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Federal Jurisdiction – Is SIRA “the State”?

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The Personal Injury Commission has no power to exercise federal jurisdiction within the meaning of ss 75 and 76 of the Commonwealth Constitution. But when does federal jurisdiction arise? Does a minor injury dispute between a resident of Queensland and the NSW Nominal Defendant involve an exercise of federal jurisdiction? These questions were addressed by the District Court in Ritchie v the Nominal Defendant.

Author: Peter Hunt
Judgment date: 5th November 2021
Citation:Ritchie v Nominal Defendant
Jurisdiction:District Court

Principles

  • Pursuant to Division 3.2 of the Personal Injury Commission Act 2020 (the PIC Act), the Personal Injury Commission (the PIC) does not have jurisdiction to determine disputes involving federal jurisdiction as defined by ss 75 and 76 of the Commonwealth Constitution.
  • The State Insurance Regulatory Authority (SIRA) is part of the State of NSW for the purpose of s 75(iv) of the Commonwealth Constitution.
  • Given that the Nominal Defendant is defined to be SIRA, disputes between interstate residents and the Nominal Defendant involve an exercise of federal jurisdiction and the PIC has no jurisdiction to determine those disputes.

Background

The claimant, a Queensland resident, was injured in a motor accident in NSW whilst temporarily in that State for work. He brought a claim against the Nominal Defendant because the vehicle at fault was unidentified. A dispute arose between the claimant and the Nominal Defendant regarding whether the claimant only sustained minor injuries.

The claimant made a “compensation matter” application under s 26 of the Personal Injury Commission Act 2020 for leave to bring substituted proceedings before the District Court.

There was no dispute that:

  • The claimant was a resident of Queensland.
  • Pursuant to s 2.27 of the Motor Accident Injuries Act 2017 (MAIA), the Nominal Defendant is SIRA.

The central issue was whether SIRA was “the State” for the purpose of s 75(iv) of the Commonwealth Constitution, which provides (emphasis added):

In all matters…(iv) between States, or between residents of different States, or between a State and a resident of another State… the High Court shall have original jurisdiction.

If SIRA was “the State”, then the minor injury dispute was between a resident of Queensland and the State of NSW – and involves an exercise of federal jurisdiction –  in which case the PIC has no jurisdiction.

If SIRA was not “the State”, then the minor injury dispute was between a resident of Queensland and a non-State entity – and no exercise of federal jurisdiction arises – in which case the PIC does have jurisdiction.

In (very) general terms:

  • The claimant argued that SIRA is “the State” because it performs governmental functions of regulating the CTP and other statutory insurance schemes.
  • The Nominal Defendant argued that SIRA is not “the State” because it is not subject to the direction or control of the Minister and is a fully self-funded entity.

Decision

The application came before District Court Judge Susan Gibb and her Honour delivered Judgment on 5 November 2021.

Her Honour concluded that SIRA was “the State” for the purpose of s 75(iv) of the Constitution. As such, the PIC did not have jurisdiction to assess the minor injury dispute (or any other dispute arising in the claim).

In summary, her Honour reasoned:

  • The Test – there is no definitive test for assessing whether SIRA is part of the State of NSW.
  • Funding Arrangements – the fact that SIRA neither draws from, nor contributes to, consolidated revenue does not mean that SIRA is not part of the State. The creation of a “user pays” system, to fund the scheme, removes a burden from consolidated revenue, but does not change the character of the governmental function which SIRA performs. It merely shifts a cost burden from all taxpayers to a nominated subset.
  • Ministerial Control – the extent of the Minister’s control over SIRA is not determinative of whether SIRA is part of the State. Government agencies, such as ICAC and the DPP are, for example, not the subject of close Ministerial control.
  • Governmentality – the objectives set out in s 23 of the State Insurance and Care Governance Act 2015 (NSW) are “quintessentially executive/governmental in their nature, directed to the implementation of legislative schemes regulating employment, road usage and residential building…In the twenty-first century these are matters at the heart of the executive/governmental role, created and managed though complex governmental schemes“.

Her Honour stated her overall conclusion, on page 21 of her Judgment, as follows:

“Despite the user pays structure applied to the collection and management of the compulsory “contributions” under the statutory structure, the structure, function and ownership and management of the State Insurance Regulatory Authority and the purposes it is required to pursue reveal its integral relationship with the State of NSW. Putting aside that a compulsory contribution is a tax by another name (albeit one focussed specifically), the State Insurance Regulatory Authority is effectively wholly owned and controlled by the State of NSW and set upon functions that are exclusively governmental in nature (and in large part regulatory).”

Her Honour proceeded to remit the minor injury dispute (and any review rights) to the PIC for assessment in accordance with its usual practice and procedure.

Once the Commission has issued a minor injury certificate, the parties were directed to file a motion in the District Court to adopt (whether with or without variation), or refuse to adopt, the Commission’s determination.

Why this case is important

Primary Implications

The immediate consequence of her Honour’s reasoning is that the PIC has no jurisdiction to assess any medical dispute, merit review matter, miscellaneous assessment matter or damages dispute between an interstate resident and the Nominal Defendant.

Each time such a dispute arises, the parties must seek leave in the District Court pursuant to s 26(3) of the PIC Act for the “compensation matter” to be determined by the Court in substituted proceedings.

Once leave is granted, the Court may remit its functions to the PIC to perform an assessment.

The Court retains the power, however, to subsequently either accept, reject or vary the findings made by the PIC.

In other words, the District Court refers the dispute to the Commission much like  a Court referral to a neutral referee in a building case. The ultimate jurisdiction, however, remains with the District Court. The Commission’s Certificate will have no lawful effect until it is adopted by the Court.

Scope of Federal Jurisdiction

The Judgment in this matter clarifies what type of CTP disputes will involve an exercise of federal jurisdiction.

Looking at the issue of federal jurisdiction wholistically, we make the following general observations:

Any claim against a NSW licenced CTP insurer, irrespective of residence.

 

A statutory benefits or damages claim against a NSW licenced CTP insurer – whether by a NSW resident or an interstate resident – involves no exercise of federal jurisdiction because each of the NSW CTP insurers is a corporation and, therefore, neither a resident of any place or “the State”.
Statutory benefit or common law claims by interstate residents injured by unidentified or uninsured vehicles. Where an interstate claimant makes a claim against the Nominal Defendant, an exercise of federal jurisdiction arises because the dispute is between a resident of another State and the State of NSW (see Ritchie v Nominal Defendant).
Statutory benefit claims by claimants injured by interstate vehicles. Section 3.2(6)

Any statutory benefits claim involving an interstate vehicle is made against the Nominal Defendant, by virtue of s 3.2(6) of MAIA.

NSW Residents

Where the claimant is a NSW resident, no exercise of federal jurisdiction arises because the dispute is between a NSW resident and the State of NSW.

Interstate Residents

Where the claimant is an interstate resident, the dispute would involve an exercise of federal jurisdiction because the dispute is between a resident of another State and the State of NSW (see Ritchie v Nominal Defendant).

 

Common law claims against interstate insurers irrespective of residence Victoria | Western Australia | Tasmania

The Victorian Transport Accident Commission (TAC), the Western Australian Insurance Commission (WAIC) and the Tasmanian Motor Accident Insurance Board (MAIB) are State-owned insurers.

Any common law claim against those insurers involves an exercise of federal jurisdiction because they involve a dispute between a resident of one State and “the State” of another State (unless the Claimant resides in the same State as the insurer).

Queensland | South Australia | Australian Capital Territory | Northern Territory

These States operate private CTP schemes. As such, no federal jurisdiction arises, irrespective of residence, because the CTP insurer is neither a resident of any place or “the State”.

Interstate residents injured in NSW by interstate vehicles of their own State Statutory Benefit Claims

Any statutory benefits claim involving an interstate vehicle is made against the Nominal Defendant, by virtue of s 3.2(6) of MAIA. As such, any statutory benefits claim by an interstate resident involves an exercise of federal jurisdiction – irrespective of where the vehicle most at fault is registered – because the dispute is between the resident of one State and the State of NSW.

Common Law Claims

Where an interstate resident is injured in NSW by a vehicle registered in their own State, no issue of federal jurisdiction will arise, irrespective of whether the insurer is State-owned or privately owned.

 

The following table summarise when a CTP dispute will involve the resident of one State and “the State”, within the meaning of s 75(iv) of the Commonwealth Constitution:

Residence Type of Dispute Circumstances
NSW Damages only Claim against an interstate State-owned insurer

(Victoria, Western Australia and Tasmania)

Interstate Statutory Benefits only Claim against the Nominal Defendant where the most-at-fault vehicle was an interstate vehicle.
Interstate Statutory Benefits and Damages Claim against the Nominal Defendant where the offending vehicle is unidentified
Interstate Statutory Benefits and Damages Claim against the Nominal Defendant where the offending vehicle is uninsured

 

No federal jurisdiction arises, however, in the following disputes:

Resident Type of Dispute Circumstances
NSW Statutory Benefits and Damages Claim against any licenced NSW CTP Insurer
NSW Damages only Claim against any private interstate insurer

(ACT, NT, Queensland and South Australia)

Interstate Statutory Benefits and Damages Claim against any licenced NSW CTP Insurer
Interstate Damages only Claim against any private interstate insurer (corporate insurers in ACT, NT, QLD, SA).

Claim against a State-owned insurer (VIC, WA, TAS) were the Claimant lives in the same State.

 

Practice and Procedure

The parties must make an application to the District Court, under s 26 of the PIC Act, in every dispute involving an exercise of federal jurisdiction.

It is worth remembering that multiple disputes may arise in each federally impacted claim. There may be multiple medical disputes, merit review matters, miscellaneous assessment matters and a damages dispute.

Whether a separate Summons is required for each dispute within each claim – or whether a single Summons can accommodate all disputes within a claim – is not yet clear.

Each dispute in a federally impacted claim, however, must ultimately be brought back before the Court to adopt, reject or vary the Commission’s determination.

Costs

The costs of a compensation matter application under s 26 of the PIC Act are regulated by Clause 6, Schedule 1 to the Motor Accident Regulation 2017 (subject to indexation, annually, on 1 October):

Item Maximum Fee
Court proceedings in relation to “compensation matter application” $1,068.90
Junior Counsel $2,672.25
Senior Counsel $3,794.60
Conference ‘directly related to an assessment of a claim for damages or a court hearing’ $320.70 per hour

Where leave is granted by the District Court pursuant to s 26 of the PIC Act, costs of the subsequent substituted proceedings become unregulated, by virtue of clauses 11, 12 and 13 of the Personal Injury Commission Regulation 2020.

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