The Current Legal Landscape

The characterisation of judicial power for the purposes of Chapter III of the Constitution has been the subject of uncertainty for years.[1] In the wake of Burns v Corbett[2] and Attorney General for New South Wales v Gatsby[3], a series of matters have come before the courts which deal with the inability of State tribunals, such as the Personal Injury Commission (the Commission), to exercise federal judicial power. The Commission must act within the confines of s. 75(iv) of the Constitution, noting that only Courts of the States are invested with federal jurisdiction, ‘in all matters, between States, or between residents of different States, or between a State and a resident of another State’[4].

As occurred in the recent decisions of Searle v McGregor[5] and Islam v TAC; Worldon v TAC[6] (see our linked previous case notes), federal jurisdiction issues have again been considered in Kanajenahalli v State of New South Wales (Western New South Wales Local Health District)[7], albeit this time in the Workers Compensation Division of the Commission.

Facts

The appellant, Mr Kanajenahalli, alleged that he sustained a psychological injury during the course of employment with the State of New South Wales, at Dubbo Base Hospital.

Subsequently, proceedings were commenced in the Personal Injury Commission, for determination of weekly payments of compensation, treatment expenses, and lump sum compensation, pursuant to s. 66 of the Workers Compensation Act 1987 (NSW) (the 1987 Act).

The State denied liability on several grounds, by way of a notice pursuant to s. 78 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the 1998 Act). However, by the time this matter proceeded to arbitration before Member Burge, the only issue in dispute between the parties was whether or not the State was entitled to rely on a s. 11A ‘defence’ to deny liability.

Section 11A(1) of the 1987 Act provides the following:

‘No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be undertaken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.’[8]

The State was ultimately unsuccessful in seeking to rely upon s. 11A of the 1987 Act, and appealed Member Burge’s decision. On appeal, Deputy President Wood asked to hear the parties on a preliminary issue as to whether or not a federal jurisdiction issue arose in relation to the proceedings, noting that the appellant worker resided in Queensland.

This involved the determination of three questions, being whether or not:

1. The dispute was between the State (the employer) and a resident of another State (the appellant/worker)?
2. The Commission is a court of the State?
3. The power exercised by the Member and thereafter Deputy President was of administrative or judicial nature?

The first two questions were relatively uncontroversial, with Deputy President Wood agreeing with the parties in finding that (1) the dispute was between the State (the employer) and a resident of another State (the appellant); and (2) the Commission is not a court of the State. As to the third question, Deputy President Wood determined that the dispute involved the exercise of judicial power, and therefore the Commission was not vested with federal jurisdiction to hear and determine the claim and appeal.

The appellant thereafter appealed to the NSW Court of Appeal; although there was no real dispute between the parties, as both had agreed that the Commission had exercised administrative rather than judicial power in this case.

Notices pursuant to s. 78B of the Judiciary Act 1903 (Cth) were issued, as is required in proceedings involving consideration of constitutional issues, and whilst the Attorney General for New South Wales formally intervened, submissions were filed to the effect that the Commission exercised administrative power in this case.[9]

An Exercise of Judicial or Administrative Power?

With the parties’ attitudes towards the issue at hand being aligned, the NSW Court of Appeal provided a joint judgment on the papers, in which it found that determination of the appellant’s claim by the Commission was an exercise of administrative power, as opposed to judicial power. Therefore, the Commission did have jurisdiction to determine that claim (and the appeal).

In the short reasons, it was noted that this was purely determination of a statutory prohibition (s. 11A), with ‘no close analogy to any issue arising at general law’.[10] Further, the determination of such dispute was ‘considerably removed from traditional aspects of judicial power’[11], with the Court distinguishing the exercise from the determination of a claim for negligence.

The Court also briefly considered the operations of ss. 56, 57 and 59 of the Personal Injury Commission Act 2020 (NSW), which ‘do not all point in the same direction’ with respect to whether the decisions were administrative or judicial.[12] While ss. 56 and 59 would seem to indicate that the decisions are intended as being binding and authoritative (a characteristic of judicial power), s. 57 permits the Commission to rescind, alter or amend any decision previously made.

Implications for the Workers Compensation & Motor Accidents Divisions

Again noting the commentary in Islam v TAC; Worldon v TAC[13], the decision of the NSW Court of Appeal in Kanajenahalli is another example of the courts adopting a narrow approach when considering whether or not a decision maker is exercising judicial power, in the context of Chapter III of the Constitution. Consistent with other recent decisions (linked above), Kanajenahalli confirms that no federal jurisdiction issues arise before the Commission in the context of determining disputes pursuant to s. 11A of the 1987 Act.

Of course, ss. 56, 57 and 59 of the Personal Injury Commission Act 2020 (NSW), which were of some relevance to the Court’s consideration of the nature of the decision in this case, are only applicable to decisions in the Workers Compensation Division of the Commission. There are no equivalent provisions operating in the Motor Accidents Division. However, the decision is in harmony with the recent jurisprudence, and hopefully the controversy about the nature of power exercised in the Commission has been well and truly quelled.

[1] Chief Justice Bathurst AC, ‘The Mysteries of Judicial Power: Defining the Relationship between Law and Power in the Modern State’ (George Winterton Memorial Lecture, 14 February 2019) 4.

[2] [2018] HCA 15.

[3] [2018] NSWCA 25 (‘Gatsby’).

[4] Australian Constitution s 75(iv); Judiciary Act 1903 (Cth) s. 39(2).

[5] [2022] NSWCA 213 (‘Searle v McGregor’).

[6] [2022] NSWDC 582 (‘Islam v TAC; Worldon v TAC’).

[7] [2023] NSWCA 202 (‘Kanajenahalli’).

[8] See Department of Education & Training v Sinclair [2005] NSWCA 440; Northern New South Wales Local Health Network v Heggie [2013] NSWCA 255.

[9] Searle v McGregor (n 5) 82 (Kirk JA).

[10] Kanajenahalli (n 7) 9.

[11] Ibid; Gatsby (n 3) 125-126 (Bathurst CJ).

[12] Kanajenahalli (n 7) 12.

[13] Islam v TAC; Worldon v TAC (n 6) 43.