NSW Trustee and Guardian on behalf of Robert Birch v Olympic Aluminium Pty Ltd - [2016] NSWWCCPD 54

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:	NSW Trustee and Guardian on behalf of Robert Birch v Olympic Aluminium Pty Ltd [2016] NSWWCCPD 54
APPELLANT:	NSW Trustee and Guardian on behalf of Robert Birch
RESPONDENT:	Olympic Aluminium Pty Ltd
INSURER:	Allianz Australia Workers Compensation (NSW) Ltd
FILE NUMBER:	A1-662/16
ARBITRATOR:	Mr J Harris
DATE OF ARBITRATOR’S DECISION:	8 June 2016
DATE OF APPEAL HEARING:	21 October 2016
DATE OF APPEAL DECISION:	10 November 2016
SUBJECT MATTER OF DECISION:	Dispute about a work capacity decision; jurisdiction of the Commission; s 43(1) and (3) of the Workers Compensation Act 1987; whether Arbitrator erred in declining to award compensation where inconsistent decisions made by insurer
PRESIDENTIAL MEMBER:	President Judge Keating
HEARING:	Oral
REPRESENTATION:	Appellant:	Mr McManamey, instructed by Brydens Lawyers Pty Ltd
Respondent:	Ms Wood, instructed by HWL Ebsworth Lawyers

ORDERS MADE ON APPEAL:

1. The Certificate of Determination of 8 June 2016 is revoked and the following order is made in its place:

“Pursuant to s 43(3) of the Workers Compensation Act 1987 the Commission declines to make any order.”

BACKGROUND

The appellant, Robert Birch, was employed by the respondent, Olympic Aluminium Pty Ltd, as a storeman, driver and general hand.
On 28 November 2002, Mr Birch injured his lumbar spine whilst pulling lengths of aluminium from a racking system.
Mr Birch also suffers from an unrelated medical condition, namely schizophrenia. Due to this condition, he is the subject of a financial management order in favour of the NSW Trustee and Guardian pursuant to s 25P of the Guardianship Act 1987. That order was made on 21 January 2003 and confirmed on 30 January 2004. Accordingly, these proceedings are commenced by the NSW Trustee and Guardian on behalf of Mr Birch.
The respondent’s insurer, Allianz Australia Workers Compensation (NSW) Ltd (Allianz), accepted liability for Mr Birch’s lumbar spine injuries and commenced weekly payments of compensation.
In a Certificate of Determination dated 23 May 2005, Mr Birch was awarded lump sum compensation in respect of six per cent whole person impairment arising from the injuries he sustained on 28 November 2002. On a date which cannot be identified from the documents before me, Mr Birch made a further claim for lump sum compensation claiming a further one per cent whole person impairment (seven per cent whole person impairment in respect of the lumbar spine). On 18 December 2015, Allianz denied liability for the additional compensation. It alleged that any impairment was not related to the initial injury as claimed.
As a result of the amendments introduced by the Workers Compensation Legislation Amendment Act 2012 (the 2012 amending Act), Mr Birch’s claim was to be transitioned to the new benefits scheme in 2013. On 9 October 2013, Allianz wrote to Mr Birch informing him that following an assessment of his work capacity, a decision had been made that he currently had a capacity for work and was entitled to benefits under s 38 of the Workers Compensation Act 1987 (the 1987 Act). As a result of the transition, Mr Birch was informed that he was entitled to weekly compensation at the rate of $758.80 per week from 17 January 2014. The terms of that notification and the calculations it contained are the subject of controversy. However it is accepted by both parties that the letter of 9 October 2013 constitutes a “work capacity decision”. The terms of that letter are set out at [20] of this decision.
On 16 June 2014, Allianz issued a notice under s 74 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). Allianz stated that it would not accept liability for weekly payments beyond 11 August 2014. It alleged that the injury on 28 November 2002 was a minor aggravation of an underlying degenerative condition, the effects of which had ceased.
On 10 February 2016, Mr Birch lodged an Application to Resolve a Dispute with the Commission. He sought an order for weekly payments of compensation from 12 August 2014. He also sought an increase in the lump sum compensation previously paid to him in respect of the lumbar spine.
On 2 March 2016, the respondent filed a Reply relying upon the s 74 notice.
On 8 April 2016, the matter came before a Commission Arbitrator, Mr Harris. No oral evidence was called. The Arbitrator delivered an extempore decision finding in favour of Mr Birch on the liability issues. He found that Mr Birch continued to suffer from the effects of his injuries. He directed that the claim for permanent impairment compensation be referred to the Registrar for remittal to an Approved Medical Specialist for an assessment of the whole person impairment. There is no issue in relation to the Arbitrator’s finding on those matters.
There was considerable argument before the Arbitrator concerning his jurisdiction to enter an award in favour of Mr Birch under s 38 of the 1987 Act. Mr Birch’s counsel, Mr McManamey, submitted that the Arbitrator should enter an award in favour of Mr Birch consistent with the work capacity decision issued on 9 October 2013. The respondent argued that Mr Birch did not satisfy the requirements of s 38 and submitted that no order could be made in Mr Birch’s favour. The Arbitrator reserved his decision on that issue.
On 8 April 2016, the following extempore orders were made:
“1.     I find that the effects of the injury to the lumbar spine suffered on 28 November 2002 are ongoing as at 16 June 2014;
2.       I find that the document at Application, page 108 is not a work capacity decision within the meaning of s 43 of the 1987 Act;
3.       I decline to find that a work capacity decision is inferred from the document at Application, 108; [s 74 Notice dated 16 June 2014]
4.       I note the parties agree that the document at Application, page 106, is a work capacity decision. [letter from Allianz to Mr Birch dated 9 October 2013]
5.       The respondent is to pay the applicant’s section 60 expenses.
6.       I reserve the following issue for consideration:
‘Can the Commission make an order pursuant to s 38(3) of the 1987 Act in circumstances where the applicant is not working 15 hours per week during the relevant period?’
7.       The applicant is to file and serve written submissions by 29 April 2016;
8.       The respondent is to file and serve written submissions in reply by 20 May 2016.
9.       I remit the matter to the Registrar for referral to an Approved Medical Specialist as follows:
Date of Injury:                  28 November 2002
Body part:  Lumbar Spine
Method of Assessment:     Whole Person Impairment
I note the prior Medical Assessment Certificate provided by Dr Bodel (Application, page 1).
10.     The following documents are referred by the Commission:
(a)Application to Resolve a Dispute and attachments;
(b)Reply and attachments;
(c)These orders.
11.     I grant liberty to the parties to obtain an urgent telephone conference in the event that the parties reach agreement on the claim for permanent impairment compensation.” (emphasis in original)
After receiving further submissions, the Arbitrator delivered a written decision accompanied by a Statement of Reasons on 31 May 2016. The Arbitrator found that Mr Birch was not entitled to an award pursuant to s 38.
On 8 June 2016, an amended Certificate of Determination was issued to acknowledge the parties’ agreement to resolve the permanent impairment compensation claim by the payment of an additional one per cent whole person impairment. This obviated the need for a referral by the Registrar to an Approved Medical Specialist for assessment.
In an Amended Certificate of Determination dated 8 June 2016, the Commission determined:
“The applicant/worker is presently not entitled to an order pursuant to section 38(3) of the Workers Compensation Act 1987 in respect of the period from 12 August 2014 to date.”
Mr Birch appeals the Arbitrator’s determination.

PRELIMINARY MATTERS

There is no issue that the threshold requirements of s 352(3) of the 1998 Act as to the quantum of compensation in issue have been satisfied.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with s 352(4) of the 1998 Act.

THE WORK CAPACITY DECISION

Both parties conceded at the arbitration hearing that the letter of 9 October 2013 was a work capacity decision. The respondent’s counsel, Ms Wood, argued on the appeal that whilst she agreed the letter was a work capacity decision it was not a work capacity decision with respect to Mr Birch’s entitlements under s 38.
The meaning and effect of the letter of 9 October 2013 is very much in issue. Therefore, it is reproduced in full:
“Change to your weekly payments rate
We refer to our discussions with you on 09/10/2013 and would like to confirm the following:
Under the changes to the Workers’ Compensation Scheme which were introduced by the NSW Government in June 2012, your claim must transition to the new benefits system in 2013 following a work capacity assessment and decision.
Following an assessment of your work capacity, a decision has now been made that you currently have capacity to work and are entitled to weekly payments under the new Section 38 of the Workers’ Compensation Act 1987.
As a result of this decision you will be transitioned to the new weekly payment rate of $758.80 under the new Section 38 of the Worker’s Compensation Act 1987. The new rate will apply after 17/01/2014 and is based on the following information:
% applicable =  80%
Average weekly earnings =   $948.50
Current work capacity =       12 per week
Current weekly earnings =     $0
Please note that:
·your weekly payments at your current rate will continue to be paid until 16/01/2014, provided certificates of capacity cover you until that date. Please refer to Section 54(2)(a) of the Workers’ Compensation Act 1987;
·the transition amount is specified in the legislation and must be used as the deemed ‘average weekly earnings’ for any workers who made their claim prior to 1 October 2012 and are transitioning to the new benefits system. Please refer to Section 43(1)(d) of the Workers’ Compensation Act 1987;
·this transition amount was calculated by taking the average of all the average weekly earnings across the whole workers’ compensation system to make it as fair as possible for everyone;
·the transition amount applies irrespective of your real earnings prior to injury;
·dependants are no longer included in determining entitlements to weekly payments.
·the transition amount will be indexed twice a year, namely in April and October. As a result your weekly entitlements will be adjusted to reflect the change.
·based on the information listed within this letter, it is advisable that if you have other Government Agencies or companies that may be linked or potentially be impacted by changes to your Workers Compensation payments (for example: Child Support Agency, Centrelink) or have other insurance policies that may be impacted by these changes to your weekly payments (for example: Income Protection Insurance) that you should advise these parties of this decision as well.
If your situation changes, your capacity for work and your ongoing entitlement to weekly payments will be reassessed.
In the meantime you must continue to meet the following obligations or your ongoing entitlement to weekly payments may be suspended or terminated:
·participate and co-operate in the establishment of an Injury Management Plan;
·comply with the obligations imposed by an Injury Management Plan;
·make all reasonable efforts to return to work.
Please do not hesitate to contact me on the number below if you have any queries.”

STATUTORY PROVISIONS

The relevant statutory provisions on appeal are s 38 and s 43 of the 1987 Act. Those provisions have been extracted below.
Section 38 of the 1987 Act provides:
“38 Special requirements for continuation of weekly payments after second entitlement period (after week 130)
(1)     A worker’s entitlement to compensation in the form of weekly payments under this Part ceases on the expiry of the second entitlement period unless the worker is entitled to compensation after the second entitlement period under this section.
(2)     A worker who is assessed by the insurer as having no current work capacity and likely to continue indefinitely to have no current work capacity is entitled to compensation after the second entitlement period.
(3)     A worker (other than a worker with high needs) who is assessed by the insurer as having current work capacity is entitled to compensation after the second entitlement period only if:
(a) the worker has applied to the insurer in writing (in the form approved by the Authority) no earlier than 52 weeks before the end of the second entitlement period for continuation of weekly payments after the second entitlement period, and
(b) the worker has returned to work (whether in self-employment or other employment) for a period of not less than 15 hours per week and is in receipt of current weekly earnings (or current weekly earnings together with a deductible amount) of at least $155 per week, and
(c) the worker is assessed by the insurer as being, and as likely to continue indefinitely to be, incapable of undertaking further additional employment or work that would increase the worker’s current weekly earnings.
(3A) A worker with high needs who is assessed by the insurer as having current work capacity is entitled to compensation after the second entitlement period only if the worker has applied to the insurer in writing (in the form approved by the Authority) no earlier than 52 weeks before the end of the second entitlement period for continuation of weekly payments after the second entitlement period.
(4)     An insurer must, for the purpose of assessing an injured worker’s entitlement to weekly payments of compensation after the expiry of the second entitlement period, ensure that a work capacity assessment of the worker is conducted:
(a) during the last 52 weeks of the second entitlement period, and
(b) thereafter at least once every 2 years.
Note : An insurer can conduct a work capacity assessment of a worker at any time. The Workers Compensation Guidelines can also require a work capacity assessment to be conducted.
(5)     An insurer is not to conduct a work capacity assessment of a worker with highest needs unless the insurer thinks it appropriate to do so and the worker requests it. An insurer can make a work capacity decision about a worker with highest needs without conducting a work capacity assessment.
(6)     The weekly payment of compensation to which an injured worker who has no current work capacity is entitled under this section after the second entitlement period is to be at the rate of:
(a) (AWE × 80%) − D, or
(b) MAX − D,
whichever is the lesser.
(7)     The weekly payment of compensation to which an injured worker who has current work capacity is entitled under this section after the second entitlement period is to be at the rate of:
(a) (AWE × 80%) − (E + D), or
(b) MAX − (E + D),
whichever is the lesser.
(8)     A worker’s entitlement to compensation under this section may be reassessed at any time.”
Section 43 of the 1987 Act provides:
“43 Work capacity decisions by insurers
(1)     The following decisions of an insurer (referred to in this Division as work capacity decisions) are final and binding on the parties and not subject to appeal or review except review under section 44BB or judicial review by the Supreme Court:
(a) a decision about a worker’s current work capacity,
(b) a decision about what constitutes suitable employment for a worker,
(c) a decision about the amount an injured worker is able to earn in suitable employment,
(d) a decision about the amount of an injured worker’s pre-injury average weekly earnings or current weekly earnings,
(e) a decision about whether a worker is, as a result of injury, unable without substantial risk of further injury to engage in employment of a certain kind because of the nature of that employment,
(f) any other decision of an insurer that affects a worker’s entitlement to weekly payments of compensation, including a decision to suspend, discontinue or reduce the amount of the weekly payments of compensation payable to a worker on the basis of any decision referred to in paragraphs (a)-(e).
(2)     The following decisions are not work capacity decisions:
(a) a decision to dispute liability for weekly payments of compensation,
(b) a decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act.
(3)     The Commission does not have jurisdiction to determine any dispute about a work capacity decision of an insurer and is not to make a decision in respect of a dispute before the Commission that is inconsistent with a work capacity decision of an insurer.”

THE ARBITRATOR’S REASONS

The Arbitrator stated that the issue for his determination was whether the Commission had jurisdiction to make an order pursuant to s 38. He said (at [20]):
“Can the Commission make an order pursuant to s 38(3) of the 1987 Act in circumstances where the applicant is not working 15 hours per week during the relevant period?”
The Arbitrator made orders for the filing and serving of written submissions by the parties on that question which were duly complied with. The Arbitrator summarised the parties’ submissions at [23]–[24] of the reasons.
The parties’ written submissions raise questions of construction concerning the work capacity decision contained in the letter of 9 October 2013. The Arbitrator observed that the document was contradictory and confusing. The Arbitrator found that the most likely interpretation of the work capacity decision was that Mr Birch did have a current capacity to work 12 hours per week. The Arbitrator rejected the submission that the decision assessed Mr Birch as having “no current capacity”.
As a matter of statutory construction, referring to the text, context and purpose of the legislation, s 38 is clear in it terms. There is an entitlement to compensation under s 38 “only if” the requirements of s 38(3)(a)(b) and (c) are satisfied. That is, the worker must have returned to work for at least 15 hours per week and earning at least $150 per week and the worker is assessed by the insurer as being, and is likely to continue indefinitely to be, incapable of undertaking further additional employment or work that would increase the worker’s current weekly earnings. This, the Arbitrator held, was an interpretation consistent with the restrictive purpose to limit the entitlement to weekly compensation after the second entitlement period for workers other than those with the highest needs.
The Arbitrator did not accept Mr Birch’s submission that any decision other than to award $758.80 per week would be inconsistent with the work capacity decision, which is prohibited by s 43(3) of the 1987 Act. He held (at [46]) that the limitation provided by s 43(3) is that the Commission “is not to make a decision in respect of a dispute before the Commission that is inconsistent with a work capacity decision”. The Arbitrator held that the essential “dispute” was whether Mr Birch was entitled to an award under s 38(3). The resolution of that dispute depends, only in part, on the work capacity decision. It also depends on satisfaction of the requirements of s 38, particularly the requirement of s 38(3)(b), namely that the worker has returned to work for a period of not less than 15 hours per week and is in receipt of current weekly earnings of at least $155 per week. Neither condition can be satisfied by Mr Birch.

Given the mandatory requirements of s 38(3)(b) the Arbitrator concluded that there was no entitlement to an award in favour of Mr Birch. That finding was not inconsistent with the work capacity decision because the entitlement is denied on a basis other than the insurer’s assessment of any work capacity.
Mr Birch submitted that he was incapable of working 12 hours per week given the restrictions contained in the various medical certificates and his unrelated schizophrenic condition. The Arbitrator concluded that that submission was directed to the merits of the work capacity decision and was beyond the jurisdiction of the Commission to consider (s 43(3)). He observed that the right to review the work capacity decision arises pursuant to s 44BB of the 1987 Act (formerly s 44 of the 1987 Act).

GROUNDS OF APPEAL

The appellant submits that the Arbitrator erred:
(a) when he failed to consider that the decision to pay weekly compensation during the s 38 period was itself a work capacity decision and he had no jurisdiction to make a decision inconsistent with that decision;
(b) when he considered that a decision that Mr Birch had a capacity of “12 per week” meant that he had a capacity to earn working 12 hours per week, and
(c) by considering that he could engage in a consideration of s 38 when there was a work capacity decision.

THE JURISDICTIONAL ISSUE

The appellant’s written submissions contend that the work capacity decision made by the insurer on 9 October 2013 was a decision to pay Mr Birch weekly compensation at the rate of $758.80 under s 38 of the 1987 Act. Anything else contained within the letter of 9 October 2013 was not a “decision” but merely contained information leading to the decision to pay weekly compensation at the set rate.
The respondent’s written submissions contend that the opposite is the case. That is, that the decision made by the insurer was a decision that Mr Birch had been assessed as having a current work capacity which had been assessed at 12 hours per week. If that is the decision, the gateway to an award under s 38 cannot be satisfied and therefore the Arbitrator was correct in declining to make an order.
My preliminary view was that the issues raised on this appeal in substance concern a “dispute about a work capacity decision of an insurer”. If that is the correct characterisation of the dispute, the Commission has no jurisdiction to determine the dispute due to the privative provisions in s 43(1) and the qualification on the Commission’s jurisdiction in s 43(3) of the 1987 Act. As the parties’ submissions were not directed to that issue the appeal was listed for an oral hearing.
At the appeal hearing, on 21 October 2016, I sought further submissions from the parties concerning the Commission’s jurisdiction to entertain the appeal. The submissions received may briefly be summarised as follows.

The appellant’s submissions

The appellant’s counsel, Mr McManamey, argued that this appeal does not raise a challenge to a work capacity decision. He submitted, consistent with his written submissions, that the insurer made a decision that the worker is entitled to be paid a certain sum of money. That is the work capacity decision and the Commission cannot make a decision that is inconsistent with it. He submitted that in order for the Commission to determine whether any order it may make is consistent with or inconsistent with a work capacity decision of an insurer, it must first determine what decision has been made.
Mr McManamey submitted that s 43(3) would exclude the Commission from determining a dispute, for example, about the correctness of a work capacity decision. However, s 43(3) does not impede the Commission’s power to determine what decision has been made by the insurer.
Mr McManamey strongly argued that to consider any other aspect of the decision other than the decision to pay the worker a particular sum of money would be going behind the decision, which is beyond the Commission’s jurisdiction.
He accepted the proposition that the work capacity decision of 9 October 2013 is, on one view, a confused, confusing and internally inconsistent document (T9.29). However he rejected the proposition that the resolution of a dispute as to the meaning of a work capacity decision is excluded by the operation of s 43(3). He submitted that the jurisdiction of the Commission is not excluded in circumstances where the meaning of the work capacity decision is not straightforward.
Finally, Mr McManamey submitted that the decision to pay the worker weekly compensation at the rate of $758.80 per week is itself a work capacity decision falling within s 43(1)(f). He submitted that it would be inconsistent for the Commission to make any order inconsistent with that determination.

The respondent’s submissions

The respondent’s counsel, Ms Wood, submitted that in the circumstances of this case the Commission can make no order for several reasons.
Ms Wood submitted that any decision that the Commission makes would be inconsistent with the work capacity decision of 9 October 2013 in one respect or another. In other words, it would be either inconsistent with a finding that the worker is entitled to compensation at the rate of $758.80 or alternatively inconsistent with a finding that Mr Birch has a current work capacity assessed at a level insufficient to open a gateway to an award under s 38. That is because the worker has not returned to work for a period of not less than 15 hours per week and is not earning at least $155 per week. In fact Mr Birch has not returned to work at all.
Ms Wood submitted that the dispute between the parties is a dispute regarding a work capacity decision. It is clear that the document is internally inconsistent and therefore the Commission has no power to go behind that document to resolve the internal inconsistency by reason of the operation of s 43(3).
For these reasons the Commission does not have jurisdiction to entertain the appeal. It is submitted that in any event the Arbitrator was correct when he determined that he could not make an order in the circumstances of this case.
Finally, Ms Wood submitted that if the worker is aggrieved by the Arbitrator’s decision he can follow the review process pursuant to s 44BB of the 1987 Act.

Consideration

The first question that must be addressed is whether the dispute before the Commission concerns a “dispute about a work capacity decision of an insurer” (s 43(3)). The legislation does not contain a definition of the term “dispute” or shed any light on what is meant by the phrase “any dispute about a work capacity decision”.
While dictionaries may be used to assist in determining the meaning of a term contained in legislation, dictionary definitions are not conclusive.
Deputy President Roche considered the limitations of the use of dictionary definitions to determine the meaning of legislation in Rushbrook v Alan James Biggs t/as A J Biggs Used Cars [2014] NSWWCCPD 75. Deputy President Roche found (at [46]) the better approach was to “consider the words in context” (Films and Casting Temple v Malla [2013] NSWCA 377 at [92] considered). Deputy President Roche (at [57]) applied Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 (at [69] citing Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1989] HCA 26; 147 CLR 297 at 320 per Mason and Wilson JJ): the text of the provision is to be construed according to the context “by reference to the language of the instrument viewed as a whole”.
In XYZ v Commonwealth [2006] HCA 25 Chief Justice Gleeson said (at [19]): “[t]here are many instances where it is misleading to construe a composite phrase simply by combining the dictionary meanings of its component parts”. This authority was applied in Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42 (at [61]) where the majority said:
“[i]t is not always appropriate to dissect a composite legislative expression into separate parts, giving each part a meaning which the part has when used in isolation, then combine the meanings to give that composite expression a meaning at odds with the meaning it has when construed as a whole.”
In Sea Shepherd Australia Limited v Commissioner of Taxation [2013] FCAFC 68, Gordon J (Besanko J agreeing) considered the use of the dictionary. His Honour held (at [34]) that the principles of statutory construction may be summarised as follows:
“1. The task is to construe the language of the statute, not individual words: St George Bank Ltd v Federal Commissioner of Taxation [2009] FCAFC 62; (2009) 176 FCR 424 at [28]; see also XYZ v Commonwealth [2006] HCA 25; (2006) 227 CLR 532 at [102]; R v Brown [1996] 1 AC 543 at 561 quoted in Agfa-Gevaert at 397 and Metropolitan Gas Co v Federated Gas Employees’ Industrial Union [1925] HCA 5; (1924) 35 CLR 449 at 455.
2. The task is not to pull apart a provision, or composite phrase within a provision, into its constituent words, select one meaning, divorced from the context in which it appears, and then reassemble the provision: Lorimer v Smail [1911] HCA 44; (1911) 12 CLR 504 at 508–10; R v Carter; Ex parte Kisch [1934] HCA 50; (1934) 52 CLR 221; Biga Nominees Pty Ltd v Commissioner of Taxation (1991) 104 FLR 74 at 85–6. Indeed, it is rare that resort to a dictionary will be of assistance in searching for the legal meaning of a provision in a statute: R v Campbell [2008] NSWCCA 214; (2008) 73 NSWLR 272 at [49].”
The unhelpfulness of relying on dictionary definitions for statutory meaning has been reiterated recently in the Court of Appeal (State of New South Wales v Chapman-Davis [2016] NSWCA 237 at [62] citing 2 Elizabeth Bay Road Pty Ltd v The Owners – Strata Plan No 73943 [2014] NSWCA 409 at [81] (Leeming JA); TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] NSWCA 68 at [80] (Leeming JA, Beazley P and Emmett AJA agreeing)).
Applying these principles, I am satisfied that the issue raised on appeal concerns a dispute about a work capacity decision for the following reasons.
The letter of 9 October 2013, which the parties accept is a work capacity decision, is a confused, confusing and internally inconsistent document. Paragraph two of that document states that, by reason of the amendments to the legislation in 2012, Mr Birch was to be transitioned to the new benefits regime. It states that a work capacity assessment and decision had been made. In paragraph three, the author states that “following an assessment of your work capacity, a decision has now been made that you currently have capacity to work and are entitled to weekly payments under the new Section 38 of the Workers’ Compensation Act 1987”.
It is certainly open to conclude that the insurer decided that Mr Birch had been assessed as having a work capacity and, although it is not conceded, it is reasonable to infer that that capacity was assessed at 12 hours per week.
The author of the letter goes on to state “as a result of this decision” you will be transitioned to the new weekly payment rate of $758.80 under the new Section 38 …” Whether that is also a decision that is binding on the Commission or whether it results from the decision referred to at [53] is also a matter that is in dispute. Indeed, Mr McManamey submits that the decision to pay Mr Birch $758.80 is itself a work capacity decision made pursuant to s 43(f).
If Ms Wood’s submissions are accepted the decision made by the insurer was that Mr Birch had a work capacity decision of 12 hours per week, and that would be insufficient to attract an award of compensation under s 38 and the Arbitrator’s decision would be confirmed.
On the other hand, if Mr McManamey’s submissions are accepted the only decision is that Mr Birch is entitled to compensation at the rate of $758.80, and the Arbitrator’s decision would be revoked and an award entered in Mr Birch’s favour.
Both submissions cannot be correct.
In order for the Commission to resolve the differences between the arguments presented in respect of the letter, it necessarily involves the resolution of a dispute about a work capacity decision which is beyond the Commission’s jurisdiction by reason of the express exclusion contained in s 43(3). To the extent that the Arbitrator engaged in a resolution of that dispute he erred.
The finding in the preceding paragraph is sufficient to dispose of the appeal.
It follows that paragraph one of the Arbitrator’s determination of 8 June 2016 must be revoked and the following order substituted in its place:
“Pursuant to s 43(3) of the Workers Compensation Act 1987 the Commission declines to make any order.”
However, if the conclusion I have reached is incorrect or not the preferred construction, I would not uphold the appeal in any event for the following reasons.
For convenience, I propose to deal with ground two first.

Ground two

The Arbitrator erred when he considered that a decision that Mr Birch had a capacity of 12 per week meant that he had a capacity to earn, working 12 hours per week

The appellant’s submissions

The appellant submits the decision of 9 October 2013 was in two parts. It contained a conclusion that Mr Birch was entitled to weekly payments under the new s 38 in the sum of $758.80. It also contained a conclusion that he had “current work capacity = 12 per week”. The Arbitrator was required, so it is submitted, to interpret the findings “in the light that there was a work capacity decision that the appellant was entitled to compensation. To do otherwise would be to make a decision inconsistent with the work capacity decision”.
The appellant submitted that the decision that Mr Birch was entitled to compensation at 80 per cent of the transitional rate, namely $758.80 per week, is itself a work capacity decision within the meaning of s 43(f). Therefore the Commission is unable to make a decision which is inconsistent with that decision.
The nature of work capacity decisions are such that the Commission cannot go behind the decision to identify or correct error. Without a further explanation, it is impossible to say what the words “12 per week” appearing in the letter of 9 October 2013 mean. It is not possible to say whether there has been a work capacity decision that Mr Birch has been assessed as capable of 12 hours per week.
A possible interpretation is that there has been a conclusion reached that Mr Birch is capable of working 12 hours per week at the time of the letter, with the restrictions imposed upon him, namely a lifting restriction of 5 kg with nil pushing, pulling, bending, twisting or squatting. That does not mean that he has a current work capacity within the meaning defined in s 32A. It is necessary to consider his capacity for work with those restrictions together with the limitations arising from his schizophrenic condition (see Wollongong Nursing Home Pty Ltd v Dewar [2014] NSWWCCPD 55 at [59]). With both conditions considered it is submitted that there is a nil earning capacity.
The conclusion reached by the insurer that Mr Birch was entitled to ongoing payments of $758.80, when properly read, is not in conflict with a conclusion that Mr Birch has a capacity for work of 12 hours per week. That is because inherent in the work capacity decision is a conclusion that Mr Birch is unable to earn income in suitable employment. In other words as it was put to the Arbitrator, there was no suitable employment having regard to Mr Birch’s incapacity, age, education, skills and work experience.
On appeal, Mr McManamey submitted that the Arbitrator did not consider the line of reasoning outlined above when making his decision. Rather he considered the words “current work capacity = 12” in isolation without considering the document as a whole and without considering the binding nature of the decision that there was an entitlement to compensation. By doing so the Arbitrator erred.
The appellant submits that the correct response in this case was to make an order for the payment of compensation in accordance with the existing work capacity decision. If the insurer is of the view that there really is a capacity to engage in suitable employment, then the onus is upon it to make a new work capacity decision. One of the effects of the enactments in ss 43 and 44 of the 1987 Act is that the insurer must accept the consequences of making a work capacity decision that is not favourable to it.

The respondent’s submissions

The respondent submits that the only available inference to be drawn from the terms of the letter of 9 October 2013 is that Mr Birch has a capacity for work of 12 hours per week.
Even if that inference is not available, the Arbitrator was precluded from determining that Mr Birch had no capacity for work because the insurer had concluded to the contrary, stating “a decision has now been made that you currently have capacity for work …”.
If there was an error in the calculation of Mr Birch’s entitlement, the assertion that the Commission is bound to perpetuate that error is not founded in any provision of the legislation.
The appellant’s submissions require the Commission to infer that the insurer had moved from its decision that Mr Birch had capacity to work. Had that been the case, one would have expected the calculation to have stated “current work capacity = 0 per week” but that was not the case.
For the appellant’s submissions to be accepted, the Commission would have to infer that the insurer had deliberated on the potential suitable employment for the purposes of s 32A and made a decision that there was no suitable work available. There is no reference in the decision to such an exercise and there is no evidence to support the notion that such an exercise (if any) resulted in a determination that there was no suitable work.

Consideration

I do not accept the appellant’s submissions.
The relevant “decisions” made by the insurer in the work capacity decision are referred to at [3] and [4] of the letter.
The first decision made by the insurer concerned the requirement to transition Mr Birch to the new benefits scheme in 2013, following the amendments to the legislation introduced by the 2012 amending Act. The decision to transition Mr Birch, so the letter states (at [3]), was “following a work capacity assessment and decision” (emphasis added).
The next passage is particularly relevant and although it has been previously quoted, I repeat it:
“Following an assessment of your work capacity, a decision has now been made that you currently have capacity to work and are entitled to weekly payments under the new Section 38 of the Workers’ Compensation Act 1987.” (emphasis added)
The fourth paragraph commences with the words “[a]s a result of this decision”, then goes on to state that Mr Birch would be transitioned to the new weekly payment rate which was “based on the following information”. Included in the stated information is the statement that Mr Birch has “Current work capacity = 12 per week”.
The finding that Mr Birch has a capacity of “12 per week” can only be consistent with a finding that he has been assessed as being capable of working 12 hours per week. No other submission or possible construction was put forward for consideration. The appellant merely submitted that it is impossible to say what the words “12 per week” actually mean, nor is it possible, in the appellant’s submission, to find that it means that Mr Birch has been assessed as being capable of working 12 hours per week.
However, at the hearing of the appeal, the appellant’s counsel Mr McManamey conceded that the Arbitrator’s finding that “12 per week” meant “12 hours per week” was, on one view, a reasonable conclusion for the Arbitrator to have reached (T32.14 and T34.35).
When one looks at the contemporaneous medical evidence at the time the decision was made it is readily apparent that the conclusion that “12 per week” was an erroneous term meant to express the preponderance of medical evidence at the relevant time, namely, that Mr Birch was assessed as being capable of undertaking 12 hours of work per week.

In a report dated 28 March 2013, Dr Anderson, an occupational physician, reported to Allianz that “Mr Birch should be capable of continuing with his occupation which currently has been certified four hours a day for three days of the week.”
In a series of medical certificates issued by Mr Birch’s nominated treating doctor, Dr Richmond, between 16 December 2013 and 14 March 2014, he certified that Mr Birch had capacity for some form of employment for 4 hours per day, 3 days per week with a lifting/carrying capacity of 5 kg and nil pushing and pulling, bending, twisting or squatting.
In a further report to Allianz dated 14 May 2014, Dr Anderson, having consulted with Mr Birch the same day, reported that Mr Birch was again assessed as being capable of working for four hours per day for three days of the week.
To accept Mr McManamey’s submissions it is necessary to draw an inference that Mr Birch had been assessed as having no earning capacity when the effects of his accepted work injury were considered in conjunction with his non-work related medical condition. There is nothing in the evidence before me upon which such an inference can be drawn.
In Sabanayagam v St George Bank Limited[2016] NSWCA 145 (Sabanayagam), Sackville AJA found (at [119] (Beazley P agreeing), citing Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 at 355-356 (Mason CJ, Brennan and Deane JJ agreeing); Bruce v Cole (1998) 45 NSWLR 163 at 187-188 (Spigelman CJ, Mason P, Sheller and Powell JJA agreeing)): “The making of findings and the drawing of inferences in the absence of any evidence to support them is an error of law.”
The available evidence points in the opposite direction to that submitted by Mr McManamey. It is apparent for the reasons below that Allianz made no attempt to assess Mr Birch’s ability to earn in suitable employment. There is no reference in the letter of 9 October 2013 to any consideration of the factors relevant to such an assessment, such as Mr Birch’s age, education, work experience or any of the other factors relevant to such an assessment (see s 32A). Allianz restricted its consideration to an assessment of Mr Birch’s physical incapacity only.
For these reasons it was open to the Arbitrator to conclude that Allianz’s decision of 9 October 2013 was a decision that Mr Birch retained a physical capacity for work of 12 hours per week. That was the only conclusion reasonably available on the evidence presented.
It follows that ground two would fail.

Ground One

The Arbitrator erred when he failed to consider that the decision to pay weekly compensation during the s 38 period was itself a work capacity decision and he had no jurisdiction to make a decision inconsistent with that decision

The appellant’s submissions

The appellant submits that there are a number of different decisions that can constitute a work capacity decision. The restriction on the Commission’s jurisdiction applies to each of those decisions and there is “no ranking of the exclusion to the effect that one type of work capacity decision is to take precedence over another”. The decision that binds the Commission is the work capacity decision of 9 October 2013, being a decision that Mr Birch is entitled to weekly benefits under s 38 at the rate of $758.80 per week.
The structure of s 43 is that work capacity decisions can be made in respect of a number of matters that must be considered to determine whether there is an entitlement to weekly compensation whether it be under ss 36, 37 or 38. Significantly s 43(f) provides that any other decision referred to in s 43(a)–(e) is itself a work capacity decision.
The work capacity decision of 9 October 2013 contains a number of decisions that are work capacity decisions and therefore prevent the Commission from making a decision that is inconsistent with that decision.
The decision made was that Mr Birch is entitled to weekly compensation under s 38 and that the rate of the weekly compensation is $758.80 per week. That decision was based on other work capacity decisions, namely “decisions about average weekly earnings and other matters”.
To reach a conclusion that the entitlement is other than $758.80 would be inconsistent with the work capacity decision. The Commission cannot go behind the decision to determine for itself whether the terms of s 38 have been met. To reach a conclusion that the entitlement is other than $758.80 per week would be inconsistent with the work capacity decision. The appellant argues that a submission to this effect was made at arbitration, which the Arbitrator failed to address.

The respondent’s submissions

In her written submissions, Ms Wood argued that the decision of 9 October 2013 to pay Mr Birch the full entitlement under s 38 was clearly not on the basis of his “current work capacity” (s 43(a)). Had the work capacity decision been made on the basis of Mr Birch’s work capacity (12 hours) his entitlement would have been nil.
In addition, she submitted that the requirements of s 43(b), (c) and (d) had not been addressed at all and s 43(e) was irrelevant.
In the alternative, if the letter did constitute a work capacity decision, the Commission has not erred in declining to make an order. Section 43(3) does not compel the Commission to make an order; it precludes the making of a decision that is inconsistent with a work capacity decision.
The decision to decline to make an order in respect of Mr Birch’s entitlement to weekly compensation is not a decision that is incompatible with the insurer’s work capacity decision. Had the Arbitrator made a decision to pay Mr Birch $758.80 per week, that decision would be inconsistent with the decision that Mr Birch had a work capacity of 12 hours per week.
At the hearing of the appeal Ms Wood submitted that it is patently clear from the letter of 9 October 2013 that the insurer made a decision that Mr Birch had a capacity to work.
The decision to pay Mr Birch $758.80 is based on 80 per cent of a transitional figure, and not based on his pre-injury average weekly earnings. It is the application of a figure that is deemed to be his pre-injury average weekly earnings. It does not involve the exercise prescribed in s 43 of calculating the worker’s pre-injury average weekly earnings as described in s 43(1)(b).
In any event, the calculation undertaken by the insurer is not based on an assessment of the worker’s ability to earn in suitable employment. The insurer deducted the current weekly earnings (nil), not the worker’s ability to earn. For that reason, the respondent submits that the decision to pay Mr Birch weekly compensation was not a decision made in accordance with s 38. It was not based on the formula dictated by s 38 in order to calculate a worker’s entitlement to weekly benefits under that section.
The decision to pay Mr Birch a sum of weekly compensation cannot stand alone from the rest of the document. It must be accepted that the insurer has decided that the worker has a capacity to earn. However, the decision that is required to enliven the jurisdiction of s 38 is in fact a decision made pursuant to s 38 and made in accordance with that provision.
Ms Woods submitted that the insurer’s decision does not enliven the power of the Commission to make an award under s 38.
In the respondent’s submission, the decision to pay Mr Birch $758.80 per week is not a decision made pursuant to s 38, it was a decision made for transitional purposes only. Therefore, so it is submitted, as there is no work capacity decision pursuant to s 38, the Commission cannot make an order for compensation under that provision: Lee v Bunnings Group Ltd [2013] NSWWCCPD 54 (Lee) (see also Sabanayagam at [137]–[141]).
After 130 weeks of weekly payments, the insurer must make a decision whether to continue to make weekly payments to a worker. Section 38 is a gateway to a worker having an entitlement to weekly benefits. The Commission has no power to entertain a claim for weekly payments under that section unless such a decision has been made. Once that decision has been made, the Commission is prohibited from making any order inconsistent with it.
Further it is submitted the Commission is prohibited from making an order that Mr Birch is entitled to $758.80 per week for a number of reasons. First, the gateway to an award under s 38 has not been satisfied. Second, the decision that the insurer has reached is unclear, and thirdly the Commission must make a determination under s 38. It can’t simply endorse something that the insurer has decided. If the Commission comes to a differing result after properly determining the matter, then the Commission cannot make an order and therefore the Arbitrator’s decision was correct.
The Arbitrator acknowledged that there was a work capacity decision and that the applicant had been assessed as having a current earning capacity. That has not been challenged by Mr Birch in these proceedings other than to make a submission as to what may or may not be suitable employment in his particular circumstances. However, the fact that the insurer has decided that Mr Birch has a work capacity has the consequence that if he is not working, he is not entitled to an award under s 38. Therefore the order that Mr Birch seeks is seeking to have the Commission make a determination that is contrary to law.

Consideration

I accept the respondent’s submissions.
The parties accept that the insurer made a decision that Mr Birch retained a physical capacity for some form of work. So much is clear from the third and fourth paragraphs of the letter of 9 October 2013.
As the author of that letter states, as a result of that decision, Mr Birch was transitioned into the new weekly payments regime following the 2012 amendments. The quantification of his entitlement was based only on the information as set out in paragraph four of the letter, namely that Mr Birch was entitled to transition to compensation at the rate of 80 per cent of the deemed transitional rate which at the relevant time was $948.50.
For reasons I shall come to shortly, Allianz failed to consider the requirements of s 38(3) having failed to recognise that the worker had not returned to work and was not working “not less than 15 hours per week” and was not earning “at least $155 per week”. Allianz also failed to consider the factors relevant to an assessment of Mr Birch’s current work capacity as defined in s 32A of the 1987 Act. Therefore it seems to me that Ms Wood’s submission is correct. The decision, in so far as it quantifies Mr Birch’s entitlement, was a decision for a transitional purpose only.
In Sabanayagam, Sackville AJA held (at [143]) that:
“…in exercising their statutory functions and powers, insurers must apply the criteria laid down by the legislation…”
Had the decision been made for a purpose other than transitioning the worker into the new benefits regime, namely, to assess Mr Birch’s entitlements under s 38 generally, the insurer would have been required to turn its attention to the requirements of s 38(3). Section 38(3) provides that a worker (other than a worker with highest needs) having a current work capacity is entitled to compensation after the second entitlement period only if certain conditions are met. Those conditions are that the worker has returned to work, for not less than 15 hours per week and earning at least $155 per week. At the time the decision was made Mr Birch could not have satisfied that provision.
Furthermore, for the insurer to have made a determination of Mr Birch’s current work capacity under s 38 it was required to have regard to the definition of “current work capacity” in s 32A which states:
“‘current work capacity’, in relation to a worker, means a present inability arising from an injury such that the worker is not able to return to his or her pre-injury employment but is able to return to work in suitable employment.”
The term “suitable employment” referred to in the definition of “current work capacity” is defined in s 32A to mean:
“‘suitable employment’, in relation to a worker, means employment in work for which the worker is currently suited:
(a) having regard to:
(i) the nature of the worker’s incapacity and the details provided in medical information including, but not limited to, any certificate of capacity supplied by the worker (under section 44B), and
(ii)the worker’s age, education, skills and work experience, and
(iii) any plan or document prepared as part of the return to work planning process, including an injury management plan under Chapter 3 of the 1998 Act, and
(iv) any occupational rehabilitation services that are being, or have been, provided to or for the worker, and
(v) such other matters as the Workers Compensation Guidelines may specify, and
(b) regardless of:
(i) whether the work or the employment is available, and
(ii)whether the work or the employment is of a type or nature that is generally available in the employment market, and
(iii)the nature of the worker’s pre-injury employment, and
(iv)the worker’s place of residence.”
There is no evidence in the letter of 9 October 2013 that the insurer turned its attention to any of the matters referred to in the definition of “suitable employment” in s 32A other than to refer to the limitations on Mr Birch’s physical incapacity to work. There is no mention of his age, education, skills, or work experience. There is no reference to any injury management plan. Nor is there any reference to any return to work plan or any occupational rehabilitation plan.
Although the letter makes reference to s 38, it is clear that the insurer failed to make any assessment of Mr Birch’s ability to return to work in suitable employment and therefore failed to make any assessment of Mr Birch’s current work capacity. The decision made on 9 October 2013, was not one that was made in accordance with s 38. It follows that for the reasons discussed in Lee the insurer’s decision did not enliven the power of the Commission to make an award under s 38. Therefore, the Arbitrator was correct to conclude that he was precluded from making an order in favour of Mr Birch.
Even if the decision was made pursuant to s 43(f) as Mr McManamey submits, it would not advance the appellant’s position on appeal. That is because it would lead to the conclusion that the insurer made two inconsistent decisions. I have already found that the Arbitrator was correct to conclude that Allianz in its decision of 9 October 2013 decided that Mr Birch had a retained physical capacity of only 12 hours per week. That finding is insufficient to attract an award under s 38.
If Mr McManamey is correct, Allianz has decided in the same decision that Mr Birch has an entitlement under s 38 which it assessed at $758.80. Both decisions are inconsistent with the other, making it impossible, as I have discussed, for the Commission to make an award of compensation that was not inconsistent with the work capacity decision in one respect or another.
I accept that the Arbitrator made no express reference to the s 43(f) submission however, for the reasons stated above, it would have made no difference to the outcome.
It follows that ground one would fail.

Ground three

The Arbitrator erred by considering that he could engage in a consideration of s 38 when there was a work capacity decision

The appellant’s submissions

Mr McManamey submits that the Arbitrator erred by considering that he could engage in any consideration of s 38 when there was a work capacity decision extant.
The decision of the insurer concerning the quantum of the compensation to be paid to the worker was based on the findings of his residual work capacity. That decision is itself a work capacity decision which is not reviewable by the Commission.
By engaging in a determination of whether the terms of s 38 were satisfied, the Arbitrator engaged in an exercise that went beyond jurisdiction. It does not make any difference whether it is a decision to pay compensation or to deny compensation.
By failing to apply the work capacity decision to order compensation in favour of Mr Birch, the Arbitrator fell into error and made a decision inconsistent with the work capacity decision.
The only decision that could have been made that was consistent with the work capacity decision is one that Mr Birch is entitled to compensation at 80 per cent of the transitional rate.

The respondent’s submissions

There was no error in the Arbitrator engaging in a consideration of s 38. It was incumbent upon the Commission to consider the requirements of the section which preludes an entitlement unless certain conditions are satisfied.
The Arbitrator did not engage in an exercise beyond jurisdiction unless he had no power to determine an entitlement pursuant to s 38. Once the power to determine an entitlement is enabled, a proper consideration of the legislation must be embarked upon, otherwise the determination will not be in accordance with law.
The respondent submits that the appellant has failed to identify error in the Arbitrator’s reasoning or decision. In any event, if there were any error, any such error has not affected the outcome. If the matter were to be reviewed the outcome would be the same, or in the alternative there would be an award for the respondent in respect of the claim for weekly payments as the criteria for an award under s 38 has not been satisfied given that the Commission is bound by the work capacity decision that Mr Birch has a capacity for work.

Consideration

The Commission is established under the 1998 Act, and its powers are granted, pursuant to s 105 of that Act. Section 105(1) provides:
“(1) Subject to this Act, the Commission has exclusive jurisdiction to examine, hear and determine all matters arising under this Act and the 1987 Act.
Note: The Commission does not have jurisdiction to determine any dispute about a work capacity decision of an insurer and is not to make a decision in respect of a dispute before the Commission that is inconsistent with a work capacity decision of an insurer. See section 43 of the 1987 Act.”
The Commission’s exclusive jurisdiction under s 105 is qualified by s 43 of the 1987 Act (reproduced at [23] above). Section 43(3) prohibits the Commission from making a decision which is inconsistent with a work capacity decision. The qualification is expressed in terms of any final determination the Commission might make.
Section 43 does not limit the powers and function of the Commission in the way it conducts proceedings. Pursuant to s 354 of the 1987 Act the Commission “may inform itself on any matter in such manner as the Commission thinks appropriate and as the proper consideration of the matter before the Commission permits”.
No reasoned argument or authority has been advanced to support the submission that the Arbitrator exceeded his jurisdiction by considering whether the terms of s 38 were satisfied before making a final decision.
Section 43(3) prohibits the Commission from making a decision inconsistent with a work capacity decision.
There is nothing in s 43(3) which commands or directs the Commission to make an order in the terms of a work capacity decision if there are valid reasons, as in this case, not to do so. To construe the section in the terms submitted by Mr McManamey is to read words into the section that are simply not there.
For these reasons no error is established. It follows that ground three would fail.

ORDER

The Certificate of Determination of 8 June 2016 is revoked and the following order is made in its place:
“Pursuant to s 43(3) of the Workers Compensation Act 1987 the Commission declines to make any order.”

Judge Keating
President

10 November 2016