Background

2.1 Background material submitted to us ¹ suggests that this amendment is intended to achieve several objectives.

• First, there are considerations of principle supporting a separation of judicial and administrative functions. Executive and judicial power have traditionally been separated, to preserve independence of the judiciary. Combination of both functions may infringe this principle and, in some circumstances, may create an impression of conflict of interest.
• Secondly, it is desired that the judicial time available for the determination of claims for compensation be increased as a contribution to the control of delays. This might be assisted by relieving the judges of their present administrative functions.
• Thirdly, the proposed Board is seen as having a positive role in the development of policies and programs in relation to accident prevention, rehabilitation, compensation practices, compilation of statistics and conciliation. It is intended that the present conciliation power vested in the Commission be transferred to the Board in an expanded form. It is envisaged that such function could be utilised particularly in circumstances where the Board is approached for advice upon non-payment or cessation of the payment of compensation. The purpose is to effect a speedy and informal resolution of some disputes in this way.

Submissions

2.2 The Chairman of the Workers’ Compensation Commission has suggested to us that the present administrative functions of the Commission should be retained by the judges.² We were informed that the administrative functions of the judges of the Commission had not significantly affected the amount of time spent by them on their judicial functions. The major areas of administration were seen to be areas which had been developed by the Commission in a unique way, and in which considerable expertise had been acquired. There was a danger that this expertise might be lost if the administrative functions were denied to the court. It was also submitted that the various functions had been efficiently and successfully carried out by the Commission, with a single administration and at a single administrative cost. In the area of licensing of insurers and self-insurers procedural means had been adopted to remove any opportunity for conflict. There were seen to be advantages in the employment of judicial skills in the course of administrative decisions and an overlapping of functions in practice.

Issues Involved

2.3 We have given consideration to the following matters in formulating a recommendation on this policy question:

• independence of the judiciary;
• responsibility of the Chairman as a permanent head;
• administrative costs;
• increase of judicial time;
• policy advice; and
• budget and financial administration.

Independence of the Judiciary

2.4 We believe there are strong reasons of principle and practice for the separation of the present judicial and administrative functions of the Commission. The foremost reason of principle is the traditional independence of the judiciary. Holdsworth has written of the judiciary in England:

“The judges hold an office to which is annexed the function of guarding the supremacy of the law ... The Judiciary has separate and autonomous powers just as truly as the King or Parliament; and, in the exercise of those powers, its members are no more in the position of servants than the King or Parliament in the exercise of their powers.”³

The Judicial Committee of the Privy Council has said of the judiciary in Australia:

“…in a federal system the absolute independence of the judiciary is the bulwark of the constitution against encroachment whether by the legislature or by the executive. To vest in the same body executive and judicial power is to remove a vital constitutional safeguard.”⁴

The independence of the judiciary from the executive promotes confidence in the rule of law and the administration of justice.

2.5 The judges of the Commission perceive the possibility of conflict as more apparent than real. In the only area in which they believe there is any potentiality for conflict, the supervision of insurers and self-insurers, procedures have been adopted with a view to avoiding such conflict. In particular, each judge has a panel of insurers and he absents himself from any meeting of the judges in which any criticism of an insurer on his panel is raised. This is done so that in the event of proceedings being instituted in the Commission against such an insurer the judge will be in a position to try the proceedings without having taken part in the administrative processes which led to the proceedings being instituted.⁵ These arrangements show that the judges, as one would expect, are themselves keenly aware of the potential conflict between their executive and judicial responsibilities, and great weight should be given to their opinion that it is suitably resolved. Nonetheless, we regard this consideration as a matter of fundamental importance. Not only should the conflict be avoided but the appearance of conflict should be avoided. We regard it as unsatisfactory that a judge exercising the judicial functions of the Commission should try a question upon which the Commission has, in its administrative capacity, decided that there is a prima facie case to be answered.

2.6 The proceedings concerning the cancellation of the licence of F.A.I. Insurance Limited under the Act illustrate the manner in which there might be a possibility of an appearance of conflict, in the absence of a separation of function. These proceedings were determined by Judge McGrath of the Commission (as he then was) on 31 October 1980. An appeal from his decision was dismissed by the Supreme Court of New South Wales, Court of Appeal, on 21 December 1981.⁶ Although we stress that we do not suggest that the proceedings were in any way affected by any conflict of judicial and executive power, we mention three respects in which an appearance of conflict might have arisen.

• First, in the course of the proceedings before the Commission, subpoenas were issued on the application of the insurer directed to the Registrar of the Commission requiring production of documents. In response to the subpoenas, claims of privilege on the ground of public interest were made, supported by an affidavit sworn by the then Chairman of the Commission. Cross-examination of the Chairman on the affidavit was sought. As a consequence, a judge of the Commission was required, at an interlocutory stage, to deal with a claim for privilege in relation to documents in the possession of the Commission, and to determine whether its Chairman should be cross-examined in relation to the claim for privilege.
• Secondly, in the course of the insurer’s appeal to the Court of Appeal, the Registrar of the Commission filed a notice of contention, and advanced a submission, to the effect that Judge McGrath, a member of the Commission, had no authority to consider, in exercising the Commission’s judicial function, some of the questions which he had considered.
• Thirdly, the judge, exercising the judicial function of the Commission, was required in the course of the proceedings to consider, inter alia, whether the arrangement of the arrangements of the insurer’s affairs had been such that the Commission should exercise its powers under section 29 of the Act in relation to its licence. Amongst the matters taken into account were non-compliance with, and stated intentions not to comply with, certain general guidelines issued by the Commission, in the exercise of its administrative function. Although a policy had been adopted of excluding the judge who would determine judicial proceedings to which an insurer was a party from all administrative deliberations concerning that insurer, nonetheless, that judge would normally be a party to the formulation and adoption of general policy guidelines. Although there was not unanimity in the Court of Appeal as to the approach which should be taken to the guidelines, the majority on this question (Hope J.A. and Hutley J.A.) said:

“We have no doubt that the Commission, in its judicial role, and this Court on appeal, may and indeed should have regard to any relevant guidelines in this class of case.”⁷

The majority did not regard the guidelines as the end of the inquiry, and indeed, Judge McGrath had considered in each case whether the relevant guideline provided an appropriate criterion.

2.7 The proceedings show the manner in which a possibility of conflict may arise on procedural aspects. They also show that a judge of the Commission may find it necessary to examine, in a judicial capacity, the appropriateness or application of general guidelines adopted by the Commission, in the formulation and adoption of which he may have participated in an administrative capacity.

2.8 Furthermore, the members of the Commission are amenable to the direction of Government in relation to their administrative functions under the Act. It is inconsistent with the tradition of judicial independence from the executive that judges should be amenable to directions of this kind albeit in relation to their administrative functions.

Responsibility of the Chairman as a Permanent Head

2.9 A related complication is the role of the Chairman of the Commission as a permanent head with the responsibility of advising a Minister, the Attorney General, on matters of policy. The relationship of a permanent head and a Minister has been described as “a highly personal and individual one” and as a partnership requiring both the survey of policy objectives and, on occasions, improvisation “to stave off or survive crises or sudden pressures of the moment.”⁸ It has also been said that the first requirement of the public service and hence of a permanent head is to recognise those developments which will lead towards political decisions and to advise on matters requiring political decision.⁹ More recently, the need has been emphasised for the public administration to respond more adequately to the modern challenge of policy development, including the exploration of underlying issues and the development of options for Ministerial consideration.¹⁰ Whilst it is to be acknowledged that those judges who have occupied the position of Chairman of the Commission have always been available to Government for advice in relation to the Act and its administration, the close working relationship between a permanent head and his Minister, necessary to discharge to the full the foregoing objectives, is not feasible. In our view it is inconsistent with the preservation of the appearance of judicial independence, which may involve making decisions contrary to the interests of government.

Administrative Costs

2.10 There will be costs associated with the constitution of a Board with an infrastructure separate from that of the proposed court. Such costs should be substantially limited to higher management, since the present administrative staff of the Commission would be available to perform under the Board the same functions as they presently perform in the Commission. To the extent that it is envisaged that the Board would undertake functions in addition to or in amplification of those presently performed by the Commission, there would, of course, be additional costs involved. We do not believe that any additional policy question is raised for our consideration in relation to such matters.

Increase of Judicial Time

2.11 As we have stated, one of the objectives of the separation of judicial and administrative functions is to increase the judicial time available for the determination of claims for compensation. The judges of the Commission presently allocate one day per calendar month to the administrative functions of the Commission, representing one-twentieth of each judge’s time. Other work is done by the judges in discharge of their administrative functions, particularly by the Chairman of the Commission, outside normal court hours. In theory, in a Commission comprised presently of 13 judges, the application of one day per calendar month to administrative functions by each judge would represent approximately two-thirds of the contribution to court work which would be made by an additional judge. However, the judges point out that a large part of the time occupied in this way relates to the management of those administrative functions which are ancillary to the judicial function of the Commission and which would persist notwithstanding the separation of functions . We doubt therefore whether there is likely to be any significant increase in the availability of the judges for judicial work as a result of the proposed legislation

Policy Advice

2.12 At the present time there is a need for the generation of initiatives and policy advice in a number of areas. These include rehabilitation, industrial safety, occupational health and the cost to employers of the benefits provided by the Act as reflected in insurance premiums. The Amendment Bill has been framed on the basis that policy advice and other initiatives would most effectively be provided by a body with specialised administrative and policy-generating responsibilities. This is a matter of public administration which raises issues that go beyond the scope of this report. Accordingly, we make no comment on whether a separation of the judicial and administrative functions of the Commission would facilitate this objective.

Budget and Financial Administration

2.13 We mention one final matter which arises out of the separation of the Commission into a Board and court. Although not mentioned in earlier submissions of the Chief Judge of the Commission it emerged in discussion -that concern was entertained in respect of the financial control of the court. The proposed Bills accept the continuance of the present position whereby the costs of the court would be met out of funds levied from the licensed insurers and self-insurers.¹¹ There are, however, some changes which are consequential upon separation of the functions of the Commission. The Board has the primary responsibility for raising the funds required for its operations and the operations of the court. It will be required to pay out of the fund belonging to and vesting in it (which includes contributions from insurers and self-insurers) amounts which are to be determined by reference to an annual estimate of expenditure made by the Chief Judge, as and when requisitioned by the Chief Judge.¹² These funds are to be paid into a special deposit account in the Treasury known as a Compensation Court account.¹³ This account is to be administered by the Minister,¹⁴ whose approval would be required for payment of any amount required to meet expenditure of an exceptional or unusual nature.¹⁵ From this account are to be paid all amounts required for remuneration, fees and allowances of judges, commissioners, and officers and staff of the court, and of arbitrators appointed under the Act, and of any other costs of operation of the court (including the provision of court accommodation and judges’ chambers).¹⁶

2.14 The Chairman of the Commission has asserted that it is essential to the effective operation of the court that it have the same real financial independence and discretion in administration as the existing Commission. This is said to be essential to facilitate recruitment of the precise staff required, to provide adequate court reporting services, particularly on country circuits, and to satisfactorily respond to emergent needs of the court. It was accordingly submitted that subject to the need for ministerial approval to payment out of any amount required to meet expenditure of an exceptional or unusual nature, the court fund should be administered under the control of the Chief Judge in all respects, within the scope of his annual estimates. Attention was also drawn to the absence of any provision for the creation of reserves to deal with any shortfall in estimates, or for the making and presentation of supplementary estimates during the year.

2.15 We do not consider financial control or administrative procedures to be properly within the scope of this interim report, and we make no recommendation in relation thereto. We do, however, point to some ambiguities in the proposed legislation as framed.

• It is not clear what force or significance the annual estimate of the Chief Judge required by clause 40(4) of the Court Bill has. In particular, it is not clear whether the total annual payment to the Compensation Court account is to be confined within the limits of the annual estimate, or whether the estimate is intended as an aid to the Board in fixing contributions, or whether the Board may disagree with the estimate and pay a lesser sum to the account. If the Board can reject an estimate, no machinery for resolution of any resulting dispute is provided.
• The effect of a requirement by the Chief Judge for payment by the Board to the Compensation Court account is similarly not clear. In particular, it is not clear what the Board should do if a requirement is made for an amount in excess of the estimate, or in excess of available funds (after allowance to meet the Board’s own operating costs).
• The extent of the Minister’s administration of the Compensation Court account for expenditure otherwise than of an exceptional or unusual nature is also not clear. Similarly, it is not clear what the role of the Chief Judge should be, or whether he is intended to have day to day control of the account in relation to normal operating costs.
• The procedure to be followed in the case of any shortfall in estimates or of the fund is also not made clear.

2.16 While not making recommendations in relation to these matters, we believe that there is considerable ambiguity in the legislation as framed, which should be rectified.

Summary

2.17 For the reasons outlined, we do not suggest any change in the proposal for a separation of the present judicial and administrative functions of the Commission, by the constitution of a Compensation Court and a Compensation Board. However, as we have already mentioned, we may in the course of our reference, ultimately recommend a quite different administrative and judicial structure for the management of workers, compensation claims. We assume, in expressing this advice, that the Board would be so constituted and staffed that it could continue to conduct the administrative functions with the same expertise as has been exercised by the Commission in the past. We make no recommendation as to staffing levels, qualifications or training, as we do not consider this to be within the scope of our interim report. For the same reason, we make no recommendation in relation to the financial arrangements for the court. We do, however, point to some ambiguities in the legislation as framed.

FOOTNOTES

1. Schedule: Items 1-17.

2. Schedule: Item 19.

3. Sir W.S. Holdsworth, “His Majesty’s Judges” (1932) 173 L.T. 336, at pp.336-337.

4. Attorney General (Cth) v. The Queen (1957) 95 C.L.R. 529, at pp. 540-541.

5. Schedule: Item 19.

6. FAI Insurance Limited v. The Registrar of the Workers’ Compensation Commission of New South Wales, 21 December, 1982, Supreme Court of New South Wales, Court of Appeal. Leave to appeal to the Privy Council has since been granted by the Court of Appeal [1982] 1 N.S.W.L.R. 239.

7. Id., Transcript of Judgment, p.31.

8. L.F. Crisp, Australian National Government (4th ed. 1978), p.456.

9. P.Hasluck, The Public Servant and Politics (1968), p.2.

10. Interim Report of the Review of New South Wales Government Administration, Directions for Change (New South Wales Govt. Printer, 1977), pp.17-19.

11. Amendment Bill, Schedule 6, Item (4)(a).

12. Amendment Bill, Schedule 6, Item (4)(c), (d).

13. Amendment Bill, Schedule 6, Item (4)(c), and the Court Bill, cl.40(l).

14. Court Bill, cl.40(l).

15. Court Bill, cl.40(3).

16. Court Bill, cl.40(2).