Campbelltown Tennis Club Ltd v Lee
[2013] NSWWCCPD 50
•1 October 2013
| WORKERS COMPENSATION COMMISSION | |||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||
| CITATION: | Campbelltown Tennis Club Ltd v Lee [2013] NSWWCCPD 50 | ||
| APPELLANT: | Campbelltown Tennis Club Ltd | ||
| RESPONDENT: | Kerry Lee | ||
| INSURER: | Employers Mutual (NSW) Limited | ||
| FILE NUMBER: | A1-10278/12 | ||
| ARBITRATOR: | Ms K Haddock | ||
| DATE OF ARBITRATOR’S DECISION: | 24 June 2013 | ||
| DATE OF APPEAL DECISION: | 1 October 2013 | ||
| SUBJECT MATTER OF DECISION: | Meaning and effect of a complying agreement made under s 66A of the Workers Compensation Act 1987; distinction between increase in impairment and dispute concerning deductible amount; s 323 of the Workplace Injury Management and Workers Compensation Act 1998. | ||
| PRESIDENTIAL MEMBER: | President Judge Keating | ||
| HEARING: | On the papers | ||
| REPRESENTATION: | Appellant: | Edwards Michael Lawyers | |
| Respondent: | Slater & Gordon Limited | ||
| ORDERS MADE ON APPEAL: | The Arbitrator’s determination of 24 June 2013 is revoked and the following orders are substituted: 1. Award for the respondent. 2. No order as to costs of the proceedings before the Arbitrator. 3. No order as to costs of the appeal. | ||
BACKGROUND TO THE APPEAL
The applicant, Kerry Lee (Ms Lee), was employed by the respondent, Campbelltown Tennis Club Ltd (the Club), as an office supervisor. On 24 June 2003, she injured her back while moving boxes of financial records.
The Club’s workers compensation insurer, Employers Mutual (NSW) Limited (Employers Mutual), accepted liability for the claim and paid weekly payments of compensation and medical expenses.
On 25 September 2006, Ms Lee’s solicitors made a claim on her behalf for lump sum compensation in an amount of $37,500 in respect of 24 per cent whole person impairment pursuant to s 66 of the Workers Compensation Act 1987 (the 1987 Act). A claim was also made for pain and suffering in the sum of $33,333 pursuant to s 67. The claim was based on a report of Dr Weisz dated 8 September 2006 in which Dr Weisz assessed that Ms Lee suffered 27 per cent whole person impairment reduced by 10 per cent to take account of a pre-existing condition under s 323 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) to produce a final result of 24 per cent whole person impairment.
The Club through its insurer arranged for Ms Lee to be examined by Dr Machart, who provided a report dated 17 November 2006. Dr Machart also assessed that Ms Lee suffered a 27 per cent whole person impairment, however, he assessed a one third reduction to take account of a pre-existing condition pursuant to s 323 of the 1998 Act to produce a final assessment of 18 per cent whole person impairment.
On 18 January 2007, the parties entered into a complying agreement under s 66A of the 1987 Act, pursuant to which it was agreed that Ms Lee would be paid $24,500 in respect of 18 per cent whole person impairment as a result of the injuries sustained on 24 June 2003. Further, it was agreed that Ms Lee would be paid $17,500 pursuant to s 67. The agreement was signed by Ms Lee and her solicitor certified that he had provided legal advice about the agreement prior to its execution. The agreement noted that the reports relied upon to assess the degree of permanent impairment were those of Dr Weisz of 8 September 2006 and Dr Machart of 17 November 2006.
On 1 August 2012, Ms Lee made a further claim for lump sum compensation pursuant to s 66 in respect of the injuries sustained on 24 June 2003. She claimed a further eight per cent whole person impairment based on a report of Dr Bodel dated 2 July 2012. Dr Bodel confirmed that Ms Lee suffered a 27 per cent whole person impairment which he reduced by 10 per cent to take account of a pre-existing condition under s 323 to produce a final whole person impairment of 24 per cent. Ms Lee also claimed additional compensation pursuant to s 67. Whilst the difference in the amount previously agreed and the current claim amounts to six (not eight) per cent, which seems to have been acknowledged in the course of argument, the pleadings were not formally amended.
On 16 August 2012, Employers Mutual issued a notice under s 74 of the 1998 Act. It denied liability for the additional compensation claimed on the basis that the claim was not maintainable following the amendments introduced by the Workers Compensation Legislation Amendment Act 2012 (the Amending Act 2012). Relevantly the amendments limit claims under s 66 to one claim only (s 66(1A) of the 1987 Act) and s 67 was repealed in respect of claims made on or after 19 June 2012. This issue was resolved in Mrs Lee’s favour in Goudappel v ADCO Constructions Pty Ltd [2013] NSWCA 94 and ultimately was not pressed.
Ms Lee lodged an Application to Resolve a Dispute (the Application) with the Commission on 5 September 2012. She claimed $13,000 in respect of a further eight per cent impairment as a result of the injury to her lumbar spine on 24 June 2003, pursuant to s 66 of the 1987 Act and a further $30,000 for compensation for pain and suffering pursuant to s 67.
The respondent lodged its Reply on 25 September 2012. In addition to the matter referred to in its s 74 notice, it also sought to dispute that there had been any increase in the degree of permanent impairment.
Section 66A(3) of the 1987 Act provides the Commission with jurisdiction to award compensation additional to the compensation payable pursuant to a complying agreement in limited circumstances. One such circumstance is where there has been an increase in the degree of permanent impairment since the agreement was entered into.
The issue for determination before the Arbitrator concerned whether Ms Lee suffered an increase in the degree of permanent impairment since the complying agreement was entered into in January 2007.
The matter was listed for an arbitration hearing on 2 May 2013. The Arbitrator determined the dispute in favour of Ms Lee, finding that there had been an increase in the degree of permanent impairment and ordered that the matter be remitted to an Approved Medical Specialist (AMS) for assessment of the permanent impairment of Ms Lee’s lumbar spine as a result of the injuries sustained on 24 June 2003.
The Club appeals the Arbitrator’s decision.
ON THE PAPERS
Section 354(6) of the 1998 Act provides:
“(6) If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
Having regard to Practice Directions Nos 1 and 6, the documents that are before me, and the submissions by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’ without holding any conference or formal hearing and that this is the appropriate course in the circumstances.
THRESHOLD MATTERS
There is no dispute that the threshold requirements as to quantum and time as found in ss 352(3) and 352(4) of the 1998 Act have been met.
INTERLOCUTORY DECISION
Section 352(3A) of the 1998 Act provides:
“There is no appeal under this section against an interlocutory decision except with the leave of the Commission. The Commission is not to grant leave unless of the opinion that determining the appeal is necessary or desirable for the proper and effective determination of the dispute.”
Both parties agree that the order made by the Arbitrator was to refer the matter to the Registrar for referral to an AMS. As no final order has been made in the proceedings, the decision may therefore be regarded as interlocutory.
The Club submits that if the appeal is permitted to proceed and is successful, there would be a final determination between the parties as Ms Lee would be precluded from bringing the claim for further lump sum compensation particularised in the Application. In other words, any referral to an AMS would be redundant and an unnecessary utilisation of the Commission’s resources could be avoided.
Therefore, the Club submits that leave to appeal an interlocutory decision should be granted under s 352(3A) on the basis that “determining the appeal is necessary or desirable for the proper and effective determination of the dispute” DP World Sydney Limited (formerly known as Container Terminals Australia Pty Limited) v Kelly [2011] NSWWCCPD 43. In that matter, Deputy President Roche held at [13] that it was appropriate to grant leave to appeal an interlocutory decision in circumstances where the appeal, if successful, would “determine all issues between the parties and eliminate the need for an examination by an AMS”.
The submissions lodged on behalf of Ms Lee do not directly address the question of whether or not leave should be given to determine the appeal notwithstanding the interlocutory nature of the Arbitrator’s orders, but merely assert that, as the issue in dispute involves a medical dispute, the appropriate order is that the dispute be remitted to the Registrar for referral to an AMS for assessment.
Contrary to Ms Lee’s submissions, the issues for determination on appeal involve a great deal more than a simple medical dispute. I accept that if leave is refused, the matter would then proceed to an AMS to determine the extent of any whole person impairment suffered by Ms Lee. At that point, final orders would be entered and the Club would be entitled to lodge a further appeal. I am satisfied that it is desirable for the proper and effective determination of the dispute that the issues for determination be resolved now because, as the Club submits, if the issues are resolved in its favour it will avoid an unnecessary referral to an Approved Medical Specialist, thus avoiding further costs and delay. I grant leave to appeal.
GROUNDS OF APPEAL
The appellant alleges the Arbitrator erred in law in:
(a) determining that the issues before her involved a “medical dispute” within the meaning of s 319 of the 1998 Act and that she therefore had no jurisdiction to determine the issues raised before her or to do other than refer the matter to the Registrar for referral to an AMS;
(b) failing to properly distinguish and/or apply the decision of Roche DP in Abou‑Haidar v Consolidated Wire Pty Limited [2010] NSWWCCPD 128 (Abou‑Haidar ) and thereby concluding that she was deprived of jurisdiction to do other than refer the matter to the Registrar for referral to an AMS;
(c) failing to find that the “medical dispute” arising under s 319(d), namely as to the extent of the s 323 deductible proportion, had been resolved by the s 66A complying agreement which was final and by which the parties were bound;
(d) failing to give proper force and effect to the final and binding nature of the s 66A complying agreement;
(e) failing to find that the respondent worker was estopped from claiming further lump sum compensation by operation of s 66A and the complying agreement made pursuant to it;
(f) failing to properly apply s 66A(3)(c);
(g) failing to properly appreciate the true nature of the claim made by the respondent worker and to properly address the issues raised in grounds (c)-(f) herein or to give any or any adequate reasons in relation to them;
(h) concluding that the claim was one for “increased permanent impairment” rather than for a revisiting of the issue as to the extent of the s 323 deductible proportion which had been resolved by the s 66A complying agreement, and
(i) referring the matter to the Registrar for referral to an AMS.
LEGISLATION
Section 66A of the 1987 Act provides:
“66A Agreements for compensation
(1) In this section, complying agreement means a written agreement:
(a)under which a worker who has received an injury, and an employer or insurer, agree as to the degree of permanent impairment that has resulted from the injury, and
(b)in which there is a provision in which the employer or insurer certifies that it is satisfied that the worker has obtained independent legal advice, or has waived the right to obtain independent legal advice, before entering into the agreement.
(2) If a worker enters into a complying agreement in relation to an injury, the permanent impairment compensation to which the worker is entitled in respect of the injury is the compensation payable in respect of the degree of impairment so agreed.
(3) The Commission may award compensation additional to the compensation payable under subsection (2) by virtue of a complying agreement if it is established that:
(a)the agreed degree of permanent impairment is manifestly too low, or
(b)the worker has been induced to enter into the agreement as a result of fraud or misrepresentation, or
(c)since the agreement was entered into, there has been an increase in the degree of permanent impairment beyond that so agreed.
(4) Complying agreements, and the payments made under them, are to be recorded in accordance with the WorkCover Guidelines.
(5) Subsection (2) has effect despite section 234 (No contracting out) of the 1998 Act.
(6) Nothing in this section prevents a complying agreement from containing provision as to the payment of costs.”
Section 323 of the 1998 Act provides:
“323 Deduction for previous injury or pre-existing condition or abnormality
(1) In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality.
(2) If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence.
Note. So if the degree of permanent impairment is assessed as 30% and subsection (2) operates to require a 10% reduction in that impairment to be assumed, the degree of permanent impairment is reduced from 30% to 27% (a reduction of 10%).
(3) The reference in subsection (2) to medical evidence is a reference to medical evidence accepted or preferred by the approved medical specialist in connection with the medical assessment of the matter.
(4) The WorkCover Guidelines may make provision for or with respect to the determination of the deduction required by this section.
(5) (Repealed)
Note. Section 68B of the 1987 Act makes provision for how this section applies for the purpose of calculating workers compensation lump sum benefits for permanent impairment and associated pain and suffering in cases to which section 15, 16, 17 or 22 of the 1987 Act applies.”
Section 319 of the 1998 Act provides:
“319 Definitions
In this Act:
medical dispute means a dispute between a claimant and the person on whom a claim is made about any of the following matters or a question about any of the following matters in connection with a claim:
(a) the worker’s condition (including the worker’s prognosis, the aetiology of the condition, and the treatment proposed or provided),
(b) the worker’s fitness for employment,
(c) the degree of permanent impairment of the worker as a result of an injury,
(d) whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion,
(e) the nature and extent of loss of hearing suffered by a worker,
(f) whether impairment is permanent,
(g) whether the degree of permanent impairment of the injured worker is fully ascertainable.”
THE EVIDENCE
The Arbitrator summarised the relevant medical evidence at [22]–[39] which I respectfully adopt. However, having regard to the fact that there is no dispute that Ms Lee suffers a whole person impairment of 27 per cent, the following summary is restricted to the approach taken by the doctors to assess the deductible amount under s 323 of the 1998 Act.
Dr Weisz
Dr Weisz’s assessment of the deductible proportion of Ms Lee’s impairment is contained in a brief report dated 8 September 2006. He simply noted that “her quantification will attract one tenth deductible proportion as there is evidence of pre-existent constitutional and degenerative change”. It would seem from Dr Weisz’s comments that he adopted the default method provided for in s 323(2) for assessing the deductible proportion. That is, in circumstances where it would be difficult or costly to determine the deductible proportion it is to be assumed (for the purpose of avoiding disputation) that the deduction will be 10 per cent unless this assumption is at odds with the available evidence.
Dr Machart
Dr Machart’s assessment of the deductible proportion is referred to in his report of 17 November 2006. Dr Machart simply said “deduction for pre-existing condition is one third because of degenerative changes and two double disc disease”.
Dr Bodel
Dr Bodel stated in his report of 2 July 2012 concerning the question of the deductible proportion:
“I accept there is evidence of pre-existing injury or condition in this circumstance but it is difficult to determine the exact level of that contribution from that pre-existing pathology and injury in this circumstance to the overall level of impairment which is present. There is no medical evidence to confirm that any particular level of impairment should be preferred on the basis of the medical evidence and there [sic] it is too difficult to determine the exact level of the pre-existing contribution and therefore a one tenth deduction in accordance with s 323 should apply …”.
THE ARBITRATOR’S REASONS
After carefully referring to the relevant evidence and the parties’ submissions the Arbitrator concluded that the dispute should be referred to an AMS for assessment of permanent impairment. The Arbitrator reasoned that Ms Lee had previously been compensated for permanent impairment of 18 per cent and now claims to have 24 per cent permanent impairment based on Dr Bodel’s assessment.
The Arbitrator rejected the respondent’s submissions that Ms Lee’s claim was not a claim for an increase in impairment, again referring to the fact that the claim made by Ms Lee was now six per cent greater than the impairment agreed upon in the s 66A complying agreement. The Arbitrator referred to s 321(4)(a) of the 1998 Act and noted that the Registrar may not refer to an AMS a medical dispute concerning permanent impairment “where liability is in issue and has not been determined by the Commission”.
At [61] of the Arbitrator’s Reasons she held, applying Deputy President Roche’s comments in Abou-Haidar at [57], that the Commission has no jurisdiction to determine medical disputes that come within the terms of s 319 of the 1998 Act. As there was no dispute as to injury or any other liability dispute, the claim for the additional compensation as a result of a claimed increase in the degree of permanent impairment was a medical dispute which must be referred to an AMS for assessment.
The Arbitrator further held that there was no requirement for the worker to establish a prima facie case of deterioration of her condition before such a claim can be referred to an AMS for assessment, once the claim for the additional impairment had been properly made in accordance with s 282 of the 1998 Act.
Again referring to Abou-Haidar, the Arbitrator adopted Deputy President Roche’s observations (at [55]) that:
“If the assessment is the same as in a previous award or order of the Commission, there will be no basis for referral to an AMS. If the assessment is higher that in a previous award or order, then, assuming that there is no liability issues in dispute, the Registrar will refer the matter to an AMS for further assessment.”
The Arbitrator did not accept that the assessment now relied upon by Ms Lee was the same as the assessment in which agreement was reached between the parties referred to in the s 66A complying agreement. She stated “the impairment assessment they agreed upon was 18 per cent, while the assessment on which the applicant now relies is 24 per cent”.
Referring to s 322 of the 1998 Act, the Arbitrator noted that the process of assessment involved each of Drs Weisz, Machart and Bodel first making an assessment of the worker’s impairment. Then, applying s 323(1), they proceeded to make a deduction for the proportion of Ms Lee’s impairment that was in their opinions appropriate. The figure they reached after the deduction represented each doctor’s assessment of Ms Lee’s (compensable) permanent impairment. Accepting that Ms Lee was not required to establish a prima facie case of deterioration by reason of the alleged increase in the impairment claimed, there was a medical dispute that must be determined by an AMS. The Arbitrator then entered appropriate orders to reflect her conclusion.
In reaching her final conclusions the Arbitrator made no reference to whether the s 66A complying agreement entered into between the parties in 2007 was binding and whether it precludes Ms Lee from pursuing the present claim.
SUBMISSIONS AND DISCUSSION
Was the dispute a medical dispute only?
The Club submits that whilst Ms Lee’s claim was initially refused by reference to the restrictions on lump sum compensation introduced by the Amending Act 2012, the issue between the parties was in substance whether the claim was in fact one for an increase in the degree of permanent impairment since the s 66A complying agreement was entered into. That issue was raised in the Club’s Reply and leave was sought and granted at the arbitration to contest that issue, pursuant to s 289A(4) of the 1998 Act.
The respondent submits that, from the history of the matter, it can be seen that the assessment of the degree of permanent impairment present (27 per cent whole person impairment) and indeed the net degree of permanent impairment after a s 323 deduction (24 per cent whole person impairment) made by Dr Bodel is precisely the same as that made by Dr Weisz in support of the claim in 2006, which was resolved by way of the s 66A complying agreement in 2007.
It is argued that the only point of difference between each of the doctors who have assessed the impairment is in relation to the extent of the deductible proportion under s 323. The potential “medical dispute” in relation to that issue, as raised by the reports of Dr Weisz and Dr Machart, was resolved and finalised by the s 66A complying agreement dated 18 January 2007.
The Club’s fundamental complaint is that the Arbitrator erred in concluding that the claim made in the current application was for an “increase in permanent impairment” giving rise to a “medical dispute” within the meaning of s 319 of the 1998 Act with the consequence that referral to an AMS was mandatory.
The Club submits that the Arbitrator failed to look beyond a bare comparison of the final assessments (after allowing for any deduction under s 323) contained in the s 66A complying agreement and the amount claimed in the Application, and in reaching this conclusion failed to appreciate or have proper regard to the fact that the only true difference between the s 66A complying agreement and the claim now made is in relation to the extent of the s 323 deduction and that any “medical dispute” relating to that issue had been resolved by the legally binding effect of the s 66A complying agreement.
The Club submits that the current proceedings are an attempt to re-visit an issue that was resolved and concluded by a binding s 66A complying agreement. Put another way, it submits that Ms Lee is seeking to withdraw from a binding s 66A complying agreement.
The Club argues that the Arbitrator’s approach was heavily influenced by the decision of Deputy President Roche in Abou-Haidar, which the Arbitrator appears to have considered as authority for the proposition that, where, on the face of the pleadings and on the evidence, the degree of permanent impairment claimed is greater than that under a prior award or agreement, there is a “medical dispute” within the meaning of s 319 that precludes an Arbitrator from dealing with the matter and mandates referral to an AMS in the absence of one of the liability issues referred to by Deputy President Roche at [39] (see Reasons at [53], [55], [56], [57] and [58]).
In Abou-Haidar, Deputy President Roche held at [39]:
“The term “liability” is not defined in the legislation, but has been held to include, among other things, whether the worker received an injury within the meaning of the legislation, whether employment was a substantial contributing factor to the injury under s 9A of the Workers Compensation Act 1987 Act (the 1987 Act), and what pathology is said to have been caused by the relevant work incident (Connor v Trustees of the Roman Catholic Church for the Archdiocese of Sydney[2006] NSWWCCPD 124; 5 DDCR 337).
The Deputy President added at [54]:
“An arbitrator’s task is to determine injury and other liability issues. Once that is done, the question of the extent of any whole person impairment as a result of the injury is a matter for an AMS”.
As a matter of general principle, the Club accepts the correctness of that approach, as do I.
Mr Young, counsel for Ms Lee, submitted that the Arbitrator correctly applied Abou-Haidar but made no other submissions of any assistance on this issue.
In the circumstances of this case, I agree with the Club’s submission that the question is whether the Arbitrator failed to appreciate that one of the “other things” encompassed by the general and undefined concept of “liability” is an issue relating to whether, by operation of a s 66A agreement, a party may be prevented from bringing a claim for further lump sum compensation when the claim now sought to be made was incorporated in or subsumed by a s 66A complying agreement.
I also accept the Club’s submission that Abou-Haidar can be distinguished on the basis that that matter concerned a dispute about the increase in the degree of permanent impairment since an assessment by an AMS, which is a medical dispute that fell within the sole jurisdiction of an AMS. In the instant matter, the issue concerns whether Ms Lee is precluded from bringing a further claim by reason of having entered into a s 66A complying agreement. In other words, the dispute concerns the meaning and effect of the s 66A agreement and is therefore not merely a medical dispute. This is a legal or liability issue falling within the jurisdiction of an arbitrator. It requires the Commission to interpret the terms of the s 66A agreement by applying the usual rules of construction of contracts, in the context of the applicable legislation.
Did the Arbitrator determine the effect of the 66A complying agreement?
The respondent’s counsel, Mr Parker, argued at the arbitration that the claim presented by the applicant for 27 per cent permanent impairment is the same impairment that was agreed between the parties and was the subject of the s 66A complying agreement. He said that the original dispute concerned not the degree of impairment but the extent of the deductible proportion. That issue was compromised and was the subject of the s 66A agreement. Whilst Mr Parker conceded that there can be no estoppel in a changing situation, there was no relevant change in this dispute. He said that the evidence upon which Ms Lee relied was precisely the same as the evidence she presented in January 2007 when she entered into the complying agreement.
It was argued that the Arbitrator was therefore required to determine whether the applicant was precluded by reason of the s 66A complying agreement from pursuing the further claim. It was submitted that the Arbitrator did not deal with this issue.
Although the question of the effect of the s 66A complying agreement was not an issue that was identified in either the s 74 notice or the Club’s Reply, the Club argued, with the Arbitrator’s leave, that the effect of the s 66A agreement prevented the applicant from bringing a further claim because there had been no change in her compensable impairment under s 66A(3)(c). It argued that the only area of dispute in the first claim was the extent of any deduction under s 323, and that issue had been the subject of a legally binding agreement (T3.43, T4.10, T4.27 and T4.43).
Mr Young submitted (at the arbitration) that the effects of the complying agreement could be overcome on two bases. First, the degree of permanent impairment was manifestly too low (s 66A(3)(a)) and, second, since the agreement was entered into there had been an increase in the degree of permanent impairment beyond that so agreed (s 66A(3)(c)).
It is clear from the way in which the matter was argued before the Arbitrator that she was required to consider whether the Commission had jurisdiction to award the additional compensation, if Ms Lee could establish that there has been an increase in the degree of permanent impairment, having regard to the terms of the dispute that was before the Commission in 2007 and the terms of the complying agreement entered into by the parties. Whether she was required to determine whether the agreed degree of permanent impairment was manifestly too low is another matter, which is dealt with at [83] – [93].
The Arbitrator’s Reasons focussed only on whether Ms Lee was claiming an increase in the degree of permanent impairment beyond the amount previously agreed. The Arbitrator did not consider the effect of the s 66A agreement or whether the current claim can proceed notwithstanding that agreement. That was an error that requires intervention.
As a result, the Arbitrator’s decision must be revoked and the matter re-determined. As there was no oral evidence called and there is no issue as to Ms Lee’s credit, I am in as good a position as the Arbitrator to conduct the redetermination and I note that the parties have consented to that course.
What was the effect of the s 66A complying agreement?
The Club’s submissions
The gateway to referral to an AMS is the existence of a “medical dispute” within the meaning of s 319. The Club submits that the real issue in this case is not the existence of a “medical dispute” but rather when and how such a dispute is resolved and finalised.
If an offer to resolve a claim under s 66 is made and accepted, and the settlement is recorded in an agreement under s 66A, the claim is resolved, meaning there is no longer a “medical dispute” requiring referral to an AMS in accordance with s 65 of the 1987 Act and s 321 of the 1998 Act.
In CSR Limited v Gonzales [2010] NSWWCCPD 181 (Gonzales), Deputy President O’Grady determined that a reference to “injury” in s 66A is a reference to all of the consequences of the injurious event rather than a reference to an injury to a particular body part or system. He found that, as a matter of statutory construction and the application of contract principles, an agreement under s 66A constitutes a final and binding agreement between the parties as to the degree of permanent impairment which results from an injurious event and that, in the absence of any exceptions prescribed by s 66A(3), it is not open to the worker to bring a further claim for lump sum compensation resulting from that injurious event and that a worker is therefore estopped by such agreement from bringing any such claim.
The facts in the present case may be distinguished from those in Gonzales in a way that makes the principles discussed in Gonzales even more powerfully apposite. Whereas Gonzales involved a claim for a body part or system not previously assessed or claimed, the only claims ever made in the instant case relate to the permanent impairment resulting from the injury to the lumbar spine and the conflicting evidence of Drs Weisz and Machart regarding the extent of the deductible proportion under s 323. The Club submits that it may be inferred from the fact that the s 66A complying agreement expressly referred to the reports of Drs Weisz and Machart, that the applicant agreed to accept the assessment made by Dr Machart.
The Club also relies to Deputy President O’Grady’s findings in Di Paolo v Cazac Constructions (NSW) Pty Limited [2013] NSWWCCPD 8 (Di Paolo), where the Deputy President held that an agreement under s 66A determines a worker’s entitlement to lump sum compensation resulting from an injury finally and for all time unless one of the circumstances set out in s 66A(3) becomes operative.
It submits that it is significant that subsection (3) commences with the words:
“the Commission may award compensation additional to the compensation payable under subsection (2) by virtue of a complying agreement if it is established that…”.
In other words, unless one of three circumstances set out in s 66A(3) apply, the Commission has no power to award further lump sum compensation.
Section 66A(3)(c) invests in the Commission the jurisdiction to award further lump sum compensation if it is established that “since the agreement was entered into there has been an increase in the degree of permanent impairment beyond that so agreed”. The subsection clearly envisages a situation where there has been a deterioration in a worker’s condition which has led to an increase in permanent impairment resulting from an injury after the s 66A complying agreement was entered into. That is not the situation in the present case. It is submitted that it is clear from the medical evidence that all doctors are agreed that the overall permanent impairment present before and after the entry into the s 66A complying agreement is 27 per cent whole person impairment and further that Dr Bodel agrees with Dr Weisz, on whose report the original claim leading to the s 66A complying agreement was based, that the degree of permanent impairment after deduction of 10 per cent pursuant to s 323, is 24 per cent whole person impairment.
The position now, therefore, is precisely the same as it was at the time the original claim was compromised and such compromise was recorded in the final and binding s 66A complying agreement. There has, therefore, been no relevant change, since the agreement was entered into, producing an increase in the degree of permanent impairment.
In the absence of any circumstances set out in s 66A(3) the Club submits that Ms Lee is bound by the complying agreement entered into under that section and therefore cannot now seek to withdraw from or revisit the agreement or the compromise on which it was based.
Ms Lee’s submissions
In response to the Club’s detailed and helpful submissions, Mr Young’s submissions on behalf of Ms Lee are particularly brief and provide little assistance in resolving the issues presented by this appeal.
Mr Young submitted that reliance on the decisions in Gonzales and Di Paolo is misconceived. However, apart from making that assertion, he did not provide any submissions as to why reliance on those authorities was misconceived or develop any other submission concerning the application of those authorities.
Mr Young denied that Ms Lee was seeking to withdraw from or revisit the s 66A complying agreement but again offered no further submissions or reasoned argument to develop the submission any further.
Mr Young submitted, in the alternative, that Ms Lee sought the additional compensation claimed under s 66A(3)(a), that is, that the sum agreed in the complying agreement was manifestly too low. He argued before the Arbitrator that the difference between the sum agreed to and the amount now claimed, six per cent, amounted to a factor of 25 per cent of the amount now claimed which was manifestly too low.
Consideration
In order to determine the effect of the complying agreement, it must be interpreted according to the usual principles of contract law. The High Court considered the principles relevant to the construction of a contract in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 (Alphapharm), where it unanimously held (at [40]):
“This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”
Referring to more recent authority on the question of statutory construction Deputy President Roche in WDS (Mining) Pty Ltd v Piper [2013] NSWWCCPD 19 said (at [35]):
“35. Since the above cases were decided, however, the High Court has stated that the ‘true rule’ as to the admission of evidence of surrounding circumstances is that stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 (Codelfa) at 352 (see Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45). Regrettably, the exact meaning of Mason J’s decision in Codelfa is open to debate.
36. In the most recent statement on the topic from an intermediate Court of Appeal, Bathurst CJ (Macfarlan and Meagher JJA agreeing) said at [52] in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd[2012] NSWCA 184:
‘A contract is to be construed by reference to what a reasonable person would understand by the language in which the parties have expressed their agreement having regard to the context in which the words appear and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22]; Toll (FGCT) Pty Limited v Alphafarm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; 234 CLR 151 at [53]. At least in the case of ambiguity, resort can be had to the surrounding circumstances known to the parties in interpreting the particular provision: Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; 149 CLR 337 at 352; Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 282 ALR 604.’”
In the earlier proceedings the parties’ experts, Drs Weisz and Machart, agreed that Ms Lee suffered a whole person impairment of 27 per cent. Their opinions differed only with respect to the extent of the deductible proportion under s 323 of the 1998 Act. The complying agreement, which records Ms Lee’s acceptance of lump sum compensation in respect of an 18 per cent whole person impairment, as assessed by Dr Machart, makes express reference to the reports of both Drs Weisz and Machart.
There can be no doubt that Ms Lee knew when she entered into the complying agreement that there was a dispute concerning the degree of the deductible proportion. That was the only dispute. The compelling inference is that she elected, having received legal advice, to compromise the dispute and accept the higher deductible assessed by Dr Machart.
Construing the agreement by what a reasonable person would understand by the terms of the agreement and having regard to the purpose and object of the transaction and taking into account the nature of the dispute, I conclude that the objective intention of the parties was to record the resolution of the only matter remaining in issue at the time the agreement was entered into, namely, the extent of any deductible proportion under s 232.
The underlying purpose of s 66A of the 1987 Act is to permit the parties to reach a final and binding agreement concerning the entitlements to lump sum compensation. This section is an exception to s 234 of the 1998 Act, which prevents parties from contracting out of the Act, and is subject to any statutory exceptions such as those found in s 66A(3).
I accept the Club’s submission that there may be circumstances where a complying agreement prevents a later claim for further lump sum compensation, as discussed in Gonzales and Di Paolo. Those cases were, however, decided on their own facts and it is clear that the Commission has jurisdiction to award further lump sum compensation following a s 66A complying agreement if it can be established that, since the agreement was entered into, there has been an increase in the degree of permanent impairment beyond that so agreed (s 66A(3)(c)), or if any of the other circumstances in s 66A(3) are satisfied.
However, on the facts of this case I agree with the Club’s submission that Ms Lee cannot satisfy the requirements of s 66A(3)(c). The current claim is supported by exactly the same assessment Ms Lee had in 2007. Therefore, it does not support a claim that, since the agreement was entered into, Ms Lee has suffered an increase in the degree of permanent impairment beyond that agreed to on 18 January 2007.
Therefore, as the Club submits, as the only issue in dispute has been resolved by the complying agreement, there is no dispute to be referred to an AMS.
The current Application is an attempt to re-litigate an issue that has been resolved by the complying agreement. In the absence of any of the exceptions prescribed by s 66A(3) applying, Ms Lee is bound by the terms of the complying agreement and is precluded by such agreement (and s 66A) from bringing the current claim, which is based on the same assessment in her possession in 2007.
For the reasons given I am not satisfied that Ms Lee has established that she has suffered any increase in the degree of impairment previously agreed and, in these circumstances, she is bound by the terms of the s 66A complying agreement.
Was the Arbitrator required to determine if the compensation agreed to was manifestly too low?
As I mentioned at [56], Ms Lee briefly argued before the Arbitrator that the amount of compensation agreed to in the complying agreement was manifestly too low and that in those circumstances s 66A(3)(a) applied, which gave the Commission jurisdiction to award additional compensation. Ms Lee has repeated that submission on appeal.
The Commission has received correspondence from the Club’s solicitor, Mr Wardell, dated 29 July 2013, seeking to reserve his client’s rights with respect to this issue. He correctly observed that the Arbitrator did not determine whether the compensation agreed to in 2007 was manifestly too low.
In the circumstances, on 16 September 2013, I convened a telephone conference between the parties, at which time, following a discussion of these issues, I granted the parties a brief adjournment to make any further submissions on the following issues. First, whether the application of s 66A(3)(a) was properly before the Arbitrator as an issue requiring her determination. Second, any further submissions as to how the Arbitrator’s failure to deal with the matter is an appealable error under s 352 of the 1998 Act.
On 20 September 2013, I convened a further telephone conference during which the parties made additional submissions.
Mr Dufour, solicitor for Ms Lee, submitted that as the issue for determination was for additional lump sum compensation, the applicant was not required to plead or otherwise specify that s 66A(3)(a) would be relied upon. Further, whilst Mr Dufour was unable to point to any error by the Arbitrator, he submitted that the Commission should infer that the Arbitrator did not decide the issue because, as she had concluded that there had been an increase in the impairment claimed, it was unnecessary to determine any other basis for awarding additional compensation.
Mr Wardell submitted that the application of s 66A(3)(a) was not an issue identified for the Arbitrator’s determination, notwithstanding a brief reference to the issue in the course of the arbitration hearing. Further, that having regard to the manner in which the issue was introduced (T9.23), namely, with the words, “Going one step further and to confirm, to reinforce that submission …” (that submission being a reference to the main argument around the application of s 66A(3)(c)), it is unclear as to whether s 66A(3)(a) was raised as a separate and discrete basis for awarding additional compensation to that payable pursuant to the complying agreement, or whether it was advanced as an argument in support of the principal argument under s 66A(3)(c).
Mr Wardell submitted that as the matter was not properly before the Arbitrator, and as no error has been identified, the Commission is deprived of jurisdiction to make any orders in relation to that issue on appeal.
Accepting that the Commission is not bound by strict pleadings, I am not satisfied that the application of s 66A(3)(a) was properly before the Arbitrator or that it was understood to be a matter requiring determination. At the commencement of the arbitration hearing the Arbitrator requested the parties to identify the issues requiring her determination. The application of s 66A(3)(c) was squarely raised, and leave was given to pursue that matter. However, the application of s 66A(3)(a) was not raised at the commencement of the arbitration hearing, or at the teleconference that proceeded it, as an issue in the proceedings.
I do not accept the submission that it should be inferred that the Arbitrator did not deal with the issue because of her findings on the application of s 66A(3)(c). If that was the way the Arbitrator approached the issue I would have expected her to have stated so. She did not.
Even if I am wrong, and the issue was raised, I would not be in a position to re-determine the issue on appeal in any event. The submissions on the issue have not been fully developed. Indeed, no submissions have been made as to the meaning of “manifestly too low” in this statutory context. This is an important consideration given that my researches and Mr Wardell’s researches have failed to identify any authority on the point.
For the foregoing reasons, I make no findings on the application of s 66A(3)(a). However, I would comment that, as there is unanimity as to the extent of the overall impairment, and as the deductible amount has been assessed by a qualified assessor, who has provided reasons, albeit brief reasons for his conclusion, and accepting that Ms Lee suffered from an undisputed significant pre-existing condition, it would be difficult, in my view, to establish that the agreed compensation was manifestly too low.
CONCLUSION
Section 66A agreements take effect according to their terms and according to the terms of the legislation. In the present case the clear objective intention of the parties in the 2007 complying agreement was to resolve the s 323 dispute. As the current evidence is the same as the worker’s evidence in 2007, Ms Lee has failed to establish that, since the agreement was entered into there has been any increase in the permanent impairment beyond that so agreed.
ORDERS
The Arbitrator’s determination of 24 June 2013 is revoked and the following orders are substituted:
1. Award for the respondent.
2. No order as to costs of the proceedings before the Arbitrator.
3. No order as to costs of the appeal.
Judge Keating
President
1 October 2013
I, MARGOT UNDERCLIFFE, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF JUDGE KEATING, PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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