Seal v Transfield Services (Australia) Pty Ltd

[2011] HCATrans 163

[2011] HCATrans 163

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A26 of 2010

B e t w e e n -

NOEL SEAL

Applicant

and

TRANSFIELD SERVICES (AUSTRALIA) PTY LTD

Respondent

Application for special leave to appeal

FRENCH CJ
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

FROM MELBOURNE BY VIDEO LINK TO ADELAIDE

ON FRIDAY, 10 JUNE 2011, AT 11.37 AM

Copyright in the High Court of Australia

MR M.C. LIVESEY, QC:   If the Court pleases, I appear with MR J.K. WARREN for the applicant.  (instructed by Dixon Gallasch Pty Ltd)

MR T.L. STANLEY, QC:   If the Court pleases, I appear with MR B.J. DOYLE for the respondent.  (instructed by Gilchrist Connell)

FRENCH CJ:   Yes, thank you, Mr Livesey.

MR LIVESEY:   If the Court pleases, the applicant worker in this case puts forward three matters which, it is submitted, are of general principle.  The first is whether the long‑accepted test of incapacity for work is accurately transcribed as the Full Court Bench found, and the Full Court by majority accepted.  The second is whether the concept of a breach of mutuality is properly applied to an injured worker who has a partial capacity for work, and has never refused work or rehabilitation, who has never posed any danger at work or rehabilitation, but who away from work, carries out activities which some employers might regard as unsatisfactory.  The third is whether a section which requires an employer to provide suitable duties is irrelevant to the question whether any employment is reasonably accessible to the worker who retains a partial capacity for work.

Those issues arise in a context where, as with many Workers Compensation Acts around the country, this worker’s entitlement to payments of weekly compensation was made subject to an obligation of mutuality and, in particular, whether it could be said that this worker had committed what was a recognised breach of mutuality.  The classical example of that is where a worker becomes totally disabled by a supervening medical condition, such as in the case of the heart attack in Hartwell’s Case. 

The effect of the ruling in this case, as upheld by the Full Court, is that even though the worker was found to be physically able to undertake work, and even though his use of alcohol and marijuana had never affected his working or his rehabilitation duties, he must be regarded as totally incapacitated because a hypothetical reasonable prospective employer might form the view that he was not worth the risk of employment.

It is submitted that that approach involves two errors.  The first is the application of the wrong test concerning incapacity for work and, secondly, it ignores the statutory obligation under section 58B of the Act to provide civil employment.  As to the first, the legal test for incapacity for work has, for nearly a century now, been whether a worker has an injury resulting in an incapacity for doing work in a market for his labour reasonably accessible to him.  In this case, that test was applied by the trial judge at the first trial and the Court will see that application at page 36 of the application book where the learned trial judge at paragraph 147 referred to an accepted variation of the long‑established test, and then at paragraph 148, concluded that he was, third line down:

not satisfied that it has been established that as at August 2006 the worker did not have a realistic residual capacity for labour which he could sell in a genuine working environment –

The trial judge was satisfied that –

if he was offered suitable employment, the worker was . . . capable of controlling the extent of his substance use –

It is submitted that the trial judge identified the correct test, and properly applied the facts of the case before him to that test in a situation where the evidence before the trial judge showed that the seven working placements that this worker had undertaken had never been affected by his substance use.  They included time at a school and a time of eight weeks at the South Australian brewery.  

What occurred thereafter is that in the first Full Bench decision, the Full Bench identified a new, and it is submitted incorrect, test which the Court will see at page 50 in paragraph 37.  That is where the court first identifies the hypothetical prospective employer with the qualities of a reasonable employer and, with respect to the Full Bench and contrary to what Justice Kourakis held, at paragraph 41 on the following page, the Full Bench made it clear that that was the test to be applied.  It was not merely an intermediate step.  The Court will see that in the last five lines of paragraph 41:

That evidence could lead to a finding that a reasonable employer . . . would form the view that offering Mr Seal a job was not worth the risk –

and might I emphasise –

and that in turn would lead to a finding that he was totally incapacitated.

CRENNAN J:   Well, what about what Justice Kourakis said about that at 152 of the application book, at the bottom of the page, paragraph 194:

The reasonable employer test is a short hand expression for the application of common sense and experience to a factual enquiry ‑ ‑ ‑

MR LIVESEY:   With respect, your Honour, Justice Kourakis went on to say at page 153 of the application book at 198 that, in effect, there was no error in looking at the reasonable hypothetical prospective employer, providing – and might I emphasise that:

it is remembered that the ultimate question is whether there is a position or positions in the labour market reasonably accessible ‑ ‑ ‑

CRENNAN J:   That is right.  His Honour was saying there is value in that hypothesis.

MR LIVESEY:   Yes, and the error that occurred before the Full Bench was that the ultimate question was not asked, nor was it answered, because as the Court will see at paragraph 41, what the Full Bench concludes is that if that intermediate step is answered adversely to the worker, then it would lead to the finding, without more, that the worker was totally incapacitated.  That is indeed what the trial judge did on the second trial.  At page 59 of the application book, paragraph 15, accepting my learned friend’s submission for Transfield that the prospective or hypothetical employer might think that it was not worth offering the worker a job, it would then follow – this was the submission which was accepted – it would then follow, without more, that the finding should be that the worker was totally incapacitated and it is on that incorrect path that the learned trial judge ultimately concluded at page 66 of the book, paragraphs 46 and 47, that based on the hypothetical reasonable prospective employer test, employing my client was not worth the risk and, as his Honour put it, it thus follows that he was totally incapacitated ‑ ‑ ‑

CRENNAN J:   Are you contending that a labour market reasonably accessible to the worker has to include the unreasonable employer?

MR LIVESEY:   The contention is that it will include the benevolent employer as well as the actual employer, Transfield, and I will come to Transfield in a moment if I may, your Honour, but by looking only, as it appears, to the hypothetical reasonable prospective employer, that is the employer considering a disabled worker for the first time, and leaving out of account Transfield, with all of its statutory obligations, an error occurred.  The Full Bench made it clear that its conception of breach of mutuality was not based on whether someone might be given a job, but whether someone could take up suitable employment by reason of a supervening medical condition.  The Court will see that at page 80 of the application book, paragraph 18:

There is clear authority that a supervening medical condition that prevents a . . . worker from working is a breach of mutuality.

The Court there refers to Hartwell, the heart attack case.  That is not this case.  This case is the case of a worker who retains a partial capacity, but who it is said, because of activities away from the workplace, would not be regarded as an attractive employment prospect.  The Full Bench went on to conclude at paragraphs 22 and 23 on page 81 that there was no new point of principle involved, and then at 23, section 58B “had no role to play”.

In my respectful submission, the new test, as it was identified by the Full Bench, was the only test that was applied by the Full Bench on two occasions, and the only test applied by the trial judge at the second trial.  When Justice Kourakis said that these were relevant intermediate steps, with great respect, he failed to identify that an error of law had occurred because both the Full Bench and the trial judge did not refer to any ultimate question that only to, as it was put by Justice Kourakis, “the intermediate question”, which was the only basis for the finding made of total incapacity. 

His Honour Justice Gray found that the appeal turned on questions of fact, not law, and his Honour went so far as to say, and this is at page 107 of the book, that this was a worker who, as his Honour put it at paragraph 30 in the last four lines:

was rendered unfit to be able to attend to light duties by reason of the effects of long‑standing and continuing substance abuse.

With great respect to Justice Gray, that ignores the findings made by the trial judge.  The trial judge’s findings were very clear.  This worker could work to the extent of his partial capacity.  His use or misuse of substances such as alcohol and marijuana had never affected his working or his rehabilitation.  So far as Justice Kourakis is concerned, I have already identified his approach.  The Court will see that in two places, at 133 of the book in the last three lines of paragraph 131, that there was no new test, no exclusive test, but when one comes to the passage at application book page 137 at paragraph 149, what his Honour meant becomes very clear in the last dozen or so lines.  Justice Kourakis, with respect to him, very frankly accepts that the way in which the test was posed by the Full Bench, the words:

the posing of the test in that way is not sanctioned by authority.  However, in my view the Full Bench did not intend to modify . . . It did no more than pose intermediate questions which can properly be asked in the course of answering the ultimate test –

With great respect to Justice Kourakis, that is not what the Full Bench did on two occasions, and that is certainly not what the trial judge did when he thought he was applying the Full Bench decision.  The trial judge did no more than ask whether the reasonable prospective hypothetical employer would offer this man a job. 

Before I move to Justice White, Justice Kourakis then looked at other issues and, as I have already submitted, at application book 153 at paragraphs 196 through to 200, his Honour had regard, with great respect, in a rather speculative way to what prospective employers might think, before concluding at 200 that:

it is necessary to have regard to all of the known information . . . because, even if the information is not immediately known, it would soon become apparent when the worker commenced to perform the duties and preclude the worker properly discharging his or her duties.  Such a worker is in reality incapable of securing and retaining the position –

With great respect to Justice Kourakis, the only witness called by Transfield, the employer, at the trial, a Mr Thacker, a rehabilitation consultant, frankly conceded that nothing that he saw by this worker, so far as his substance abuse was concerned, had affected his employment or his rehabilitation.  That finding made by the trial judge in favour of the worker is ignored by Justice Kourakis in what he has to say at paragraph 200.

In my submission, and as Justice White recognised at page 125 of the application book, paragraph 97, the correct test has been understood is not limited to whether only employment might be procured from a reasonable employer, it is whether employment might be procured in any employment or any employment market reasonably accessible to the worker.  Those concepts are quite different.  Any market reasonably accessible to the worker would include, as Justice White accepted at page 125, paragraph 97 in the last six lines, the large employer such as Transfield who had a relevant statutory obligation to provide return‑to‑work plans, and as his Honour acknowledged a little earlier in that same passage, not only the reasonable employer but also “the benevolent and public‑spirited” employer.  Those employers remain part of the market, reasonably accessible to a worker, and as his Honour points out ‑ ‑ ‑

CRENNAN J:   I think you have to look at paragraph 102 as well in the context of what you are saying.

MR LIVESEY:   I am obliged to your Honour.  I was coming to that next, and so what his Honour Justice White says is that the intermediate step analysis is an appropriate one, but it is not the end of the inquiry, certainly not the end of the inquiry as the trial judge and the Full Bench suggested, and relevantly for present purposes, 103, your Honour, the obligation which Transfield owed to the worker extended, under section 28A, to provide “a rehabilitation and return to work plan”. 

In this case, Transfield did that even after the notice terminating payments was sent.  It did that in October 2006, and as my learned friend, Mr Stanley, recognised before the trial judge, the employer did that in recognition of its obligations under the Act, including section 58B.  The Court will see that mentioned by, that is to say, the last of the return‑to‑work plans, mentioned on the following page, 127.

It is submitted that on the application of the correct test, as identified by the trial judge on the facts of the case before him, the correct conclusion was reached at the first trial, and the findings made thereafter only proceeded on the wrong path because of the wrong test identified by the Full Bench, the wrong test as applied by the trial judge, and it is respectfully submitted, mistakenly accepted by a majority of the Full Court.  But for that wrong test, the findings made at the first trial should stand.

My second submission concerns the obligation to provide suitable employment under section 58B.  It has its counterparts around the country, including an almost identical provision in New South Wales, and that requires – and the Court will see that section referred to at page 127 of the application book – where a worker is able to return to work:

the employer from whose employment the disability arose must provide suitable employment –

that does not apply if, in (2) –

it is not reasonably practicable to provide employment in accordance with that subsection (and that onus of establishing that lies in any legal proceedings on the employer) –

The second Full Bench found, as I have already pointed out at application book page 81, that that section had no role to play.  The Full Court gave it short shrift.  Justice Gray did not refer to this section at all.  Justice White said that it applied:

only if that worker is able to return to some work –

Respectfully, that is correct, but he said that that was an issue which was already in the proceedings, and the Court will see that in what his Honour said at line 40 on page 127.  With great respect, that was not an issue which the Full Bench considered.  It was not an issue which the trial judge considered.  The issue in this case was notwithstanding his physical ability to return to work, he would not get to the workplace because it was not

worth the risk.  That is an entirely separate analysis.  Justice Kourakis at page 154 found that section 58B did not avail a worker – the Court will see that at application book page 154, at the last two lines of paragraph 203, because it was:

subject to the implied qualification of mutuality –

With great respect to the judge, his reason for finding that is subsection (2)(a).  As the Court will already have seen, page 127, (2)(a) says nothing about mutuality.  It only speaks of whether the employer has proved:

it is not reasonably practicable to provide employment –

That was never established by the employer.  In the circumstances, this was a case where Transfield sought to rely on the fiction of the hypothetical prospective employer in order, in effect, to avoid its statutory obligation to provide suitable duties.  Because there was a statutory obligation to provide suitable employment, it could not be said that this was a worker who, within the meaning of the well‑established test, did not have a market for his labour which was not reasonably accessible to him.  Because of the statutory obligation, there was an employment available to him, and it was employment with his employer, Transfield.

That, too, would require the finding that there was no basis for deemed incapacity in the circumstance of a worker who retained a physical capacity to return to working duties as he had established on seven placements whilst he was off work on weekly workers compensation payments.  For that reason too, it is submitted that the first decision made by the trial judge was correct and it should be reinstated.  If the Court pleases.

FRENCH CJ:   Thank you, Mr Livesey.  We will not need to call on you, Mr Stanley.

The applicant suffered injury in the course of his employment with the business now owned by the respondent, and was paid weekly compensation payments under the Workers Rehabilitation and Compensation Act 1986 (SA). This application arises out of the respondent’s cessation of these payments pursuant to section 36(1)(f) of the Act on the ground that the applicant had breached a statutory obligation of mutuality as between worker and employer.

A majority of the Full Court of the Supreme Court of South Australia dismissed an appeal from the Full Bench of the Workers Compensation Tribunal and approved the approach taken by the Tribunal in determining whether the applicant was not ready, willing or able to undertake suitable employment or, alternatively, was totally incapacitated by substance abuse.

The Full Court also considered the proper application of section 58B of the Act.  While not agreeing with all that was said by the majority in the Full Court, we are not persuaded that an appeal to this Court would enjoy sufficient prospects of success to warrant a grant of special leave.  Special leave will be refused with costs.

We will adjourn now to reconstitute.

AT 11.59 AM THE MATTER WAS CONCLUDED