Razmovski, Alexander v Telstra Corporation Ltd Hoyle, Nancy Dorothea v Telstra Corporation Ltd
[1997] FCA 257
•17 APRIL 1997
CATCHWORDS
WORKERS' COMPENSATION - Commonwealth employees - permanent impairment occurring before commencement of the Safety Rehabilitation and Compensation Act 1988 (Cth) ("SRC Act") - whether entitled to lump sum for permanent impairment under the SRC Act - operation of transitional provisions of Part X of the SRC Act.
Compensation (Commonwealth Government Employees) Act 1971 (Cth), s 39.
Safety Rehabilitation and Compensation Act 1988 (Cth), ss 24, 27, 124.
Bozicevic v Comcare Australia, AAT, 4 June 1996, unreported.
Brennan v Comcare (1994) 50 FCR 555.
Comcare v Levett (1995) 131 ALR 645.
Comcare v Miles (1995) 56 FCR 448.
Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297.
Heath v Commonwealth (1982) 151 CLR 76.
Schlenert v Australian and Overseas Telecommunications Corporation (1994) 49 FCR 139.
ALEXANDER RAZMOVSKI v TELSTRA CORPORATION LTD
NG 945 OF 1995
NANCY DOROTHEA HOYLE v TELSTRA CORPORATION LTD
NG 151 OF 1997
Sackville J.
Sydney
17 April, 1997
FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )
GENERAL DIVISION )
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
MATTER NO. NG 945 OF 1995
BETWEEN:
ALEXANDER RAZMOVSKI
Applicant
AND:
TELSTRA CORPORATION LTD
Respondent
Coram: Sackville J
Place: Sydney
Date: 17 April, 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application be dismissed.
The applicant pay the respondent's costs.
Order 2 be stayed for 14 days to provide the parties with an opportunity to make submissions on costs should they wish to do so.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )
GENERAL DIVISION )
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
MATTER NO. NG 151 OF 1997
BETWEEN:
NANCY DOROTHEA HOYLE
Applicant
AND:
TELSTRA CORPORATION LTD
Respondent
Coram: Sackville J
Place: Sydney
Date: 17 April, 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application be dismissed.
The applicant pay the respondent's costs.
Order 2 be stayed for 14 days to provide the parties with an opportunity to make submissions on costs should they wish to do so.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )
GENERAL DIVISION )
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
MATTER NO. NG 945 OF 1995
BETWEEN:
ALEXANDER RAZMOVSKI
Applicant
AND:
TELSTRA CORPORATION LTD
Respondent
MATTER NO. NG 151 OF 1997
BETWEEN:
NANCY DOROTHEA HOYLE
Applicant
AND:
TELSTRA CORPORATION LTD
Respondent
Coram: Sackville J
Place: Sydney
Date: 17 April, 1997
REASONS FOR JUDGMENT
These are two appeals from decisions of the Administrative Appeals Tribunal ("AAT"). The appeals are brought to the Court in its original jurisdiction under s.44 of the Administrative Appeals Act 1975 (Cth) and have been heard together. The order that the appeals be heard together was made on the basis that the issues in each matter are
identical. As the argument developed, it emerged that the circumstances in each case, although very similar, are not quite identical.
It is common ground that the applicant in each matter has an impairment that became permanent before 1 December 1988, the date the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("SRC Act") came into effect. I refer to that date as "the commencing day". Each applicant received periodic compensation under the now repealed Compensation (Commonwealth Government Employees) Act 1971 ("1971 Act"), on the basis that he or she was totally incapacitated for work. Thereafter each received periodic compensation under the SRC Act. The issue is whether each applicant is entitled to lump sum compensation for the injuries resulting in permanent impairment, pursuant to ss.24 and 27 of the SRC Act.
To resolve that issue, it is necessary to determine a question of statutory construction. The question is whether s.124(3) of the SRC Act, which deals with permanent impairments that occurred before the commencing day, precludes each applicant from receiving lump sum compensation under the SRC Act in respect of his or her permanent impairment. At the risk of some over-simplification, the answer to this question depends on whether s.124(3) of the SRC Act has the effect of applying s.39(14) of the 1971 Act to the applicants. Section 39(14), which of course was repealed by the SRC Act, prevented an employee who had suffered permanent loss from claiming lump sum compensation if he or she was totally incapacitated for work. The AAT in each case decided that s.39(14) of the 1971 Act was attracted by s.124(3) of the SRC Act and that, accordingly, the applicants were not entitled to receive lump sum compensation under the SRC Act in respect of their permanent impairments.
The Statutory Scheme
As was pointed out by the Full Court in Comcare v Levett (1995) 131 ALR 645, at 646, the SRC Act introduced a new scheme of rehabilitation and compensation for persons who can broadly be described as Commonwealth employees. The SRC Act repealed the previous compensation scheme operating under the 1971 Act: SRC Act, s.139. The general scheme of the SRC Act was explained by McHugh J in Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297, at 322-323:
"The [SRC Act] extinguishes all rights to sue the Commonwealth or a Commonwealth authority for damages for injuries sustained in the course of employment with the Commonwealth or a Commonwealth authority. In place of those rights is substituted a statutory scheme of compensation which provides for lump sums for permanent impairment (ss 24, 25), weekly payments for incapacity (s 19), medical expenses (s 16) and sums for non-economic loss (s 27). According to the second reading speech explaining the [Bill for the SRC Act], the purpose of the proposed Act was to `provide incentives for injured employees to return to work as soon as possible' and to `provide greater powers in relation to rehabilitation'. These objectives were said to be the Commonwealth's response to a 700 per cent increase in government expenditure on workers' compensation over the decade between 1976 and 1986. The Minister attributed the increase to inefficiencies in the 1971 Act and to long delays in the court system in bringing negligence actions on for hearing. Both factors were said to provide disincentives for injured workers to return to work and to encourage them to maximise the extent and duration of their injuries. The Minister stated that the new Act was an attempt to reverse this position by encouraging speedy rehabilitation."
The fact that McHugh J dissented in Georgiadis does not affect this passage: Brennan v Comcare (1994) 50 FCR 555 (FCA/FC), at 563.
Section 14(1) of the SRC Act provides that, subject to Part II, Comcare, a body established by the Act (s.68), is liable to pay compensation in respect of an injury suffered by an employee if the injury results in death, incapacity for work or impairment. Section 19 provides periodic compensation to an employee who is incapacitated for work as the result of a work related injury or disease. Unlike the 1971 Act, the level of compensation payable does not depend on whether the employee is partially or wholly incapacitated. Generally speaking, the weekly compensation is calculated by reference to a formula which entitles the employee to the difference between his or her "normal weekly earnings" and the amount (if any) that he or she "is able to earn in suitable employment": s.19(2),(3).
Where an injury results in "permanent impairment", Comcare is liable to pay lump sum compensation in accordance with s.24(1). The amount of compensation is assessed in accordance with the employee's degree of permanent impairment (determined by reference to an approved Guide), expressed as a percentage: s.24(3), (5), (6). The employee is entitled to receive the assessed percentage of a specified maximum: s.24(4), (9). Section 27(1) of the SRC Act provides compensation for non-economic loss as follows:
"Where an injury to an employee results in a permanent impairment and compensation is payable in respect of the injury under section 24, Comcare is liable to pay additional compensation in accordance with this section to the employee in respect of that injury for any non-economic loss suffered by the employee as a result of that injury or impairment."
Part X of the SRC Act contains transitional provisions, which deal with the application of the SRC Act to pre-existing injuries. A key provision is s.124, the general purpose of which was explained this way in Comcare v Levett, at 646-647:
"Section 124 is one of a number of transitional provisions in Div 2 of Pt X of the [SRC Act], which is intended to create continuity between the scheme established by the 1971 Act and the scheme created by the [SRC Act]. Both Acts concern the provision of benefits as either a periodic payment, or a lump sum payment, to Commonwealth employees injured as a result of or in the course of their employment. One of the purposes of the transitional provisions is to establish the benefits, if any, arising under the [SRC Act] resulting from events which occurred while the 1971 Act was in force."
As in Comcare v Levett, it is necessary in these proceedings only to refer to the 1971 Act and not to earlier legislation dealing with the same subject matter.
The general rules are laid down by s.124(1) and (1A) of the SRC Act:
"124(1) Subject to this Part, this Act applies in relation to an injury, loss or damages suffered by an employee, whether before or after the commencing day.
(1A)Subject to this Part, a person is entitled to compensation under this Act in respect of an injury, loss or damage suffered before the commencing day if compensation was, or would have been, payable to the person in respect of that injury, loss or damage under the...1971 Act."
The general rules are qualified by s.124(2), (3) and (4):
"(2) A person is not entitled to compensation under this Act in respect of an injury, loss or damage suffered before the commencing day if compensation was not payable in respect of that injury, loss or damage:
(a)...;
(b)...; or
(c)in any other case - under the 1971 Act as in force when the injury, loss or damage was suffered.
A person is not entitled to compensation under section 24...in respect of a permanent impairment..., being an impairment...that occurred before the commencing date; if:
(a)the person received compensation of a lump sum in respect of that impairment...under the 1971 Act; or
(b)the person was not entitled to receive compensation of a lump sum in respect of that impairment...:
(i)...;
(ii)...; or
(iii)in any other case - under the 1971 Act as in force when the impairment...occurred.
The amount of compensation (if any) that a person is, by virtue of this section, entitled to receive under section 24...in respect of a permanent impairment..., being an impairment...that occurred before the commencing day, shall be the same as the amount of the compensation that would have been payable to that person, if this Act had not been enacted, under:
(a)...;
(b) ...; or
(c)in any other case - the 1971 Act as in force when the impairment...occurred."
The 1971 Act
It is sufficient for present purposes to note that the 1971 Act provided for various forms of compensation for work-related injury or disease, including periodic payments and lump sum compensation. The amount of periodic compensation depended on whether the employee was totally incapacitated for work (s.45) or partially incapacitated for work (s.46).
Section 39 provided that, where an injury to an employee resulted in a loss specified in the Table of Maims, reproduced in s.39(4), or in a loss otherwise specifically mentioned in the section, compensation was payable: s.39(1), (3). The term "loss" was defined to mean "a permanent loss": s.39(15). The Table of Maims set out a percentage figure for each specified loss and the compensation payable was the stipulated percentage of the prescribed maximum lump sum: s.39(3),(4). An example relevant to the present case is that the Table of Maims included the loss of a great toe, the loss of which was assessed at 20%. Section 39(14) of the 1971 Act, to which I have already referred, was as follows:
"(14) An amount of compensation referred to in this section is not payable in respect of an injury so long as the employee is, or is likely to be become, totally incapacitated for work where the incapacity for work results, or, if it occurs, will result, in whole or in part from that injury."
The Facts and AAT Determination: Razmovski v Telstra
The applicant in the first matter (to whom I shall refer as the "first applicant") was born in Macedonia in 1921 and came to Australia in 1962. He worked in factories until 1970, when he commenced work with the respondent ("Telstra"). After an interval working elsewhere, the first applicant returned to Telstra's employment in 1973. He was employed digging trenches for telephone cables until he was retired as medically unfit on 20 March 1981.
On 20 December 1978, the first applicant injured his foot at work. He was absent from work following the injury, but returned on 2 January 1979. On 10 March 1979 he complained of further pain in his first metatarso-phalangeal joint. Thereafter, he did not work and was ultimately retired in accordance with the provisions of s.56(1) of the Telecommunications Act 1975 (Cth), with effect from 20 March 1981. It was common ground before the AAT that the first applicant had become permanently impaired after 1 September 1979 but before 1 September 1980.
The first applicant was paid periodic compensation under s.45 of the 1971 Act from 1 September 1980, on the basis that he was totally incapacitated for work. On 23 February 1982, a determination was made that the first applicant's periodic compensation should cease as and from 26 March 1981. That determination was upheld by the AAT, but subsequently set aside by this Court. On 16 August 1984, a delegate of the Commissioner for Workers Compensation determined as follows:
"the said Alex (sic) Razmovski has been totally incapacitated for work on and from to (sic) 26 March 1981 as a result of the said aggravation of bilateral hallux rigidus to which his employment was a contributing factor,
the Australian Telecommunications Commission is therefore liable to pay compensation to the said Alex Razmovski under section 45 of the said Act in respect of that total incapacity for work on and from 26 March 1981 until a date to be determined by the Commissioner or his Delegate."
I was informed that the periodic payments to the first applicant ceased in 1990, but I was not told the reason for the cessation and there was no evidence on the point.
The AAT, dealing with the first applicant's case noted that, although his permanent impairment might be described in a variety of ways, there was no doubt that it was covered by the Table of Maims in s.39(4) of the 1971 Act. However, the AAT decided that, since s.39(14) of the 1971 Act prevented the first applicant receiving lump sum compensation for permanent loss under that Act, the applicant could not receive lump sum compensation under the SRC Act. The AAT's brief reasoning was as follows:
"In this matter the Applicant's total incapacity for work as determined by the delegate of the Commissioner for Employees' Compensation, resulted from the aggravation of his bilateral hallux rigidus to which his employment was a contributing factor. An amount of compensation was not therefore payable to him under the 1971 Act, consequently s 124(3) of the [SRC Act] provides that no compensation is payable to him under the [SRC Act]."
Accordingly, the AAT affirmed a decision that no compensation was payable to the first applicant under ss.24 or 27 of the SRC Act.
The Facts and AAT Determination: Hoyle v Telstra
The applicant in this matter (to whom I shall refer as the "second applicant") was born in 1937, and in 1972 commenced employment with what was then the Post-Master General's Department as a switchboard operator. From 1976 onwards, she experienced increasing pain in her left arm and hand in consequence of working a push button keyboard. Ultimately, she finished work in February 1985 and has not worked since. On 20 January 1986 her employment was formally terminated, although her retirement on the ground of invalidity was apparently effective from 19 March 1987.
On the date the second applicant's employment was terminated, Telstra made a determination under the 1971 Act that she had contracted a disease, namely "hand, wrist, forearm and arm pain", to which her employment over a period of time was a contributory factor. The determination provided for periodic compensation in respect of total incapacity, pursuant to s.45 of the 1971 Act.
The second applicant continued to receive payments until 14 November 1996, when a delegate of Telstra determined that it was no longer liable to pay compensation to her. That decision was subsequently reviewed and affirmed. The second applicant challenged the determination. The AAT, in its determination of 19 February 1997, found that the second applicant continued to be incapacitated for work as a result of a work-related injury and that compensation continued to be payable to her under s.19 of the SRC Act.
The AAT also dealt with the second applicant's claim for permanent impairment. The AAT noted that the second applicant had suffered permanent impairment prior to the commencing day; that at all relevant times she was totally incapacitated for work within the meaning of s.45 of the 1971 Act; and that she had been receiving payments prior to the commencing day under s.45. The AAT also noted that the scheme of the 1971 Act was that a person who suffered a loss ordinarily compensable under s.39 was not to be paid a lump sum while he or she was receiving periodic compensation under s.45. The underlying policy was that a totally incapacitated person should not be allowed to compromise future compensation entitlements by accepting the payment of a lump sum. This observation by the AAT was a reference to s.45(9) of the 1971 Act, which provided that where a determination was made under s.39 for the payment of lump sum compensation, periodic compensation under s.45 was not thereafter payable to the employee in respect of a period of incapacity for work resulting from the employee's injury. Similarly, s.46(5) provided for the termination of periodic compensation in respect of partial incapacity for work where a s.39 lump sum payment was made. See generally Heath v Commonwealth (1982) 151 CLR 76.
The AAT adopted the view that ineligibility for lump sum compensation under the 1971 Act, for any reason, results in ineligibility for such compensation under s.124(3) of the SRC Act. The second applicant, had she applied for a lump sum at any time between the date of the original determination and the commencing day, would have been unsuccessful because of s.39(14) of the 1971 Act. The AAT concluded as follows:
"The transitional provisions of the [SRC Act] do no more than preserve an employee's rights under the 1971 Act to ensure that the employee is, in Lockhart J's words [in Schlenert v Australian and Overseas Telecommunications Corporation (1994) 49 FCR 139 (FCA/FC), at 143], `in no better or worse position under the [SRC Act] than he or she was under the 1971 Act'. As Mrs Hoyle would have been ineligible in the circumstances in which she found herself to receive a lump sum payment under s 39 of the [1971 Act], so also she will be ineligible to receive any payment in respect of a permanent impairment under s 24 of the [SRC Act]."
The Competing Contentions
The applicants' starting point was that s.124(1) of the SRC Act applies that Act to an injury, loss or damage suffered by an employee, whether before or after the commencing day (1 December 1988). The applicants submitted that the effect of s.124(1), in relation to a permanent impairment occurring before the commencing day, is that entitlement to a lump sum for injuries resulting in permanent impairment is to be determined under s.24 of the SRC Act. The only relevant limitations on the application of s.24 are those contained in s.124(3) and s.124(4).
Section 124(3) of the SRC Act, according to the applicants' argument, excludes a person from entitlement to compensation only if the person's impairment (being a permanent impairment occurring before the commencing day) is one for which lump sum compensation is not available under s.39 of the 1971 Act. To adopt the terminology used by Mr Grey (who appeared for the applicants), s.124(3) operates as a gateway, through which the claimant must pass. The claimant passes through only if his or her physical impairment is one of the permanent losses specifically identified in s.39 of the 1971 Act. However, that is the only exclusion effected by s.124(3).
It follows from the applicants' argument that s.124(3) of the SRC Act excludes some claimants suffering a pre-commencing day permanent impairment from lump sum compensation under the SRC Act. An example is a person, like the claimant in Brennan v Comcare, whose permanent impairment is a disability flowing from lower back pain. Because of what Gummow J in Brennan v Comcare referred to (at 565) as "the limited categories of incapacities attracting lump sum payments under the 1971 Act", s.39 of that Act did not cover lower back pain, even if the person suffering from it was permanently disabled. The applicants contended that s.124(3) is concerned only with the medical and factual qualifications for payment of a lump sum under the 1971 Act. In other words, s.124(3) only excludes from the scope of s.24 those permanent losses not specified in s.39 of the 1971 Act (whether in the Table of Maims, or otherwise in the section). On this argument, s.39(14) of the 1971 Act, which prevented an employee claiming a lump sum if he or she was or was likely to become totally incapacitated for work, is simply not attracted by s.124(3) of the SRC Act.
The applicants also submitted that s.124(4) of the SRC Act does not import s.39(14) of the 1971 Act into the scheme of the SRC Act. Mr Grey contended that s.124(4) is simply intended to ensure that the quantum of compensation in respect of a permanent impairment sustained before the commencing day is determined by reference to the maximum amount fixed by s.39 of the 1971 Act and to the percentages specified in the Table of Maims. In the absence of s.124(4), lump sum compensation for permanent impairment would be assessed by reference to the limit specified in s.24(9) of the SRC Act and to the criteria laid down in the SRC Act for assessing the degree of permanent impairment. Section 124(4) governs assessment of the quantum of compensation for those who pass through the gateway created by s.124(3), and does not impose a further qualification which a claimant must satisfy in order to show entitlement to compensation under the SRC Act.
The applicants argued that there was evidence before the AAT which was capable of supporting a finding that each applicant had sustained a permanent loss of a kind identified in s.39 of the 1971 Act. In other words, there was evidence that each applicant had sustained a physical impairment that was identified in the Table of Maims in s.39 of the 1971 Act. Accordingly, the appropriate course was to remit each matter to the AAT for determination according to law, with a direction that s.39(14) of the 1971 Act has no application to the assessment of the amount of compensation payable to the applicants under ss.24 and 27 of the SRC Act.
The respondent submitted that the transitional scheme embodied in Part X of the SRC Act is straightforward in its application to a person suffering an impairment which became permanent before the commencing day. The SRC Act applies to an injury loss or damage which was suffered before the commencement of the SRC Act: s.124(1). A person is disentitled from compensation under s.24 of the SRC Act in respect of permanent impairment if the impairment occurred before the commencing date and the impairment was not compensable under the 1971 Act as in force when the impairment occurred: s.124(3). The only question therefore is whether the applicants, at the date of determination of their claims under the SRC Act, would have been entitled to receive a lump sum payment under the 1971 Act had it continued in force. In each case, the answer is that the applicant would not have been so entitled, since he or she had been paid compensation on the basis of total incapacity for work and s.39(14) of the 1971 Act excluded lump sum compensation for a person who is, or is likely to become, totally incapacitated.
Mr Watson, who appeared for the respondent, contended in his written submissions that the disqualification of the applicants for lump sum compensation flowed from the terms of s.124(3) of the SRC Act. He argued that persons in the position of the applicants came within s.124(3)(b), because they "were not entitled to receive compensation of a lump sum in respect of [their] impairment ...under the 1971 Act as in force when the impairment... occurred". In the course of oral argument Mr Watson relied, in the alternative, on s.124(4) to achieve the same result. He submitted that s.124(4) achieved this result by limiting the amount of compensation (if any) that a person is entitled to receive under s.24 to the same amount as would have been payable to that person under the 1971 Act. By reason of s.39(14) of the 1971 Act, that amount was nil.
The Approach to the Construction Question
Mr Grey supported the applicants' contentions by pointing to the differences between the 1971 Act and the SRC Act. As the AAT acknowledged in the second applicant's case, s.39(14) of the 1971 Act was clearly designed to prevent a totally incapacitated worker, otherwise entitled to periodic compensation, succumbing to the lure of a relatively small lump sum. However, as Mr Grey correctly observed, the concept of total incapacity has not been expressly carried over to the SRC Act. Periodic compensation is payable under s.19 of the SRC Act in respect of incapacity for work, by reference to a formula which does not depend on whether the employee is totally or partially incapacitated for work. Section 19 requires compensation to be assessed by reference to the difference between the employee's normal weekly earnings and the amount (if any) that the employee is able to earn in suitable employment. Moreover, lump sum payments under ss.24 and 27 of the SRC Act may be made at any time and regardless of whether the employee is receiving a maximum weekly payment (which Mr Grey referred to as "equivalent to total incapacity") under s.19. It follows, according to Mr Grey, that there is no reason to incorporate s.39(14) of the 1971 Act into the scheme of the SRC Act.
Mr Grey also pointed out that Part X of the SRC Act does not import all the provisions of the 1971 Act governing compensation in respect of permanent impairment. A number of examples illustrate his point:
•It has been held that the SRC Act permits a person who received a lump sum under s.39 of the 1971 Act to receive an additional payment for non-economic loss under s.27 of the SRC Act, even though there was no provision under the 1971 Act for compensation for pain or suffering or loss of amenities of life: Schlenert v AOTC (Sheppard and Einfeld JJ, Lockhart J dissenting).
•There is nothing in the SRC Act to prevent an employee who was partly incapacitated on the commencing day, and who had received a lump sum before that date under s.39 of the 1971 Act, from retaining that payment if he or she became totally incapacitated after the commencing day. Had the employee become totally incapacitated before the commencing day, s.50 of the 1971 Act required periodic compensation for total incapacity to be reduced so that the lump sum payment was in effect "clawed back" over a period of time. Periodic compensation under s.19 of the SRC Act, in respect of a period after the commencing day, is not affected by s.50 of the 1971 Act: see SRC Act, s.124(7).
•A partially incapacitated employee who received a lump sum payment under s.39 of the 1971 Act thereby lost his or her entitlement to future periodic compensation under s.46 of that Act: 1971 Act, s.46(5). However, there is nothing in s.124 of the SRC Act to prevent such an employee from applying for periodic compensation under s.19 in respect of periods of incapacity for work after the commencing day.
It is clearly correct that the regime of compensation for permanent loss, as spelled out in the 1971 Act, has been modified by the SRC Act, in its application to a permanent impairment occurring before the commencement date. It is not entirely clear whether the modification of the regime is wholly favourable to an employee sustaining a pre-commencing day permanent impairment. In Comcare v Miles (1995) 56 FCR 448, for example, Hill J expressed the view that in such a case lump sum compensation is payable, generally speaking, only where the degree of permanent impairment is greater than 10%, even though no such threshold applied under the 1971 Act. His Honour said (at 452-453) that this conclusion follows from s.24(7) of the SRC Act, which provides that, subject to certain exceptions, compensation is not payable to an employee under s.24 where Comcare determines that the degree of permanent impairment is less than 10%.
Olney J, in his capacity as a Presidential Member of the AAT, in a carefully reasoned decision, has declined to follow Hill J's view: Bozicevic v Comcare Australia, AAT, 4 June 1996, unreported. Olney J considered that a person suffering a pre-commencing day permanent impairment is entitled to lump sum compensation by virtue of s.124 of the SRC Act, not s.24. The key provision is therefore s.124(4), which requires the amount of compensation to be the same as the amount that would have been payable under the earlier legislation. Section 124(4) therefore establishes the quantum of compensation in respect of a pre-commencing day permanent impairment. Accordingly, to the extent that s.24(7) would otherwise deny an employee compensation, it is inconsistent with Part X of the SRC Act and cannot apply.
It is unnecessary to pursue the examples given by Mr Grey or to resolve the conflict between the observations in Comcare v Miles and Bozicevic v Comcare. Whatever the correct construction of other provisions in the SRC Act, the critical question in the present case is the meaning of the words used in s.124(3) and (4) of that Act. As Sheppard J said on a related issue in Schlenert v AOTC (at 150), it is more helpful to consider the particular words of the legislation than to proceed by reference to what are said to be the policy considerations underlying other provisions.
Nonetheless, in doing so, it is necessary to take account of two principles of construction, recently restated by Burchett J in Brennan v Comcare, at 559. The first is that
"the consistency of the policy of a statute, and its fairness, have repeatedly been regarded as good guides to its interpretation".
The second principle is that
"workers' compensation legislation is of a remedial nature, and should be construed liberally. That view was asserted by all members of the High Court [in Johnston v Commonwealth (1982) 150 CLR 331], as appears at 342 and 343. The same point was made by Fullagar J in his dissenting judgment in Wilson v Wilson's Tile Works Pty Ltd (1960) 104 CLR 328 at 335, when he referred to "the established principle that, where two constructions of a Workers' Compensation Act are possible that which is favourable to the worker should be preferred": see also the authorities collected in Repatriation Commission v Hawkins (1993) 45 FCR 205 at 211, and Gye v McIntyre (1991) 171 CLR 609 at 619."
Burchett J's observations were referred to with approval by the Full Court in Comcare v Levett, at 649.
Section 124(3)
Section 124(1) of the SRC Act provides that, subject to Part X, the SRC Act applies in relation to an injury or loss suffered by an employee including a loss suffered before the commencing day. The effect of s.124(1) is to create an
entitlement to lump sum compensation under s.24(1) of the SRC Act in respect of a permanent impairment suffered before the commencing day: Comcare v Levett. The entitlement is, however, subject to the qualifications or exclusions stated elsewhere in s.124. Some of those provisions, viz s.124(2),(3),(5),(6),(8) and (10), specify circumstances in which a person "is not entitled to compensation" under a nominated substantive provision of the SRC Act: Brennan v Comcare, at 565, per Gummow J. Others, viz s.124(4),(7) and (9), state the amount or rate of compensation to which a person is entitled by virtue of s.124(1) and do so by reference to the provisions (relevantly) of the 1971 Act. In the present cases, as I have said, it is necessary to examine closely the language of s.124(3) and (4).
It is convenient to repeat the material terms of s.124(3)
"(3) A person is not entitled to compensation under section 24...in respect of a permanent impairment..., being an impairment...that occurred before the commencing date; if:
(a)...;
(b)the person was not entitled to receive compensation of a lump sum in respect of that impairment...:
(i)...;
(ii)...; or
(iii)in any other case - under the 1971 Act as in force when the impairment... occurred."
The opening words of s.124(3) use the present tense. As Mr Watson accepted, these words are directed to a person's entitlement at the time an application for lump sum compensation is made or, alternatively, determined. A person who would otherwise be entitled to claim compensation in respect of a permanent impairment is excluded from compensation if he or she
"was not entitled to receive compensation of a lump sum in respect of [the] impairment...under the 1971 Act in force when the impairment...occurred".
In contrast to the opening words of s.124(3), para.(b) of the section does not speak of an entitlement at the time a claim for lump sum compensation is made or determined. If s.124(3) were intended to disentitle a claimant who would have been ineligible to receive a lump sum payment under the 1971 Act (had that Act been in force at the date of the application or determination), it would have been easy for Parliament to use appropriate words to achieve this result. The use of the past tense in s.124(3)(b) focuses attention on the claimant's entitlement to lump sum compensation under the 1971 Act (as in force when the impairment occurred) at some time in the past. The paragraph does not specify the precise time in the past at which the claimant's entitlement is to be considered. However, the use of the past tense suggests that the notional assessment of the claimant's entitlement under the 1971 Act is to be carried out by reference to a date or period preceding the commencing day.
It will be recalled that the respondent submitted that s.124(3) excludes a person suffering a pre-commencing day
permanent impairment from compensation if that person is totally incapacitated at the time the claim is made or determined under the SRC Act. The difficulty with that submission is that the use of the past tense in s.124(3)(b) suggests that the assessment is to be carried out by reference to an entitlement at an earlier date or period. Moreover, it is necessary to take into account that a person's entitlement to lump sum compensation under the 1971 Act could vary from time to time, depending on his or her degree of incapacity. For example, a person who was totally incapacitated for a period was, during the period of total incapacity, ineligible for lump sum compensation under the 1971 Act by virtue of s.39(14). However, if that person's condition improved, so that the incapacity became partial only, s.39(14) of the 1971 Act no longer precluded the person from eligibility to receive lump sum compensation. In the reverse situation, a partially incapacitated employee, whose condition subsequently deteriorated to one of total incapacity for work, would become ineligible for lump sum compensation by reason of s.39(14).
Section 124(3)(b) of the SRC Act appears to assume that the question it poses - whether a person "was not entitled to receive" lump sum compensation under the 1971 Act - is capable of a definitive answer. As I have already said, the provision does not specify a particular time by reference to which the question must be answered. In this connection, the concluding words in s.124(3)(b)(iii) do not assist. They merely identify the form of the legislation by which the claimant's entitlement is to be assessed; they do not specify the time by reference to which the assessment is to be made. If s.124(3)(b)(iii) had the effect of requiring the assessment to be made at the date the impairment occurred, almost all employees would be regarded as totally incapacitated. This is because, as Mr Watson acknowledged, an injury or disease normally results in a period of total incapacity, however short.
In my opinion, s.124(3)(b) of the SRC Act does not have the effect of applying s.39(14) of the 1971 Act to persons who suffered permanent impairment as the result of a work related injury before the commencing day. In other words, s.124(3)(b) does not exclude from lump sum compensation under the SRC Act, persons suffering pre-commencing day impairments who are totally incapacitated. The language of s.124(3)(b) sits more comfortably with an intention to exclude from entitlement to compensation for permanent impairment only those persons whose pre-commencing day physical impairment could never be covered by s.39 of the 1971 Act because the Table of Maims simply did not identify that form of impairment. It was common ground that there was evidence before the AAT that each applicant had sustained a pre-commencing day impairment that was covered by the Table of Maims in s.39(4) of the 1971 Act. It follows that neither was excluded by s.124(3)(b) of the SRC Act from entitlement to lump sum compensation in respect of his or her impairment.
Section 124(4)
This is not, however, the end of the matter. As I have said, the respondent also relied on s.124(4) of the SRC Act. Again, it is convenient to restate the statutory language:
"(4) The amount of compensation (if any) that a person is, by virtue of this section, entitled to receive under section 24...in respect of a permanent impairment..., being an impairment...that occurred before the commencing day, shall be the same as the amount of the compensation that would have been payable to that person, if this Act had not been enacted, under
...
(c)...the 1971 Act as in force when the impairment...occurred." [Emphasis added.]
The applicants' contention is that s.124(4) is concerned only with the quantification of the lump sum payable to those who pass through the "gateway" constructed by s.124(3). Section 124(4) is intended to ensure that a claimant recovers a lump sum for a particular impairment calculated in accordance with the 1971 Act, as distinct from the (usually) more generous provisions governing assessment of compensation in the SRC Act. On Mr Grey's submission, s.124(4) is not intended to incorporate the exclusion effected by s.39(14) of the 1971 Act in relation to totally incapacitated persons.
In my view, the principal difficulty with the applicants' construction of s.124(4) of the SRC Act is that it overlooks the significance of the words "(if any)". Clearly, s.124(4) is concerned with the amount of compensation a person is entitled to receive under s.24 in respect of a pre-commencing
day injury resulting in permanent impairment. The sub-section directs that the amount of compensation, if any, a person is entitled to receive is to be the same as the amount of compensation that would have been payable to that person had the 1971 Act remained in force. Section 124(4) explicitly recognises that the amount of compensation payable to the person by virtue of s.124 may be nil. Yet the amount of compensation payable to a person under the 1971 Act in respect of an impairment covered by the Table of Maims cannot be nil, unless s.39(14) applies to preclude payment of lump sum compensation to a person who is or is likely to become totally incapacitated. This contrasts with the position under the SRC Act, where the degree of permanent impairment can be assessed at 0%: SRC Act, s.28(5).
It seems to me that the clear intention of s.124(4) is that a claimant who has suffered a pre-commencing day permanent impairment should receive no lump sum compensation in respect of that impairment if, at the time of the claim, he or she is totally incapacitated for work. In this respect, the SRC Act preserves the position that applied before the commencing day.
That this is the intention underlying s.124(4) of the SRC Act is reinforced by the parity of language used in that sub-section and in s.39(14) of the 1971 Act. Section 39(14) provided that an "amount of compensation...is not payable in respect of an injury" during, inter alia, a period of total incapacity. Section 124(4) says that the amount of compensation, if any, a person is entitled to receive is the same as "the amount of compensation that would have been payable to that person" if the SRC Act had not been enacted. Section 124(4) appears to have been drafted with s.39(14) very much in mind.
I do not think that by giving effect to the clear language of s.124(4) it can be said that the result is absurd or unfair, or at odds with a legislative intention expressed elsewhere in the statute. It is true that Parliament might have chosen to expand the entitlements of a person suffering a pre-commencing day permanent impairment to include a right to a lump sum payment even though the person is totally incapacitated and therefore would not have had any such right under the 1971 Act. It might have chosen to do so notwithstanding that many totally incapacitated people suffering a pre-commencing day permanent impairment were, by 1988, well over retirement age and had suffered the impairment many years earlier.
Equally, it was open to Parliament to take a different view as, in my opinion, it has by enacting s.124(4). The fact that the SRC Act expands in certain respects the entitlements of a person suffering a pre-commencing day impairment does not mean that Parliament intended that the entitlement should be expanded in other respects. It has not done so, for example, for a claimant whose permanent impairment was simply not covered by the Table of Maims, even though the impairment would have been compensable had it been sustained after the commencing day.
I should add that I do not see any particular difficulty for a decision-maker to determine whether a claimant for lump sum compensation is or is likely to become totally incapacitated for work, within the meaning of s.39(14) of the 1971 Act. Decision-makers have long been accustomed to making such determinations.
For the reasons I have given, neither applicant was entitled to lump sum compensation under s.24 or s.27 of the SRC Act if he or she was, or was likely to be, totally incapacitated for work at the date the claim was made and determined.
Conclusion
I have referred to the fact that the position of each applicant was not quite identical. In the case of the second applicant, although the AAT focussed on her entitlement to compensation before the commencing day, it specifically found that at all material times she was totally incapacitated for work, including the dates for which her claim was made and determined. For the reasons I have given, she is therefore not entitled to compensation under ss.24 or 27 of the SRC Act.
In the case of the first applicant, the AAT did not make a finding that he was totally incapacitated for work on the dates his claim was made and determined. The AAT relied on s.124(3) of the SRC Act, rather than s.124(4), to determine that he was not entitled to lump sum compensation. The AAT found that the applicant had been totally incapacitated at the time the delegate made the determination in 1984, but did not consider the position at any later date. It was apparently never suggested to the AAT that the first applicant had ceased to be totally incapacitated at the time he applied for lump sum compensation under ss.24 and 27 of the SRC Act or at the time the AAT made its determination. Mr Grey did not concede that the first applicant was totally incapacitated on either of those dates. However, he did not suggest that there was any material before the AAT which could have supported a finding that the first applicant had merely been partially incapacitated on those dates. In these circumstances, I do not think it appropriate to remit the matter to the AAT.
In each matter, the application should be dismissed. Unless the parties wish to be heard on costs, I propose to order that the applicants pay the respondent's costs. I shall stay the costs orders for 14 days, and if submissions on costs are filed within that period, I shall extend the stay to enable any costs issue to be resolved.
I certify that this and the preceding 28 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville.
Associate:
Dated: 17 April 1997
Heard:25 March, 1997
Place: Sydney
Decision:17 April, 1997
Appearances: Mr L. Grey, instructed by McClellands, Solicitors, appeared for the applicants.
Mr G. Watson, instructed by Sparke Helmore, Solicitors, appeared for the respondent.
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