PARTIES:	CARL CARLSEN

		v

		AAT KINGS TOURS PTY LTD

TITLE OF COURT:	COURT OF APPEAL OF THE 
		NORTHERN TERRITORY

JURISDICTION:	CIVIL APPEAL

FILE NO:	AP 10 of 1998 (9413872)

DELIVERED:	18 November 1998

HEARING DATES:	8 October 1998

JUDGMENT OF:	MILDREN, THOMAS and BAILEY JJ

CATCHWORDS:

Appeal – Work Health – s87 Work Health Act – creates a rebuttable presumption of liability by the employer – meaning of word “deemed” – on application to Court to rebutt presumption as a preliminary issue, onus of showing where discretion should fall, lies upon employer.

Appeal – Work Health –Voluntary weekly payments of compensation made by employer treated as informal admissions of liability but open to dispute claim.

Appeal – Work Health – no estoppel created when employer accepts liability or deemed to have accepted liability and employer must make payments of compensation – compensation also payable even if employer defers making decision.

Appeal – Work Health – time limits and procedures pursuant to s85 must be strictly complied with – s85(6) requirements must be adhered to strictly.

Appeal – Work Health – where worker pleads reliance under s87 the employer should also plead it seeks relief from s87 and the grounds thereof.

Legislation

Work Health Act – s98 s85; s86; s85(4)9b); s87(7) s69; s107(2)9c); s85(6); s85(1); S87
Workman’s Compensation Act (1923) (UK) – s14
Workmen’s Compensation Ordinance 1949 (NT) – s7A

Cases

1)	Schell v Northern Territory Football League (1995) 5 NTLR 1 applied.

2)	Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 referred.

3)	H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694, referred.
4)	Way v Penrikyber Navigation Colliery Company, Limited [1940] 1KB 517 referred.
5)	S.A. Stevedoring Company Limited v Gerai [1965] SASR 212 referred.
6)	Logie v Union Steamship Company of New Zealand Limited [1945] NZLR 388 referred.
7)	Bright v Opotiki Hospital Board [1946] NZLR 750 referred.
8)	The Western Australian Coastal Shipping Commission and Another v Wallner (1980) 144 CLR 110 referred.
9)	Anchor Donaldson Limited v Crossland [1929] AC 297 referred
10)	Perfect v Northern Territory of Australia (1992) 107 FLR 428 referred.
11)	The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 applied
12)	Johnston v Paspaley Pearls Pty Ltd (1996) 5 NTLR 199 referred.
13)	Collins Radio Constructors Inc. v Day (unreported, Mildren J, 26/3/98).

REPRESENTATION:

Counsel:

	Appellant:	Mr J Waters QC
	Respondent:	Mr I Nosworthy

Solicitors:

	Appellant:	Caroline Scicluna and Associates
	Respondent:	Hunt and Hunt

Judgment category classification:	B
Judgment ID Number:	MIL98178
Number of pages:	14

IN COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA

No. AP 10 of 1998 (9413872)

		BETWEEN:

		CARL CARLSEN
			Appellant

		AND:

		AAT KINGS TOURS PTY LTD
			Respondent

CORAM:	MILDREN, THOMAS and BAILEY JJ

REASONS FOR JUDGMENT

(Delivered 18 November 1998)

THE COURT:
[1]	This appeal raises the question of the effect of s87 of the Work Health Act, when the Court is dealing with an application by a worker for compensation, and the case has been fully litigated on the merits.
[2]	S87 provided, at the relevant time, that where an employer, having received a claim for compensation, did not deal with it in accordance with s85, (i.e. by admitting or denying liability or deferring acceptance of the claim within ten working days) the employer is deemed to have accepted liability for the relevant compensation “until such time as the Court otherwise orders”.
[3]	The principal contention of Mr Waters QC, counsel for the appellant, is that the Court was bound to make an award of the relevant compensation, at least up to the date of the hearing, if an application is made by the employer at the hearing for the Court to “otherwise order” and the application is successful.  The principal contention of Mr Nosworthy, counsel for the respondent, is that where the Court is of the opinion that the worker is not entitled on the merits of the case to any compensation, or to less compensation than was claimed in the original claim, the Court is bound to decide the case on the merits, notwithstanding s87, and even if no formal application is made at the hearing by the employer for the Court to “otherwise order”.
[4]	After hearing the submissions of counsel, the Court was unanimously of the opinion that this appeal should be dismissed.  On 8 October 1998 we ordered that the appeal be dismissed with costs and we said that we would publish our reasons at a later date.  We now do so.
The appellant’s claim
[5]	At the hearing in the Work Health Court, the appellant, who was employed by the respondent as a tourist coach-driver, claimed to have injured his back in the course of his employment in May 1992.  The appellant notified the employer of this injury and sought chiropractic treatment.  He continued to work as the pain had abated and he believed that the injury had resolved.
[6]	In September 1992 the appellant suffered a further injury to his back in the course of his employment.  He advised his employer, but as the pain had subsided, he continued to work, although he sought medical treatment in October 1992.
[7]	Whilst on a tour in January 1993, he suffered a further episode of back pain.  In February 1993, he advised his employer of his injury.  On 23 March 1993, he lodged a formal claim for compensation.  The claim was accompanied by a medical certificate covering the period 26/3/93 to 26/4/93 (Ext A2).  However, the appellant said in evidence that he continued working (AB69); that he was notified orally a few days later that his claim was not accepted; and that the formal notice was read to him over the telephone.  He claimed that the employer’s insurer later accepted his claim and paid his medical expenses until March 1994.  He claimed that he continued with his duties, although his back was becoming progressively worse, until July 1994 when he asked his employer to change his duties from extended tours to day tours.  This was accepted.  In December 1994 he claimed to have aggravated his back again whilst on a day tour to Palm Valley.  Subsequently, his back worsened.  He sought lighter duties, but none were offered and on 21 February 1995 he resigned.  Thereafter the appellant obtained other less-well paid employment.  He claimed to be partially incapacitated and sought an award of weekly compensation and the payment of his medical expenses.  The employer disputed the claim.
The hearing in the Worth Health Court
[8]	At the time of the hearing, the appellant did not assert in his pleadings that he was relying on s87 of the Act.  Both parties assumed that the employer had complied with s85 of the Act.  During the course of the hearing, evidence was given that the formal written notice rejecting the claim was not served until mid April.  The matter was not formally raised by counsel for the appellant until submissions.  No application was made to amend the pleadings.  No formal application was made by counsel for the respondent seeking that the Court “otherwise order”.
[9]	The learned Magistrate dismissed the claim, in so far as it was based on an injury occurring in May 1992.  As to the injury in September 1992, she found in favour of the appellant, except that she held that the injury had resolved by January 1994 to its pre-September 1992 condition.  She also held that the respondent had not “properly disputed” liability.  She awarded weekly compensation for the period 26/3/93 to 28/4/93 and medical expenses up to the end of 1993.  She rejected any subsequent claim on the basis that the appellant’s subsequent back complaints were not due to an injury arising out of or in the course of his employment. 
	The appeal to the Supreme Court
[10]	The appellant appealed to the Supreme Court on a number of grounds, all of which were dismissed by Angel J.
[11]	As to the argument based on s87, Angel J held that the answer to it was to be found in the decision of this Court in Schell v Northern Territory Football League (1995) 5 NTLR 1 at 6-7, and the issue was
…subsumed by the general hearing and implicit in her Worship’s findings is that any deeming was terminated by her finding.
The effect of s87
[12]	Mr Waters QC submitted that Schell’s case did not provide support for the proposition that the Court could “otherwise order” without a formal application of some kind.  He submitted that s87 conferred substantive rights, and was not merely procedural, and that before the Court could “otherwise order”, not only had there to be a formal application, but the Court had to consider the reasons for the delay in complying with s85, whether there was any hardship or prejudice to the appellant which could not be cured, and consider whether the respondent had a meritorious defence.  He submitted that s85 and s86 had to be strictly observed with the consequence that if the claim was not disputed in the time and manner prescribed by the Act, the employer was bound to made payments of compensation until such time as the Court ordered otherwise.
[13]	In our opinion, these contentions cannot be sustained.  The true nature of s87 is to create a rebuttable presumption of liability by the employer.  This was adverted to by this Court in Schell v NT Football League, supra, when the Court said:
The word “deemed” does not always create an irrebuttable presumption of fact, and whether it does or not must depend upon the context, and the Act read as a whole.  In this case we are satisfied that, even before the amendment in 1993 to s87, it would have been open to the employer to prove that it was not in fact liable, or no longer liable, to pay compensation to the worker.
[14]	In Schell, it was submitted (supra at p 5) that the only way the employer could rebut the presumption was at a substantive hearing at which the employer established that it was not liable.  This Court held, in effect, that this was not the only way the presumption could be rebutted; it may do so on an application made to the Court as a preliminary issue, for example, as the section conferred on the Court the widest possible discretion.  On such an application, the employer bore the onus of showing that the discretion should be exercised in its favour.  The Court went on to outline (at pps 6-7) the sort of factors which a court considering such an application would have to consider, and said:
If the delay is lengthy, or not explained, or if the failure to comply with s85 was deliberate, or if the defence looks weak, the Court might not grant the employer relief unless there is actual proof that the employer is not liable at a full hearing on the merits.  
The Court also said, at p7, that if the employer’s case appeared weak, it may be better to leave the issue until there is a formal hearing of the worker’s claim and in that event:
…the worker could upon proof of service of his claim and any lack of response thereto rest upon the deeming effect of s87, close his case thereby forcing the employer to call evidence that it is not liable, and then call his own evidence in reply.  
(emphasis added)
It is plain that the Court contemplated that it was always open to an employer, faced with s87, to prove at a hearing on the merits that it was not in fact liable.
[15]	Counsel for the worker at the hearing before the learned Magistrate did not submit that the deeming effect of s87 could not be displaced without a formal application by the employer.  It is not clear from those submissions whether counsel was relying on the deeming provision as amounting to an admission which could only be retracted by leave, or merely as an admission which could be relied upon as a piece of evidence admissible as an exception to the hearsay rule.  The learned Magistrate appears to have given some effect to s87 in arriving at her conclusions in favour of the appellant in relation to the claim for the period from March 1993 to December 1993.  The respondent makes no complaint to this Court of that.
[16]	In civil proceedings formal admissions of liability (as opposed to informal admissions, such as admissions contained in answers to interrogatories or discovery of documents) can only be withdrawn by leave of the Court:  Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738; H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694.  Voluntary payments of compensation made by an employer were treated as informal admissions of liability which could be relied upon as evidence supporting the worker’s claim, but which did not estop the employer from disputing the claim:  Way v Penrikyber Navigation Colliery Company, Limited [1940] 1 KB 517; S.A. Stevedoring Company Limited v Gerai [1965] SASR 212 at 213-14; Logie v Union Steam Ship Company of New Zealand Limited [1945] NZLR 388; Bright v Opotiki Hospital Board [1946] NZLR 750.  In most jurisdictions the legislature has intervened to prevent an employer who had commenced making voluntary payments from unilaterally ceasing payments:  see for example Workmen’s Compensation Act (1923), s14 (U.K.); Workmen’s Compensation Ordinance 1949, (NT) s7A.  Under those provisions, if the employer wished to cease payments, it was necessary to make a formal application to the Court.  If no such application was made and the employer ceased payments, the employee could obtain an order for interim payments:  The Western Australian Coastal Shipping Commission and Another v Wallner (1980) 144 CLR 110.  However, voluntary payments made or continued to be made (whether or not as the result of an interim order) conferred only a provisional right to the payments, and the worker was liable to return them if it was ultimately found that the employer was not liable:  Wallner, supra, at p 112, 114; Anchor Donaldson Limited v Crossland [1929] AC 297.
[17]	In our opinion, there is nothing in the Work Health Act which goes so far as to create an estoppel when an employer accepts liability; or having failed to comply with s85, is deemed to have accepted liability.  In both cases the employer is obliged to make payments of compensation vide s85(2).  Indeed, even if the employer defers making a decision, the employer is obliged to commence making payments:  see s85(4)(b).  However, in those circumstances s87(7) provides that the payments do not amount to an admission of liability and are irrecoverable by the employer notwithstanding that the employer may not be liable under the Act.  It is questionable whether payments required to be made under s85(2) can be recovered in all circumstances where the employer ultimately is found not to be liable.
[18]	It was held in Perfect v Northern Territory of Australia (1992) 107 FLR 428 at 435-436 per Mildren J that one of the objects of the provisions of Div 5 of Part V of the Act (ss79-91) was to ensure that a worker’s claim was dealt with speedily by his employer, and to that end, the time limits and the procedures laid down by s85 for dealing with claims must be strictly complied with.  Given the very short period of time within which an employer must accept, reject or defer a claim, and the consequences of failing to comply with the provisions, it would be surprising if the legislature had intended that a decision to admit liability was irreversible, even if mistakenly made, or made in the absence of information not then available which shows that the claim is groundless.  Indeed, there is nothing in s69 which suggests that such a change of position by the employer cannot result in the employer cancelling weekly payments, although it can only be done on notice, and reasons must be given.  In Schell this Court said, at p6, that s69 is not confined to cases where there are changed circumstances warranting the cancellation or reduction of payments.  In the case of other payments voluntarily made, the employer can cancel them without notice, as s69 applies only to weekly payments.
[19]	This Court said in Schell, at p6, that an employer who is deemed to have accepted liability is in no worse position than an employer who has admitted liability.  But in one sense, the employer is worse off because s87 creates the right for the worker to continue to receive payments vide s85(2) until the employer persuades the Court to otherwise order, so that the procedure under s69 is not available as in the case of a voluntary admission.  However, as Schell demonstrates, the employer can apply to the Court before there is any substantive hearing on the merits for such an order.  If the order is made, the effect is that the failure to comply with s85 is forgiven and the employer is put in the same position, (subject to the possibility that payments already made cannot be recovered) as if he had complied and denied liability.  At that stage the Court may still make an order for interim payments vide s107(2)(c) of the Act.  If the application is refused, the obligation to make the payments will continue until there is a hearing on the merits, at which the onus will be cast on the employer to show that it was never liable in the first place or not liable to the same extent as its deemed admission.  If the employer is successful, the result is the same – the deemed admission is rebutted by the evidence and has no other consequences: it is as if the admission had never been made, although it may be that any payments already made as a consequence are irrecoverable.
[20]	In our opinion there is no analogy between a formal admission of liability made in the course of proceedings and a deemed admission of liability under s87.  If such an analogy existed, it is difficult to see how this Court in Schell could have accepted the proposition that the employer could rebut the effect of s87 by proving that it was not liable in the first place.  Of course other considerations would arise if the worker established that the circumstances gave rise to an estoppel:  see the comments of Lord Denning M.R. in H. Clark (Doncaster) Ltd v Wilkinson, supra, at 703, and of Salmon LJ at 704 and The Commonwealth of Australia v Verwayen (1990) 170 CLR 394, but that was not suggested by counsel for the worker before the learned Magistrate.  Nevertheless we consider that where a worker pleads reliance on s87 the employer should also plead that it seeks relief from that section, and the grounds thereof.  If estoppel is raised and proven, the remedy must be tailored proportionally to the detriment:  Verwayen, supra, at 411-12, per Mason CJ; at 429 per Brennan J; at 436-7 per Deane J; at 454 per Dawson J; per McHugh J at 501.  The estoppel may operate to preclude the employer from rebutting the effect of s87 entirely or it may limit the employer to rebutting it except on terms.
[21]	In this case, the worker never sought to amend his pleadings to formally raise s87.  Mr Waters QC submitted that this should not be held against the worker as the point arose very late due to the fault of the employer in not making full discovery.  We do not accept that the fault lay with the employer, or that the lateness of raising the issue, even if it had been the employer’s fault, relieved the worker of the obligation of amending his pleadings.  If there was lack of formality by the worker, the worker can hardly complain that there was lack of formality by the employer in failing to formally seek relief.  The learned Magistrate dealt with both parties as if the relevant amendments had been made.  We do not consider that she was wrong to have done so.
The respondents’ contention – was s85 in fact complied with?
[22]	Before leaving this appeal, we consider that it is desirable to deal with a point raised by counsel for the employer who submitted that in fact the employer had complied with s85.  We doubt whether the findings of the learned Magistrate, which appear to us to be findings of fact, can now be challenged by the employer.  Be that as it may, we are of the opinion that the argument cannot be sustained.  Mr Nosworthy submitted that as the terms of the notice had been read to the appellant over the telephone within the time stipulated by s85, and the notice was later served personally upon the worker, albeit later than the required 10 days, the employer had complied with s85(1) of the Act.  S85(6) provides that notice shall be in writing and may be given either by personal service, by leaving it in an envelope addressed to the worker with a person who has apparently attained the age of 16 years at the worker’s address shown on his application form, or by prepaid post sent to that address.  It is clear that on the facts of this case, the employer did not comply with at least one of the prescribed methods.  It was not suggested that it was impossible for the employer to have so complied.  It seems to us to be clear beyond question that s85(6) is not complied with unless the written notice is served within the time prescribed, and that an oral notice coupled with a later written notice does not comply with the section.
[23]	In our opinion the real question to be asked is whether s85(6) must be strictly complied with, with the result that a failure to comply with at least one of the prescribed methods of service results in no valid service.  The approach to the resolution of that question is to be found in this Court’s decisions in Johnston v Paspaley Pearls Pty Ltd (1996) 5 NTLR 199 at 204, and in Collins Radio Constructors Inc. v Day (unreported, Mildren J, 26/3/98).  We note that s85(6) provides that “notification…shall be in writing and given by” one of the three alternative methods referred to in the section.  S87 provides that:
…where, within the times specified in s85, an employer does not comply with that section, the employer shall, until such time as the Court orders otherwise, be deemed to have accepted liability…
In Perfect v Northern Territory, supra, at 439-40 it was held that non-compliance with the strict terms of s85(10) (at it then was) did not result in the employer being deemed to have admitted liability.  It is arguable that the methods of bringing notice to the attention of a worker prescribed by s85(7) do not have the consequence of a deemed admission of liability but as that point was not debated before us, and is not necessary for our decision in this case, we decline to decide it.
[24]	Accordingly, the appeal is dismissed with costs.