes an order under subsection (7), it may make such further orders (including an order as to an amount already paid under the agreement) as it thinks fit. 
(9)	The Court may, at any time, rectify a special register. 
[23]	It follows from what I have said above that in my view the memorandum of agreement is inconsistent with s 74 of the Act and ought not to be recorded.  However I will address the other matters argued before me. 
[24]	The agreed settlement figure is $560,000 payable in addition to payments already made.  If the amount commuted under s 74 is assumed to be the sum of $124,815.60, the balance of $435,184.40 is the amount the parties have agreed is to be accepted in respect of the other items covered by the agreement.  Of course the respondent would be entitled to ongoing medical and other expenses that cannot be commuted under the Act.
[25]	The learned Magistrate was concerned by matters included in the memorandum of agreement.  The first of those concerns was that an approval of an agreement by the court cannot “avoid the procedures laid down in s 72 of the Act”.  That section, along with s 71, entitles the worker to compensation for permanent impairment assessed pursuant to a prescribed formula.  Section 71 provides that the level of impairment shall be assessed in the first instance by a medical practitioner.  It goes on to provide for a system of review by a panel of medical practitioners in the event that a person is aggrieved by the decision of the medical practitioner. The assessment of the panel “shall be taken to be the degree of permanent impairment for the purposes of s 71”.  As his Worship correctly observed the Work Health Court is not involved in that procedure.
[26]	Although the Work Health Court is not involved in the ascertainment of the amount payable pursuant to s 71 of the Act this does not mean that the figure once ascertained cannot be incorporated into a memorandum of  agreement recorded pursuant to s 108 of the Act.  Provided the requirements of s 71 and s 72 are followed and an amount is paid in accordance with those provisions I see no reason why that payment cannot be referred to in a memorandum of agreement that records an agreement regarding compensation under s 108 of the Act.  
[27]	In this case the parties agreed to an assessment made by a medical practitioner and payment of the entitlements of the respondent to a lump sum payment by way of compensation for permanent impairment was made in 1994.  There is no suggestion that the sum paid did not reflect the entitlement of the respondent under the relevant provisions of the Act.  The proposed agreement does not seek to avoid the procedures of the Act it simply acknowledges that payment of an amount calculated in accordance with those procedures has been made and there is to be no further claim in that regard.
[28]	The next concern of his Worship was that the agreement provided a sum in respect of “home modifications”.  He observed:
“In addition, I am not sure that it is possible to pay for such things as future home modifications in advance.  It may be where there is some evidence of the need for the same along with a costing (and evidence that the worker intends to do it).  But none of those matters are evident in the documents before me”.
[29]	Section 78(1) of the Work Health Act provides as follows:
Subject to this section, in addition to any other compensation under this Part, an employer shall pay the costs incurred for such home modifications, vehicle modifications and household and attendant care services as are reasonable and necessary for the purpose of this Division for a worker who suffers or is likely to suffer a permanent or long-term incapacity. 
[30]	Section 78(2) sets out the matters which may be taken into account in determining what are reasonable and necessary home modifications.  Section 78(3) then provides that an employer shall not be liable to pay the costs incurred for home modifications except where the worker for whose benefit the modifications “are or are to be” carried out is severely impaired in his or her mobility or ability to live independently within the home.
[31]	In this matter the parties have agreed that in addition to sums already paid to the respondent a further payment is to be made for home modifications that are agreed to be reasonable and necessary.  The work that remains to be done was addressed in the affidavit of the respondent and related to some work in the bathroom and the installation of a reverse cycle split system for heating.  Apart from those matters the respondent expressed the view that the house was suitable for his existing needs.  The medical evidence is to the effect that his condition is stable.  There is evidence of the need for identified work and of the cost associated with doing the work with the quotes being contained in the documents provided to the court.
[32]	Provided the works are to be undertaken, and are identified as being required for compliance with the obligation the employer has to pay the costs incurred for home modifications that are reasonable and necessary, then I see no reason why the payment should not be made to the worker in advance of the commencement of work.  
[33]	Section 108 of the Act permits an agreement to be made “for the payment of an amount of compensation” and “in respect of any other matter relating to compensation”.  The agreement is able to be recorded after it has been considered by the court and where it does not fall foul of any of the matters referred to in s 108(3)(a) of the Act.  However in this matter the requirements of s 108(3)(a)(iv) have not been met. 
[34]	I dismiss the appeal.  
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