JC Equipment Hire Pty Limited v The Registrar of the Workers Compensation Commission of NSW

[2008] NSWCA 43

Reported Decision: 70 NSWLR 7045 DDCR 403

New South Wales

Court of Appeal

CITATION:	J C Equipment Hire Pty Ltd v The Registrar of the Workers Compensation Commission of NSW [2008] NSWCA 43
HEARING DATE(S):	7 March 2008
JUDGMENT DATE:	31 March 2008
JUDGMENT OF:	Tobias JA at 1; Campbell JA at 81; Bell JA at 82
DECISION:	(a) Appeal allowed; (b) Set aside the orders made by Associate Justice Malpass on 20 April 2007; (c) Remove Matter No. 8070-06 from the Workers Compensation Commission of New South Wales to this Court; (d) The determination of the Delegate of the Registrar of the Commission that the pre-filing statement served by the respondent on the appellant on 10 August 2006 was not defective be quashed; (e) Remit the question of whether the said pre-filing statement was defective to the Registrar of the Commission for re-determination in accordance with the reasons of this Court; (f) The respondent to pay the costs of the appellant of the summons filed on 26 September 2006 and of the appeal but to have with respect to the latter a certificate under the Suitor’s Fund Act 1951, if otherwise qualified.
CATCHWORDS:	Workers compensation – Lump sum compensation – Work injury damages – Whole person impairment – Permanent impairment – Whether acceptance of degree of whole person impairment for purposes of s 66 claim constituted acceptance for purposes of work injury damages claim– Legislative history of claims by injured workers in NSW – Dichotomy between statutory compensation and work injury or common law damages – Estoppel by conduct – Whether party estopped from denying degree of whole person impairment in respect of one claim when it agreed in respect of another.
LEGISLATION CITED:	Motor Accidents Compensation Act 1999 (NSW) Suitor’s Fund Act 1951 (NSW) Supreme Court Act 1970 (NSW) Workers Compensation Act 1987 (NSW) Workers Compensation Commission Rules 2003 (NSW) Workplace Injury Management and Workers Compensation Act 1998 (NSW)
CASES CITED:	Berowra Holdings Pty Ltd v Gordon (2006) HCA 32; (2006) 225 CLR 364 Brown v Lewis (2006) 65 NSWLR 587; [2006] NSWCA 87 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Grundt v The Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641 J C Equipment Hire Pty Limited v Registrar of the Workers Compensation Commission of New South Wales & Anor [2007] NSWSC 342
PARTIES:	J C Equipment Hire Pty Ltd The Registrar of the Workers Compensation Commission of NSW Roy Lovett
FILE NUMBER(S):	CA 40309/07
COUNSEL:	Cl: M Elkaim SC 1 Opp: Submitting appearance 2 Opp: S G Campbell SC / P R Stockley
SOLICITORS:	Cl: Edwards Michael, Sydney 1 Opp: Crown Solicitors Office, Sydney 2 Opp: Paul A Curtis & Co, Suydney
LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	SC 30129/06
LOWER COURT JUDICIAL OFFICER:	Malpass A-J
LOWER COURT DATE OF DECISION:	20 April 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	J C Equipment Hire Pty Limited v Registrar of the Workers compensation Commission of New South Wales & Anor [2007] NSWSC 342

CA 40309/07
SC 30129/06

TOBIAS JA
CAMPBELL JA
BELL JA

Monday 31 March 2008

J C EQUIPMENT HIRE PTY LTD v THE REGISTRAR OF THE WORKERS COMPENSATION COMMISSION OF NSW & ANOR

Judgment

1 TOBIAS JA: The claimant, J C Equipment Hire Pty Ltd, seeks leave to appeal from an order of Associate Justice Malpass made on 20 April 2007 dismissing a summons filed in the Administrative Law List of the Common Law Division of the Supreme Court claiming declarations and orders in the nature of prerogative relief. Relief was claimed before his Honour with respect to a determination by a delegate of the Registrar of the Workers Compensation Commission (the Commission) pursuant to s 317(2) of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the WIM Act) that a pre-filing statement served by the second opponent upon the claimant was not defective for the purposes of Div 3 of Pt 6 of Ch 7 of that Act.

2 The second opponent did not oppose the grant of leave, acknowledging that the issues sought to be agitated on the appeal, if leave be granted, related to a matter of general importance in the administration of the WIM Act.

3 As the Court agreed with that assessment, during the course of oral argument it granted the claimant leave to appeal from the decision of the primary judge. Accordingly, I shall hereafter refer to the claimant and the second opponent as the appellant and respondent respectively. I note that the first opponent, the Registrar of the Workers Compensation Commission, filed a submitting appearance both with respect to the proceedings at first instance and the appeal.

The nature of the dispute

4 The issue before this Court concerns the effect of ss 313 and 314(2)(a) of the WIM Act and whether there has been the requisite acceptance by the employer of the degree of the injured worker’s permanent impairment for the purposes of those provisions. They provide for the situation where there is a dispute between an injured worker and his or her employer as to whether the former has sustained the necessary degree of permanent impairment resulting from the relevant injury that meets the threshold established by s 151H(1) of the Workers Compensation Act 1987 (NSW) (the 1987 Act) so as to entitle the worker to claim modified common law damages (work injury damages) with respect to that injury.

5 This required consideration of whether the agreement or acceptance by the employer that the degree of permanent impairment of the worker was a particular percentage being 15% or greater for the purpose of calculating the statutory lump sum compensation under s 66 of the 1987 Act, constituted an acceptance that the degree of permanent impairment of the worker resulting from the relevant injury was sufficient to satisfy the s 151H(1) threshold for an award of work injury damages.

6 The Registrar’s delegate issued a direction determining that s 314(2)(a) of the WIM Act was satisfied by the filing of an agreement under s 66A of the 1987 Act (as it stood at the relevant time) in which the parties had agreed that the lump sum compensation payable by the appellant to the respondent was the sum of $21,500 “in respect of 16% WPI”. The primary judge held that the appellant had not demonstrated an entitlement to relief from this determination and dismissed the summons.

7 The appellant challenges that decision on the basis that any acceptance by an employer that the degree of permanent impairment is 15% or greater for the purpose of calculating the workers entitlement to lump sum compensation under s 66 of the 1987 Act is an acceptance only for that purpose and not for any other purpose; and that there must be a separate acceptance for the purpose of s 314(2)(a) of the WIM Act that the degree of permanent impairment of the injured worker is at least 15% and so satisfies the threshold for the purpose of and relating to a claim made by that worker for work injury damages pursuant to Div 4 of Pt 3 of Ch 7 of that Act.

8 Accordingly, the question in issue on the appeal is whether the appellant’s acceptance of a 16% degree of permanent impairment for the purpose of calculating the respondent’s entitlement to lump sum compensation under s 66 of the 1987 Act was a relevant acceptance within the meaning of s 314(2)(a) of the WIM Act.

How did the dispute arise?

9 On 23 November 2003 the respondent sustained a compensable injury to his back whilst in the employment of the appellant. On 31 August 2005 his solicitor made a claim upon the appellant for lump compensation under s 66 of the 1987 Act and for compensation for pain and suffering under s 67. With respect to the s 66 claim, it was asserted that the respondent had a degree of permanent impairment (referred to as whole person impairment) of 16% entitling him to the sum of $21,500 calculated in accordance with the formula set out in s 66(2)(b) of the 1987 Act as it then stood.

10 The respondent claimed the amount of $20,000 under s 67 upon the basis that his pain and suffering constituted 40% of the most extreme case. In this respect s 67(1) only entitles a worker to receive compensation for pain and suffering when it results from a degree of permanent impairment of 10% or more. Once that threshold is satisfied, the worker is entitled to receive from his employer as compensation for pain and suffering resulting from that permanent impairment an amount not exceeding $50,000.

11 By letter dated 15 September 2005 the appellant’s workers compensation insurer (the insurer) acknowledged receipt of the respondent’s s 66 claim and, pursuant to s 119 of the WIM Act required him to attend a medical examination by Professor Michael Fernside, a neurosurgeon, in order to assess the level of impairment caused by his injury.

12 By a “without prejudice” letter dated 8 December 2005 the insurer relevantly advised the respondent’s solicitor as follows:

“We accept your initial report from Dr Searle in regards to 16% Whole Person Impairment. However we wish to make a counter offer in regards to the Section 67 component. The offer is:
Section 66 – 16% Whole Person Impairment – $21,500
Section 67 – $16% of the max payable ($50,000) – $8,000
Total – $29,500 ”

13 By letter dated 13 December 2005 the respondent’s solicitor wrote to the insurer confirming that agreement had been reached for s 66 compensation in the sum of $21,500 “in respect of 16% whole person impairment”. A counter offer was then made with respect to the s 67 claim. There being a dispute as to the s 67 claim, an application to resolve that dispute was lodged by the respondent with the Commission. Paragraph 4.3 of the application was entitled “Permanent Impairment/Pain and Suffering”. In the columns headed “Injury Description”, “Percentage” and “Amount Claimed” respectively, the respondent’s solicitor had inserted “Whole person impairment (Agreement reached)”, “16%” and “$21,500” respectively. Paragraph 4.4 of the application entitled “Threshold Dispute for Work Injury Damages or Commutation” was not completed possibly because no claim for such damages had then been made.

14 On 9 March 2006 Arbitrator Georgiadis issued a certificate pursuant to s 295 of the WIM Act in which it was noted that in a telephone conference the parties, assisted by the Arbitrator, had come to an agreed resolution of the issues in dispute as at that date. That document provided as follows:

“The following is not a determination of the Commission, however, I note the parties agree:

· That the Respondent will pay the Applicant $21,500 as lump-sum compensation under section 66 of the Workers Compensation Act 1987, for 16% whole person impairment in respect of the injuries set out in the Application to Resolve a Dispute.

· That the Respondent will pay the Applicant $15,000 as lump-sum compensation under section 67 of the Workers Compensation Act 1987, for pain and suffering.

The parties further agree to file an Application for Registration of Agreement under section 66A of the Act, within 14 days.”

15 By letter dated 14 March 2006 the respondent’s solicitor served on the insurer a work injury damages claim. That claim was accompanied by the particulars required by ss 259, 260 and 262 of the WIM Act (which are not presently relevant) as well as particulars said to be required by ss 281 and 282 of that Act. Although s 282 requires certain particulars with respect to a claim for work injury damages to be provided, s 281 does not – however, that is of no great relevance.

16 On 24 March 2006 the s 66A agreement was registered. As that section stood at the time, it relevantly provided as follows:

“(1) An agreement by a worker to receive an amount of permanent impairment compensation or pain and suffering compensation in respect of impairment may be registered by the Registrar. Once the agreement is registered the worker is not entitled to receive any additional compensation in respect of the impairment under an award of the Commission.
…
(7) This section does not limit an award of additional compensation in accordance with this Part in respect of an increase in the degree of permanent impairment that occurs after the impairment to which an agreement relates.”

17 “Permanent impairment compensation” was defined in s 4 of the WIM Act to mean “compensation for permanent impairment under s 66 of the 1987 Act;” whilst “pain and suffering compensation” was defined in the same section as “compensation for pain and suffering under s 67 of the 1987 Act”. That those definitions appear in the WIM Act rather than the 1987 Act is of no consequence as under s 2A(2) of the 1987 Act that Act is to be construed with, and as if it formed part of, the WIM Act. Accordingly, where I refer below to “the Acts” I am referring to the 1987 Act and the WIM Act combined.

18 By letter dated 24 March 2006 the solicitors for the insurer required the respondent to be medically examined by a Dr F Machart, Orthopaedic Surgeon. By letter dated 5 May 2006 Dr Machart advised the insurer’s solicitors that the total whole person impairment relating to the respondent’s injury was, in his assessment, 12%. Accordingly, by letter dated 22 June 2006, the insurer’s solicitor wrote to the respondent’s solicitor in the following terms:

“We are instructed to advise that our client does not accept that the degree of permanent impairment of the injured worker is at least 15%.
Accordingly, it will be necessary for you to obtain a Medical Assessment Certificate in accordance with s 313 and 314(2)(b) of the Workplace Injury Management Act 1998.”

19 By letter dated 5 July 2006 the respondent’s solicitor drew to the attention of the insurer’s solicitors that a Certificate of Determination had been issued by the Commission in respect of the respondent’s entitlement to s 66 lump sum compensation “where an agreement was reached that the [respondent] has a 16% whole person impairment”.

20 In view of that agreement the insurer’s solicitors were requested to indicate the basis upon which their client did not accept that the degree of permanent impairment of the respondent was at least 15%. The following day the insurer’s solicitors responded to this request indicating that it did not believe that the agreement in respect of lump sum compensation determined the issue regarding the degree of permanent impairment for the purpose of the work injury damages claim under s 314 of the WIM Act.

21 No doubt rejecting this explanation as incorrect, on 11 August 2006 the respondent’s solicitor, pursuant to s 315(1) of the WIM Act, served upon the insurer’s solicitors a pre-filing statement to which was attached the statement of claim intended to be filed in the District Court alleging that the respondent’s injury was caused by the appellant’s negligence and claiming past and future economic loss (being the only heads of damage in respect of which a claim for work injury damages could be made under the Acts).

22 By letter dated 16 August 2006 the insurer’s solicitors advised the respondent’s solicitor that the pre-filing statement was considered to be defective upon the following grounds:

(a) The respondent’s claim under s 281 of the WIM Act for work injury damages was served on 14 March 2006 on the insurer (being the person on whom that claim was made for the purposes of Div 4 of Pt 3 of Ch 7 of the WIM Act ;

(b) There had not been an acceptance by the insurer within the meaning of s 314(2)(a) of the WIM Act that the respondent’s degree of permanent impairment was at least 15%;

(c) There had been no medical assessment certificate issued pursuant to s 314(2)(b) of the WIM Act certifying that the degree of permanent impairment of the respondent was at least 15% as a consequence thereof;

(d) The pre-filing statement had been served in breach of s 313 of the WIM Act which provided as follows:

"If there is a dispute as to whether the degree of permanent impairment of the injured worker resulting from an injury is sufficient for an award of damages, the claimant cannot commence court proceedings for the recovery of work injury damages and cannot serve a pre-filing statement under Division 3 unless the degree of permanent impairment has been assessed by an approved medical specialist under Part 7.” (Emphasis added)

A copy of that notification was lodged with the Registrar of the Commission in accordance with r 84(1) of the Workers Compensation Commission Rules 2003 (the Rules).

23 Pursuant to r 84(3), by letter dated 17 August 2006 the respondent’s solicitor referred the dispute as to whether the respondent met the 15% permanent impairment threshold to the Registrar for determination pursuant to s 317(2) of the WIM Act. The Registrar’s delegate determined that dispute on 30 August 2006 by issuing the direction referred to in [6] above.

24 By summons filed in the Administrative Law List of the Common Law Division of the Supreme Court on 26 September 2006, the appellant sought declarations as to the invalidity of the Registrar’s determination and pursuant to s 69 of the Supreme Court Act 1970 an order that the matter be removed from the Commission into the Court and that the Registrar’s determination be quashed or otherwise set aside.

The relevant statutory provisions

25 Section 66(1) of the 1987 Act provides as follows:

“(1) A worker who receives an injury that results in permanent impairment is entitled to receive from the worker’s employer compensation for that permanent impairment as provided by this section. Permanent impairment compensation is in addition to any other compensation under this Act.”

26 Section 66(2) then provides that the amount of permanent impairment compensation is to be calculated in accordance with the escalating formulae set out in subparagraphs (a), (b), (c), (d) and (e) of the subsection, of which (b), as it then stood, is relevant:

“(b) if the degree of permanent impairment is greater than 10% but not greater than 20%, the amount of permanent impairment compensation is to be calculated as follows:
$12,500 + [D-10 x $1,500]”

“D” is the number derived by expressing the degree of permanent impairment as D%, which, in the present case, was 16%. Accordingly, the compensation payable based on that percentage was $21,500, the amount in fact claimed: see [9] above.

27 It is to be noted that in accordance with that formula, every 1% increase or decrease in the degree of permanent impairment would have resulted in either an increase or decrease, as the case may have been, of the amount of lump sum compensation in the amount of $1,500. Thus, had the degree of permanent impairment of the respondent as now asserted by the appellant for the purposes of the threshold provided by s 151H of the 1987 Act, namely, 12%, been the appropriate degree of impairment to be taken into account for the purpose of the calculation required by s 66(2)(b), the amount of lump sum compensation calculated on the basis of a 16% degree of permanent impairment, namely $21,500, would have been reduced by $6,000. In context, this would be a relatively minor amount for the insurer to dispute compared to the quantum of past and future economic loss which might be awarded as work injury damages where, once the threshold was satisfied, the percentage degree of permanent impairment played no further part in the determination of the injured worker’s economic loss for the purposes of his or her claim for such damages. This may be contrasted with the statement of Mason P (with whom Santow and McColl JJA agreed) in Brown v Lewis (2006) 65 NSWLR 587 at 591-592 [20]-[23], which is examined below in [64].

28 Division 3 of Pt 5 of the 1987 Act deals with modified common law damages. Section 151E states the Division applies to an award of damages in respect of an injury to a worker caused by the negligence or other tort of the worker’s employer. Section 151F provides that a court may not award damages to a person contrary to Div 3. Thus, s 151G(1) provides that the only work injury damages that may be awarded are those for past economic loss due to loss of earnings and damages for future economic loss due to the deprivation or impairment of earning capacity.

29 Although the effect of s 151G(1) is to confine work injury damages to past and future loss of earnings, that is, to past and future economic loss, the claimant worker is nevertheless entitled to retain any permanent impairment compensation paid under s 66 of the 1987 Act as well as pain and suffering compensation paid under s 67 of that Act. The only compensation already paid in respect of the relevant injury that is required to be deducted from any award of work injury damages is the amount of any weekly payments of compensation: see s 151A(1)(b). This is to avoid double dipping as weekly payment compensation is payable in respect of the worker’s loss of earning due to his or her injury.

30 It is no doubt to ensure that the injured worker receives not only past and future economic loss by way of work injury damages but also ss 66 and 67 compensation that s 280A of the WIM Act provides that a claim for work injury damages cannot be made unless a claim for lump sum compensation in respect of the injury is made before or at the same time as the claim for those damages. The expression “lump sum compensation” is defined in s 4 of the WIM Act to mean compensation under Div 4 of Pt 3 of the 1987 Act that includes both permanent impairment compensation under s 66 and pain and suffering compensation under s 67.

31 The critical provisions with which this appeal is concerned are ss 281, 313 and 314 of the WIM Act which relevantly provide as follows:

“ 281 Liability to be accepted and settlement offer made
(1) The person on whom a claim for lump sum compensation or work injury damages is made must, within the time required by this section, determine the claim by:
(a) accepting liability and making a reasonable offer of settlement to the claimant, or
(b) disputing liability.
…
(2B) When the person on whom a claim is made accepts or disputes liability, the person must notify the claimant as to whether or not the person accepts that the degree of permanent impairment of the injured worker resulting from the injury is sufficient for an award of damages.
…
313 Threshold dispute prevents service of pre-filing statement and commencement of court proceedings
If there is a dispute as to whether the degree of permanent impairment of the injured worker resulting from an injury is sufficient for an award of damages, the claimant cannot commence court proceedings for the recovery of work injury damages and cannot serve a pre-filing statement under Division 3 unless the degree of permanent impairment has been assessed by an approved medical specialist under Part 7.

(1) For the purposes of this Part, there is considered to be a dispute as to whether the degree of permanent impairment of the injured worker resulting from an injury is sufficient for an award of damages if:
(a) the person on whom the claim is made has not accepted that the degree of permanent impairment of the injured worker resulting from the injury is at least 15%, or
(b) there is a dispute as to whether the degree of permanent impairment resulting from the injury is fully ascertainable.
…
(2) There is considered to be no dispute as to whether the degree of permanent impairment of the injured worker resulting from an injury is sufficient for an award of damages if:
(a) the person on whom the claim is made has accepted that the degree of permanent impairment of the injured worker is at least 15%, or
(b) an approved medical specialist has given a medical assessment certificate certifying that the degree of permanent impairment of the injured worker is at least 15%.”

32 Sections 281(2B), 313 and 314 all use the phrase “the degree of permanent impairment of the injured worker resulting from an injury is sufficient for an award of damages”. That degree of impairment to which I have referred as the threshold, which must be satisfied before a worker can either commence court proceedings for the recovery of work injury damages or serve a pre-filing statement under Div 3 with respect to such a claim, is provided for in s 151H(1) of the 1987 Act which is relevantly in the following terms:

“No damages may be awarded unless the injury results … in a degree of permanent impairment of the injured worker that is at least 15%.”

The decision of the primary judge

33 After referring to the relevant statutory provisions which I have recorded above, his Honour noted (at [22]) that the primary question raised by the parties was whether or not there was a dispute as to the 15% threshold requirement so as to make defective the service of a pre-filing statement before the commencement of proceedings in the District Court. His Honour then referred to the effect of s 314, namely, that there was considered to be a dispute as to whether that threshold has been met if the person on whom the claim is made has not accepted that the degree of permanent impairment of the injured worker resulting from the injury is at least 15%.

34 His Honour then noted (at [23]) the respondent’s submission that there could be no dispute by reason of the agreement made in respect of the s 66 claim and the registration of that agreement under s 66A of the 1987 Act. On the other hand, the appellant had submitted that the operation of that agreement was limited to the claim that was made pursuant to s 66 and had no application to a claim for work injury damages. It further submitted that the only way in which an acceptance could be made in respect of a claim for work injury damages was by express notification of such acceptance pursuant to s 281(2B).

35 His Honour then continued (at [24]):

“A number of matters are relied on to support this submission (these include the lack of status had by a s 66A agreement, the clear distinction drawn in the legislation between compensation and work injury damages, the limited jurisdiction had by the Commissioner in respect of work injury damages and the language of ss 313 and 314).”

36 The primary judge’s conclusion and the reasons for it were confined to the following:

“25 On this aspect of the matter, I accept the submissions made on behalf of the second defendant. In my view, by reason of the agreement, there is no dispute as to the fifteen percent threshold in the sense contemplated by s313 and s314 of the 1998 Act [the WIM Act].
26 The provisions of s281 have application to both the claim that was made for lump sum compensation pursuant to s66 and the claim for work injury damages. It seems to me that s281(2B) is a mandatory provision that requires a response to be made by the person on whom a claim has been made. Where there is dispute, the same assessment process has application to both claims for lump sum compensation and work injury damages.
27 I consider that the provisions of ss313 and 314 look to the actual state of affairs that exists between the parties. The question of whether or not there is a threshold dispute requires the drawing of a conclusion of fact.”

The submissions of the parties on the appeal

37 The appellant’s submissions may be summarised as follows:

(a) The only manner in which a person on whom a claim for work injury damages is made can " accept ” that the “ degree of permanent impairment … is sufficient for an award of damages ” is by express notification of such acceptance pursuant to s 281(2B) of the WIM Act after the claim for work injury damages is formally made. In the absence of any such express notification there is a “ dispute ” within the meaning of s 313 with respect to that matter, which can only be resolved by an approved medical specialist giving a medical assessment certificate under Pt 7 of Ch 7 of that Act as required by s 314(2)(b), certifying the respondent’s degree of permanent incapacity.

(b) Reliance by the respondent upon the s 66A agreement is misplaced given that such an agreement does not enjoy the status of an award of the Commission and that the Commission, even when exercising its jurisdiction to deal with a claim for compensation under s 66, cannot enter an award by consent unless a medical assessment certificate has been issued by an approved medical specialist. Such a certificate removes any dispute in relation to a claim for work injury damages by operation of s 314(2)(b) of the WIM Act . Section 66B(1) of the 1987 Act expressly precludes a s 66A agreement being entered as an award to give effect thereto unless the proceedings also relate to some dispute in connection with the worker’s claim for compensation under the Act.

(c) Accordingly, a s 66A agreement has no status beyond being an agreement between the parties in respect of, and limited to, a claim for lump sum compensation under s 66. In the present case the parties’ agreement of a 16% degree of permanent impairment was for the purpose only of resolving a dispute as to the respondent’s claim to statutory lump sum compensation. There is nothing in the insurer’s letter of 8 December 2005 (see [12] above) which suggested that the insurer accepted the report from Dr Searle assessing the whole person impairment of the respondent at 16% for any purpose other than with respect to his claim for s 66 lump sum compensation. This must be so given that at that point of time no claim for work injury damages had either been made or particularised.

(d) The Acts draw a clear distinction between “ compensation ” and “ work injury damages ”. Although s 281(1) of the WIM Act refers to a claim for lump sum compensation or work injury damages, it does so only for the purpose of imposing an obligation upon the person on whom such a claim is made to determine the claim within the relevant time limit either by accepting liability for the claim and making a reasonable offer of settlement to the claimant or disputing liability. Although s 280A contemplates that a claim for lump sum compensation may be made at the same time as a claim for work injury damages, there is no reason why the person on whom the claims are made could not accept liability in respect of the claim for lump sum compensation but dispute liability in relation to the claim for work injury damages. This is because liability for lump sum compensation is not dependant upon any fault on the part of the employer whereas liability for work injury damages is so dependant.

(e) Importantly, s 281(2B) by its terms relates solely to claims for work injury damages. It contemplates that liability with respect to a claim for such damages may either be accepted or disputed. In context, the reference to liability in respect of such a claim is a reference to an admission or denial of fault on the part of the employer. This must be so as liability to pay work injury damages is entirely dependant upon the worker establishing that his injury was caused by the negligence or other tort (including breach of statutory duty) of his employer or a breach of contract by that employer: see s 150B of the 1987 Act .

(f) However, an acceptance of liability in the sense referred to does not of itself entitle the worker to work injury damages: he must still satisfy the s 151H threshold. Hence the mandatory requirement of s 281(2B) for the person on whom the claim for work injury damages is made to notify the claimant as to whether or not that person accepts that the degree of impairment is sufficient for an award of such damages. Acceptance is to be made or refused only in the context of, and in response to, a claim for work injury damages.

(g) Sections 313 and 314 are also predicated upon a claim having been made for work injury damages. Sequentially, such a claim having been made is required to be responded to by the person on whom it is made in accordance with s 281(1) and (2B). In the event that the person on whom the claim is made accepts, pursuant to s 281(2B), that the degree of permanent impairment is sufficient for an award of damages, the next step required of the claimant is for the service of a pre-filing statement pursuant to Div 3 of Pt 6 of Ch 7 of the WIM Act . On the other hand, if there is no such acceptance, Div 2 of Pt 6 is engaged as s 313 enjoins a claimant for work injury damages from commencing court proceedings for the recovery of such damages or serving a pre-filing statement where there is a dispute as to whether the degree of permanent impairment is sufficient for an award of such damages.

(h) It is in that context that s 314 provides a mechanism for the determination of whether there is any such dispute. There is deemed to be no such dispute if:

"the person on whom the claim is made has accepted that the degree of permanent impairment of the injured worker is at least 15%”
Section 281(2B) then requires the person on whom the claim is made to notify the claimant accordingly.


(i) It follows that the combined effect of ss 281(2B), 313 and 314 of the WIM Act is that an acceptance by the employer or its insurer that the requisite degree of permanent impairment exists requires a positive act of notification of such acceptance in response to the claim once made. There can be no acceptance for the purposes of s 314(2)(a) by default or by silence.

(j) The foregoing is further supported by reference to s 65 of the 1987 Act , which provides, for the purposes of Div 4 of Pt 3 of that Act (which includes s 66), that the degree of permanent impairment that results from an injury is to be assessed as provided by that section and Pt 7 (Medical Assessment) of Ch 7 of the WIM Act . Section 65(3) provides that if there is a dispute about the degree of permanent impairment of an injured worker, the Commission may not award permanent impairment compensation unless the degree of permanent impairment has been so assessed by an approved medical specialist under Pt 7 of Ch 7. Under s 313 of the WIM Act , where there is a dispute as to whether the degree of permanent impairment is sufficient for an award of work injury damages, that dispute is also required to be resolved by an assessment by an approved medical specialist under Pt 7 of Ch 7. The medical assessment certificate of such a specialist certifying the degree of permanent impairment of the injured worker is, by s 326 of the WIM Act , conclusively presumed to be correct as to the degree of permanent impairment of the worker as a result of the relevant injury and any proceedings before a court with which the certificate is concerned. Thus the scope for a dispute as to whether the threshold has been satisfied would be non-existent where, for instance, a medical assessment certificate issued with respect to a s 66 claim was less than 15%, as that certificate would, on the respondent’s argument, be conclusive in relation to the degree of permanent impairment of the worker for the purposes of s 151H of the 1987 Act .

38 I would interpolate here that there is some difficulty with this last proposition of the appellant, which relies upon the effect of s 326(1) of the WIM Act. This is because a medical assessment certificate pursuant to an assessment under Pt 7 of Ch 7 is only conclusively presumed to be correct in any proceedings before a court or the Commission with which the certificate is concerned. Where such a certificate is given with respect to proceedings in the Commission for the determination of lump sump compensation under s 66, it cannot be conclusively presumed to be correct with respect to proceedings for work injury damages in the District Court as the proceedings are clearly different.

39 However, it is to be noted that the effect of s 326(1) is that a medical assessment certificate issued pursuant to a medical assessment under Pt 7 of Ch 7 is only conclusively presumed to be correct with respect to the proceedings for the purpose of which the certificate has been obtained, namely, for the purpose of a lump sum compensation claim on the one hand or a work injury damages claim on the other. As such, the acceptance by the person on whom a claim for lump sum compensation under s 66 is made that the degree of permanent impairment is a particular percentage figure should not, unless the text of the statute so requires, be conclusively binding upon that person in respect of a claim for work injury damages.

40 This is particularly so given that s 281(2B) requires the person on whom that claim is made to notify the claimant as to whether or not that person accepts that the degree of permanent impairment is sufficient for an award of work injury damages.

The respondent’s submissions

41 Counsel for the respondent commenced his submissions by referring to the history of the legislation with respect to claims for damages by injured workers. I find it convenient to adopt that history as summarised by Kirby J in Berowra Holdings Pty Ltd v Gordon (2006) HCA 32; (2006) 225 CLR 364 at 384-385 (omitting citations):

“72. … Until 1987 in New South Wales, claims for damages by workers, entitled to benefits under workers' compensation law, were generally regulated by the common law. However in 1987, Pt 5 of the Act (specifically, ss 149 and 150) abolished the ‘common law right’ to recover damages from employers in respect of injuries for which the employers were liable to pay compensation under the Act. Those provisions remained in force until the amendment of the Act by the Workers Compensation (Benefits) Amendment Act 1989 (NSW).
73. As a result of the 1989 Act, a new Pt 5 was inserted into the Act. That Part, entitled ‘Common Law Remedies’, repealed the original ss 149 and 150. Division 2 and Div 3 of Pt 5 restored the right to ‘common law damages’ against such employers, although with certain modifications. The result of this amendment was that the defendant's ‘right’ was restored by statute. What was restored was the right to ‘common law damages’. This is not therefore a case of a right based in, and defined by, legislation (such as entitlements under a workers' compensation statute). There the enacted law grants the rights and fixes the preconditions to recovery. Here the source of the right, once restored, was the common law. The modifications introduced by statute included an obligation to elect between a claim for common law damages and a claim for lump sum compensation under the Act; the introduction of caps on damages for non-economic loss and on some forms of economic loss; the institution of thresholds before common law damages could be recovered; and the introduction of procedural requirements. Such procedural requirements included the one contained in s 151C, the subject of this appeal. Part 5 of the Act applied only to injuries suffered after 30 June 1987. …
74. Further modifications, imposing additional limitations on the award of damages, were later enacted, as by the introduction in 2001 of s 151H…. The effect of these provisions is that separate regimes operate in respect of claims for damages for workplace injuries. ...”

42 The respondent then referred to what he termed the “radical” changes in 2001 whereby the only heads of common law damage recoverable were those for past and future economic loss (s 151G(1)). However, unlike the previous regime, s 66 permanent impairment compensation and s 67 pain and suffering compensation was to be retained by the injured worker as part of his overall compensation package; the only deduction from any award of damages for economic loss being the amount received by the claimant in respect of weekly compensation payments.

43 As a consequence of the “marrying” of statutory compensation with common law economic loss damages where the former constituted what previously would have been referred to as “general damages”, the dichotomy between statutory compensation and work injury or common law damages was no longer as stark as it had previously been. On the contrary, the present regime was a hybrid whereby the total claim of an injured worker asserting negligence on the part of his or her employer was constituted by both statutory compensation as well as an award of past and future economic loss. The hybrid nature of the worker’s entitlement was emphasised by s 280A of the WIM Act which provides that a claim for work injury damages cannot be made unless a claim for lump sum compensation (which includes both ss 66 and 67 compensation) in respect of the relevant injury is made before or at the same time as the claim for work injury damages.

44 In these circumstances it was submitted that, instead of there being two separate regimes with respect to statutory compensation on the one hand and work injury damages on the other, there is a unified scheme in which there is a requirement for an assessment, whether under Pt 7 of Ch 7 of the WIM Act or by agreement, of the degree of permanent impairment of the injured worker resulting from his injury.

45 This leads to the conclusion, so it was submitted, that there should be a consistent approach to the determination of the degree of permanent impairment so that once such an assessment is made or the person on whom the claim is made for permanent impairment compensation under s 66 accepts a particular degree of permanent impairment, that person should be bound by that agreement or acceptance for all purposes including whether the degree of permanent impairment is sufficient for an award of work injury damages.

46 Thus, in the present case the respondent contended that the system would be brought into disrepute if the employer and its insurer were permitted to accept a degree of permanent impairment of 16% in November 2005, but to change their position six months later in May 2006 to assert a lower degree of impairment which did not satisfy the threshold.

47 Finally, reliance was placed upon the fact that both ss 314(1) and (2) adopt the past perfect tense in determining whether or not a dispute is considered to exist. Section 314(2)(a) deems that there is no dispute as to whether the degree of permanent impairment is sufficient for an award of damages if the person on whom the claim is made “has accepted that the degree of permanent impairment of the injured worker is at least 15%”. The language of that provision, so it was submitted, clearly contemplated the possibility of an earlier acceptance of at least a 15% degree of permanent impairment which was satisfied in the present case by the appellant’s acceptance of a 16% degree of permanent impairment for the purpose of calculating s 66 lump sum compensation.

48 If the legislature had intended otherwise, it would have cast the relevant parts of s 314(1)(a) and (2)(a) in the present tense. Thus with respect to the latter it would have provided that there would be no dispute if the person on whom the claim is made “accepts” that the degree of permanent impairment of the injured worker is at least 15%.

49 I would interpolate here that the difficulty with this last submission is that it would not necessarily cater for the notification to the claimant by the person on whom the claim for work injury damages has been made of its acceptance that the degree of permanent impairment was sufficient for an award of damages as mandated by s 281(2B).

The appellant’s submissions should be accepted

50 Under s 281(1) of the WIM Act, two different claims by the injured worker are contemplated: first, a claim for lump sum compensation (which includes both ss 66 and 67 compensation) and, second, a claim for work injury damages. The subsection requires the person on whom the claim is made to either accept or dispute liability in respect of any such claim within the relevant time limit under s 281(2). Failure to so comply is an offence: see s 283.

51 Irrespective of whether the person on whom a claim for work injury damages is made accepts or disputes liability, s 281(2B) mandates that that person notify the claimant as to whether or not it accepts that the degree of permanent impairment of the claimant resulting from the injury is “sufficient for an award of damages”. The latter is clearly a reference to s 151H(1) of the 1987 Act which requires a minimum 15% degree of permanent impairment to qualify a worker to claim work injury damages.

52 In the present case a claim for lump sum compensation under s 66 of the 1987 Act was made in 2005 to which the insurer responded on 8 December 2005 that it accepted the assessment of 16% whole person impairment with respect to that claim. Contrary to the respondent’s submission, there can be no doubt that, in terms, that acceptance was related only to the respondent’s claim for s 66 permanent impairment compensation. At that point in time no claim had been made for work injury damages alleging negligence on the part of the appellant and, as I have already observed in [27] above, a dispute as to the degree of permanent impairment for the purpose of such a claim involved relatively small amounts, namely, $1,500 per 1% of impairment.

53 Accordingly, the financial consequences from an insurer’s point of view in disputing the degree of permanent impairment asserted by a claimant for s 66 compensation, where the dispute as to the degree of permanent impairment is small, are relatively insignificant. The same cannot, in my view, be said with respect to the s 151H threshold. Whether an injured worker falls on one side of the threshold or the other has the potential for significant financial consequences not only for the claimant but also for the insurer.

54 Similar observations may be made with respect to the s 66A agreement that, again in terms, confined acceptance of 16% whole person impairment to the respondent’s s 66 claim.

55 Thereafter a claim for work injury damages was made. Section 281(1) obligated the person on whom the claim was made to either accept liability and make a reasonable offer of settlement or to dispute liability within the relevant time limit under ss(2). As I have already observed, work injury damages can only be awarded if there is fault on the part of the claimant’s employer (see s 151E(1) of the 1987 Act), so that acceptance of liability does not automatically entitle the claimant for such damages to proceed with that claim. The threshold must still be satisfied. Thus there is the requirement in s 281(2B) that the person on whom such a claim is made notify the claimant as to whether or not it accepts that the degree of permanent impairment of the injured worker resulting from the injury “is sufficient for an award of damages”.

56 Section 313 contemplates that there may be a dispute as to whether the degree of permanent impairment of the injured worker is sufficient for an award of damages. Section 314 then provides a mechanism for determining whether there is any such dispute. Where the person on whom the claim is made responds to the mandatory requirements of s 281(2B) by notifying the claimant that it does not accept that the degree of permanent impairment is sufficient for an award of damages then, by force of s 314(1)(a), there is considered to be a dispute as to that matter.

57 On the other hand, and perfectly logically, where pursuant to s 281(2B) the person on whom the claim is made accepts that the degree of permanent impairment is sufficient for an award of damages, then by force of s 314(2)(a) there is considered to be no dispute as to that matter.

58 Where an acceptance or non-acceptance is notified in accordance with s 281(2B), such notification necessarily precedes the commencement of court proceedings for the recovery of work injury damages or the serving of a pre-filing statement pursuant to s 315 of the WIM Act. In that context it is unsurprising that the terms of ss 314(1)(a) and 314(2)(a) are couched in the past perfect tense.

59 I would therefore reject the respondent’s submission that the current regime has blurred the dichotomy between statutory compensation and work injury damages as a consequence of the latter being confined to past and present economic loss on the one hand and the former being able to be retained by a claimant as part of his or her overall compensation package.

60 Section 149 of the 1987 Act emphasises the dichotomy between damages on the one hand and statutory compensation on the other. The fact that statutory compensation may be retained by a worker injured by his or her employer’s negligence is unsurprising given that work injury damages are now confined to present and future economic loss. The scheme of the legislation is, simply, that non-economic loss is determined in accordance with the provisions of ss 66 and 67 of the 1987 Act, whereas economic loss (where fault on the part of the employer causing the relevant injury is established) is recoverable as damages. The confining of such damages to economic loss does not, in my view, blur the dichotomy between a claim for lump sum compensation (as defined in s 4 of the WIM Act) on the one hand and work injury damages (as defined by s 250 of that Act) on the other.

61 Accordingly, it is difficult to perceive any reason why it is necessary for the purposes of ss 314(1)(a) and (2)(a) to look beyond whether there is actual notification by a person on whom a claim for work injury damages is made under s 281(2B) as to whether or not that person accepts that the degree of permanent impairment of the injured worker resulting from the relevant injury is sufficient for an award of work injury damages.

62 In particular, in my opinion no useful purpose would be served by binding a person on whom a claim for work injury damages has been made to an agreement or acceptance by that person of a particular degree of permanent impairment (which is at least 15%) made for the purpose of enabling a calculation of permanent impairment compensation to be made in accordance with the mathematical formulae set forth in s 66(2) of the 1987 Act.

63 The respondent submitted that there would be no injustice to the person on whom a claim for work injury damages is made by holding that person to an acceptance of a degree of permanent impairment of 15% or greater made with respect to a claim for permanent impairment compensation under s 66. This was because any such acceptance would be relevant only to the threshold being satisfied and would play no further part in the determination by the court of the past and future economic loss sustained by the injured worker.

64 The respondent sought to draw analogy on this point to a similar threshold requirement in the Motor Accidents Compensation Act 1999, which was the subject of comment by Mason P in Brown v Lewis (at 592 [23]):

“the statutory concept of (permanent) “impairment” is not to be equated to the notion of incapacity (permanent or temporary) that may be a stepping-stone in a case involving a claim of damages for economic loss. It is Pt 5.2 of the Act (s 124–s 130) that contains the legislative qualifications upon the common law principles governing assessment of damages for economic loss. Those provisions do not engage the statutory concept of “permanent impairment”.

65 These comments are analogous to the relevant provisions of the 1987 Act: see ss 151I to 151L.

66 Accordingly, so it was submitted, any reassessment of the claimant’s condition after the determination of his or her claim for statutory lump sum compensation that demonstrated a partial recovery would be reflected in the usual way when determining the extent of the claimant’s deprivation or impairment of earning capacity (see s 151G(1)(b) of the 1987 Act). Thus even though the threshold would have been satisfied, the quantum of damages may not necessarily include any award for future economic loss. In these circumstances, so it was submitted, there would be no injustice to the insurer in holding it to its acceptance for the purpose of the calculation of statutory lump sum compensation of a degree of permanent impairment that satisfied the threshold.

67 With respect I cannot agree. The threshold provided by s 151H(1) has a broader purpose than that of avoiding some form of injustice to an insurer by holding it to a previous acceptance of a particular percentage of permanent impairment for the purpose of calculating s 66 compensation. It is apparent that the threshold is intended to promote the broader social purpose of avoiding the cost of litigating small claims. That cost extends not only to that of the insurer and therefore the employer in defending such claims but also to the cost, not recoverable from the claimant, of pursuing such claims as well as the cost to the community of providing the scarce resources of the State for the purpose of dealing with such claims. Those purposes are not promoted, in my view, by the respondent’s contention that once an insurer acknowledges a degree of permanent impairment for the purpose of calculating s 66 compensation, it is bound by that decision and thereby prevented from disputing whether the threshold has been met for the purpose of entitling the claimant to pursue a claim for work injury damages.

68 If the respondent’s contentions are accepted, then given that an injured worker is entitled to statutory lump sum compensation irrespective of any question of fault on the part of his or her employer, the mere prospect of a subsequent claim for work injury damages is likely to inhibit an insurer from agreeing on the degree of permanent impairment for the purpose of calculating s 66 compensation lest it be bound by that acceptance for the purposes of the work injury damages threshold also. Such inhibition would inevitably lead to unnecessary disputation with respect to the degree of permanent impairment necessary for the purpose of the s 66 calculation albeit that any such dispute may be resolved pursuant to Pt 7 of Ch 7 of the WIM Act. Although that mechanism is relatively straight forward, it still involves a cost to the community that might otherwise be avoided if agreement were reached.

69 Nothing in the statutory text or context of s 314 mandates acceptance of the respondent’s submissions and hence, for the forgoing reasons, they ought to be rejected. Furthermore, when s 314 is read in context with the other relevant provisions of Ch 7 of the WIM Act and, in particular, those in Div 4 of Pt 3, the correct construction of ss 314(1)(a) and (2)(a) as contended for by the appellant becomes clear.

70 My views on this issue may be summarised as follows. First, the acceptance of a degree of permanent impairment of at least 15% has a particular significance in relation to a claim for work injury damages which it does not have with respect to a claim for lump sum compensation under s 66 of the 1987 Act. Second, the acceptance in the present case of a 16% degree of permanent impairment was relevant only for the purpose of calculating the amount of lump sum compensation to which the worker was entitled in accordance with the mathematical formula provided by s 66(2)(b). Third, the sole purpose of the requirement that the person on whom a claim for work injury damages is made notify a claimant whether it accepts that the degree of permanent impairment is sufficient for an award of damages pursuant to s 281(2B) is to satisfy the requirement of s 151H(1) of the 1987 Act and to establish that there is no dispute with respect to that issue for the purpose of s 313. Fourth, the requirement in s 281(2B) that the person on whom the claim is made notify the claimant whether or not the person accepts that the degree of permanent impairment of the injured worker resulting from the injury is sufficient for an award of damages applies even where the person on whom the claim is made disputes liability. In other words, liability can still be disputed but the issue of whether the s 151H threshold is satisfied can no longer be in dispute. That only means that the claimant worker has passed the permanent injury gateway in respect of a claim for work injury damages. It is a requirement that is separate from, and in no way relevant to, the liability of the person on whom the claim is made.

71 That is why s 314(2)(a) speaks of the acceptance by the person on whom the claim is made that the degree of permanent impairment is “at least 15%”. It does not require that person to nominate a degree of permanent impairment greater than 15%. But absent a dispute on the question, there is a requirement for the employer to agree to a particular degree of permanent impairment for the purpose of a s 66 calculation of lump sum compensation. In the present case it was agreed at 16%.

72 For the foregoing reasons therefore, in my opinion the primary judge erred in upholding the determination of the Registrar’s delegate. That determination on its face reveals an error of law which this Court must now remedy.

The respondent’s notice of contention

73 The respondent submitted that the decision of the primary judge and, therefore, that of the Registrar’s delegate should be upheld on an alternative ground: that the acceptance by the appellant’s insurer that the respondent had sustained a 16% whole person impairment, as contained in the insurer’s letter to the respondent’s solicitor dated 8 December 2005, as well as the acknowledgment in the s 66A agreement to the same effect, constitutes a conventional estoppel of the nature of that described by Dixon J in Grundt v The Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641. The relevant passage is at 676 where his Honour said:

“[The parties] may adopt as the conventional basis of the transaction between them an assumption which they know to be contrary to the actual state of affairs.”

74 This form of estoppel was described in the joint judgment of the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244 in the following terms:

“Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by the representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying.”

Their Honours also observed that there could be no such estoppel unless it could be shown that the parties have in fact adopted the alleged assumption as the conventional basis of their relationship.

75 In Handley’s “Estoppel by Conduct and Election”, Sweet & Maxwell (2006) the learned author described estoppel by convention in these terms (at 115, para 8-001):

“When parties make a statement of fact or of mixed fact and law the conventional basis of their transaction … both are estopped from questioning its truth for the purpose of that transaction.”

76 Then, in the same text at 122, para 8-008, the learned author notes that the change of position that creates an estoppel by convention may be entry into the relationship which attracts the convention, the estoppel preventing a return to the previous relationship so that there is no need to consider the detriment that that would cause. However, as the appellant pointed out, Handley also noted, at 127 para 8-015, that the estoppel only applies for the purpose of the transaction or relationship in respect of which the convention was adopted.

77 In the present case, it was submitted by the appellant that the mutual assumption of fact adopted by the parties of a 16% degree of permanent impairment was adopted only as the conventional basis of their relationship for the purpose of calculating the entitlement of the respondent to permanent impairment compensation under s 66 of the 1987 Act and for no other purpose.

78 In my view this contention of the appellant is clearly correct. The evidence does not establish, nor could it in the circumstances, that the mutual adoption by the parties of a degree of permanent impairment of 16% for the purpose of the s 66 calculation was so adopted by them for all purposes relating to any claims which might be made under the Acts, including a claim for work injury damages.

79 Accordingly, in my opinion the submission by the respondent that an estoppel by convention existed with respect to the agreement by the insurer that for the purpose of calculating s 66 compensation the respondent had sustained a 16% degree of permanent impairment, was confined to that claim and did not constitute adoption by the parties of that degree of permanent impairment for any other purpose. It follows that the respondent’s claim in its notice of contention based on conventional estoppel should be rejected.

Conclusion

80 It follows from the foregoing that in my view the primary judge erred in dismissing the appellant’s summons. I would therefore propose the following orders:

(a) Appeal allowed;

(b) Set aside the orders made by Associate Justice Malpass on 20 April 2007;

(c) Remove Matter No. 8070-06 from the Workers Compensation Commission of New South Wales to this Court;

(d) The determination of the Delegate of the Registrar of the Commission that the pre-filing statement served by the respondent on the appellant on 10 August 2006 was not defective be quashed;

(e) Remit the question of whether the said pre-filing statement was defective to the Registrar of the Commission for re-determination in accordance with the reasons of this Court;

(f) The respondent to pay the costs of the appellant of the summons filed on 26 September 2006 and of the appeal but to have with respect to the latter a certificate under the Suitor’s Fund Act 1951, if otherwise qualified.

81 CAMPBELL JA: I agree with Tobias JA.

82 BELL JA: I agree with Tobias JA.

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