Fenwick v Fenwick [1964] PNGLR 103 (9 April 1964)

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WORKERS’ COMPENSATION - Application to District Court - Reference to Supreme Court - Individual right to claim compensation - Apportionment - No provisions governing judicial discretion - Arbitration mandatory in determining agreements involving dependents - Workers’ Compensation Ordinance 1958-1963, sections 5 (1), 6, 7 (3), 8 (1); Second Schedule paragraphs 6, 1 (a), 8 and 9; Third Schedule paragraphs 2 and 7, Workers’ Compensation Regulations 1960 rr. 11, 13, 26; District Courts Ordinance 1924-1961; Workers’ Compensation Act (Victoria) section 34.

The husband of the applicant was lost at sea, leaving his wife and four children surviving him. His employer paid in the required amount of compensation under the Workers’ Compensation Ordinance 1958-1963 and an application under Regulation 11 of the Workers’ Compensation Regulations 1960 was made to the District Court at Rabaul to settle the apportionment of compensation.

That each dependant has an individual right to claim compensation but whether such right is converted into a right to payment is a matter for the Court to determine. The magistrate is given an unfettered discretion as to how he shall apportion payments amongst dependants. Such discretion should be exercised fairly, equitably and in good faith, taking into account all relevant considerations. Further, the Court has a right to vary from time to time the amount of such payment (unless the sum had been paid out forthwith).

By paragraph 8 schedule 2 of the Workers’ Compensation Ordinance - the amount payable to each dependant must always be referred to arbitration and cannot be settled by agreement only.

Haigh v. State Government Insurance Office Queensland (1963) Q.J.P.R. 116 considered.

MINOGUE J: On the 1st April, 1963, Dallas Henderson Fenwick, the Master of the m.v. “Polurrian”, lost his life when that ill-fated vessel disappeared. He left him surviving his widow, the applicant in these proceedings, and four infant children, the respondents, who are all under the age of sixteen years.

The deceased man was a worker within the meaning of the Workers’ Compensation Ordinance 1958-1963, and by virtue of section 8 (1) of the Ordinance, his employer, the Bougainville Company Pty. Ltd., became liable to pay compensation in accordance with the Second Schedule to the Ordinance. The applicant and respondents being totally dependent upon the deceased, the amount of compensation payable under that Schedule was £3,400, which amount the employer company did not dispute and, pursuant to paragraph (6) of the Schedule, paid to the Treasurer on or about 25th September, 1963.

The question arose as to the apportionment and application of the compensation payable to the dependents of the deceased and, in accordance with Regulation 11 of the Workers’ Compensation Regulations 1960, an application for the settlement of the question by arbitration was made, in form by the widow against the other dependents. No provisions exist either in the Ordinance or Regulations of in the District Court Ordinance 1924-1961 nor in the Rules made under that ordinance for the appointment of a next friend to appear in proceedings of this nature. However, steps were taken to have Mr. Keith Noel Finter appointed as next friend of the infant respondents. Although he probably should have been appointed as guardian ad litem and whatever his legal obligation as next friend might be, the course taken was a sensible one and enabled the infant respondents to be adequately represented before the Court. I should add that the District Courts Ordinance 1963 makes provision for the appointment of a next friend and guardian ad litem where it is necessary or desirable in the interests of justice to do so. This Ordinance is not as yet in force. The employer, having paid the maximum amount payable by it, there was no necessity to make it a respondent to the application. See Regulation 11 (2).

In the particulars annexed to the application the applicant set out the facts of dependency and also the ages of the infant children. Ewan Dallas Fenwick was, at the time of the application, ten years of age, Roderick Peter was nine years, Judith Anne seven years and Deborah Elizabeth six years. No particulars of the circumstances, financial or otherwise, of the applicant or respondents were given. The applicant sought to have the amount of compensation apportioned and applied in the following way:- To herself the sum of £1,400 and to each of the children the sum of £500 to be paid to and held by her in trust and applied for the maintenance, education and benefit in life generally of the respective children. Because of the difficulties which he felt, the learned Magistrate stated a case for the opinion of the Supreme Court. This he was enabled to do by virtue of paragraph (2) of the Third Schedule to the Ordinance.

(a) Does the compensation payable on the death of the said Dallas Henderson Fenwick accrue:

(i) for the dependents collectively so that the compensation is payable to the widow of the deceased for and on behalf of herself and the children without apportionment;

(ii) for the widow in her own right on the one hand, and for the widow (or some other person) as trustee for the children collectively on the other hand;

(iii) so that each dependent acquires an individual legal right to compensation;

(b) If “yes” to either (a) (ii) or (a) (iii) on what principles should the Court proceed to arrive at a basis of apportionment as between the parties entitled.

(c) If “yes” to either (a) (ii) or (a) (iii) above on what principles should the Court proceed in making an order for the disbursement of monies apportioned between the widow and children and more particularly should the monies for the children:

(i) be ordered to be held in trust until the children (or each of them) attain a specified age;

(ii) be held in trust as in (i) above but with power in the trustees to expend or advance monies for “necessaries of life”;

(iii) be held in trust by trustees with unfettered discretion (subject to the liabilities and obligations of a trustee).

(d) If “No” to (a) (i) above then in paragraph (8) of the Second Schedule to the said Ordinance does the phrase “in default of agreement” also have reference to the words “and the amount payable to each dependent shall be settled by arbitration under this Ordinance” or is the paragraph to be construed so that in the event where there is a greater number of dependents than one arbitration is mandatory regardless of agreement between them.

At the conclusion of the hearing at Rabaul it was pointed out to me that over twelve months had elapsed since the death of the deceased and so far none of the dependents had received any compensation. As I had reached a conclusion as to what the answers to the questions (a), (b) and (c) should be, I then answered them and stated that I would publish my reasons subsequently.

The Workers’ Compensation Ordinance 1958-1963, in common with the Workers’ Compensation legislation of the Commonwealth and the Australian States, sets out to provide compensation for workers who suffer personal injury by accident arising out of, or in the course of, their employment, to enact that in such cases the employer is liable to pay compensation and to further ensure payment of compensation by compelling the employer to insure himself or itself in respect of liability. Where the worker has died as the result of such injury the Ordinance provides for payment of compensation, calculated in accordance with the number of dependents and the degree of dependency. See paragraph (1) (a) of the Second Schedule. The Ordinance, however, does not in such a case specify directly to whom the compensation is payable or how the compensation monies are to be applied. What it does do is to say in paragraph (6) of the Second Schedule that the payment shall, unless otherwise provided by the Schedule or by the Regulations, be paid to the Treasurer and any sum so paid shall be invested, applied or otherwise dealt with by the Treasurer in such manner as the Court orders for the benefit of persons entitled thereto under the Ordinance and the receipt of the Treasurer is to be a sufficient discharge in respect of the amount paid in.

The Court is defined in section 5 (1) to mean a District Court or Court of Petty Sessions, as the case may be, and jurisdiction under the Ordinance is conferred upon such Court by section 6. That section in relation to the Territory of New Guinea confers jurisdiction on a District Court constituted either by a Stipendiary Magistrate or by a District Officer authorised by the Administrator, by notice in the Gazette, to constitute a District Court for the purposes of the Ordinance. In this case jurisdiction is conferred on the learned Stipendiary Magistrate.

It is clear from the general tenor of the Ordinance that the legislature intended to make provision for those who were wholly or partially dependent upon the deceased worker. But in an Ordinance which in this Territory can have application to practically every resident of the community, to attempt to lay down rules as to amounts or the proportion of a sum payable by an employer as compensation which would cover every possible variation of the type and degree of dependency would be an impossible task. The legislature has, wisely in my opinion, left this task to an individual who is trained to assess the relative merits of competing claims, that is the Stipendiary Magistrate of a district. It may well be that as claims for compensation increase in a country which is moving towards a wage economy a special tribunal will become necessary as it has in the Commonwealth and all the States of Australia but, for the present the Stipendiary Magistrate is the person best equipped for the task. In my opinion the Stipendiary Magistrate has a judicial but otherwise unfettered discretion as to how he will apportion compensation monies amongst dependents. Paragraph (9) of the Second Schedule envisages that he may decide to award the total sum to a widow for the benefit of herself and her children. But he is not bound to do so. In Victoria, where there is a Workers’ Compensation Board, the Workers’ Compensation Act, 1958, in section 34, makes clear that the Board may apply or otherwise deal with any sum paid into its custody in such manner as in the opinion of the Board will, for the time being, be of most benefit to the dependents. By the same section the Board may exclude any dependent from participating in any benefit. Whilst the ambit of the Victorian Board’s discretion is perhaps more widely expressed, I do not think that the ambit of the Court’s discretion under paragraph (6) of the Second Schedule is any less. Of course, like any discretion, it must be exercised fairly and equitably and in good faith and after the taking of all proper and relevant considerations into account. For example, the Court in considering the circumstances of each of the dependents and the degree of dependency, may well have to consider whether the widow is able to provide a home for her children, or whether they would have to be accommodated by relatives or friends, whether the widow has a sufficient business sense to be able to handle comparatively large sums of money, or whether some form of weekly payment to her is more desirable. I am only suggesting possible matters for consideration and am not to be taken as in any way attempting to limit or fetter the discretion of the Court which must make up its own mind after a consideration of all relevant circumstances. Such circumstances would also include the age, sex and physical condition of the claimant or claimants, the degree of dependency during the worker’s lifetime, the degree existing at the date of the hearing of the arbitration and the financial position both existing and reasonably foreseeable for the claimants for compensation.

From what I have said it follows that the compensation payable on the death of a worker does not accrue for the dependents collectively to the intent that in the case of a widow and children the compensation is payable to the widow of the deceased for and on behalf of herself and the children without apportionment. It also follows that the compensation does not accrue for the widow in her own right on one hand, and for her as a trustee for the children collectively on the other hand. I am not prepared to go as far as Townley J. in Haigh v. State Government Insurance Office Queensland[lxxx]¹, when he expressed the opinion that the widow and children each had separate rights to compensation. I think that the law is, and all that was decided in Dey v. Victorian Railway Commissioners[lxxxi]² was, that each dependant has an individual right to claim compensation. To this extent I now feel that I must modify the answer that I previously gave to question (a) (iii). Whether that claim is converted into a right to compensation depends upon the decision of the Court. Once the Court has decided that an individual is entitled to some portion of the sum paid as compensation, then that dependant has a right to that amount of compensation. But unless the award of the Court is that the sum be paid forthwith to that dependant he or she has not even then an absolute right because paragraph (9) entitles the Court to vary its previous award. If, for example, a dependant were to win a substantial lottery prize I can well imagine the Court varying its award by taking away from that dependant and adding to the amount or amounts previously awarded to other dependants.

Questions 5 (b) and (c) do show that the learned Magistrate felt some difficulty as to how he should set about his task and sought the guidance of legal principle. But as I have earlier stated, there is no body of rules to cover the situation facing him and the guiding principle is really one of common sense, namely to consider all the relevant circumstances and to do what is fair and just for all the dependants, having regard to their competing interests. So that he may, in appropriate circumstances, make any of the orders envisaged in question 5 (c) but he is not bound to follow any such course and could, for example, order the whole of the monies to be paid to the widow for the purchase of a family home, or, at the other end of the scale, could retain control of the whole of the monies himself and direct their disbursement by weekly payments, or even direct their investment and payment at a later date. These are all matters which are solely within the province of the Magistrate so long as he does not take extraneous factors into account, or fail to take into account factors which are material.

In view of the fact that an application for arbitration had been filed, it was not necessary for me to answer question 5 (d), but I was informed by both Mr. Smith and Mr. Cruickshank that doubts had arisen as to whether apportionment as between dependants could be effected by agreement and the question was a matter of concern to practitioners. Accordingly, I stated I would give some consideration to the question asked. Paragraph (8) of the Second Schedule of the Ordinance reads:

“Any question as to who is a dependant shall, in default of agreement and subject to the provisions of subsection (3) of section 7 of this Ordinance, be settled by arbitration under this Ordinance, and the amount payable to each dependent shall be settled by arbitration under this Ordinance. Where there are both total and partial dependants, nothing in this Schedule shall be construed as preventing the compensation being allotted partly to the total and partly to the partial dependants.”

Paragraph (7) of the Third Schedule envisages and sanctions the making of agreements before or without arbitration and Regulation 13 of the Regulations seems to envisage agreement being attempted on all matters arising under the Ordinance before recourse is had to arbitration. I do not find paragraph (7) easy to construe, the more particularly when it is a matter of considering an agreement made by or on behalf of dependants who are infants or under some other disability. Regulation 26 of the Regulations in dealing with the Memorandum of Agreement required by paragraph (7) to be sent to the Clerk of the Court refers to its authentication by the signature of a next friend in the case of persons under disability. But, whether such agreements can or cannot be made, in my opinion on the proper construction of paragraph (8) of the Second Schedule it is mandatory to refer the question of the amount payable to each dependant to arbitration.

There are two quite separate matters which the paragraph provides shall be settled by arbitration. The first is the question as to who is a dependant. In such a case allowance seems to be made for the possibility of a legally binding agreement between persons claiming to be such, although from my perusal of the Third Schedule I doubt whether dependants can make such an agreement between themselves, particularly where persons under a disability are concerned. Even if this allowance be made the reference to subsection (3) of section 7 of the Ordinance puts beyond doubt that agreement cannot be effected where dependants by native custom of a worker are involved. The second matter in which provision is made for settlement by arbitration is the question of the amount payable to each dependant. Clearly this cannot be subject to the provisions of subsection (3) of section 7 because that subsection has nothing to do with the individual amount payable to each dependant. And I cannot see how as a matter of construction one can separate that qualification from the qualification of default of agreement so as to import the latter without the former into the second clause of the first sentence of the paragraph. In my opinion the words “the amount payable to each dependant shall be settled by arbitration under this Ordinance” are to be read without any qualification whatsoever and are mandatory in their operation. And I would answer question (d) accordingly.

(iii) No, but each dependant has an individual legal right to claim compensation.

[lxxx] (1963) Q.J.P.R. 116 at 121.

[lxxxi] 78 C.L.R. 62.

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Papua New Guinea Law Reports

Fenwick v Fenwick [1964] PNGLR 103 (9 April 1964)

Papua New Guinea Law Reports - 1964