Seafarers Act – Expanded scope and intrusion on state compensation

Legal Directions

Samson Maritime Pty Limited v Aucote [2014] FCAFC 182

The scope of application of the Seafarers Rehabilitation and Compensation Act 1992 (the ‘Seafarers Act’) has expanded substantially, and now prevails over state based workers compensation schemes, for workers on Australian registered vessels following this judgment of the Full Bench of the Federal Court. Employers and insurance brokers need to be aware of this judgment to ensure adequate insurance coverage and proper administration of claims by workers.

Background

Section 19 of the Seafarers Act specifies when the Act applies to a claim for injury by a worker. Significantly, ss19(1) has been regarded by many industry participants as the sole test for the application of the Seafarers Act, with the following subsections (2),(3) and (4) regarded as merely ensuring the constitutional validity of the Seafarers Act. However, the potential has always existed (and previously been argued) for these following subsections to each separately provide grounds for application of the Seafarers Act.

Relevantly, s19 provides that:

(1)        This Act applies to the employment of employees on a prescribed ship that is engaged in trade or commerce:

(a)        between Australia and places outside Australia; or

(aa)      between two places outside Australia; or

(b)        among the States; or

(c)        within a Territory, between a State and a Territory or between two Territories

….

(2)        This Act also has the effect it would have if:

(a)        a reference to an employer were limited to a reference to a trading corporation falling within the limits of the Commonwealth; and

(b)        a reference to an employee were limited to a reference to an employee employed by a trading corporation formed within the limits of the Commonwealth.

Subsections 19 (3) and (4) operate identically to subsection 19(2) but for ‘financial corporations’ and ‘foreign corporations’.

‘Employee’ is of limited definition under s4 as meaning ‘a seafarer’ or ‘trainee’, and ‘seafarer’ is then defined in s3 as ‘a person employed in any capacity on a prescribed ship, on the business of the ship …’.

‘Prescribed ship’ is defined in s3 as ‘a ship to which Part II of the Navigation Act applies but doesn’t include a government ship’.

Section 10 of the Navigation Act 1912(within Part II) provides that it applies to: ‘(a) A ship registered in Australia; ….’

As can be seen, ss19(1) is fact specific and dependent upon (i) employment on a prescribed ship; (ii) that is engaged in trade or commerce; and (iii) on a journey satisfying s19(1)(a) to (c) (essentially not intra state). Given the potential subjectivity of (ii) and (iii), the application of s19(1) can often be somewhat uncertain.

In contrast ss19(2) to (4) extend to apply to employment of an employee of a trading, financial or foreign corporation, and are clearly of broader ambit.

Facts

Noel Aucote (‘the worker’) was employed by Samson Maritime Pty Limited (‘Samson’) as a deckhand on the Samson Mariner, an Australian registered vessel. The vessel had been chartered by John Holland Pty Limited to assist in construction of a wharf and associated infrastructure at Port Walcott in the Pilbara region of Western Australia. John Holland was undertaking these works for Rio Tinto to provide a facility to load 50 million tonnes per annum of iron ore, principally for shipment to China.

The worker suffered an injury on 18 June 2011 to his right shoulder when he threw a heaving line while working on the vessel. He claimed compensation under the Seafarers Act and his claim was refused by Samson on the basis that:

  • Subsection 19(1) was the sole test for application of the Seafarers Act (and subsections 19(2) to (4) merely qualified application of subsection 19(1)); and
  • Subsection 19(1) was not satisfied as the vessel was only on an intra-state journey in performing activities on the wharf project.

Administrative Appeals Tribunal

The AAT determined that the Seafarers Act did apply to the worker’s injury as:

  • The vessel was engaged in international trade (ie: trade between Australia and places outside of Australia) to satisfy ss19(1)(a) as the work it was undertaking was ultimately for Rio Tinto to engage in the export of iron ore; and
  • In addition, ss19(1) was not the sole test for application of the Seafarers Act and ss19(2) applied to enliven the application of the Seafarers Act.

Samson appealed to the Full Bench of the Federal Court.

Full Court

Samson contended the Seafarers Act did not apply as:

  • The vessel’s activities were not ‘trade and commerce’ between Australia and places outside Australia, but rather activities which were wholly intra state; and
  • Subsection 19(2) did not alone give rise to application of the Seafarers Act, but rather only qualified the operation of ss19(1).

The Full Court (Allsop CJ, Rares and McKerracher JJ) unanimously rejected Samson’s argument that section 19(2) could not alone enliven the operation of the Seafarers Act. The Full Court held that s19 was intended to provide multiple foundations for application of the Seafarers Act, rather than having its application potentially limited. In doing so, they reviewed the long history of the constitutional challenges for legislating in this area.

Further, they considered Samson’s contention that s19(1) was the sole test (which necessitated ‘employment’) to be nonsensical as it would render redundant other provisions which provided benefits to trainees and others.

The Full Bench considered that the evident purpose of subsections 19(2) to (4) was to extend the application of the Seafarers Act as had been achieved with other legislation, such as the Trade Practices Act 1974, by relying upon other constitutional powers.

As the Full Court held that satisfaction of section 19(2) enlivened application of the Seafarers Act, it did not need to determine whether section 19(1) was also satisfied.

It is not known whether Samson will seek to appeal the Full Court judgment.

Impact

The practice of many in the industry of regarding s19(1) as the test for application of the Seafarers Act  has been rejected by this judgment and the Seafarers Act now has broader application to cover situations where employees are merely employed on a prescribed ship, which in this case was an Australian registered vessel, and employed by an Australian trading, financial or foreign corporation.

Employers and brokers would be wise to ensure that their policy coverage under the Seafarers Act (and related payroll disclosures) accurately reflect their workforces as it can be expected that many claims by workers will now be brought under this Act, rather than state based compensation schemes. Despite the increased scope of application of the Seafarer Act, its application is arguably now more certain given the subjective nature of the factual enquiries required under ss19(1).

Authored by Andrew Toogood, Partner, Sydney, and Agnes Camilleri, Senior Associate, Perth.


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