Mitsubishi Motors Australia Limited v Frank Sosa Worker's Rehabilitation and Compensation Corporation v Frank Sosa Nos. SCGRG 94/1609 and SCGRG 94/1610 Judgment No. 5084 Number of Pages 9 Workers' Compensation

[1995] SASC 5084

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1) DUGGAN(2) AND NYLAND(3) JJ

CWDS
Workers' compensation - Entitlement to and liability for compensation - weekly income maintenance - alleged availability of suitable employment - discontinuance of weekly payments - whether discontinuance authorized by Act - effect of 535 - no review pursuant to s38 - right to discontinue not automatic on loss of entitlement - prescribed procedures for discontinuance not followed - discontinuance not authorized. Workers Rehabilitation and Compensation Act
ss 35, 36 and 38. GMH v Workers' Rehabilitation and Compensation Corporation
(1991) 55 SASR 395, applied.

HRNG ADELAIDE, 11 April 1995 #DATE 8:6:1995 #ADD 4:9:1995

Counsel for appellant Mitsubishi:     Mr R C White

Solicitors for appellant Mitsubishi: Fountain and Bonig

Counsel for appellant WRCC:            Ms R A Layton QC with
   Ms J Grundy

Solicitors for appellant WRCC:         Thomsons

Counsel for respondent:                Mr A P Durkin

Solicitors for respondent:             Duncan And Hannon

ORDER
Appeal dismissed.

JUDGE1 KING CJ These are appeals on a question of law from a decision of the Workers Rehabilitation and Compensation Appeals Tribunal consisting of Judge J P McCusker.

2. The appellant, Mitsubishi, is an exempt employer under the WorkersRehabilitation and Compensation Act and therefore possesses all the powers of the Workers Rehabilitation and Compensation Corporation which are relevant to this case; Workers Rehabilitation and Compensation Acts63. The respondent sustained injury in his employment by Mitsubishi on 13 February, 1991. He was in receipt of weekly payments by way of income maintenance pursuant to s35 of the Act until they were discontinued pursuant to a decision made by the appellant on 15 January, 1993. He sought a review of the appellant's decision and the Review Office set aside the decision and determined that weekly payments should continue. This determination was upheld on appeal by Judge McCusker. There are two appeals to this Court, one by the exempt employer and the other by the Corporation.

3. Judge McCusker, affirming the view of the Review Officer held that weekly payments could be lawfully discontinued only if the discontinuance was authorized by s36 of the Act and that that section does not authorize discontinuance in the circumstances of the present case. Section 36, as it stood at the relevant time, is as follows:
    "36.(1) Subject to this Act, weekly payments to a worker
    who has suffered a compensable disability shall not be
    discontinued unless -
    (a) the worker consents to the discontinuance of weekly
    payments; or
    (b) the Corporation is satisfied, on the basis of a
    certificate of a recognised medical expert, that the worker
    has ceased to be incapacitated for work by the compensable
    disability;
    (c) the Corporation has, by notice in writing to a worker,
    required the worker to -
     (i) submit to an examination by a recognised medical
     expert nominated by the Corporation; or
     (ii) submit to the Corporation a certificate from a
     recognised medical expert certifying that the compensable
     disability continues,
    and the worker has failed to comply with the requirement
    within the time allowed in the notice; or
    (d) the worker has returned to work; or
    (e) the discontinuance of weekly payments is authorised or
    required by some other provision of this Act.

(2) Subject to this Act, weekly payments to a worker who has
    suffered a compensable disability shall not be reduced
    unless -
    (a) the worker consents to the reduction of weekly payments;
    or
    (b) the Corporation is satisfied, on the basis of a
    certificate of a recognised medical expert, that there has
    been a reduction in the extent the worker is incapacitated
    for work by the compensable disability, or
     (ba) reduction is necessary to correct an arithmetical or
     clerical error; or
     (bb) where the weekly payments include a component for
     overtime - the Corporation is satisfied that if the worker
     had continued in the work in which he or she was last
     employed before becoming incapacitated, he or she would
     not have continued to work overtime or the pattern of
     overtime would have changed so that the amount of overtime
     would have diminished; or
    (c) the reduction of weekly payments is authorised or
    required by some other provision of this Act,
    (and any reduction made on the basis of this subsection must
    be consistent with section 35).

(3) Where the Corporation decides to discontinue or reduce
    weekly payments in pursuance of this section, the
    Corporation must give notice in writing to the worker
    containing such information as the regulations may require
    as to the reasons for the Corporation's decision and
    informing the worker of the worker's right to have the
    decision reviewed.

(3a) The notice must be given at least 21 days before the
    decision is to take effect in any of the following cases:
    (a) where a decision to discontinue weekly payments is made,
    without the consent of the worker, on the ground that -
     (i) the Corporation is satisfied that the worker has
     ceased to be incapacitated for work by the compensable
     disability (although the worker has not returned to work);
     or
     (ii) the worker has failed to submit to an examination by
     a recognised medical expert or to provide a medical
     certificate as required by the Corporation; or
    (b) where a decision to reduce weekly payments is made,
    without the consent of the worker, on the ground that -
     (i) the Corporation is satisfied that there has been a
     reduction in the extent the worker is incapacitated for
     work by the compensable disability; or
     (ii) the Corporation is satisfied, in the case of a worker
     whose weekly payments include a component for overtime,
     that the worker would not have continued to work overtime
     or the pattern of overtime would have changed so that the
     amount of overtime would have diminished; or
    (c) where a decision to discontinue or reduce weekly
    payments is made under section 37 or 38,
    and in any other case the notice must be given as soon as
    practicable after the decision is made (but not necessarily
    before it takes effect),

(4) Where a worker applies for the review of a decision by
    the Corporation to discontinue or reduce weekly payments
    under this section within one month after the worker
    receives notice of the decision, the operation of the
    decision is suspended, and the weekly payments must continue
    or, if the decision has already taken effect, be reinstated
    (to their previous level), until the matter is first brought
    before a Review Officer.

(4a) If any proceedings before a Review Officer that relate
    to a decision of the Corporation under this section are
    adjourned, the Review Officer may, subject to subsection
(4b), on such terms and conditions as the regulations may
    prescribe, order that weekly payments be made to the worker
    for the duration of the adjournment.

(4b) A Review Officer should, in considering whether or not
    to make an order under subsection (4a), take into account -
    (a) the reason or reasons for the adjournment; and
    (b) the conduct of the parties to the proceedings,
    and may take into account such other matters as the Review
    Officer thinks fit.

(4c) Any period between the conclusion of a hearing before a
    Review Officer and the handing-down of the Review Officer's
    decision is to be regarded as an adjournment for the
    purposes of subsections (4a) and (4b).

(5) Where, on a review, the Corporation's decision under the
    section is confirmed, any amounts to which the worker would
    not have been entitled but for the operation of subsection
    (4) or (4a) may, at the Corporation's discretion (but
    subject to the regulations) -
    (a) be recovered by the Corporation from the worker as a
    debt; or
    (b) be set off by the Corporation against liabilities of the
    Corporation to make payments to the worker under this Act.

(6) If the Corporation makes a weekly payment to a worker on
    the assumption that the worker is incapacitated for work but
    the worker has in fact returned to work, the Corporation
    may, subject to the regulations, recover the amount of the
    payment as a debt.

(7) If the Corporation overpays a worker by way of weekly
    payments in consequence of -
    (a) an arithmetical or clerical error; or
    (b) an assumption, subsequently found to be incorrect, that
    a particular pattern of overtime would have continued if the
    worker had continued in the work in which he or she was last
    employed before becoming incapacitated,
    the Corporation may, subject to and in accordance with the
    regulations, recover the amount overpaid as a debt.

(8) An employer who believes that reasonable grounds exist
    for the discontinuance or reduction of weekly payments under
    this section to a worker employed by, or formerly employed
    by, the employer may, in a manner determined by the
    Corporation, request the Corporation to review the
    circumstances of the case and to discontinue or reduce the
    weekly payments.

(9) The Corporation must carry out the review as soon as
    practicable after receipt of the request unless the request
    is, in the Corporation's opinion, unreasonable.

(10) If the Corporation declines to carry out a review in
    pursuance of a request under subsection (8), or it appears
    that there has been undue delay in carrying out the review,
    a Review Officer may, on application by the employer, direct
    the Corporation to carry out the review, or give such
    directions as appear reasonable in the circumstances to
    expedite the review (as the case may require).

(11) The Corporation must comply, or take steps to ensure
    compliance, with such a direction.

(12) On completing the review, the Corporation must give the
    employer notice in writing -
    (a) of the Corporation's decision on the review, and the
    reasons for its decision; and
    (b) of the employer's right to have the Corporation's
    decision reviewed.

(13) This section does not apply in relation to the
    discontinuance of payments pursuant to Division 4A."

4. The exempt employee gave a notice purportedly pursuant to s36(1) in the following terms:
    "WORKERS REHABILITATION AND COMPENSATION ACT 1986

NOTICE UNDER SECTION 36(1)

TO FRANK SOSA
    391 Military Road
    HENLEY BEACH SA 5022

TAKE NOTICE that unless you return to work within 21 days of
    the date of receipt of this notice MITSUBISHI MOTORS
    AUSTRALIA LTD proposes to discontinue your weekly payments
    of income maintenance.

The grounds on which your weekly payments are to be
    discontinued are:
    1. The discontinuance of weekly payments is authorised or
    required by Section 35(2)(a) as suitable employment for
    which you are fit is available to you and remains available
    to you.

Dated 13 January 1993

MITSUBISHI MOTORS AUSTRALIA LTD
    by its solicitors
    BAKER O'LOUGHLIN

per (Signed)

TAKE NOTICE that if you are not satisfied with this decision
    you may within one month of receiving this notice apply to
    the WorkCover Corporation 100 Waymouth Street Adelaide for a
    review."

5. The contention for the appellants on the appeal was that the discontinuance of the payments was excluded from the prohibition contained in s36(1) by the exemption in paragraph (e) where "the discontinuance of weekly payments is authorized or required by some other provision of the Act." It was contended that that authorization or requirement was to be found in s35(1)(a)(ii) and s35(2)(a). Section 35, as it stood at the relevant time, is as follows:
    "(1) Subject to this Act, where a worker suffers a
    compensable disability that results in incapacity for work,
    the worker is entitled to weekly payments in respect of that
    disability in accordance with the following principles:
    (a) if the period of incapacity for work does not exceed one
    year -
     (i) the worker is, if totally incapacitated for work,
     entitled for the period of incapacity to weekly payments
     equal to the worker's notional weekly earnings;
     (ii) the worker is, if partially incapacitated for work,
     entitled for the period of incapacity to weekly payments
     equal to the difference between the worker's notional
     weekly earnings and the weekly earnings that the worker is
     earning or could earn in suitable employment;
    (b) if the period of incapacity for work exceeds one year,
    the worker is entitled to weekly payments determined in
    accordance with paragraph (a) for the first year of the
    period of incapacity and thereafter -
     (i) the worker is, if totally incapacitated for work,
     entitled for the period of incapacity to weekly payments
     equal to 80 per cent of the worker's notional weekly
     earnings;
     (ii) the worker is, if partially incapacitated for work,
     entitled for the period of incapacity to weekly payments
     equal to 80 per cent of the difference between the workers
     notional weekly earnings and the weekly earnings that the
     worker is earning or could earn in suitable employment
     that the worker has a reasonable prospect of obtaining.

(2) For the purposes of subsection (1) -
    (a) a partial incapacity for work over a particular period
    shall be treated as a total incapacity for work over that
    period unless the Corporation establishes that suitable
    employment for which the worker is fit is reasonably
    available to the worker in respect of that period (but where
    the period of incapacity extends beyond a period of two
    years, this paragraph does not apply to a period commencing
    after, or extending beyond, the end of the second year of
    incapacity);
    and
    (b) the following factors shall be considered, and given
    such weight as may be fair and reasonable, in making an
    assessment of the prospects of a worker to obtain employment -
     (i) the nature and the extent of the worker's disability;
     (ii) the worker's age, level of education and skills;
     (iii) the worker's experience in employment; and
     (iv) the worker's ability to adapt to employment other
     than the employment in which he or she was engaged at the
     time of the occurrence of the disability.

(2a) Where -
    (a) a period of incapacity for work exceeds two years;
    (b) an assessment of the weekly earnings that the worker is
    earning or could earn in suitable employment is made under
    subsection (1)(b)(ii);
    and
    (c) the worker's actual weekly earnings subsequently exceed
    the amount so assessed,
    the Corporation cannot reduce the weekly payments to reflect
    the worker's actual weekly earnings except to the extent
    that the aggregate of the weekly payment plus the actual
    weekly earnings (excluding prescribed allowances) exceeds
    the notional weekly earnings of the worker.

(3) Subject to subsection (4), where a disabled worker
    receives from an employer a payment, allowance or benefit in
    respect of a period of incapacity for work, the weekly
    payments payable to the worker under this section in respect
    of that period shall not, unless the Corporation determines
    otherwise, be reduced to take account of the value of that
    payment, allowance or benefit.

(4) No reduction shall be made under subsection (3) on
    account of -
    (a) any payment, allowance or benefit related to annual or
    other leave;
    (b) any payment, allowance or benefit paid or conferred by
    the employer on the worker's retirement;
    (c) any payment, allowance or benefit paid or conferred
    under a superannuation or pension scheme;
    (d) any payment, allowance or benefit paid or conferred on
    the retrenchment, or in relation to the redundancy, of the
    worker.

(5) Weekly payments are not payable in respect of a period
    of incapacity for work falling after the later of the
    following dates -
    (a) the date on which the worker attains the age at which
    the worker would, subject to satisfying any other qualifying
    requirements, be eligible to receive an age pension under
the Social Security Act 1947 of the Commonwealth;
    or
    (b) the date on which the worker attains the normal retiring
    age for workers engaged in the kind of employment from which
    the worker's disability arose or 70 years of age (whichever
    is the lesser).

(6) A worker is not entitled to receive for two or more
    disabilities weekly payments in excess of the worker's
    notional weekly earnings.

(6a) If a liability to make weekly payments is commuted into
    a liability to make a capital payment, the worker is
    presumed, for the purposes of this section, to be receiving
    the weekly payments the worker would have been receiving if
    there had been no commutation.

(6b) If a worker ceases to be entitled to weekly payments
    because the Corporation makes a capital payment for loss of
    earning capacity under Division 4A, the worker is presumed,
    for the purposes of this section, to be receiving the weekly
    payments the worker would have been receiving if there had
    been no such capital payment.

(7) In this section:-
    (a) a reference to a period of incapacity for work is, where
    the disability results in separate periods of incapacity for
    work, a reference to the aggregate period of incapacity;
    (b) a reference to weekly earnings is a reference to weekly
    earnings exclusive of prescribed allowances."

6. It was argued that the requisite authorization or requirement was implicit in the provisions of s35. The entitlement to weekly payments is prescribed by s35. When suitable employment became available, thereby causing the entitlement under ss35(1)(e)(ii) and 35(2)(a) to cease, there was an implied authorization, indeed requirement, so the argument ran, to discontinue the weekly payments.

7. This view of the effect of s35 is directly contrary to the reasoning of the judges comprising the Full Court in GMH v Workers Rehabilitation and Compensation Corporation (1991) 55 SASR 395. That case concerned the right of an exempt employer to reduce the amount of weekly payments because of a change in the overtime component of the wage currently earned by its working employees. It was concerned with reduction not discontinuance of payments. Nevertheless an essential component of the reasoning which led to the decision was the view that the effect of s35 is confined to defining the entitlement to weekly payments and that that section does not of itself require or authorize discontinuance or reduction of those payments.

8. The same view of s35 was taken by Mullighan J in Workers Rehabilitation and Compensation Corporation v James (1991) 56 SASR 414 and by Mr President Stanley in The Corporation (Linfox Transport Aust) Pty Ltd v Carter (Unreported decision of WCAT, Print A 23/1994, delivered 7 April, 1994) and Turci v The Corporation (Codan Pty Ltd) (Unreported decision of WCAT, Print A
43/1994, delivered 16 June, 1994).

9. Counsel for both appellants urged this Court not to apply the reasoning in those cases to a case of discontinuance of weekly payments by reason of suitable employment being made available, because, so it was said, if s35 does not authorize such discontinuance there is no mechanism by which the payments can be lawfully discontinued. That argument demands a consideration of the powers which exist in the Act for the discontinuance of weekly payments.

10. The provision which authorizes the Corporation to review weekly payments is s38. That section authorizes the Corporation to review "the amount of weekly payments" and requires it to do so if requested by a worker or employer. If the request is made by the employer on reasonable grounds, the review must be carried out "as soon as practicable", s36(8) and (9). The power of the Corporation following such review is to "adjust the amount of the weekly payments to take account of any change in the extent of the worker's incapacity for work (insofar as the incapacity is attributable to a compensable disability)." section 38(2). The powers under s38 may be exercised by an exempt employer; s63.

11. The expression "incapacity for work" is not used with total consistency in workers compensation legislation or in cases decided upon such legislation. In general, however, it expresses a wider notion than physical disability. It has an economic component related to the worker's capacity to earn a living. A worker's qualifications, skills and work experience are all factors in determining the extent of the worker's incapacity for work. Unemployment due to the state of the labour market is not incapacity for work caused by the compensable disability, but the extent of a worker's incapacity caused by such disability must be assessed in the light of the availability of work for which he is qualified and which he is physically capable of performing. I consider that the becoming available of work which the injured worker is capable of performing and which was not previously available, would amount to a "change in the extent of the worker's incapacity for work" within the meaning of s38(3). I doubt whether the expression "incapacity for work" could be given the same meaning in s36(l)(b) or (2)(b) where it is linked to a requirement for a medical certificate. The stipulation in those provisions that the satisfaction of the corporation of a cessation, or reduction in the extent, of incapacity must be based on a medical certificate, suggests that incapacity for work in those provisions may refer to physical disability only. There is room, however, for the view that a medical certificate that the worker is fit for the work which has become available would be sufficient and it is unnecessary to express a concluded opinion on the point. The expression "incapacity for work" in s38 is free of any link with a medical certificate requirement and there is no impediment to the construction which I have adopted of the expression in that section.

12. The power of the Corporation under s38 is to review "the amount of the weekly payments" and to "adjust the amount". No doubt in some contexts these expressions would be construed in a manner which would require that some amount remained after the adjustment. I think, however, that they permit a construction which authorizes an adjustment of the weekly payments to nil. That construction should be adopted if it "would promote the purpose or object of the Act" Acts Interpretation Act, 1915 s22(1). I think that s38 is the provision intended by the legislature to authorize the review of weekly payments to bring them into conformity with the entitlement prescribed by s35 in the circumstances then existing. If that requires an adjustment to nil, the section should be understood as authorizing that adjustment.

13. Section 36 prohibits discontinuance or reduction of weekly payments except on the grounds stipulated in the section. The prohibition is expressed to be "subject to this Act" but I do not think that that is significant for present purposes. The grounds in s36 include the authorization or requirement of discontinuance or reduction, as the case may be, by some other provision of the Act. In my opinion s38 supplies that authorization or requirement. Where an adjustment under s38 involves a discontinuance or reduction in weekly payments, the Corporation or exempt employer, in implementing the adjustment, must comply with the procedural stipulations of s36.

14. I do not accept, for the reasons given, that rejection of the appellants' view of s35 would leave no mechanism for reviewing and discontinuing weekly payments where suitable work has become available.

15. The construction of s35 advanced by the appellants carries with it the implication, in my opinion, that whenever the entitlement under s35 ceases or diminishes, the Corporation or exempt employer is entitled automatically to discontinue weekly payments. That is plainly contrary to the policy of the Act. The legislature in prescribing procedures for the discontinuance or reduction of weekly payments, has recognized that injured workers are dependent for livelihood upon the weekly payments. Arbitrary cessation or reduction could cause great hardship. Procedures are set in place to protect injured workers against arbitrary cessation or reduction of their means of livelihood. The procedures in ss36, 37, 38, 39 and 41 are designed for that purpose. It is unthinkable that the legislature, having adopted those protective measures, would largely negate them by conferring in s35 a power on the Corporation or exempt employer to discontinue or reduce weekly payments unilaterally and without compliance with the protective procedures.

16. I consider that the reasoning in the GMH case should be applied to a case such as the present in which it is claimed that suitable employment is available. Judge McCusker reached the correct conclusion. In my opinion, the appeal should be dismissed.

JUDGE2 DUGGAN J I agree that this appeal should be dismissed for the reasons given by King CJ.

JUDGE3 NYLAND J I agree that the appeal should be dismissed for the reasons expressed by King CJ.