James and Military Rehabilitation and Compensation Commission
[2009] AATA 842
•30 October 2009
CATCHWORDS – COMPENSATION – permanent impairment – previous injury under Safety, Rehabilitation and Compensation Act 1988 – whether method set out in Chapter 25 of GARP M relating to impairment resulting from previous injury sets out a method reasonably proportionate to power given under the MRC Act and Transitional Act – whether Chapter 25 reduces or diminishes right to compensation given under s 68 of the MRC Act – for purposes of making a decision correct in law, decided that Chapter 25 made within power.
Acts Interpretation Act 1901 ss 13(3), 23(b) and 46A
Legislative Instruments Act 2003, ss 38, 42 and 46(1)
Legislative Instruments (Transitional Provisions and Consequential Amendments) Act 2003, ss 2(1) and 3, Schedule 1, items 6 and 7
Military Rehabilitation and Compensation Act 2004, ss 5, 6(1), 8, 13, 13(3), 23(1), 24(1), 27(a), (b) and (d), 28(5), 29, 30(b), 67, 68, 69, 70, 71(1), 72(1), 73, 74(1), 75, 76, 77, 78, 80, 198, 199, 200(2), 201(1), 204(3) and 319
Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004, ss 2(1), 4(1), 7(1), 7(3), 12(1), 12(2), 13, 13(4), 14 and 24(3)
Safety, Rehabilitation and Compensation Act 1988, ss 15A, 24 and 28
Sentencing (Crime of Murder) and Parole Reform Act 2003 (NT), s 19(5)
Veterans’ Entitlements Act 1986, s 15
Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Regulations 2004, rr 2 and 4(2)
GARP M, Instrument No. M9 of 2005
GARPV M, Instrument No. 1 of 2004, cll Introduction, (2), (3)(a)-(d), (5)
Guide to the Assessment of the Degree of Permanent Impairment
Statutory Interpretation in Australia by DC Pearce and RS Geddes, Butterworths,
6th edition, 2006
Alexandra Private Geriatric Hospital v Blewett (1984) 2 FCR 368; 56 ALR 265
Brayson Motors Pty Ltd (in liq) v Federal Commissioner of Taxation (1985) 156 CLR 651
Canute v Comcare (2006) 229 ALR 445
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; 141 ALR 618
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation
Fellowes v Military Rehabilitation and Compensation Commission [2009] HCA 38
Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106; 45 ALJR 241
Hanlon v Law Society [1981] AC 124
Hunter Resources Ltd v Melville ((1988) 77 ALR 8 at 14 per Mason CJ and Gaudron J) and Secretary, Department of Health, Housing, Local Government and Community Services v Kaderbhai ((1994) 122 ALR 577
Leach v R (2007) 230 CLR 1; 81 ALJR 598; 232 ALR 325
Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381
Re Jonssonand Marine Council (No 2) (1990) 12 AAR 323
Samad v District Court (NSW) (2002) 209 CLR 140; 76 ALJR 871; 189 ALR 1
Secretary, Department of Health, Housing, Local Government and Community Services v Kaderbhai ((1994) 122 ALR 577
Shanahan v Scott (1957) 96 CLR 245
South Australia v Tanner (1989) 166 CLR 161
TCN Channel Nine Pty Ltd v Australian Mutual Provident Society (1982) 42 ALR 496
Vanstone v Clark [2005] FCAFC 189; (2005) 147 FCR 299
Wacando v The Commonwealth (1981) 148 CLR 1; 37 ALR 317
Ward v Williams (1955) 92 CLR 496
Webster v McIntosh (1980) 32 ALR 603
Williams v City of Melbourne (1933) 49 CLR 142
DECISION AND REASONS FOR DECISION [2009] AATA 842
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2007/5882-5884
GENERAL ADMINISTRATIVE DIVISION )Re:JUSTIN JAMES
Applicant
And:MILITARY REHABILITATION AND COMPENSATION COMMISSION
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 30 October 2009
Place: Melbourne
Decision:The Tribunal:
1.by consent in relation to file No. 2007/5883:
(1)affirms Comcare’s reviewable decision dated 23 October 2007; and
(2)orders the respondent to pay the applicant’s reasonable legal costs and disbursements associated with the proceedings instituted by the applicant under the Safety, Rehabilitation and Compensation Act 1988;
2.by consent in relation to file No. 2007/5884:
(1)decides that:
(a)the applicant’s level of impairment has increased from 10% to 20% when assessed in accordance with Table 9.5 of the approved Comcare Guide, 2nd edition, for the purposes of s 25(4) of the Safety Rehabilitation and Compensation Act 1988; and
(b)the respondent shall pay the applicant the sum of $17,859.55 consisting of:
(i)$15,039.62 under s 24 of the SRC Act; and
(ii)$2,819.93 under Part 1 of s 27 of the SRC Act; and
(2)orders the respondent to pay the applicant’s reasonable legal costs and disbursements associated with the proceedings instituted by the applicant under the Safety, Rehabilitation and Compensation Act 1988; and
3.in relation to file No. 2007/5882:
(1)affirms the reviewable decision of the respondent dated 31 October 2007 and decides that the applicant is entitled to compensation for permanent impairment as a result of his right knee injury amounting to $0.95 per week or, should he choose to commute that payment to a lump sum, $1,209.45.
S A Forgie
Deputy President
REASONS FOR DECISION
In accordance with s 319 of the Military Rehabilitation and Compensation Act 2004 (MRC Act), Lieutenant Justin James claimed compensation for permanent impairment in respect of a right knee injury. A delegate of the Military Rehabilitation and Compensation Commission (Commission) decided that he was entitled to compensation under s 68 of that Act. The issue in this case centres on the manner in which Lieutenant James’ compensation for permanent impairment is assessed. Before certain facts were agreed at the hearing regarding two previous injuries accepted under the Safety Rehabilitation and Compensation Act 1988 (SRC Act), Mr Wallace of counsel submitted that Lieutenant James’ entitlement amounted to $0.95 per week or, should he choose to commute that payment to a lump sum, $1,209.45. He did so on behalf of the Commission. On behalf of Lieutenant James, Mr Carey of counsel had submitted that it should be interpreted in a manner that leads to his being paid compensation in the form of a lump sum amounting to $32,966.70.
The $30,000 difference between the parties can be explained by their different views of the validity of Chapter 25 of the Guide determined by the Commission under s 67 of the MRC Act (GARP M).[1] Chapter 25 of that guide sets out the way in which the amount of compensation is assessed in circumstances in which an injury or disease has already been accepted under the SRC Act or the Veterans’ Entitlements Act 1986 (VE Act).
[1] Instrument No. M9 of 2005
I have decided that the method determined by the Commission in Chapter 25 of GARP M is reasonably proportionate to the power given to it under the MRC Act and the Transitional Act. My decision cannot, of course, be taken as determining its validity. That would be an exercise of judicial power that lies with a court and, by virtue of the separation of powers under the Commonwealth Constitution, not with a tribunal exercising executive power. My consideration of the issue is undertaken solely for the purpose of deciding whether or not I can validly make a decision having regard to the provisions of Chapter 25. Had they not been valid, I could not have made a decision that was correct in law having regard to them.[2] My decision must be the decision which is not only that which is correct on the evidence or probative material but which is correct according to law. If there is a range of correct decisions, and this case is not one in which this can occur, there would be a discretion to choose one of those correct decisions according to criteria expressed in the relevant legislation or inherent in its purpose and provisions.
[2] See my discussion generally in ReJonssonand Marine Council (No 2) (1990) 12 AAR 323 at 335-341
THE ISSUES
The parties identified the following six issues for resolution in this case:
1.Section 68 of the MRC Act confers an entitlement in respect of a permanent impairment. What is its proper construction?
2.Does Chapter 25 of GARP M operate in a way that reduces, diminishes or destroys the entitlement conferred by s 68?
3.Do the MRC Act, the Transitional Provisions Act or the Transitional Regulations authorise Chapter 25 of GARP M to operate in such a way that a person’s entitlement under s 68 of the MRC Act is reduced?
4.Does Chapter 25 of GARP M operate for all purposes of the MRC Act?
5.If Chapter 25 does reduce or extinguish a person’s entitlement under
s 68 of the MRC Act, is it permissible that it does so?
In the course of these reasons, I have answered all of the questions except the fourth and fifth. In brief, I do not consider that Chapter 25 extinguishes any rights to compensation under s 68 of the MRC Act. I consider that it has been determined according to the power given to the Commission under the MRC Act and the Transitional Act and is consistent with that legislation and also with the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Regulations 2004 (Transitional Regulations). Chapter 25 does not reduce, diminish or destroy the entitlement conferred by s 68 of the MRC Act. I have not answered the fourth or fifth questions for they do not arise in relation to the decision I must review. They should be answered in the context of a decision that does raise them and so in a context in which the issues may be properly canvassed.
THE SUBMISSIONS
Both parties made detailed written and spoken submissions. I have had regard to all and will only outline them in the briefest manner in this section of my reasons.
At the heart of Mr Carey’s submission on behalf of Lieutenant James is the proposition that Chapter 25 and the formulae it contains are not authorised by the MRC Act, the Transitional Act or the Transitional Regulations to affect a person’s entitlement under s 68 of the MRC Act. His analysis of the impairment provisions of the SRC Act and his comparison with the method set out in Chapter 25 led him to submit that GARP M provides no proper basis on which the benefit actually received can be assessed. Furthermore, the method it does provide actually reduces the benefit that is conferred by s 68 of the MRC Act.
Section 13 of the Transitional Act, Mr Carey submitted, cannot be the source of authority for the application of Chapter 25 to impairment entitlements under the MRC Act. Section 24(3)(b) of the Transitional Act authorises regulations for the purpose of converting a lump sum into weekly amounts for the purpose of working out an amount of compensation payable for a service injury or disease under Parts 2 and 6 of Chapter 4 of the MRC Act. Regulation 4(2) sets out a formula for making that calculation but it does not authorise the reduction of a person’s entitlement to compensation under s 68 of the MRC Act. Referring to the Explanatory Statement accompanying the Transitional Regulations, Mr Carey submitted that the formula must be read as applicable only when offsetting Special Rate Disability Pensions (SRDP) payable under the MRC Act. The term “offset” is used only once in the MRC Act and that is in s 204 when referring to the reduction of the maximum weekly amount of a SRDP that would otherwise be payable.
If I were to decide that Chapter 25 were not limited to the calculation of SRDP payments, Mr Carey submitted that I should regard GARP M as invalid to the extent that it contains that Chapter. In doing so, he acknowledged that the Tribunal cannot exercise judicial power and so cannot determine invalidity of delegated legislation. He developed his submissions on this point on three bases: inconsistency; the Commission had exercised its power to determine a guide for a purpose other than those for which the power was given; and unreasonableness.
On behalf of the Commission, Mr Wallace submitted that the MRC Act and the Transitional Act must be read together because, together, they establish a scheme of compensation. Section 13(4) of the Transitional Act provides that the Commission may include in GARP M one or more methods for working out the amount of compensation a person is entitled to for permanent impairment for a service injury or disease. In view of s 13(4), Mr Wallace submitted that it is correct to say that GARP M was determined for the purposes of s 67 of the MRC Act. Even if it were not determined under s 67, the Commission had power to determine Chapter 25 under s 13(4) of the Transitional Act.
BACKGROUND
After the evidence was given, the parties agreed upon a number of facts. I will set them out in this section of my reasons.
A.SRC Act claim: Right ankle injury (File No. 2007/5883)
Lieutenant James applied for a lump sum for permanent impairment for a right ankle injury. On 2 September 1997, a delegate of Comcare determined that he had suffered a whole of person impairment as a result of his compensable injury amounting to 10%.[3] This represented a total payment of compensation of $18,864.75 consisting of $11,262.53 under s 24 of the SRC Act and $7,602.22 under s 27.
[3] T documents (2007/5883), T28 at 55
Through his solicitors, Lieutenant James asked for a further assessment of his right ankle injury. On 13 September 2007, a delegate of the Commission considered it under both Tables 9.2 and 9.5 of the Guide to the Assessment of the Degree of Permanent Impairment (the Guide) prepared by Comcare in accordance with s 28 of the SRC Act. The Commission decided that Lieutenant James’ impairment had not increased by a further 10% since it was previously assessed on
2 September 1997. It reached that decision whether it assessed his impairment by reference to Table 9.2 or 9.5. Therefore, because Comcare had made a final assessment of the degree of his impairment in 1997 and the degree of his impairment had not increased by at least 10%, Lieutenant James was not entitled to a further amount of compensation in respect of his impairment. That is the effect of s 24(7) of the SRC Act. The Commission affirmed its decision on 23 October 2007.[4][4] T documents (2007/5883), T38 at 102-108
At the hearing, the parties agreed that Lieutenant James has not suffered any increase in the level of impairment of his right ankle injury since the final assessment of 2 September 1997. They also agreed that the reviewable decision be affirmed. As I am satisfied that a decision to that effect is within the Tribunal’s powers and it is appropriate to make it, I:
1.affirm Comcare’s reviewable decision dated 23 October 2007; and
2.order the respondent to pay the applicant’s reasonable legal costs and disbursements associated with the proceedings instituted by the applicant under the Safety, Rehabilitation and Compensation Act 1988.
B.SRC Act claim: Left knee injury (File No. 2007/5884)
Lieutenant James’ left knee injury was finally assessed on 23 May 2001.[5] Comcare determined that Lieutenant James had suffered a whole person impairment as a result of his left knee injury amounting to 10%. In light of that, Comcare assessed the compensation payable to him as $20,094.08. That amount comprised $11,648.70 under s 24 of the SRC Act and $8,445.38 under s 27.[6]
[5] T documents (2007/5884) T25 at 48
[6] T documents T25 (2007/5884) at 48-49
Since then, Lieutenant James has suffered an increase in the level of his impairment of 10% to 20% when assessed in accordance with Table 9.5 of the Guide. As the increase in his impairment was at least 10%, a further amount of compensation was payable to him in accordance with s 25(4) of the SRC Act.
In view of that, I:
1. decide by consent:
(1)the applicant’s level of impairment has increased from 10% to 20% when assessed in accordance with Table 9.5 of the approved Comcare Guide, 2nd edition, for the purposes of s 25(4) of the Safety Rehabilitation and Compensation Act 1988; and
(2)the respondent shall pay the applicant the sum of $17,859.55 consisting of:
(a)$15,039.62 under s 24 of the SRC Act; and
(b)$2,819.93 under Part 1 of s 27 of the SRC Act; and
2.order the respondent to pay the applicant’s reasonable legal costs and disbursements associated with the proceedings instituted by the applicant under the Safety, Rehabilitation and Compensation Act 1988.
C. MRC Act claim: Right knee injury (File No. 2007/5882)
It is agreed between the parties that Lieutenant James’ right knee injury is a service injury within the meaning of Part 3 of the MRC Act and that he has suffered a permanent impairment as a result. When assessed in accordance with the GARP M Guide (GARP M) approved under s 67 of the MRC Act, his level of impairment is represented by:
(1)12 points for the loss of range of movement of the right knee joint being:
(a)10 points from Table 3.2.1; and
(b)2 points when age adjusted according to Table 3.6.1;
(2)Nil points for resting joint pain in accordance with Table 3.4.1 of the Guide; and
(3)a rating of 4 in accordance with Chapter 22 of the Guide (Lifestyle Effects).
The Commission decided that Lieutenant James was entitled to compensation amounting to $0.95 per week. Should he elect to do so, he would be entitled to a lump sum of $1,209.45 in lieu of weekly payments.[7] The Commission affirmed its primary decision in its reviewable decision dated 13 September 2007.[8]
[7] T documents (2007/5882) T28 at 79 and offsetting calculations at T27 at 77-78
[8] T documents (2007/5884) T54 at 126
LEGISLATIVE BACKGROUND
From 1988 until 30 June 2004, the Commonwealth’s liability to pay compensation to members of the Defence Force was governed by either the Veterans’ Entitlements Act 1986 (VE Act) or the SRC Act. Since 1 July 2004, the Commonwealth’s liability to pay compensation and other benefits to current and former members of the Australian Defence Force (ADF) who suffer an injury or disease due to their service on or after that date has been regulated by the MRC Act.
A. The MRC Act
A.1 MRC Act: General outline
The MRC Act provides for compensation and other benefits to be paid to current and former service members of the Defence Service (members), cadets or declared members[9] who suffer a service injury or service disease. It also provides for compensation and other benefits to be provided to the dependants of some deceased members.
[9] A “declared member” means a person who has been engaged in activities at the request of the Defence Force, for its benefit or in relation to it and who the Defence Minister determines is to be taken to be or to have been a member for the purposes of the MRC Act: ss 5 and 8
A.2. MRC Act: Commonwealth’s liability for service injuries and diseases
Section 23(1) of the MRC Act provides:
“The Commission must accept liability for an injury sustained, or a disease contracted, by a person if:
(a)the person’s injury or disease is a service injury or disease under section 27; and
(b)the Commission is not prevented from accepting liability for the injury or disease by Part 4; and
(c)a claim for acceptance of liability for the injury or disease has been made under section 319.
The terms “service injury” and “service disease” are defined in ss 27, 29(1) and (2) and 30.[10] Those sections set out various circumstances in which an injury or disease will be regarded as a service injury or a service disease. I will refer to three examples only in s 27. An injury sustained or a disease contracted will be a service injury or a service disease if it resulted from an occurrence that happened while the person was a member rendering defence service or arose out of, or was attributable to, any defence service rendered by the person while a member.[11] The third example is found in s 27(d). That provision only applies if an injury or disease was sustained or contracted in one of two circumstances. One is that the injury or disease was sustained or contracted while the person was rendering defence service but did not arise out of that service. The other is that the injury or disease was sustained or contracted before the commencement of a period of defence service rendered by the person while a member, but not while the person was rendering defence service. If either of those circumstances exists then the injury or disease will be a service injury or a service disease if, in the opinion of the Commission, the injury or disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the person while a member after he or she sustained the injury or contracted the disease.
[10] MRC Act, s 5
[11] MRC Act, ss 27(a) and (b)
The term “defence service” means “… warlike service, non-warlike service or peacetime service”.[12] Each of those types of service is also defined.[13] The first two types of service are of a kind determined in writing by the Defence Minister to be of that kind. “Peacetime service” means any service with the Defence Force other than warlike service or non-warlike service.
[12] MRC Act, ss 5 and 6(1)(d)
[13] MRC Act, ss 5 and 6(1)(a), (b) and (c)
Section 29 provides for liability for injuries or diseases caused or aggravated by treatment. The expression “treatment” means treatment provided, or action taken, with a view to restoring a person to health or maintaining that person’s health, alleviating that person’s suffering or ensuring social well-being.[14]
[14] MRC Act, ss 5 and 13
Section 30 provides for the circumstances in which an injury or disease, which is not otherwise a service injury or a service disease, will be a service injury or a service disease. It will be a service injury or a service disease if:
“in the opinion of the Commission, a sign or symptom of the injury or disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the person while a member after he or she sustained the injury or contracted the disease.”[15]
The situations covered by this section differ from those in s 27(d) in that they refer to aggravations of, or material contributions to, signs or symptoms of an injury or disease. Section 27(d) refers to aggravations of, or material contributions to, an injury or disease.
[15] MRC Act, s 30(b)
A.3MRC Act: Compensation for members and former members
The term “compensation” has a variety of meanings including aids and appliances, a Special Rate Disability Pension, a telephone allowance, education or training, treatment and a pharmaceutical allowance. These examples are given in
s 5 but the MRC Act also makes provision for other types of compensation as well. In particular, the Commonwealth is liable to pay compensation when a service injury or a service disease results either in a person’s suffering a permanent impairment or, if a current member, in being incapacitated for service or, if a former member, for work.
A.4MRC Act: Compensation for members and former members for permanent impairment
Compensation for permanent impairment is provided for in Part 2 of Chapter 4 of the MRC Act. What is meant by the expression “permanent impairment” is found in s 68(1) when it specifies the Commonwealth’s liability to pay compensation for it:
“The Commonwealth is liable to pay compensation to a person if:
(a)the Commission has accepted liability for one or more service injuries or diseases[[16]] (the compensable condition) of the person; and
(b)the Commission is satisfied that:
(i)as a result of the compensable condition, the person has suffered an impairment; and
(ii)the impairment is likely to continue indefinitely; and
(iii)the person’s compensable condition has stabilised; and
(c)a claim for compensation in respect of the person has been made under section 319.”
[16]
Whether an impairment is likely to continue indefinitely is decided having regard to the matters specified in s 73[17]. What is meant by an “impairment”
is left to s 5 to explain:
“impairment, in relation to a person, means the loss, the loss of the use, or the damage or malfunction, of any part of the person’s body, of any bodily system or function, or of any part of such a system or function.”[18]
[17] Section 73 provides that in deciding whether an impairment is permanent, regard must be had to four matters: (a) the duration of the impairment; (b) the likelihood of improvement in one or more of the service injuries or diseases concerned; (c) whether the person has undertaken all reasonable rehabilitation treatment for the impairment; and (d) other relevant matters.
[18] MRC Act, s 5
Once the Commission has accepted liability for what is now described as the “compensable condition” (rather than the service injury or disease):
“The Commission must determine:
(a)the degree of impairment suffered by the person as a result of the compensable condition; and
(b)the date on which the person became entitled to compensation under this section by satisfying paragraph (1)(b) and sections 69 and 70 (if applicable).”[19]
[19] MRC Act, s 68(2)
The reference to s 69 is a reference to the Commonwealth’s being:
“… liable to pay compensation to a person under section 68 only if:
(a)for an impairment resulting from a single service injury or disease consisting of:
(i)hearing loss; or
(ii)the loss, or the loss of the use, of a finger or toe; or
(iii)the loss of the sense of taste or smell;
the impairment suffered by the person constitutes at least 5 impairment points; and
(b)otherwise – the impairment suffered by the person from the compensable condition constitutes at least 10 impairment points.”
Section 70 deals with the Commonwealth’s liability for compensation in respect of an aggravated injury or disease i.e. “… an injury or disease that is a service injury or disease because of paragraph 27(d), subsection 29(2) or section 30 (aggravations etc.) (and only because of that paragraph, subsection or section).”[20] Section 70(1) is concerned with the Commonwealth’s liability in respect of such a service injury or service disease:
[20] MRC Act, s 5
“The Commonwealth is liable to pay compensation under section 68 in respect of a single aggravated injury or disease only if:
(a)for an aggravation of, or a material contribution to:
(i)hearing loss; or
(ii)the loss, or the loss of the use, of a finger or toe; or
(iii)the loss of the sense of taste or smell;
the impairment suffered by the person as a result of the aggravation or material contribution constitutes at least 5 impairment points; and
(b)otherwise – the impairment suffered by the person as a result of the aggravation or material contribution constitutes at least 10 impairment points.”
Section 70(2) is concerned with the amount for which the Commonwealth is liable in respect of such a service injury or service disease:
“The amount of compensation that the Commonwealth is liable to pay in respect of the person’s aggravated injury or disease is the amount payable in respect of the impairment points of the person, and the effect on the person’s lifestyle, from the aggravation or material contribution.”
Section 71 provides that the Commonwealth is liable to pay additional compensation to a person who has been paid, or who is entitled to be paid, compensation under Part 2 of Chapter 4. That occurs in circumstances in which the Commission accepts liability for one or more service injuries or service diseases in addition to the compensable condition in respect of which the person is entitled to be paid compensation. The Commission must be satisfied that the additional service injuries or diseases have stabilised and that, as a result of them, the person suffers additional impairment that is likely to continue indefinitely. The increase in the person’s overall impairment must constitute at least five impairment points.[21]
[21] MRC Act, s 71(1)
Section 72 modifies the application of s 71(1) in relation to situations in which the Commonwealth is liable to pay additional compensation in respect of a single aggravated injury or disease. Additional compensation is payable only if the increase in the person’s overall impairment rating resulting from the aggravation or material contribution constitutes at least five impairment points.[22] Section 72(2) provides for the amount of additional compensation that the Commonwealth is liable
to pay under s 71(1) in respect of the aggravated injury or disease. That amount is:
“… the amount payable in respect of the impairment points of the person, and the effect on the person’s lifestyle, from the aggravation or material contribution.”
[22] MRC Act, s 72(1)
Section 71(2) provides for a person to be paid additional compensation if that person has suffered an additional impairment as a result of a deterioration in the compensable condition for which he or she has been paid, or is entitled to be paid, compensation under Part 2 of Chapter 4. That impairment must be a permanent impairment and the person must have made a claim under s 319 for additional compensation.
A.5MRC Act: Assessing the amount of compensation payable for permanent impairment
The maximum weekly amount of compensation payable under Part 2 of Chapter 4 and so in respect of permanent impairment is $233.07. That amount includes additional compensation under s 71. This is the effect of s 74(1) of the MRC Act.
The Commonwealth’s liability to pay compensation under ss 68 and 71 arises when the criteria in ss 68(1) or 71(1), as the case may be, are met. The effect of s 74(2) is that, as soon as practicable after the Commission has accepted liability for service injuries or service diseases, it must:
“(a) assess the effect of the injuries or diseases on the person’s lifestyle; and
(b)determine the weekly amount of compensation to which the person is entitled under that section.”
When the Commission is satisfied that a person will be entitled to compensation under either ss 68 or 71 but is not able to determine the degree of impairment suffered by the person because the service injuries or diseases have not stabilised, it will be liable to pay interim compensation if two further criteria are met. The first is that a claim for compensation has been made under s 319 in respect of the person. The second is that the Commission is satisfied that the impairment suffered by the person as a result of the injuries or diseases constitutes at least 10 impairment points.
The weekly amount of interim compensation is:
“… the amount the Commission determines to be reasonable having regard to the Commission’s estimate of the final degree of impairment that will be suffered by the person (but not having regard to the effect of the injuries or diseases on the person’s lifestyle).”[23]
Once the Commission is satisfied that the injuries or diseases have stabilised, it must determine the degree of impairment, assess the effect of the injuries on the person’s lifestyle and determine the weekly amount of compensation to which the person is entitled.[24] If the weekly amount determined at that stage to be the amount of weekly compensation is greater than the amount determined to be the interim compensation, the person is entitled to an additional weekly amount equal to the difference between the two amounts.[25]
[23] MRC Act, s 75(2)
[24] MRC Act, s 75(4)
[25] MRC Act, s 75(5)
Section 77 provides for the date on which weekly compensation payments become payable. Regard must be had to dates on which the claim, or the last claim, was made under s 319 and the date determined by the Commission under
s 68(2)(b).[26] Once the Commission has determined the amount of weekly compensation payable to a person, it must give a written notice.[27] Once the person receives such a notice, he or she may choose to convert, in some circumstances, all and, in others, part of the weekly amounts payable to him or her to a lump sum. Section 78(5) provides:
“The amount of the lump sum is worked out using the following formula:
[26] MRC Act, s 77(1)
[27] MRC Act, s 76
Weekly amount converted to a lump sum
_
Appropriate percentage of the weekly amounts paid to the person on or after the notice date and before the Commission became aware of the choice
where:
appropriate percentage means the percentage chosen by the person under subsection (1).
notice date means the date specified in the notice given to the person under section 76.
weekly amount converted to a lump sum means the appropriate percentage of the weekly amount payable to the person, as at the date of the notice given to the person under section 76, converted to a lump sum in accordance with advice from the Australian Government Actuary by reference to the person’s age at that date.”
Section 80 provides for additional amounts to be paid to a person whom the Commission has determined is impaired as a result of one or more service injuries or diseases to an extent of at least 80 impairment points.[28]
A.6MRC Act: Commission’s power to determine a Guide[29]
[28] MRC Act, s 80(1)
[29] Section 13(4) of the Transitional Act is also relevant; see [61] below.
The degree of impairment suffered by a person from a service injury or service disease, whether the original compensable condition or not, is a pivotal element in assessing the amount of compensation to which a person is entitled. Section 67 authorises the Commission to determine a Guide[30] and to repeal or amend it from time to time.[31] It is a disallowable instrument for the purposes of s 46A of the Acts Interpretation Act 1901.[32]The guide may set out:
“(a) criteria to be used in deciding the degree of impairment of a person resulting from a service injury or disease; and
(b)methods by which a degree of that impairment can be expressed in impairment points on a scale from 0 to 100; and
(c)criteria to be used in assessing the effect of a service injury or disease on a person’s lifestyle; and
(d)methods by which the effect of a service injury or disease on a person’s lifestyle can be expressed as a numerical rating; and
(e)methods by which the impairment points of a person, and the effect on a person’s lifestyle, from a service injury or disease can be used to determine the compensation payable to the person under this Part by reference to the maximum compensation that can be payable to a person under this Part.”[33]
[30] MRC Act, s 67(1)
[31] MRC Act, s 67(3)
[32] MRC Act, s 67(4) but see [108]-[112] below. Section 46A of the AI Act was repealed by Instrument No 140 of 2003.
[33] MRC Act, s 67(1)
Section 67(2) goes on to provide that:
“The guide must:
(a)specify different methods under paragraph (1)(e) for:
(i)service injuries or diseases that relate to warlike service or non-warlike service; and
(ii)other service injuries or diseases; and
(b)specify a method for determining the compensation payable to a person who has both:
(i)a service injury or disease that relates to warlike service or non-warlike service; and
(ii)another service injury or disease.”
A.7MRC Act: Special Rate Disability Pension (SRDP)
Part 6 of Chapter 4 of the MRC Act gives certain persons the choice of receiving an SRDP instead of compensation worked out under Division 2 of Part 4. Part 4 provides for compensation for incapacity for work for former members.
An SRDP is an ongoing weekly payment other than a payment under the Return to Work Scheme. The maximum amount of that pension is one half of the fortnightly rate at which a pension is payable from time to time under s 24 of the VE Act.[34]
[34] MRC Act, s 198
The circumstances in which a person is eligible to make the choice occur if the Commission is satisfied that the following criteria are met:
“(a) the person is receiving compensation worked out under Division 2 of Part 4 as a result of one or more service injuries or diseases;
(b)as a result of the injuries or diseases, the person has suffered an impairment that is likely to continue indefinitely;
(c)the Commission has determined under Part 2 that the person’s impairment constitutes at least 50 impairment points;
(d)the person is unable to take remunerative work for more than 10 hours per week, and rehabilitation is unlikely to increase the person’s capacity to undertake remunerative work.”[35]
[35] MRC Act, s 199
If satisfied, the Commission may make an offer to the person.[36] If made the offer, the person has 12 months within which to decide whether to accept it[37] but, having made a choice, cannot change it.[38]
[36] MRC Act, s 199(2)
[37] MRC Act, s 201(1)
[38] MRC Act,s 200(2)
Section 204 provides for the reduction of the maximum weekly amount of a SRDP that could be payable to a person. It applies for it to be reduced by certain amounts paid under Part 2 of the MRC Act and, if the person has retired, by any amounts received by way of pension or lump sum under a Commonwealth superannuation scheme as a result of the retirement. In relation to payments under Part 2, s 204(3) provides:
“The maximum weekly amount of a Special Rate Disability Pension that could be payable to a person is reduced by the sum of:
(a)any weekly amounts that are being paid to the person under Part 2; and
(b)if the person has chosen to convert all or part of one or more weekly amounts that were payable to the person under that Part to lump sums – those weekly amounts or those parts of those weekly amounts.”
If a person institutes proceedings for damages against the Commonwealth for non-economic loss or recovers damages from a third party, s 204(3) applies as if that person were being paid weekly amounts under Part 2 of the MRC Act. Payments of weekly amounts must be deemed in that way for s 389 provides that compensation is not payable under Part 2 in the case of proceedings against the Commonwealth and, if damages are recovered from a third party, s 402 provides that compensation is not payable under the Act.
B.Transition from the schemes under the SRC Act and VE Act to the MRC Act
B.1Transitional Act: its commencement
The Transitional Act purports to place limitations upon the application of the MRC Act. Its first three sections dealing with the short title, commencement and consequential amendments made to the SRC Act, the VE Act and various other enactments commenced operation on 27 April 2004. Its remaining provisions were expressed to come into operation “At the same time as section 3 of the MRCA commences”[39] i.e. 1 July 2004. The date that is ascertained in that way is referred to as the “commencement date” in the Transitional Act.[40] The purpose of that legislation is “… to amend laws, and to deal with transitional matters, in connection with the …” MRC Act.
[39] Transitional Act, s 2(1), Column 2
[40] Transitional Act, s 4(1)
B.2Transitional Act: its scope
Part 2 of the Transitional Act sets out those injuries, diseases, deaths and losses to which the MRC Act applies. Part 3 is concerned with those who have injuries or diseases coming under the VE Act or the SRC Act as well as the MRC Act. Part 4 sets out other transitional provisions concerning matters such as the offset of amounts of Commonwealth superannuation under the MRC Act, ongoing rehabilitation under the MRC Act for persons undergoing rehabilitation under the SRC Act or the VE Act, and the transfer of certain schemes and principles from the VE Act.
B.3Transitional Act: application of MRC Act to certain injuries, diseases, deaths, losses and damage
Section 7(1) of the Transitional Act provides:
“The MRCA applies to a person’s injury, disease or death if:
(a)the injury is sustained, the disease is contracted, or the death occurs, on or after the commencement date; and
(b)the injury, disease or death either:
(i)relates to defence service rendered by the person on or after that date; or
(ii)relates to defence service rendered by the person before, and on or after, that date.”
Section 7(3) provides that:
“… defence service is rendered before, and on or after, the commencement date whether the service spans the commencement date or is rendered during separate periods before and on or after that date.”
The expression “defence service” means “warlike service, non-warlike service or peacetime service”.[41] The terms “warlike service” and “non-warlike service” each refers to service with the Defence Force that is determined by the Defence Minister to be service of that kind.[42] Section 5(1) of the Transitional Act provides what is meant when it provides that “an injury, disease or death relates to defence service rendered by a person”.
[41] MRC Act, s 6(1)(d)
[42] MRC Act, s 6(1(a) and (b)
Section 8 of the Transitional Act provides for the application of the MRC Act to injuries or diseases and deaths caused by certain treatment. The deeming provisions in s 7(4) of the SRC Act as to the time at which an employee first sustained an injury, being a disease, or an aggravation of a disease do not apply in certain circumstances set out in ss 7 and 8. That is provided for in s 10.
Section 9 provides that the MRC Act does not apply to certain aggravations of, or material contributions to, VE Act injuries or diseases. Section 11 provides for the application of the MRC Act to the loss of, or damage to, a member’s medical aids if the loss or damage occurs after 1 July 2004. That loss or damage is no longer covered by the SRC Act.[43]
[43] SRC Act, s 15A
B.4Transitional Act: persons who have both VE Act and SRC Act injuries or diseases
Part 3 of the Transitional Act provides for those persons who have both injuries or diseases for the purposes of the SRC Act or the VE Act and the MRC Act. Section 12 of Part 3, for example, requires certain persons to choose between making a claim under s 319 of the MRC Act for acceptance of liability for an aggravation of an injury or disease and applying under s 15 of the VE Act for an increase in a rate of pension in respect of that aggravation. A person is included in those persons if:
“(a) the person is suffering from a war-caused or defence-caused injury or disease (within the meaning of the VEA); and[44]
after the commencement date, makes either the claim under the MRC Act or an application under s 15 of the VE Act. The Commission must give the person a written notice advising the person that he or she must choose between the two.[45]
[44] Transitional Act, s 12(1)(a)
[45] Transitional Act, s 12(2)
Section 13 of the Transitional Act provides for “Bringing across impairment points from a VEA or SRCA injury or disease”. It applies if a claim is made under s 319 of the MRC Act in respect of a person who already has “a separate war-caused or defence-caused injury or disease (within the meaning of the VE Act)”[46] or “a separate injury or disease (within the meaning of the SRCA)”.[47] It also applies to a person who makes a claim under s 319 in respect of an aggravation of, or material contribution to, “a war-caused or defence-caused injury or disease (within the meaning of the VE Act)”[48] or to “an injury or disease of a person (within the meaning of the SRCA)”[49] or to a sign or symptom of such an injury or disease.[50] Regardless of the genre of the earlier injury or disease, it is referred to as the “old injury or disease”.[51]
[46] Transitional Act, s 13(1)(a)(i)
[47] Transitional Act, ss 13(1)(a)(ii)
[48] Transitional Act, s 13(1)(b)(i)
[49] Transitional Act, s 13(1)(b)(ii)
[50] Transitional Act, s 13(1)(b)
[51] Transitional Act, s 13(1)
When one or other of these circumstances occurs, s 13(2) tells the Commission that it:
“… must determine the impairment points constituted by the impairment suffered by the person from the old injury or disease using the guide under section 67 of the MRCA.”
Once the Commission has done this, it must turn to s 13(3):
“For the purposes of determining under the MRCA the number of impairment points constituted by an impairment suffered by a person, the Commission must count the impairment points determined for the old injury or disease under subsection (2) towards the person’s total impairment points.”
Section 13(4) then provides:
“The Commission may include in the guide under section 67 of the MRCA one or more methods of working out the amount of compensation a person is entitled to under Part 2 of Chapter 4 of the MRCA (permanent impairment) for the service injury or disease. A method may (but does not have to) include a method of offsetting payments made to the person under the VEA or the SRCA in respect of the old injury or disease.”
Section 14 provides for the offset of payments made under the VE Act and the SRC Act against a Special Rate of Disability Pension:
“(1) For the purposes of section 204 of the MRCA, the maximum weekly amount of a Special Rate Disability Pension that could be payable to a person, at a time, must also be reduced by one half of the fortnightly rate at which any pension because of paragraph 13(1)(b) or 70(1)(b) of the VEA is payable to the person at that time.
(2)For the purposes of section 204 of the MRCA, the maximum weekly amount of a Special Rate Disability Pension that could be payable to a person must also be reduced by the sum of any previous payments of a lump sum to the person under section 24, 25 or 27 of the SRCA, converted to a weekly amount in accordance with regulations made for the purposes of paragraph 24(3)(b) of this Act.”
Section 24(3)(b) of the Transitional Act to which s 14(2) refers, is part of a wider regulation making provision. The general regulation-making power is found in s 24(1):
“The Governor-General may make regulations prescribing matters of a transitional nature (including prescribing any saving or application provisions) arising out of the enactment of the MRCA or this Act.”
Particular regulations are provided for in s 24(3):
“Without limiting subsection (1), the regulations may provide:
(a)that persons who are entitled to compensation under the MRCA cease to be entitled to a similar benefit under the VEA or the SRCA; and
(b)a method of converting a lump sum into weekly amounts for the purpose of working out an amount of compensation payable for a service injury or disease under Parts 2 and 6 of Chapter 4 of the MRCA.”
C. The Transitional Regulations
C.1Transitional Regulations: commencement
The Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Regulations 2004 (Transitional Regulations) commence on 1 July 2004.[52]
C.2Transitional Regulations: the method of converting previous payments of lump sum under ss 24, 25 and 27 of the SRC Act
[52] Transitional Regulations, r 2
Regulation 4 begins by referring to s 24(3)(b) of the Transitional Act.[53] It then goes on to provide that, for the purposes of that section, it:
[53] See [8] above. Section 24(3)(b) of the Transitional Act states that the regulations may provide a method for converting a lump sum amount into weekly amounts for the purpose of working out an amount of compensation payable for a service injury or disease under Parts 2 and 6 of Chapter 4 of the MRC Act.
“(1) … sets out the method of converting into a weekly amount the sum of any previous payments of a lump sum to a person under sections 24, 25 and 27 of the SRCA.
(2)For subregulation (1), and subject to regulation 5, the method is:
where:
aged based number means the number that is advised by the Australian Government Actuary by reference to the age of the person on the day on which the lump sum amount for section 24, 25 or 27 of the SRCA was paid to the person, and the gender of the person.
current lump sum amount means the amount worked out in accordance with subregulation (3).
(3)The current lump sum amount means the amount worked out using the following formula:
where:
maximum amount means the maximum amount specified in subsection 24 (9) of the SRCA, as indexed in accordance with section 13 of that Act.
previous lump sum amount means the sum of any amounts previously:
(a)assessed as payable to the person under sections 24, 25 and 27 of the SRCA; and
(b)paid as a lump sum or lump sums.
relevant financial year means the financial year in which an amount of compensation was paid to the person under section 24, 25 or 27 of the SRCA.”[54]
[54] The SRCA is what I have called the SRC Act.
Regulation 5 provides for the indexation of the weekly amount using the Consumer Price Index method of indexation set out in s 404 of the MRC Act.
D.GARP M
D.1 GARP M: statutory basis
I have already referred to the power given under s 67(1) of the MRC Act and s 13(4) of the Transitional Act to determine a guide, which has become GARP M, or parts of it. Power is also given by s 67(3) of the MRC Act to the Commission to repeal or amend the guide.
D.2 GARP M: provisions other than Chapter 25
By Instrument No M9 of 2005, the Commission repealed its previous determination under s 67(1)[55] with effect from 1 July 2005. In its place, it determined Instrument No M9 of 2005, which is known as the GARP M:
“For the purposes of section 67 of the MRCA, it is determined by the Military Rehabilitation and Compensation Commission that the following Guide to Impairment and Compensation (comprising pages i to iv for the Introduction and pages 1 to 232 for the remainder of the Guide) applies as the guide for the determination of the degree of impairment and lifestyle ratings when determining the compensation payable to a person under the MRCA.”[56]
[55] Instrument No 1 of 2004 dated 21 June 2004
[56] GARP M, cl (3)
GARP M is divided into three parts. Part A is headed “System Specific Assessment”, Part B “Non-system Specific Assessment” and Part C “Impairment Ratings: Combining, Apportioning, Partially Contributing”. Parts A and B are concerned with medical impairment which has two components: physical loss of, or disturbance to, any body part or system and the resultant functional loss. Those Parts set out tables matching impairment ratings against the impairment or functional loss.
Part C is headed “Impairment Ratings: Combining, Apportioning, Partially Contributing”. Chapter 18 sets out the Combined Value Chart. After all impairment ratings have been obtained for all accepted conditions, they must be combined to a single value known as the combined impairment rating. They are not added together but combined according to Table 18.1. The values shown in that table, known as the Combined Values Chart, is based on the formula:
“ [A + B (1 - rounded to the nearest integer
where ‘A’ and ‘B’ are the impairment ratings to be combined.
This formula embodies a principle of combining ratings. The principle derives from the concept of whole person impairment (see page X). …”[57]
[57] GARP M, Chapter 18, Introduction
Chapter 19 is concerned with situations in which an impairment is not due solely to the effects of an accepted condition. Chapter 20 is concerned with apportionment in situations in which an impairment rating derived from one table must be compared with an impairment rating derived from another or when two or more accepted conditions contribute to the impairment ratings from either table. Chapter 21 is concerned with the paired organs policy. That policy recognises that the impairment of one organ in a pair is greater than it would otherwise be when the other is already impaired.
The effect on lifestyle is one of the subjects dealt with in Part C. They are dealt with in Chapter 22. A lifestyle effect is said to be “… a disadvantage, resulting from an accepted condition, that limits or prevents the fulfilment of a role that is normal for a veteran of the same age without the accepted condition.”[58] Those disadvantages are divided into those that affect personal relationships, mobility, recreational and community activities, domestic activities and employment activities. Ratings are assigned to various degrees of disadvantage. Provision is made for the way in which the ratings assigned to the various disadvantages are combined and the lifestyle rating obtained.
[58] GARP M, Chapter 22, Introduction
Chapters 23, 24 and 25 appear after Part C under the heading “Calculating Permanent Impairment Compensation”. Chapter 23 is headed “Calculating Permanent Impairment Compensation”. It begins with the statement:
“Section 67 of the Military Rehabilitation and Compensation Act 2004 provides that this Guide can specify how the Military Rehabilitation and Compensation Commission is to determine the compensation payable to a person under Part 2 of that Act.”
Chapter 23 then goes on to provide that the combined impairment rating, which is obtained using the Combined Values Chart in Chapter 18, is to be combined with lifestyle rating from either the War-like or Non-Warlike Factors Tables. Those Tables set out different methods for assessing the effect of a service injury or disease on a person’s lifestyle depending on whether the service injury or disease relates to warlike service or non-warlike service on the one hand or peacetime service. The figure obtained by combining the combined impairment rating with the lifestyle rating gives the factor by which the “maximum lump sum payment available under the Act”[59] is multiplied. Given that the MRC Act provides for initial compensation on a weekly basis and for later conversion of any weekly sum to a lump sum, I suspect that the reference in this sentence should be to the maximum weekly sum, rather than to the lump sum, available under the MRC Act.
[59] GARP M, Chapter 23 at 223
Chapter 24 provides for the conversion of weekly sums into lump sums.
D.3 GARP M: Chapter 25
Chapter 25 sets out a method for working out the amount of compensation payable under the MRC Act to a person who has a service injury or disease but who also has a pre-existing injury or disease, or condition, under either the VE Act or the SRC Act. As Lieutenant James has conditions that have been accepted under the SRC Act, I will consider only that situation.
Chapter 25 provides that the combined impairment must be determined under the MRC Act using the Guide. It sets out different formulae depending on whether the injury or disease under the SRC Act or the VE Act was unrelated to that under the MRC Act or whether injury or disease under the MRC Act is an aggravation of that under the SRC Act or the VE Act as the case may be. I will refer to one only as an example.
“The impairment resulting from any old injury or disease must be determined using this Guide as at the date of the MRCA determination. The points so derived for the old injury or disease must then be combined using the combined impairment table to determine the overall impairment assessment for the purpose of the MRCA.
IR – Impairment Rating
S – Old SRCA injury or disease
M – MRCA injury or disease
Total IR (S + M) = [IR(S) + IR(M)]
Determine the lifestyle effect of both M and S taken together.
The SRCA lump sum, converted to a periodic payment, is subtracted from the MRCA periodic payment to get the net MRCA periodic payment.
In order to calculate the net MRCA periodic payment the SRCA lump sum must be converted to a periodic payment. The SRCA amount is converted to a current lump sum value (by multiplying by the ratio of the current value for maximum SRCA section 24 payment to the value when the lump sum payment was made) and the amount converted to a periodic payment by dividing by an age-based number provided by the Australian Government Actuary for this purpose. The age to be used in applying this age-based number is the age the person was at the time the SRCA lump sum was paid. The amount is indexed annually (on 1 July) using the indexation factor calculated under section 404 of the MRCA.
The net MRCA periodic payments continue for life or can be converted to a lump sum in accordance with section 78 of the MRCA.”
CONSIDERATION
A. What obligations does s 68 of the MRC Act impose and what rights does it confer?
Section 68 establishes the Commonwealth’s liability to pay compensation for permanent impairment. The Commonwealth’s liability is Lieutenant James’ correlative power to obtain or right to compensation for permanent impairment. But when does that liability and correlative right arise and what are their limits?
A.1The criteria that must be satisfied before there is a liability to pay compensation and a right to receive that payment
The first criterion that must be satisfied is that the Commission must have accepted liability “for one or more service injuries or diseases”.[60] Together, the “one or more service injuries or diseases” are described as the “compensable condition”. No mention is made of the time at which the Commission has accepted liability from those service injuries or diseases. In particular, there is no suggestion on the face of s 68(1)(a) that the Commission looks only to the service injury or disease that is the subject of the most recent application for compensation for permanent impairment under s 319 and that has not been determined. The suggestion is, in fact, to the contrary when regard is had to the way in which the service injuries or diseases are bundled together under the one descriptor of “compensable condition”.
[60] MRC Act, s 68(1)(a)
When I look to ss 70, 71 and 72 of the MRC Act, the suggestion proves to be without foundation. Section 70 limits the Commonwealth’s liability to pay compensation under s 68 in respect of a single aggravated injury or disease. That provision necessarily assumes that there was an earlier injury or disease in respect of which the Commission has accepted liability. Section 71 provides for additional compensation when the Commission accepts liability for “one or more additional service injuries or diseases”.[61] Additional compensation is payable only if “as a result of the additional injuries or diseases, the person suffers additional impairment”.[62] Again, the provision necessarily assumes the earlier injuries or diseases for which liability has been accepted. The same is true for s 72.
[61] MRC Act, s 71(1)(a)
[62] MRC Act, s 71(b)(i)
Therefore, the “compensable condition” must include those service injuries or diseases in respect of which the Commission has accepted liability in response to a previous claim or claims under s 319 and in respect of which a claim for compensation for permanent impairment has been made under s 319. The “compensable condition” does not include service injuries or diseases the subject of previous claims for permanent impairment made under s 319.
The second criterion under s 68(1) is that, as a result of the compensable condition, the person has suffered an impairment. I have set out the definition of an “impairment” above.[63] There is no need to consider in this case when, “as a result of” the compensable condition, the person has suffered an impairment.
[63] See [29] above
Nowhere in s 68 is any mention made of the impairment’s being permanent.[64] Section 68(1)(b)(ii) and (iii), however, together require that the impairment is likely to continue indefinitely and that the person’s compensable condition, and so one or more service injuries or diseases, have stabilised.
[64] Reference is made to it in the heading to the section but headings to sections are not part of the Act: AI Act, s 13(3)
A.2The Commission’s obligation once the three criteria are satisfied
Once the three criteria have been met, the Commission must determine the degree of impairment suffered by the person as a result of the compensable condition and the date on which that person satisfied s 68(1)(b) – the date on which the person suffered a permanent impairment as a result of the compensable condition – and also satisfied ss 69 and 70 if they are applicable. That is the effect of s 68(2).
Mirroring the Commission’s obligation is Lieutenant James’ right to have the Commission determine the degree of impairment suffered as a result of the compensable condition and the date he satisfied, if relevant, ss 69 and 70. Section 69 is the section that provides that the Commonwealth is not liable if an impairment does not meet certain threshold impairment points. Section 70 places a similar restriction on the Commonwealth’s liability to pay compensation for permanent impairment in respect of a single aggravated injury or disease. This is the extent of Lieutenant James’ right under s 68.
A.3In respect of what is compensation under s 68 payable?
Unlike s 24(1) of the SRC Act, s 68 of the MRC Act does not provide that the Commonwealth is liable to pay “compensation in respect of the injury”. The High Court said of that section in Canute v Comcare:[65]
“ The concept of ‘an injury’ is a term of pivotal importance in the structure of the Act. Section 24(1) … provides that Comcare’s liability to pay compensation arises in respect of ‘an injury’. Further, Comcare’s liability pursuant to s 24(1) also arises with respect to ‘an injury’ which results in ‘a permanent impairment’.”[66]
It elaborated upon three aspects of the concept of “an injury”:
“… First, the Act does not oblige Comcare to pay compensation in respect of an employee’s impairment; it is liable to pay compensation in respect of ‘the injury’. Secondly, the term ‘injury’ is not used in the Act in the sense of ‘workplace accident’. The definition of ‘injury’ is expressed in terms of the resultant effect of an incident or ailment upon the employee’s body. Thirdly, the term ‘injury’ is not used in a global sense to describe the general condition of the employee following an incident. The Act refers disjunctively to ‘disease’ or ‘physical or mental ‘injuries’ and, at least to that extent, it assumes that an employee may sustain more than one ‘injury’. The use in
s 24(1) of the indefinite article in the expression ‘an injury’ reinforces that conclusion.”[67]
[65] (2006) 229 ALR 445
[66] (2006) 229 ALR 445 at 448, Gummow ACJ, Kirby, Callinan, Heydon and Crennan JJ
[67] (2006) 229 ALR 445 at 448
After approving this interpretation of s 24(1) in Fellowes v Military Rehabilitation and Compensation Commission,[68] the majority of the High Court went on to consider the competing arguments that had been put to them regarding the interpretation of s 24(5) of the SRC Act. That sub-section provides that:
“Comcare shall determine the degree of permanent impairment of the employee resulting from an injury under the provisions of the approved Guide.”
[68] [2009] HCA 38 at [14] per Hayne, Heydon, Crennan and Bell JJ
In summary:
“ The appellant submitted that, each injury having led to a separate impairment, the degree of permanent impairment of the employee that resulted from the injury was determined by looking to the consequences that followed from that injury. The consequences to be identified, so the appellant submitted, were the consequences that followed from the particular impairment as that term is defined in the SRC Act. In this case, because there were two injuries and two impairments, two amounts of compensation should be awarded.
By contrast, the respondent submitted that what was to be determined under s 24(5) was the degree of permanent impairment of the appellant, fixed by reference to Table 9.5 of the Guide. That table classified the impairment of the appellant’s capacity to undertake the activities of daily living resulting from the second injury as the same as that which followed as a result of the first. Accordingly, so the respondent submitted, the degree of impairment resulting from the second injury, when assessed in accordance with the Guide, should be assessed as 0%, a result expressly contemplated by s 28(5) of the SRC Act[[69]].”[70]
[69] “Section 28(5) provided:
‘The percentage of permanent impairment or non-economic loss suffered by an employee as a result of an injury ascertained under the methods referred to in paragraph (1)(c) [the methods set out in the Guide] may be 0%.”
[70] [2009] HCA 38 at [14]-[16]
Which submission the majority adopted depended upon whether the word “impairment”, as it is used in s 24(5) of the SRC Act, was:
“… to be understood in that phrase as referring back to s 24(1) and its provision that Comcare (here the Commonwealth) is liable to pay compensation to an employee in respect of an injury ‘[w]here an injury to an employee results in a permanent impairment’? In particular, is the reference to ‘permanent impairment of the employee’ found in s 24(5) a reference in the circumstances of this case to permanent damage to, or loss of the use of, a part of the employee’s body, as the definition of ‘impairment’ would suggest? Or, as the respondent submitted, should s 24(5) be read as directing attention to impairment of the particular employee as a whole person rather than to damage to, or loss of the use of, a particular part of the body?...”[71]
[71] [2009] HCA 38 at [18]
The majority in Fellowes began its consideration of these competing arguments by referring to Canute:
“ In Canute, this Court pointed out[[72]] that the definition of ‘impairment in the SRC Act is not expressed in terms that require assessing impairment on a “whole person’ basis. Rather, the definition is expressed in terms conveying a disaggregated sense. As the Court said[[73]] in Canute, ‘[t]extually, the Act assumes that ‘an injury’ may result in more than one “impairment”’. Likewise, it must follow that more than one injury may result (and often will result) in more than one impairment.
[72] (2006) 226 CLR 535 at 541[11]
[73] (2006) 226 CLR 535 at 541[11]
It may be accepted that, as the respondent submitted, s 24(5) requires determination of the degree of permanent impairment of an employee resulting from an injury ‘under the provisions of the approved Guide’. It may also be accepted that, as the respondent submitted, s 28(1) of the SRC Act authorised Comcare to prepare a Guide setting out:
‘(a)criteria by reference to which the degree of permanent impairment of an employee resulting from an injury shall be determined; [and]
…
(c) methods by which the degree of permanent impairment … as determined under those criteria, shall be expressed as a percentage’.
To that extent, the respondent’s submission, that the Guide controls the assessment of the degree of permanent impairment, may be accepted. But, as pointed out in Canute[74]:
‘recourse to the criteria and methodologies set out in the Guide is only necessary once the key statutory criterion of the occurrence of “an injury” (which resulted in at least one permanent impairment) has been fulfilled.’
Once it is accepted, as it was in Canute, that the SRC Act hinges about the concept of ‘injury’ and that ‘impairment’ is to be identified in terms of effect on bodily parts, systems or functions, it follows that the appellant’s arguments are to be accepted and the respondent’s rejected. The conclusion reached by the Tribunal could be supported only by reading s 24(5) as directing, or permitting, Comcare to provide in the Guide for determination of the degree of permanent impairment resulting from an injury by reference to the pre-existing capacities of the particular applicant for compensation.”[75]
[74] (2006) 226 CLR 535 at 542 [14]
[75] [2009] HCA 38 at [19]-[21]
After identifying the references in the Guide to whole person impairment, the majority of the High Court in Fellowes said:
“… The references to ‘whole person impairment’ that are found in the Guide do not direct attention to the effect of an injury or disease on a particular individual. On the contrary, the effect to be assessed is by reference to the functional capacities of a normal healthy person.
The statement in the Guide, that ‘[w]here two or more injuries give rise to the same impairment a single rating only should be given’, must be understood as directing attention to an impairment as that term is defined in the SRC Act. That is, the reference to the ‘same impairment’ must be understood in terms of the particular identified effect on particular bodily parts, systems or functions. Contrary to the respondent’s submission, this statement in the Guide is not to be understood as requiring a single rating to be given whenever each of two injuries is assessed as yielding the same degree of impairment of two separate parts of the body.
The text of the Guide is therefore to be construed as providing that the whole person impairment to which it directs attention requires comparison with the ‘functional [capacities] of a normal healthy person’ rather than the capacities of the particular applicant as they existed immediately before the injury in question. The reference to two injuries causing the ‘same impairment’ requires attention to the particular identified effect on bodily parts, systems or functions that is said to have resulted from the two injuries. …”[76]
[76] [2009] HCA 38 at [24]-[26]
The analysis of the majority in Fellowes began with s 24(1). From my analysis of s 68, Parliament has taken a path different from that it took in s 24(1). It has not made the Commonwealth liable in respect of an injury when that injury results in a permanent impairment. That a service injury or disease has that consequence is one of the three criteria that must be established before the Commonwealth is liable. Liability only arises if all three criteria are satisfied. That is very different from imposing an obligation on the Commonwealth in respect of that service injury or disease.
It could be thought that s 70 takes a different approach in relation to aggravations. Section 70(2) begins by referring to “The amount of compensation that the Commonwealth is liable to pay in respect of the person’s aggravated injury or disease …”. That wording is very close to that in s 24(1) and might be thought to lead to the same interpretation as that identified in Canute. When regard is had to the remainder of the section, that thought is dispelled. The remaining words quantify the amount that the Commonwealth is liable to pay in respect of the aggravated injury or disease by reference to “the amount payable in respect of the impairment points of the person, and the effect on the person’s lifestyle, from the aggravation or material contribution.” I will return to s 70 below.[77]
[77] See [98] below
The wording of s 67(1)(a) of the MRC Act might also be thought to favour an interpretation that the references to whole person impairment in GARP M are references to an assessment of the person’s impairment resulting from a service injury or disease by reference to the functional capacities of a normal healthy person. That is to say, assessment would be by reference to the functional capacities of a normal healthy person rather than by reference to the effect of a service injury or disease on the particular person claiming compensation for permanent impairment. That would be to apply the interpretation given by the majority in Fellowes to
s 28(1)(a) of the SRC Act that Comcare might prepare a Guide setting out “criteria by reference to which the degree of permanent impairment of an employee resulting from an injury shall be determined”. Section 67(1)(a) is similar in that it provides that the Commission may determine GARP M setting out “criteria to be used in deciding the degree of impairment of a person resulting from a service injury or disease”.
One difference between the schemes of compensation for permanent impairment provided for in the SRC Act and that in the MRC Act is found in part in ss 24(1) and s 68(1) respectively. Section 24(1) provides for compensation in respect of an injury and s 68(1) provides for compensation if all three criteria are satisfied. Only one of those criteria in s 68(1) is that the Commission has accepted liability for one or more service injuries or diseases. A second criterion is that the person has suffered a permanent impairment as described in s 68(1)(b).
Another difference is found in the definitions of the word “impairment” that appears in the two pieces of legislation. Unlike the definition of “impairment” in s 4(1) of the SRC Act, the definition of an “impairment” in s 5 of the MRC Act is written in terms of an “impairment in relation to a person” and focuses on the loss, the loss of use, or damage or malfunction of any part of “the person’s body”. I set the definition out in full at [29] above. By contrast, the definition of “impairment” in s 4(1) of the SRC Act is expressed in terms making no reference to the person who has suffered the relevant loss. It reads:
“impairment means the loss, the loss of the use of, or the damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function”.
The difference in wording between the two definitions when read with the differences in wording between ss 24(1) and 68(1) is crucial. Provided the other two criteria in s 68(1) are met, the focus of the entitlement to compensation for permanent impairment under the MRC Act is upon the person’s having suffered an impairment and the loss that is represented by that impairment to the person. The focus is not upon the loss that is represented by that impairment to someone who is not the person in respect of whose permanent impairment compensation is being claimed. The provisions of the MRC Act lead, therefore, to a conclusion different from that reached by the majority of the High Court in Fellowes when they concluded that the Guide determined by Comcare did not direct attention to the effect of an injury or disease on a particular individual. Under the MRC Act, the Commission must determine GARP M so that it does direct attention to the effect of a service injury or disease on the particular individual who suffered the service injury or disease for which compensation is claimed.
B. Does Lieutenant James have further rights under Part 2 of Chapter 4?
Section 69 circumscribes Lieutenant James’ right. By virtue of its provisions, he has a right to compensation in respect of an impairment only if that impairment is of a degree represented by at least 10 impairment points. “Impairment points” are “…the points worked out for the person using the guide determined under section 67”.[78] Had he had an impairment resulting from a single service injury or disease consisting of hearing loss, the loss, or the loss of the use, of a finger or toe or the loss of his sense of taste or smell, he would have had a right to compensation in respect of an impairment that is of a degree represented by at least five impairment points.
[78] MRC Act, s 5
The emphasis of s 69 is upon impairment points and, in particular, upon the “impairment suffered by the person” constituting the minimum number of points designated for the circumstances. The same is true of s 70 in relation to compensation in respect of a single aggravated injury or disease. In that context, the emphasis is upon the “impairment suffered by the person as a result of the aggravation or material contribution”. In neither section is the Commonwealth’s liability to pay compensation under s 68 approached by reference to the injury. Rather, it is approached by reference to the impairment, as that term is defined in s 5, and, more particularly, by reference to the impairment suffered by the person as a result of the service injury or disease or service injuries or diseases or as a result of its or their aggravation as the case may be.
This is quite a different scheme from that in the SRC Act and considered by the High Court in Canute. Of that scheme, the High Court said:
“ However, it is important to remember that recourse to the criteria and methodologies set out in the guide is only necessary once the key statutory criterion of the occurrence of ‘an injury’ (which resulted in at least one permanent impairment) has been fulfilled. The guide is to be approached through the prism of each ‘injury’. The terms of s 24(5) are quite clear; Comcare is to assess the degree of permanent impairment of the employee ‘resulting from an injury’. Similarly, in s 24(7), the threshold permanent impairment of the employee of 10% affects the amount of compensation payable ‘under this section’: that is, ‘in respect of the injury’: s 24(1).”[79]
[79] (2006) 229 ALR 445 at 450
Certainly, a service injury or disease for which liability has been accepted is at the core of the scheme established under the MRC Act just as, to use the words of the High Court in Canute, “The scheme of the [SRC] Act proceeds … from the occurrence of ‘an injury’ in the defined sense.”[80] It is one thing to be at the core and another thing to be the matter in respect of which compensation is given. The scheme of the MRC Act is that compensation for permanent impairment is given in respect of that permanent impairment provided it attracts the requisite number of impairment points. It does not provide for compensation in respect of a service injury or disease. In light of this, Lieutenant James’ right is to compensation for permanent impairment provided it attracts the requisite minimum number of impairment points as specified by the MRC Act.
[80] (2006) 229 ALR 445 at 450
Lieutenant James has other rights conferred on him by Part 2. He has the right to have any compensation payable to him paid from the date determined by reference to s 77. The maximum weekly amount of compensation that will be payable to him for permanent impairment will be $233.07 as indexed in accordance with s 404. Lieutenant James has a right to choose to have all or a percentage of a weekly amount payable under ss 68 or 71 to a lump sum. The amount of the lump sum is determined by reference to the formula set out in s 78(5). The Commonwealth’s liability to pay, and Lieutenant James’ correlative right to be paid, interim compensation is provided for in s 75. That section requires the Commission to determine that amount by reference to what would be reasonable having regard to its estimate of the final degree of impairment that he would suffer but without regard to the effect on his lifestyle. Again, the reference in s 75 is to the degree of impairment but not to any method in which that is used, if it is used, to assess his compensation. The same is true for the remaining provisions of Part 2 other than s 67.
C.Must the Commission determine a guide?
C.1The principles
Section 67(1) is expressed in terms that suggest that the Commission is permitted to determine a guide setting out certain matters i.e. “the Commission may determine … a guide …”. The word “may” is generally “used to express permission”[81] and so, in a legislative context, to confer authority. There are occasions, though, in which the word “may” is interpreted as not only conferring authority but as conferring an obligation to exercise that authority.
[81] Chambers21st Century Dictionary, 1999, reprinted 2004
A passage from the judgment of Gummow, Hayne, Heydon and Crennan JJ in Leach v R[82] illustrates the different uses of the word. The context of the High Court’s consideration was s 19(5) of the Sentencing (Crime of Murder) and Parole Reform Act 2003 (NT). It provided that:
“The Supreme Court may refuse to fix a non-parole period if satisfied the level of culpability in the commission of the offence is so extreme the community interest in retribution, punishment, protection and deterrence can only be met if the offender is imprisoned for the term of his or her natural life without the possibility of release on parole.”
[82] (2007) 230 CLR 1; 81 ALJR 598; 232 ALR 325, Gleeson CJ dissenting
Their Honours concluded that the word “may” was not used to convey a discretion but to confer a power that a court was obliged to exercise once it was satisfied of the matters specified in s 19(5).[83] They referred to a passage to the same effect from the judgment of Windeyer J in Finance Facilities Pty Ltd v Federal Commissioner of Taxation.[84] His Honour had considered whether the Commissioner of Taxation was obliged to allow a rebate when satisfied that certain conditions had been met as to the non-payment of dividends. As explained by Gleeson CJ and McHugh J in Samad v District Court (NSW),[85] the High Court in Finance Facilities Pty Ltd v Federal Commissioner of Taxation had decided that:
“… The context indicated that it was not intended that the Commissioner should have a discretionary power to defeat that right or entitlement. The word ‘may’ conferred a power; and the statutory intention was that the power be exercised if the condition was fulfilled. …”[86]
[83] Leach v R (2007) 230 CLR 1; 232 ALR 325; 81 ALJR 598; at 16; 337; 606
[84] (1971) 127 CLR 106; 45 ALJR 241
[85] (2002) 209 CLR 140; 76 ALJR 871; 189 ALR 1
[86] (2002) 209 CLR 140 at 152-153
When a statutory power is conferred by words of permission, Gleeson CJ and McHugh J said, questions whether it is a mandatory or discretionary power and, if discretionary, the issues that may be taken into account in its exercise:
“… are to be resolved as a matter of statutory interpretation, having regard to the language of the statute, the context of the relevant provision, and the general scope and objects of the legislation …”[87]
E.2Old injuries or diseases under the SRC Act put on the same basis as those under the MRC Act
[114] MRC Act, s 13(3)
In his submissions, Mr Carey referred to the expression “old injury or disease” used in s 13 of the Transitional Act. As he said, that is the first occasion on which it is used in the history of the legislation relating to the scheme of compensation. He submitted that:
“(a) There is no requirement that the old injury or disease, whether under the VEA or SRCA, be subject to prior determination or benefit of entitlement. The section merely refers to those conditions which are injury or disease ‘within the meaning’ of those Acts.
(b)There is, in fact, no means of using the Guide authorised under section 67 MRCA to determine the impairment resulting from prior injuries or diseases since no such authorisation is given to do so by the principal enactment. The Guide is only to be used to determine the level of impairment for relevant service injuries or diseases as defined by sections 27, 29(1), 29(2) and 30 MRCA in respect of defence service following the commencement of the Act on 1 July 2004.
(c)It is possible that the person may be determined to have an impairment from prior service or employment within the meaning of the VEA or SRCA for which no compensation is payable (whether because of failure to notify the injury or claim or some other reason) which might otherwise allow an impairment entitlement to be recovered under such legislation and yet be assessed as having no impairment points under the MRCA for service injury by reason of the assessment method adopted by the MRCC in discounting MRCA impairments by reference to unrelated injuries in contradiction to the entitlement conferred by section 68 MRCA.
(d)It may be said in relation to the foregoing that section 3 MRCA (‘Simplified outline of this Act’) states, ‘Provisions in this Act might be affected by the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004.’ However, without legislative authorisation for the section 67 Guide to be used in a manner set out there is no mechanism whereby the entitlement in the principal entitling provision, section 68 MRCA can be cut down.[115]
[115] Written submissions lodged 23 March 2009 at 38
I do not read the reference to the “old injury or disease” as being an injury or disease in relation to which there need not have been any previous determination under either the VE Act or the SRC Act as appropriate. Certainly, read on its own, s 13(1) might give that impression but that impression is dispelled by
s 13(4). Section 13(4) provides that the Commission may, if it wishes, determine a method in the guide for offsetting payments made under the VE Act or the SRC Act in respect of the old injury or disease. Having regard to the scheme of compensation in the MRC Act and the provisions of s 13 of the Transitional Act, I do not think that is correct to interpret this as empowering the Commission to determine a method for offsetting payments regardless of whether the person had in fact previously claimed compensation under either the VE Act or the SRC Act and had been accepted.
Putting aside an old injury or disease for the moment, the scheme of compensation provided in the MRC Act requires that the impairment resulting from previous injuries or diseases for which the Commonwealth is liable under that legislation will be combined with the impairment resulting from the injury or disease in relation to which the person is currently seeking compensation. They are combined in order to establish that person’s total impairment. Compensation over and above that paid in relation to the earlier injury or disease for which liability has been accepted under the MRC Act will be payable only for additional impairment resulting from the current injury or disease.
The scheme provided under the MRC Act does not take account of the impairment suffered from injuries or diseases arising from, for example, a car accident and so in relation to which a person might have received a payment in the nature of damages or of compensation. It does not take account of injuries or diseases arising from an accident for which no damages or compensation are payable. It does not take account of injuries or diseases arising from an injury or disease in relation to which the person has neither claimed compensation nor been paid compensation.
The scheme of compensation, therefore, provides for regard to be had to those injuries or diseases in relation to which the Commonwealth has previously accepted liability under the MRC Act. It does not provide for regard to be had to injuries or diseases that happen to occur while the MRC Act has been in operation. Coming back to the old injury or disease and its treatment in s 13, it seems to me that it should be read as a reference to the old injury or disease in relation to which liability has been accepted under the VE Act or the SRC Act as the case might be. That interpretation is consistent with the scheme of compensation provided in the MRC Act. It is also consistent with the power given to the Commission to determine a method, if it wishes, to offset payments made to the person under the VE Act or the SRC Act.
This interpretation is not inconsistent with the direction given to the Commission that it determine the impairment points constituted by the impairment suffered as a result of the old injury or disease. I do not read that as supporting an interpretation that the impairment is one that has not previously been assessed under the VE Act or the SRC Act and, indeed, it is in respect of an injury or disease for which compensation has not been claimed. Rather, I see it as a method that enables the Commission to assess and combine impairments, the subject of separate compensatory schemes, on a common basis. They have to be assessed on a common basis to enable the impairment points attributable to them to be combined with those attributable to injuries or diseases for which compensation is now claimed under the MRC Act.
My narrower interpretation of the “old injury or disease” to which
s 13(1) is referring is also consistent with the provision in s 13(4) permitting the Commission to determine a method for offsetting payments made under the VE Act or SRC Act. The focus is upon liability previously accepted. That explains the need for why s 24(3)(b) of the Transitional Act had to provide that the regulations may provide a method for converting a lump sum into weekly amounts for the purpose of working out an amount of compensation payable for a service injury or disease under, among others, Part 2 of Chapter 4. Taking the SRC Act as an example, it provided that compensation for permanent impairment was only payable as a lump sum.[116] By contrast, compensation for permanent impairment is payable under the MRC Act as a weekly amount. Only after a person’s entitlement to compensation in a weekly amount is established may that weekly sum, or a percentage of it, be converted to a lump sum under s 71 of the MRC Act. The payments made under the SRC Act had to be converted to weekly payments to enable a comparison of the amount paid to the person in respect of old injuries or diseases and that to which the person is entitled as a result of additional impairment from the injury or disease currently under consideration.
F.The interpretation of GARP M
[116] SRC Act, s 24. Section 24(3) provides that the amount of compensation payable to an employee is an amount that does not exceed the maximum amount prescribed in s 24(9), i.e. $80,000. Reading ss 24(4), (5) and (6) together, the amount of compensation payable is the same percentage of the maximum amount as is the degree of permanent impairment, represented as a percentage, resulting from the injury.
F.1General principles
As GARP M is part of a scheme of legislative provisions that come into operation and together form a scheme in which the provisions of one are interdependent on the other, its provisions must be consistent with those of the other components of the scheme. They need not mirror them for, being interdependent, each may build upon general principles stated in another component. That is particularly so in the case of delegated legislation. The general principles are found in the legislation and the detail is etched upon those general principles in the delegated legislation.
F.2The first 24 Chapters
GARP M begins with a statement of its purpose which is that it:
“… is to be applied to assess the degree of impairment from service injury or disease. Its provisions are binding on the Military Rehabilitation and Compensation Commission, the Veterans’ Review Board and the Administrative Appeals Tribunal.”[117]
[117] MRCA Instrument No. 1 of 2004, Introduction
The first four paragraphs of s 67(1) of the MRC Act are directed to assessing that degree. They require the Commission to set out criteria to be used in deciding the degree of impairment and the effect on a person’s lifestyle and methods by which those effects can be expressed as a numerical rating. On behalf of Lieutenant James, Mr Carey of counsel submits that s 67 authorises Chapters 1 to 23. I agree and refer specifically to ss 67(1)(a) to (d) when read with s 67(2) in so far as it expands s 67(1)(c).
The fifth paragraph, s 67(1)(e) requires the Commission to set out a method by which the two numerical ratings – impairment points and effect on lifestyle – from a service injury or disease can be used to determine the compensation payable to the person under Part 2. In doing so, it has to have regard to the maximum compensation that can be paid to a person under Part 2.
Section 74 of the MRC Act expresses the amount of compensation payable for permanent impairment in terms of a weekly amount. That amount is indexed in accordance with s 404. Section 78 permits a person who is entitled to a weekly amount of compensation for permanent impairment to be paid a lump sum. Chapter 24 of GARP M is consistent with those provisions.
F.3Chapter 25
Chapter 25 of GARP M mirrors the general principles set out in s 13 of the Transitional Act. It assumes that a claim has been made under the MRC Act and that liability has been accepted for a service injury or disease. It implements the provisions of s 13 of the Transitional Act. Referring only to those provisions of Chapter 25 relating to an old injury or disease under the SRC Act as an illustration,
I note that it restates the provisions of s 13(2) that the Commission must determine the impairment resulting from the old injury or disease under GARP M and that it must do so as at the date of its determination.
I have referred to the formulae at [76] above and set one out in full as that is relevant to the circumstances of this case. The combined impairment rating of the old injury or disease under the SRC Act is added to that for the injury or disease under the MRC Act.[118] The lifestyle effect is determined by looking at the old injury or disease and that under the MRC Act together. Once that is done, the calculation of compensation for permanent impairment is calculated in accordance with Chapters 23 and 24. The payment that is calculated in that way must be “the MRCA periodic payment” to which reference is made in Chapter 25. That amount is not payable to the person because, from it, must be deducted the amount or the amounts representing the compensation paid under the SRC Act. As compensation is paid under the SRC Act as a lump sum, Chapter 25 sets out how to convert the lump sum to a periodic sum. That method repeats that set out in s 78(5) of the MRC Act.
[118] This is in contrast to the way in which impairment ratings of injuries and diseases under the MRC Act are combined under Chapter 18 rather than added together. See [70] above
F.4Principles governing the validity of delegated legislation
Whether the method adopted in Chapter 25 of GARP M is a valid exercise of the power given to the Commission under s 13(4) of the Transitional Act must be considered in light of the authorities regarding the validity of delegated legislation. They include Williams v City of Melbourne,[119] South Australia v Tanner[120] and Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd.[121] These were among those considered by the Full Court of the Federal Court in Minister of State for Resources v Dover Fisheries Pty Ltd.[122] Referring to the joint judgment of Dixon CJ, Williams, Webb and Fullagar JJ in Shanahan v Scott,[123] Gummow J said:
“… A power such as that in s 25(1) of the [Export Control Act 1982] does not authorise the making of regulations which vary or depart from the positive provisions of the Act, or which go outside the field of operation which the Act marks out; such a power does not support attempts to widen the purposes of the Act, to add new and different means of carrying them into effect, or to depart from or vary the plan which the legislature has adopted to obtain its ends. These are indicia which assist in deciding the general question of whether the regulations in question are a reasonable means of attaining the ends of the legislative delegation of power.”[124]
Hill J emphasised that “… No doubt the matters referred to by the High Court in Shanahan v Scott ... will be relevant in this inquiry, albeit they may not necessarily be the sole matters for consideration.”[125]
[119] (1933) 49 CLR 142 at 156
[120] (1989) 166 CLR 161 at 165
[121] (1993) 40 FCR 381 at 401
[122] (1993) 43 FCR 565
[123] (1957) 96 CLR 245 at 250
[124] (1993) 43 FCR 565 at 578
[125] (1993) 43 FCR 565 at 582
In the same case, Cooper J said:
“ The issue of the validity of delegated legislation poses the ultimate question whether the delegated legislation is within the regulation or rule making power conferred by the enabling statute. The question is answered by determining:
(a)as a matter of statutory construction the ambit of the statutory object of the regulation or rule making power;
(b)whether the delegated legislation as an exercise in characterisation by reference to its substantive operation falls within the power.”[126]
[126] (1993) 43 FCR 565 at 582-583
His Honour developed both aspects. I will highlight only some of the points he made:
“8. Characterisation may be approached in a number of ways, the choice of which will be determined by the nature of the statute in which the regulation or rule making power is sourced and the terms in which that power is expressed itself …”[127]
[127] (1993) 43 FCR 565 at 584
9. ….
“10. The test of proportionality operates in this area as a measure of the limit beyond which the means adopted to achieve the prescribed purpose cannot go without rendering the delegated legislation, at least to that extent, invalid. The substantive operation of delegated legislation must be capable of being reasonably considered to be appropriate and adapted to achieve the prescribed purpose. This requires that there is reasonable proportionality between the object or purpose and the means adopted to achieve or procure it. (The Commonwealth v. Tasmania [1983] HCA 21; (1983) 158 CLR 1 at 260; Richardson v. Forestry Commission [[1988] HCA 10; (1988) 164 CLR 261] at 311- 312, 346; Nationwide News Pty. Ltd. v. Wills (1992) 66 ALJR 658 at 661, 689, 692.
11. …
In the context of the validity of delegated legislation ‘reasonableness’ does not connote ‘fairness’. It is a question whether as a matter of objective reason and logic the regulation could have been adopted to achieve the object.[[128]]
12. Where the likely substantive operation of the delegated legislation in its impact upon matters beyond the subject matter of the power or matters incidental thereto is grossly disproportionate to its operation on matters properly the subject matter of the power, there will be no real or sufficient connection to sustain the validity of the delegated legislation. That is, no reasonable mind could justify the delegated legislation by reference to the object of the power. It is the disproportionate operation of the delegation which denies to it a place in the range of alternative modes of implementation available to an objective reasonable mind.
13. The test of proportionality reflects an underlying assumption that the legislature did not intend that the power to enact delegated legislation would be exercised beyond what was reasonably proportionate to achieve the relevant statutory object or purpose; the test of reasonableness assumes that the legislature did not intend to confer a power to enact delegated legislation which enactment no reasonable mind could justify as appropriate and adapted to the purpose in issue and the subject matter of the grant. Whether one describes the test as one of ‘reasonable proportionality’ or ‘unreasonableness’, the object is to find the limit set by the legislature for the proper exercise of the regulation or rule making power and then to measure the substantive operation of the delegated legislation by reference to that limit. In my view there is no substantive difference between the tests as stated. Support for such a conclusion comes from the majority joint judgment (Wilson, Dawson, Toohey and Gaudron JJ) in South Australia v. Tanner [1989] HCA 3; (1989) 166 CLR 161 at 165:-
‘In the course of argument, the parties accepted the reasonable proportionality test of validity (cf. Deane J in The Commonwealth v. Tasmania (the Tasmanian Dam Case) [1983] HCA 21; (1983) 158 CLR 1, at
p 260), namely, whether the regulation is capable of being considered to be reasonably proportionate to the pursuit of the enabling purpose. However, they differed in the answers to which their application of the test led. The
same test, in relation to a power limited to regulation, was expressed by
Dixon J in Williams (1933) 49 CLR, at p 156, as being, in substance, whether the regulation goes beyond any restraint which could be reasonably adopted
for the prescribed purpose’.(See also Brennan J at 178 - 179).
14. Once it is determined that the means adopted by the delegated legislation is within the ascertained limits of the power of delegation, the choice adopted to achieve the statutory ends, is a matter entirely for the person exercising the power and the Court will not intervene by declaring the chosen method invalid simply because other minds might reasonably have adopted a different means.”[129]
[128] This nature of the “unreasonableness” required to invalidate a law was described more fully by Diplock LJ in Mixnam’s Properties Ltd v Chertsey Urban District Council [1964] 1 QB 214 at 237-238:[129] (1993) 43 FCR 565 at 584-586
In Vanstone v Clark,[130] Weinberg J analysed the previous authorities and considered the distinction that is drawn in some and by some academic writers between unreasonableness and lack of proportionality. He concluded that there had been a move from unreasonableness to reasonable proportionality. It is a move reflected in the High Court’s increasing references to reasonable proportionality in certain aspects of the constitutional law but a move that takes Australia away from the approach adopted in the United Kingdom.[131] Weinberg J referred to two situations in which delegated legislation has been found to be invalid. Both are analogous with the principle that delegated legislation lacking reasonable proportionality is invalid:
“ There are plainly some analogies to be drawn between delegated legislation that lacks reasonable proportionality and delegated legislation that is logically fallacious. There are several recent examples of logical fallaciousness in such legislation resulting in its invalidity. One such example is the formula used to allocate catch in the Austral Fisheries case.[[132]] See also La Macchia v Minister for Primary Industries and Energy (1992) 110 ALR 201, but note Bienke v Minister for Primary Industries and Energy (1996) 63 FCR 567 at 578-580.
However, the principle goes beyond logical fallaciousness. Delegated legislation that has the potential to operate arbitrarily or capriciously has, on occasion been struck down, and solely on that basis.”[133]
[130] [2005] FCAFC 189; (2005) 147 FCR 299
[131] [2005] FCAFC 189; (2005) 147 FCR 299 at 337-338
[132] Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381
[133] [2005] FCAFC 189; (2005) 147 FCR 299 at 339
The fundamental reason for its being struck down on bases such as these appears in the judgment of Lockhart J in Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd:[134]
“Delegated legislation may be declared to be invalid on the ground of unreasonableness if it leads to manifest arbitrariness, injustice or partiality; but the underlying rationale is that legislation of this offending kind cannot be within the scope of what Parliament intended when authorising the subordinate legislating authority to enact laws.”[135]
[134] (1993) 40 FCR 381
[135] (1993) 40 FCR 381 at 384
In Vanstone v Clark, Weinberg J referred to the need to keep the test of reasonable proportionality in check lest the courts transgress their legitimate function. In that context, he referred to the limitations that are placed on its applicability when delegated legislation has been made under a purposive power and so one in which the person making the delegated legislation must achieve a certain result and those placed on its applicability when the empowering provision is non-purposive. His Honour referred to Cooper J’s judgment in Minister of State for Resources v Dover Fisheries Pty Ltd:
“159 In the same case, Cooper J also discussed the proportionality test as it applied to delegated legislation. His Honour expressly distinguished empowering provisions that were purposive, and those cast in non-purposive terms. He held that any subordinate legislation made under a purposive empowering provision had to be ‘reasonably proportionate’. However, subordinate legislation made under a non-purposive empowering provision simply had to have a ‘real and substantial connection’ with the subject matter of the grant of power.
160 Pearce provides a number of recent examples of the application of the ‘reasonable proportionality’ test to strike down delegated legislation. They include: Re Gold Coast City Council By-laws [1994] 1 Qd R 130; Paradise Projects Pty Ltd v Gold Coast City Council [1994] 1 Qd R 314; and Re Gold Coast City (Touting and Distribution of Printed Matter) Law 1994 (1995) 86 LGERA 288. Interestingly, and perhaps more relevantly for present purposes, Pearce also refers to House v Forestry Tasmania [1995] TASSC 95; (1995) 5 Tas R 169. There, the Tasmanian Full Court struck down, as disproportionate, a health and safety regulation that purported to impose absolute liability for certain conduct.
161 It may be accepted that these cases are very much the exception, rather than the rule. Most challenges based upon the reasonable proportionality test have failed. Nonetheless, each case must be decided upon its own particular facts, and as the High Court noted in Tanner, they often involve matters of impression.”[136]
[136] [2005] FCAFC 189; (2005) 147 FCR 299 at 343
F.4Chapter 25: a method?
In its everyday use, the meanings of the word “method” include:
“…a way of doing something, especially an ordered set of procedures or an orderly system…”[137]
[137] Chambers 21st Century Dictionary, revised edition, 1999, Chambers
The steps set out in Chapter 25 are a way or process “… of working out the amount of compensation a person is entitled to under Part 2 of Chapter 4 of the MRCA (permanent impairment) for the service injury or disease. …”[138] It is an orderly way that progresses from one step or calculation to the next in order to reach a final numerical figure representing the amount of compensation payable to the person claiming compensation for permanent impairment. Those steps constitute a method as that word is used in s 67(1)(e) of the MRC Act.
[138] Transitional Act, s 13(4)
Those steps variously have regard to the person’s impairment points from the service injury or disease as well as the effect on that person’s lifestyle from the service injury or disease. They do so for the purpose of determining compensation payable to the person under Part 2 of Chapter 4 and do so by reference to the maximum compensation payable under that Part. Those steps comprise a method of a sort described by s 67(1)(e). The steps also comprise a method of the sort envisaged by s 13(4) of the Transitional Act. They are the steps required to work out the compensation to be paid under Part 2 for a service injury or disease when the person claiming compensation under s 319 of the MRC Act has a separate war-caused or defence-caused injury or disease under the VE Act or the SRC Act or is claiming in respect of an aggravation of an old war-caused or defence-caused injury or disease.
F.5Chapter 25: has it been made within power conferred by Parliament?
I have looked first to the power conferred on the Commission by
s 67(1) of the MRC Act. When regard is had to the five paragraphs, it appears that the reference to “impairment points” is a reference to the impairment points resulting from “a service injury or disease” (emphasis added). “A service injury or disease” has a particular meaning for the purposes of the MRC Act.[139] When read with the Transitional Act, it is clear that a service injury or disease is not one to which the VE Act or the SRC applies. In view of that, it might be thought that the guide determined by the Commission could only provide for impairment points resulting from such a service injury or disease.[139] See [23] above
Arguably, that would be the case were it not for s 13 of the Transitional Act. In requiring the Commission to determine impairment points constituted by the impairment suffered by a person from an old injury or disease by using the guide determined under s 67 and to count them towards the person’s total impairment points, Parliament is making clear that the guide may refer to impairment points from both service injuries or diseases and old injuries or diseases. In doing so, it has provided that they are assessed on the same basis. That basis is the guide determined under s 67 of the MRC Act.
Neither ss 67 nor 13 specifically authorises the method determined by the Commission in the guide to combine the impairment points determined in relation to the impairment from the old injury or disease with those determined in relation to the service injury or disease but the authority is implicit. It is implicit in the obligation imposed on the Commission to count the impairment points from both towards the person’s total impairment points and from the scheme of compensation generally. Combination of points necessarily leads to a lower assessment of impairment than addition of impairment points but that is consistent with a scheme of compensation that has at its heart an assessment of whole person impairment rather than of compensation by reference to the impairment resulting from each injury or disease.
I note that Chapter 25 does not provide for the situation in which a person has suffered an old injury or disease under both the VE Act and the SRC Act. I do not think that is an oversight. It does not refer to the situation in which a person has multiple old injuries or diseases but I think that the method provided in Chapter 25 is intended to, and does, cover both situations. It is implicit in GARP M that regard must be had to the combined rating of the old injuries or diseases as assessed under its own provisions. That accords with the provisions of s 13(2) of the Transitional Act that the Commission must determine the impairment points constituted by the impairment suffered by the person from the old injury or disease.
Section 23(b) of the AI Act provides, in part, that “In any Act, unless the contrary intention appears … words in the singular number include the plural …”. This is such a case. Multiple injuries and diseases for which the Commonwealth is liable are numerous and Parliament would have been well aware of them. In providing in s 13(2) that the Commission must determine the impairment points constituted by the impairment suffered by the person from the old injury or disease using the guide under s 67, Parliament cannot be taken to have limited its direction to a part only of the guide. Its direction must be taken to include Chapter 18, which provides for the combination of multiple injuries or diseases. Therefore, it must have contemplated that the impairment resulting from “any old injury or disease” might well be that resulting from any old injuries or diseases. The impairment for multiple old injuries or diseases can only be reached by combination under Chapter 18. Combination must be undertaken for all old injuries or diseases whether under the
VE Act or the SRC Act before being combined with the impairment points from the service injury or disease for which the Commonwealth is liable under the MRC Act.With one exception,[140] the method by which the lump sum paid under the SRC Act is converted to a periodic payment is consistent with the formula in r 4 of the Transitional Regulations. Chapter 25 sets out a textual explanation of the two formulae set out in r 4 of the Transitional Regulations. It is clear from the cases of Canute and Fellowes, to which I have referred, and my analysis of the provisions of the MRC Act that the basis on which compensation for permanent impairment is paid differs between the SRC and the MRC Act. That difference cannot change the fact that Chapter 25 is consistent with the formulae set out in the Transitional Regulations. Parliament was presumably aware of that difference when the Transitional Regulations were tabled before both Houses of Parliament and they were not disallowed. The formulae are not in excess of the regulation making power set out in s 24(3)(b) of the Transitional Act which authorises regulations for the purpose of converting a lump sum into weekly amounts for the purpose of working out an amount of compensation payable for a service injury or disease under Parts 2 and 6 of Chapter 4 of the MRC Act.
[140] The one exception to which I referred relates to indexation. Regulation 4(3) provides that the maximum amount (for either the current financial year or the relevant financial year in which the amount of compensation was paid to the person) is “… the maximum amount specified in subsection 24(9) of the SRCA, as indexed in accordance with section 13 of that Act.” Chapter 25 states that “The amount is indexed annually (on 1 July) using the indexation factor calculated under section 404 of the MRCA.” I have set out the sentences preceding this statement at [76] above. The “amount”, to which reference is made, must be a reference to the “SRCA amount” earlier in the paragraph for there is no other.
Chapter 25 has provided for an offset of the payments a person has received under the SRC Act. An offset is clearly contemplated by s 13(4) of the Transitional Act. It is contemplated in the context of working out the amount of compensation to which a person is entitled under Part 2 of Chapter 24. Mr Carey submitted that the Note that follows s 13(4) is “… instructive as to the proper construction of the legislation.”[141] The Note reads:
“The regulations may also include a method of converting lump sum amounts into weekly amounts for the purposes of offsetting (see paragraph 24(3)(b)).”
[141] Submission lodged 23 March 2009
A note of this sort cannot be taken to be part of the Transitional Act[142] but even if I regard it as extrinsic material to which I may have regard, I do not think it assists me in interpreting the provisions one way or the other. Section 24(3)(b) of the Transitional Act provides that the Regulations may provide a method of converting a lump sum amount into weekly amounts for the purpose of working out an amount of compensation payable for a service injury or disease under either Part 2 or Part 6 of Chapter 4 of the MRC Act. Part 2 relates to permanent impairment and Part 6 to SRDP. The provisions for offsetting payments under the earlier legislation cannot be limited to SRDPs.
[142] Acts Interpretation Act 1901, s 13(3)
When regard is had to the whole of the provisions of the MRC Act, the Transitional Act and the Transitional Regulations, the method that is adopted in GARP M in relation to old injuries or diseases under the VE Act or the SRC Act and compensation received in relation to them is consistent with the method adopted in the MRC Act when a person has two or more unrelated service injuries or diseases in respect of which compensation is claimed for permanent impairment under the MRC Act. It is consistent with that adopted in relation to the aggravation of the earlier by a later service injury or disease. It is consistent with it in that it, like those under the MRC Act, is based on whole person impairment. By providing for whole person impairment and deducting from the amount of weekly compensation otherwise payable under the MRC Act, the amount of weekly compensation represented by the lump sum under the SRC Act, the method in Chapter 25 seeks to ensure that compensation is paid for impairment for which the Commonwealth is liable but has not previously compensated the person for. That method is consistent with that provided under the MRC Act for service injuries or diseases for which the Commonwealth is liable and which are not within the purview of the VE Act or the SRC Act.
It follows that I regard the method provided for in Chapter 25 to be reasonably proportionate to the power given to the Commission under the MRC Act and the Transitional Act to determine a guide.
G. Conclusion
For the reasons I have given, I decide:
1.by consent in relation to file No. 2007/5883:
(1)affirm Comcare’s reviewable decision dated 23 October 2007; and
(2)order the respondent to pay the applicant’s reasonable legal costs and disbursements associated with the proceedings instituted by the applicant under the Safety, Rehabilitation and Compensation Act 1988;
2.by consent in relation to file No. 2007/5884:
(1)decide:
(a)that the applicant’s level of impairment has increased from 10% to 20% when assessed in accordance with Table 9.5 of the approved Comcare Guide, 2nd edition, for the purposes of s 25(4) of the Safety Rehabilitation and Compensation Act 1988; and
(b)that the respondent shall pay the applicant the sum of $17,859.55 consisting of:
(i)$15,039.62 under s 24 of the SRC Act; and
(ii)$2,819.93 under Part 1 of s 27 of the SRC Act; and
(2)order the respondent to pay the applicant’s reasonable legal costs and disbursements associated with the proceedings instituted by the applicant under the Safety, Rehabilitation and Compensation Act 1988; and
3.in relation to file No. 2007/5882:
(1)affirm the reviewable decision of the respondent dated 31 October 2007 and decide that the applicant is entitled to compensation for permanent impairment as a result of his right knee injury amounting to $0.95 per week or, should he choose to commute that payment to a lump sum, $1,209.45.
I certify that the preceding one hundred and sixty six paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Kate Conners Associate
Date of Hearing 16 & 17 February and 1 May 2009
Date of Decision 27 October 2009
Solicitor for the Applicant Ben Mason
Slater & Gordon
Counsel for the Applicant Mark Carey
Solicitor for the Respondent Lazarus Dobelsky
DLA Phillips Fox
Counsel for the Respondent John Wallace
The expression “service injury or disease means a service injury or a service disease”: MRC Act,
s 5.
“… the intention of Parliament in enacting an Act is not to be ascertained by reference to the terms in which a delegated power to legislate has been exercised.” ((1980) 32 ALR 603 at 606)
As Deane J said in Brayson Motors Pty Ltd (in liq) v Federal Commissioner of Taxation ([1985] HCA 20; (1985) 156 CLR 651 at 652):
“It is generally accepted that one looks at regulations only as an indication of what a government department thinks about the construction of an Act.”
There are, however, exceptions to the general rule. An obvious exception occurs if the Act deems the provisions of the delegated legislation to be part of the Act. That situation does not arise in this case. Another exception may occur where the Act “… provides a framework built on contemporaneously prepared regulations” (Hanlon v Law Society [1981] AC 124 at 193 per Lord Lowry). This is the situation in this case as I have already found: see [117]-[125] above. Initial reference to the delegated legislation may be:
“… not to construe an overall scheme or to throw light on an ambiguity in a statutory provision but to ascertain what the scheme is.” (Brayson Motors Pty Ltd (in liq) v Federal Commissioner of Taxation (1985) 156 CLR 651 at 652 per Mason J)
Subsequent reference to the delegated legislation may be made as a direct aid in the interpretation of an ambiguous or obscure statutory provision in an Act that forms part of a scheme with each of its components interdependent on the others (See Statutory Interpretation in Australia at [3.41]).
“… the kind of unreasonablenss which invalidates a by-law is not the antonym of ‘reasonableness’ in the sense of which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a court would say:
‘Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires.’”
Approved by the House of Lords in Chertsey Urban District Council v Mixnam’s Properties Ltd [1965] AC 735 at 753 and referred to by Weinberg J in Vanstone v Clark [2005] FCAFC 189; (2005) 147 FCR 299 at 338
The provisions of Chapter 25 and of r 4(3) of the Transitional Regulations are inconsistent. It seems to me that r 4(3) must prevail for two reasons. The first is that r 4(3) clearly states the indexation factor for the circumstances. Second, s 404 itself states that it applies to the dollar amounts mentioned in the 14 provisions it specifies. It makes no general provision that it can be applied otherwise.
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