WorkCover Corporation of SA v Bellara Nursing Home No. SCGRG 96/820 Judgment No. 6072 Number of Pages 11 Workers' Compensation

[1997] SASC 6072

IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA

DOYLE CJ, BOLLEN AND DUGGAN JJ

Workers' compensation - transitional provisions - two "accidents" - accrued rights. Workers Compensation & Rehabilitation Act 1986 First Schedule s69, referred to. American Eagle Insurance Company Ltd v Federation Insurance Limited (1976) 15 SASR 282, distinguished.

ADELAIDE, 11 February 1997 (hearing), 21 March 1997 (decision)

#DATE 21:3:1997

#ADD 28:4:1997

Appellant Workcover Corporation Of South Australia:

Counsel: Mr T Stanley - Solicitors: Gun & Davey

Respondent Bellara Nursing Home:

Counsel: Mr D Quick QC - Solicitors: Elston & Gilchrist

Order: appeal dismissed.

BOLLEN J

1. I have found this an odd sort of case. Some of the submissions, whether they be right or wrong, seem to lead nowhere. The answer to the problem does not seem to be easy but it is capable, at least, of a sharp decision after consideration of a short point. But the point has been surrounded by peripheral learning in the course of the debate. I think that the short point is that no rights, except those under s69 of the Workers Compensation and Rehabilitation Act, had accrued at the relevant time.

2. Anna Lombardo was employed by the respondent, Bellara Nursing Home. She hurt her knee at work. She either made it worse or sustained a new injury later when she fell at work. The issue before us is all about subrogation. It all turns on the interpretation or on the application of the facts to the issue of subrogation. Subrogation, that is, of the appellant (WorkCover) to the rights, or some of the rights, of the claimant. The idea of this subrogation was to provide for some situations which arose by reason of the passing of new legislation about compensation for workers. Some people would have had injuries sustained before the new legislation and some would have had injuries sustained after. Some would have had injuries before and aggravation of the injury after the new legislation.

3. The First Schedule to the Act of 1986 so far as is relevant is:- "1. In this schedule -

'the appointed day' means the day on which the Workers Compensation Act 1971 is repealed by this Act;

'compensating authority' means the Corporation or an exempt employer.

2. (1) Subject to this clause, the repealed Act continues to apply in respect of a disability that is attributable to a trauma that occurred before the appointed day.

(2) This Act applies in relation to a disability (referred to in this clause as a 'transitional disability') that is partially attributable to a trauma that occurred before the appointed day and partially attributable to a trauma that occurred on or after the appointed day, but does not affect rights (referred to in this clause as 'antecedent rights') that had accrued before the appointed day in respect of a transitional disability.

(3) The following provisions apply in relation to a transitional disability -

(a) where a compensating authority pays or is liable to pay compensation to a claimant under this Act in relation to a transitional disability, the compensating authority is subrogated, to an appropriate extent, to the antecedent rights of the claimant;

(b) where the claimant has received, in pursuance of antecedent rights, damages or compensation (not being weekly payments for a period of incapacity that concluded before the appointed day), there shall be an appropriate reduction in the amount of compensation payable under this Act in respect of the disability;

(c) the extent of a subrogation under paragraph (a), or a reduction in the amount of compensation under paragraph (b), shall be determined having regard to -

(i) the amount of the compensation payable (apart from this subclause) under this Act in respect of the transitional disability; and

(ii) the extent to which the transitional disability is attributable to a trauma that occurred before the appointed day; and

(iii) any other relevant factors."

4. I have said Anna Lombardo sustained injury to the left knee during the course of her employment on the 11th August 1985. On 17th August 1988 she slipped and fell on carrots and other vegetable matter which was on the floor at her work place. But that fall was not at all occasioned by the then state of her left knee. It was not a case of her knee's giving way. It was a separate incident. But it did affect her left knee.

5. The matter first came before Judge Cawthorne sitting in the Industrial Relations Court of South Australia. It was an application by the respondent seeking to have a determination of WorkCover reviewed. That determination was that the respondent should pay WorkCover, in its subrogated position, $48,397.02.

6. The determination dated 29th November 1993 is set out by Judge Cawthorne thus:- "Re: WORKERS COMPENSATION CLAIM Worker: Anna Lombardo Claim no:4035/02184866/01R

We refer to our letter of 4 December 1992

...

Pursuant to Clause 2(5) to the First Schedule to the Workers Rehabilitation & Compensation Act 1986 the Corporation has determined as follows:-

1 That the disability sustained by the above named worker arising from employment of the worker by you on or about 11 August 1985 which disability is the subject of the claim by the worker made on a claim form dated 17 August 1988 is a transitional claim.

2. That the Workers Rehabilitation & Compensation Corporation is subrogated to the antecedent rights of the worker with respect to that disability to the extent of 40% of the worker's antecedent rights.

3. You are liable to the Corporation in the amount of $48,397.02 which sum represents 40% of the worker's antecedent rights as assessed by the Corporation.

The grounds of determination are those set out in the letter of the Corporation to you of 4 December 1992 ..."

7. Thereafter Judge Cawthorne wrote:- "Pursuant to the Transitional Provisions the Corporation is subrogated, to an appropriate extent, to the antecedent rights of the worker where it pays or is liable to pay compensation to the worker under the Act in relation to a transitional disability. By Clause 2(2) a transitional disability to which the provisions of the first Schedule of the Act apply is defined as a disability that is partially attributable to a trauma that occurred before the day on which the Workers Compensation Act 1971 ('the repealed Act') was repealed, namely, 30 September 1987 ('the appointed day') and partially attributable to a trauma that occurred on or after the appointed day. I interpolate that section 3 of the Act defines trauma as meaning 'an event, or series of events out of which a compensable disability arises'. Clause 2 of the Transitional Provisions then goes on to state that that does not affect the antecedent rights that had accrued before the appointed day in respect of a transitional disability. Moreover subclause (1) of Clause (2) provides that the repealed Act continues to apply in respect of a disability that is attributable to a trauma that occurred before the appointed day."

8. He went on to record Clause 2 of the Transitional Provisions in Schedule 1 so far as are relevant.

9. Judge Cawthorne heard evidence, not only from Mrs Lombardo, but from doctors who had treated her. He accepted their evidence and opinions. He made the following findings:- - At the time of trial the worker was 57 years of age. She was born in Italy, had limited schooling and emigrated to Australia in 1958 when she was 21 years old. She had done no paid work in Italy but rather assisted her mother around the home. Since her arrival in this country when in paid employment she has worked variously as a cleaner, kitchen hand, pantry hand and cook. She cannot read or write English and was obliged to give her evidence at trial through an interpreter.

- Prior to July 1980 when she commenced working with the applicant as a cook (working seven five hour shifts in each fourteen days) the worker had no serious health problems and had suffered no significant injury at work.

- On 11 August 1985 the worker suffered an injury to her left knee when she slipped and fell in the course of her employment with the applicant (the first injury). That injury, diagnosed following clinical examination and later arthroscopy by Dr. Davidson in January 1986, was a flap tear of the posterior horn of the medial meniscus and a tear in the articular cartilage of the femoral condyle of the knee.

- The worker was troubled by the injury and was incapacitated for work for various periods following its occurrence. The worker got to the stage where she could cope at work with assistance although she continued to have symptoms in the knee which she sought to relieve with medication. Prior to the appointed day the worker received in all the sum of $3,769.05 by way of weekly payments of compensation from the applicant.

- In August 1987 Dr. Davidson carried out a further arthroscopy on the worker's knee following complaints from her of continuing knee pain and problems on bending. That arthroscopy revealed further deterioration in articular surface of the femoral condyle and that the medial meniscus had also further degenerated into a larger degenerative type of tear. The findings were indicative of a continuing development of the pathological process set in train by the first injury.

- Whilst following the second arthroscopy there was some improvement in the worker's condition and following time off from work after the procedure she was able to continue working she continued to experience symptoms. By April 1988 they were sufficiently severe for her to go back to Dr. Davidson complaining, inter alia, of knee soreness and pain on bending and when ascending stairs.

- On 17 August 1988 the worker suffered a further injury to her knee in the course of her employment with the applicant when she again slipped and fell at work (the second injury). On arthroscopic examination in September 1988 Dr. Davidson noted, inter alia, further flap tears of the articular surface of the medial femoral condyle which had increased in size since the last arthroscopy. The greater defect noted by the doctor was the result of the second fall. It had a further deleterious effect on the worker's capacity for work. The worker was dismissed from her employment on the day of the second injury.

- The worker has not worked since the second injury and has been incapacitated for her work as a cook since that time.

- In August 1989 the worker had a left high tibial osteotomy. That operative procedure was designed to re-align the knee to allow weight bearing to be transferred from the worn part to the more normal part of the knee thus preventing further degenerative changes in the knee and in particular the femoral condyle. The procedure has prevented further deterioration in the knee and the worker's condition is now stable.

- Had the second injury not occurred the worker's left knee would have continued to degenerate and it is quite likely that the stage would have been reached where an osteotomy would have been required in any event. This stage may have been reached five to ten years after the August 1987 arthroscopy.

- Immediately prior to the second injury the worker had a 10 to 15% loss of function of the left leg resulting from the first injury and consequential degenerative change to that time. She was capable of working as a cook at that time provided the work did not involve heavy lifting, bending and twisting.

- Dr. Davidson's opinion is that presently the worker has a 25% loss of function of the left leg to which the first injury contributes about 40% and the second about 60%.

- Following the second injury the worker is not capable of work involving prolonged standing, constant bending or heavy lifting. She can work as a cook for two hours per day subject to those limitations. In addition walking for more than 15 to 20 minutes causes the worker's knee symptoms to worsen. She is unable to carry out heavy household chores although light household work is within her capacity provided she has the ability to rest when tired. Although with the aid of her rehabilitation provider she has made considerable efforts to find work she has been unsuccessful.

- The Corporation has paid to the worker the following amounts in respect to her disability:-

- hospital, medical and related travel expenses of $19,637.42

- income maintenance (including a Section 42a lump sum payment under the Act for the period 17/1/93 to 17/11/95) of $87,844.54

- lump sum pursuant to Section 43 of the Act, $13,032.00.

The Corporation estimates that the following amounts are payable to the worker in the future:-

- income maintenance, $42,433.31

- future medical expenses, $2,000.00"

10. Judge Cawthorne found that the disability from which Mrs Lombardo was suffering at the time was a transitional disability. He said:- "The first question to be decided before proceeding further is whether the disability in question is a transitional disability. If it is not then the fundamental basis of the Corporation's determination is removed and the determination must be revoked.

In this case in my view the total disability for which the Corporation is liable to pay compensation (State Transport Authority v. Hawkins unreported decision of Full Supreme Court decided 1 June 1995) is a transitional one as it is clearly partially attributable to a trauma (in particular the fall at work on 11 August 1985) that occurred before the appointed day and caused injury under the repealed Act and partially attributable to a trauma namely the second fall in the course of employment on 17 August 1988 that occurred after the appointed day."

11. His Honour went on to say:- "Moreover it is my view and I find that the disability the worker now has results from both traumas as a common sense evaluation of the causal chain demonstrates. As I see it on the facts of this case there is an unbroken chain of causation consisting of links representing different factors or events all terminating in a single conclusion of incapacity for work. In the chain the first link is the first injury causing inter alia a tear in the articular cartilage of the femoral condyle resulting initially in total incapacity for work but later resolving to a point where the worker could perform her work but with difficulty and pain. This first injury also set in train degeneration in the knee as noted by Dr. Davidson in August 1987. The next and final link in the chain was the second injury which was an aggravation of the worker's pre-existing condition in the knee and further accelerated the effects of the underlying condition of the knee: Bratovich v. Rheem (Aust.) Pty. Ltd. (1971) 2 S.A.S.R. 33 per Bray C.J. at p.39; Floriani Bros. V. Woolscourers (1976) 13 S.A.S.R. 313 per Bray C.J. at pp.319, 320; Bushby v. Morris 28 A.L.R. 611."

12. It may be that the disability was not caused by both traumas. Immediately prior to the fall in 1988 Mrs Lombardo could do her work save for some restrictions which could be by-passed no doubt by assistance from fellow workers. She had no entitlement then to any weekly payments. Perhaps her knee would have (absent any "new" trauma) deteriorated so that she could not work. But it had not done so yet.

13. Judge Cawthorne wrote:- "Clause 2(1) makes it clear that despite the repeal of the repealed Act, it continues to apply in respect of injuries (as defined for the purposes of that Act) sustained during the currency of that Act. But, where the disability is also attributable to a trauma that occurred after the appointed day, the provisions declare that the worker is entitled to the benefits of the new Act. However if that is all that was said, there would be scope for double enrichment. If the worker had already received compensation in respect of the pre-appointed day trauma and no provision was made for the Corporation to factor that receipt in determining its liability under the new Act, a worker could recover twice for the same injury. Similarly, if the worker was able to continue to prosecute a claim for compensation arising out of a pre-appointed day injury, notwithstanding the receipt of the compensation under the new Act, there would again by scope for double compensation.

The Transitional Provisions avoid those results by enabling the Corporation to claim to an appropriate extent, subrogation to the accrued antecedent rights of the worker in accordance with sub-clause 2(3)(a) or where the worker has already received damages or compensation in respect to those rights, by enabling the Corporation to reduce, to an appropriate extent, the compensation that otherwise would be payable under the new Act.

There is no scope for a worker to pursue the rights to compensation or damages that had not accrued as at the appointed day because those rights are assumed and incorporated in the compensation that is payable under the new Act. The payment under the new Act discharges the liability that the employer otherwise would have had in respect of the rights to compensation or damages that had not accrued as at the appointed day. Had Parliament intended the Act to provide the Corporation with the right to seek contribution from the employer to reflect the discharge of those rights, it seems to me it would have been simple enough for the legislation to be framed to reflect such an intention. But it has not done so. The right of the Corporation to seek recovery from the employer as conferred by the Act is limited to the worker's rights to compensation or damages that had accrued before the appointed day, but not otherwise. Whether there is scope for the Corporation to seek further recovery elsewhere is a matter for others to determine. The jurisdiction of this Court is to determine the extent of recovery permitted by this Act.

The only rights that had accrued as at that day were those rights that were capable of assessment at that time. On the facts of this case the only such right was a right to a lump sum payment pursuant to section 69 of the Act which Dr. Davidson had assessed as being a 10 to 15% loss of the function of the left leg as a whole. Although the worker had sustained an injury that in the fullness of time would probably have given rise to an entitlement to compensation for weekly payments and for medical expenses it cannot be said that the rights to compensation had accrued as at the appointed day and as such, they cannot feature in a claim for contribution based on the Transitional Provisions."

14. He made this order:- "2. That the Corporation is subrogated to an appropriate extent, namely $4,500 (representing an assessment pursuant to s.69 of the repealed Act for 12_ per cent loss of a leg at or above the knee) to the antecedent rights of the worker."

15. He had found that the total disability is a transitional one (see above). He found that the disability results from both traumas. But he found that the only rights that had accrued before the appointed day was a right of payment under s69 of the Workers Compensation and Rehabilitation Act. That last finding does not seem to me to flow naturally or necessarily from the other two. I do not think that matters. I think that the finding that only "a section 69 right" had accrued is correct no matter which trauma or traumas caused the disability.

16. WorkCover appealed to the Full Court of the Industrial Relations Court. The Full Court dismissed the appeal. It wrote:- "The legislation has been explained by the Full Supreme Court in Workers Rehabilitation and Compensation Corporation v. CMI (unreported) 1 March 1996, Judgment No. S5484 at p.7 in the judgment of the Chief Justice:- 'The worker would have had rights under the repealed Act if, as at the appointed day, he had suffered "personal injury arising out of or in the course of the employment": s9(1). Of itself, this does not require that incapacity for work has resulted by the appointed day, because while incapacity for work is a condition of the entitlement to a weekly payment under the repealed Act, the suffering of injury for the purposes of s9 gives rise to a right, the right being to compensation under PtIV of the repealed Act if the injury should later result in death, incapacity for work, the incurring of certain expenses or if the injury was a table injury or permanent injury dealt with by s70 of the repealed Act: cf Fisher v. Hebburn Ltd. (1960) 105 CLR 188.' and at p.8:- 'The scheme of the transitional provisions seems in any event to be that if a disability is partially attributable to events after the appointed day, then the case is governed by c12(2) in relation to any claim to contribution. In other words, the fact that the worker might be able to make a claim under the repealed Act does not assist the claim for contribution under c12(2), because that claim requires that there be a right as at the appointed day.'

Consistent with that approach, the right must have accrued before the appointed day. The antecedent right of the claimant to which the compensating authority is subrogated, in the subject situation, is the right created by section 9(1) of the 1971 Act, which reads as follows:-

'If in any employment personal injury arising out of or in the course of the employment is caused to a workman, his employer shall, except as provided in this Act, be liable to pay compensation in accordance with this Act.'

The right is that she be compensated on those occasions on which the worker incurs an expense, i.e. for medical or like expenses (section 59), or is totally or partially incapacitated for work resulting from the injury (section 51). Leaving aside redemption, the only other entitlements she has is to an assessment pursuant to sections 69 or 70. Further if she has no demonstrated entitlement to weekly payments resulting from that injury then there is no weekly compensation which can be redeemed. Finally in this case the entitlement to weekly compensation would cease due to the total incapacity resulting from the second injury: see Hartwell v. E.T.S.A. (1982) 29 S.A.S.R. 365, Ward v Corrimal-Balgownie Collieries Ltd. (1938) 61 C.L.R. 120.

The worker had an injury and had periods of incapacity due to the injury up to September 1987, (see summary of evidence paras 4 and 5). However on 17 August 1988, as found by His Honour, the worker suffered a further trauma to the knee in the course of her employment and in consequence was incapacitated and has not worked since. Moreover the level of incapacity due to that second injury has, in the conclusion of the learned Judge, rendered this worker totally incapacitated. In other words she has no labour to sell.

On the findings, the conclusion is that her incapacity is the result of the new Act injury. If that is so, she has no entitlement under section 51 of the old Act. Her only entitlement is the assessment under section 69 for the loss resulting from the old Act injury. That is the conceptual different between the notion of incapacity and the notion of disability. The disability has survived the second injury. The incapacity resulting from the first injury has not survived because the new event has displaced its relevance. In other words, there is no point in WorkCover saying that the first injury had left the worker with a potential or propensity for further periods of incapacity, had the second injury not occurred and that potential or propensity should be regarded in the assessment of the subrogation. The fact is the second injury was the cause of the worker's incapacity and her current state of total and permanent inability to offer herself for employment: see Bratovich v. Rheem (Australia) Pty. Ltd. (1971) 2 S.A.S.R. 33 at 39; Clark v. Demiani (1973) 5 S.A.S.R. 427.

None of those observations or indeed the approach taken by the Judge contradict the principle that an injury may be attributable to more than one cause. In Bushby v. Morris (1980) 1 N.S.W.L.R. 81 at 87 the Privy Council said in reference to the New South Wales Workers Compensation Act 1926:-

'It is well established in common law context that an injury or incapacity may be attributable to more than one cause, in the legal sense, operating concurrently ...

There is no room for an artificial rule of law that, in such a situation, one or other accident must necessarily be selected as the cause of the incapacity, apparently on an entirely arbitrary or capricious basis.'

In Australian Eagle Insurance Company Limited v. Federation Insurance Limited. (1976) 15 S.A.S.R. 282 at 289 King C.J. said:-

'If the incapacity results in a true sense from more than one accident, a workman must be entitled to claim compensation in respect of all or any of the relevant accidents. If the accidents occur in the employment of different employers, he must be entitled to claim compensation against each employer. If the accidents occur in the employment of the same employer, he is nevertheless entitled to base his claim upon all or any of the accidents.'

But such a result depends on the facts of the case and this is reinforced by similar reasoning to be found in National and General Insurance Co. Ltd. V. South British Insurance Co. Ltd. And Others (1982) 43 A.L.R. 273. In that case Deane J., with whom the other Judges agreed, stated the following proposition:-

'In a case where a single partial incapacity has resulted from a number of injuries sustained by a worker while employed by different employers and where the employer at the time of the last causative injury has failed to provide suitable employment, the liability of that last employer to pay compensation on the basis of notional total incapacity can properly be seen as flowing from that injury. Similarly, where the underlying partial incapacity has resulted from a number of separate injuries sustained by a worker in the course of his employment with the one employer who has failed to provide suitable employment, the liability to pay compensation in respect of notional total incapacity is properly to be seen as flowing from the last injury and as having arisen at the time of that injury.'

Thus the consequences attendant in the second injury in this worker's case must determine the matter. The second injury changed her from partially incapacitated to totally incapacitated. That leaves any liability for weekly payments due to the second injury.

Mr. Birchall put his case squarely on the facts arrived at by His Honour. In our view Mr. Birchall is correct. On the basis of the factual conclusions drawn by the learned Judge, which the appellant agrees cannot be disturbed, the result is that the only entitlement of the type that the First Schedule is concerned with in this case is under section 69. In the circumstances the decision is confirmed and the appeal dismissed."

17. The penultimate paragraph reveals the ratio of the decision. The second injury is the one which is capable of raising a right to weekly payments. As I have said, no such right had accrued before the appointed day. In my opinion the Full Court is correct. I think it was on sound ground, too, in distinguishing the important decision of American Eagle Insurance Company Limited v. Federation Insurance Limited (1976) 15 S.A.S.R. 282, especially at 289.

18. But some remarks of the Full Court seem not to square with the facts found by Judge Cawthorne. Judge Cawthorne found that both traumas caused the disability. The Full Court seems to equate disability with incapacity. And it says that "on the findings, the conclusion is that her incapacity is the result of the new Act injury". No doubt that is the finding of the Full Court. It was not a finding made by Judge Cawthorne and the Full Court has mentioned that his findings could not be challenged. Judge Cawthorne found that "the disability which the worker now has results from both traumas". The Full Court says "The fact is the second injury was the cause of the worker's incapacity and her current state of total and permanent inability to offer herself for employment". But perhaps there is, if I may say so, some loose use of the word "disability" and some confusion about "findings of fact" and "conclusions". On the findings of fact made by Judge Cawthorne the Full Court was, I think, entitled to decide as it did. The worker was not disabled prior to the fall of the 17th of August 1988. The second incident or injury did change her from a partially to a totally incapacitated worker. No right to weekly payments had then accrued. Nor had it if the finding be that both traumas caused the disability.

19. I would dismiss the appeal.

DOYLE CJ

20. The facts of the case, the relevant legislation and the issues are set out in the judgment of Bollen J.

21. As argued, the case presented a number of difficult features. However, like Bollen J, I consider that in the end the case turns upon a short point.

22. I agree that the worker suffered a disability which is a transitional disability. She suffers from a disability which is attributable to a trauma that occurred before the appointed day and to a trauma that occurred after the appointed day.

23. On the findings of the judge of the Industrial Relations Court the incapacity for work from which she now suffers is due to the second injury. The first injury did not cause the second injury in the sense that the second fall and injury were not attributable to the existence of the first injury. Nor can it be said that, but for the fact that the knee had already sustained an injury, it would not, in the second fall, have sustained further injury. The second injury has merely worsened the condition of the knee: cf Australian Eagle Insurance Company Limited v Federation Insurance Limited (1976) 15 SASR
282 at 285-292 King CJ.

24. Although the worker had a damaged knee at the time of the second injury, she was able to cope with her work as a cook at the time of the second fall and injury. It is only after the second fall and injury that she suffered incapacity for work.

25. The fact that the first injury might have progressed, absent any other event, to the stage of causing a lesser or greater incapacity for work than is now present is neither here nor there. It did not in fact do so. Other events overtook the first injury.

26. It is not necessary to decide, in this case, the precise scope of the expression "antecedent rights." In particular, it is not necessary to decide to what extent that expression might embrace entitlements under the repealed Act which might arise after the appointed day.

27. On the findings in this case, the only entitlement which the worker had under the repealed Act on the appointed day was an entitlement to an assessment under s69 of the repealed Act.

28. The worker's incapacity for work in respect of which compensation is now payable is not attributable to the first injury. On no view of the expression "antecedent rights" can it be said that some further entitlement under the repealed Act has arisen as a result of the second injury.

29. For that reason, in my opinion, the Full Court of the Industrial Relations Court was right and the appeal must be dismissed.

30. I base my decision upon that narrow point and upon nothing else. There are clearly difficult issues yet to be resolved under the transitional provisions, and I do not propose to decide any more than is necessary for the purpose of this case.

DUGGAN J

31. In my view the appeal should be dismissed and I am in general agreement with the reasons advanced by Bollen J. At the same time I share the Chief Justice's view that the decision should be based on the narrow point which he has identified in his judgment.