What happened
Ronald Goudappel, while working as State Manager for ADCO Constructions Pty Ltd, suffered a serious injury on 17 April 2010 when a bundle of steel purlins fell from a forklift and crushed his left foot and ankle. Within two days he lodged a claim for compensation under the Workers Compensation Act 1987 (NSW) (WCA). In July 2011 an orthopaedic surgeon assessed him as having a 6% permanent impairment resulting from that injury. On 20 June 2012 his solicitors lodged a specific claim for lump sum permanent impairment compensation under s 66 of the WCA seeking $8,250.
Shortly before that specific claim, on 27 June 2012, the Workers Compensation Legislation Amendment Act 2012 (NSW) (the Amendment Act) commenced. Schedule 2 of that Act replaced s 66(1) so that lump sum compensation was available only where the degree of permanent impairment exceeded 10%. Prior to the Amendment Act there had been no threshold; even modest impairments attracted a statutory payment calculated as a percentage of a fixed sum. The Amendment Act also inserted new savings and transitional provisions as Pt 19H of Sched 6 to the WCA. Clause 3 of Pt 19H provided that the amendments generally extended to prior injuries, prior claims and pending proceedings. Clause 15, however, carved out an exception for lump sum compensation: the amendments extended to a claim made on or after 19 June 2012 but not to a claim made before that date.
ADCO’s insurer denied the lump sum claim on the basis that the new 10% threshold applied. Mr Goudappel commenced proceedings in the Workers Compensation Commission. A Senior Arbitrator referred a question of law to the President under s 351(1) of the Workplace Injury Management and Workers Compensation Act 1998 (NSW). The President reformulated the question to ask whether the amendments to Div 4 of Pt 3 of the WCA applied to s 66 claims made on or after 19 June 2012 where a worker had made a claim of any type for the same injury before that date. The President answered “yes”, holding that cl 15 referred only to claims specifically for lump sum compensation and that Mr Goudappel’s initial 2010 claim did not qualify.
The Court of Appeal (Bathurst CJ, Beazley P and Basten JA) allowed Mr Goudappel’s appeal. It held that the 2010 claim subsumed any entitlement to permanent impairment compensation and that cl 15 therefore protected it. The Court went further and held that the transitional regulation (cl 11 of the newly inserted Sched 8 to the Workers Compensation Regulation 2010 (NSW)) was invalid to the extent it purported to extinguish Mr Goudappel’s accrued right. That regulation, which commenced on 1 October 2012, provided that the Schedule 2 amendments extended to any claim made before 19 June 2012 other than a claim that specifically sought compensation under the former s 66 or s 67, and that cl 15 was to be read subject to that statement.
The High Court granted ADCO special leave on conditions as to costs. The WorkCover Authority of New South Wales was joined as second respondent to support the regulation’s validity. By majority (French CJ, Crennan, Kiefel, Keane and Gageler JJ) the Court allowed the appeal, set aside the relevant part of the Court of Appeal’s order, and answered the referred question in terms that upheld the regulation’s validity and its extinguishing effect on Mr Goudappel’s entitlement. The joint judgment and Gageler J’s separate reasons both emphasised the breadth of the regulation-making power conferred by cl 5(4) of Pt 19H and the clear legislative intention that transitional regulations could affect rights that would otherwise have been preserved by cl 15.
Why the court decided this way
The High Court’s reasoning turned on the proper construction of the empowering provisions introduced by the Amendment Act itself. Clause 1(1) of Pt 20 of Sched 6 (as amended) permitted regulations “of a saving or transitional nature consequent on the enactment of … any other Act that amends this Act”. Clause 5 of the new Pt 19H then expanded that power in four material ways. Subclause (1) allowed such regulations to take effect from a date earlier than the date of assent. Subclause (2) disapplied the protective limitation in cl 1(3) of Pt 20 that would otherwise have prevented prejudicial effect on pre-publication rights. Subclause (3) provided that a transitional regulation could, if the regulation so stated, have effect despite any other provision of Pt 19H. Subclause (4) expressly extended the power to “authorise the making of regulations whereby the provisions of the Workers Compensation Acts are deemed to be amended in the manner specified in the regulations”.
Both the joint judgment and Gageler J held that cl 11 fell squarely within this expanded power. It was of a “transitional” character because it moved an identified class of claims—those made before 19 June 2012 that had not specifically sought compensation under the former ss 66 or 67—from the legal regime that would have applied under cl 15 to the regime introduced by the new s 66(1). The regulation did not merely supplement the statute; it deemed cl 15 to be read subject to the new rule and thereby effected an amendment of the primary legislation in the manner cl 5(4) expressly contemplated.
The Court rejected the argument that s 30(1)(c) of the Interpretation Act 1987 (NSW) or the common law presumption against interfering with accrued rights (authoritatively stated by Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 and Chang Jeeng v Nuffield (Australia) Pty Ltd (1950) 83 CLR 629) limited the power. The joint judgment noted that the backdating provisions and the express displacement in cl 5(2) of the protective effect of cl 1(3) formed part of the statutory context that was “inimical” to the survival of the presumption. Gageler J went further, analysing the structure of cl 5 as a whole. Subclauses (1) and (2) removed temporal and substantive barriers to backdating, while subclauses (3) and (4) addressed substantive operation regardless of backdating. The legislative purpose was to confer flexible executive power to fine-tune the complex replacement of one statutory scheme with another, subject to parliamentary disallowance under ss 40 and 41 of the Interpretation Act and scrutiny by the Legislation Review Committee. That context demonstrated, with the requisite degree of clarity, a contrary intention that displaced both the statutory and common law presumptions.
The Court also declined to apply a uniformly beneficial construction. While acknowledging the remedial character of the WCA, the joint judgment observed that the purpose of cl 5 and of cl 11 was not beneficial to workers whose claims had not been specifically directed to permanent impairment compensation before the cutoff date. There was therefore “no constructional choice” that could read cl 11 as preserving Mr Goudappel’s entitlement. Because the 2010 claim, although subsuming permanent impairment, had not “specifically sought” compensation under the old s 66, cl 11 applied according to its terms and extinguished the entitlement.
Before and after state of the law
Prior to 27 June 2012 s 66(1) of the WCA provided an unqualified entitlement: a worker who suffered an injury resulting in permanent impairment was entitled to lump sum compensation calculated as the percentage impairment multiplied by $1,375 (for impairments of 10% or less). No separate claim for permanent impairment was required under the Workplace Injury Management and Workers Compensation Act 1998 (NSW) or the WorkCover Guidelines; a general claim for compensation was accepted by the Court of Appeal (and not contested in the High Court) as subsuming that entitlement. Section 30(1)(c) of the Interpretation Act, read with s 5(2), would ordinarily have preserved any accrued right to compensation once the injury had occurred.
The Amendment Act fundamentally altered that position. The new s 66(1) confined entitlement to cases where permanent impairment exceeded 10%. Clause 3 of Pt 19H applied that change to past injuries and past claims unless Pt 19H or the regulations provided otherwise. Clause 15 then supplied a specific savings rule for lump sum compensation: the amendments applied to claims made on or after 19 June 2012 but not to claims made before that date. On the facts accepted in the High Court, Mr Goudappel’s April 2010 claim therefore appeared to attract the protection of cl 15.
The transitional regulation inserted by the Workers Compensation Amendment (Transitional) Regulation 2012 (NSW) changed the position again. Clause 11(1) of Sched 8 to the WCR stated that the Schedule 2 amendments extended to a claim made before 19 June 2012 but not to a claim that specifically sought compensation under the former s 66 or s 67. Clause 11(2) directed that cl 15 “is to be read subject to” that rule. The regulation therefore narrowed the class of protected claims to those that had expressly invoked the lump sum provisions before the cutoff date. The High Court held that this narrowing was authorised by cl 5(4) because the regulation deemed the WCA (including cl 15) to be amended in the manner it specified.
After the High Court’s decision the law is that a worker who has made only a general claim before 19 June 2012, and whose impairment is 10% or less, has no entitlement to lump sum compensation even though cl 15, read in isolation, would have preserved that entitlement. The regulation-making power in cl 5(4) has been construed as a deliberate legislative choice to allow executive adjustment of the otherwise rigid savings regime without the need for further amending Acts.
Key passages with plain-English translation
The joint judgment contains several passages that repay close attention. One states: “The purpose of cl 5 was to expand the regulation-making power so as to allow regulations to be made which could affect pre-existing rights. The purpose of cl 11, made pursuant to cl 5(4), was clear enough. It applied the new s 66 to entitlements to permanent impairment compensation which had not been the subject of a claim made before 19 June 2012 that specifically sought compensation under the old s 66. Its purpose was patently not beneficial.” In plain English the Court is saying that although workers’ compensation legislation is generally interpreted favourably to injured workers, this particular transitional regulation had the opposite aim—to restrict access to lump sum payments—and the statutory language left no room to read it any other way.
Gageler J’s reasons contain an extended analysis of cl 5. He writes: “The underlying legislative purpose is evidently to provide a flexible means of making adjustments to the savings and transitional provisions otherwise contained in Pt 19H which does not require those adjustments to be embodied in further amendments to the Act.” This passage translates as Parliament having decided that the detailed working-out of the new 10% threshold should not be frozen in primary legislation; instead the executive could fine-tune the savings rules by regulation, provided the regulation stayed within the “saving or transitional” character and remained subject to disallowance by either House.
Another key statement appears in the joint judgment’s treatment of retrospectivity: “Interference with existing rights does not make a statute retrospective. Many if not most statutes affect existing rights.” The Court is distinguishing between a law that purports to change the past (true retrospectivity, heavily constrained by s 39(1)(b) of the Interpretation Act) and a law that changes the legal consequences of past events for the future (common and permissible when the statute clearly so provides). Because cl 11 did not backdate its own commencement before its gazettal, the stricter temporal rules were not engaged; the only question was whether the substantive effect on Mr Goudappel’s accrued right was authorised, and the Court held that cl 5(4) supplied that authority.
The orders themselves contain the Court’s ultimate formulation: “Clause 5(4) of Pt 19H … enabled the making of cl 11 … with the effect that the amendments … apply to claims for compensation pursuant to s 66 … made on and after 19 June 2012, where the worker has not made a claim specifically seeking compensation under s 66 or s 67 before 19 June 2012.” This is the binding answer to the referred question and leaves no doubt that the regulation validly narrowed the savings clause.
What fact patterns trigger this precedent
This decision will be triggered whenever a worker’s injury occurred before the 2012 amendments, a claim of any kind was made before 19 June 2012, but no claim “specifically seeking” compensation under the former ss 66 or 67 was lodged before that date, and the assessed permanent impairment is 10% or less. The precedent applies with equal force to any subsequent legislative change that inserts a Pt 19H-style savings regime coupled with a cl 5(4)-style Henry VIII power to deem the Act amended by transitional regulation. The critical factual integers are (1) an accrued but not yet specifically claimed lump sum entitlement, (2) a general pre-cutoff claim that does not satisfy the “specifically sought” requirement, and (3) a regulation that expressly makes the savings clause “subject to” the new disentitling rule.
The decision is not limited to the precise 10% threshold or the precise dates in the 2012 amending package. Any analogous scheme that uses broad transitional regulation-making powers to adjust the temporal reach of substantive amendments will engage the same reasoning. Conversely, the precedent will not assist an employer where the worker did lodge a claim that “specifically sought” compensation under the old s 66 or s 67 before 19 June 2012; in that case cl 11 by its own terms does not apply. Nor will it assist where the regulation falls outside the “saving or transitional” character or where the empowering provision lacks the explicit deeming language of cl 5(4).
How later courts have treated it
Although the judgment itself does not cite subsequent authority, its treatment of the authorities it does discuss has become the orthodox approach. The Court cited Maxwell v Murphy and the Australian Education Union case for the common law and statutory presumptions against affecting accrued rights, but held that those presumptions were displaced by the clear contrary intention evinced in cl 5. Later courts applying ADCO v Goudappel have therefore examined whether the particular empowering language is as explicit as cl 5(4) before concluding that a regulation can override a statutory savings clause. The decision has reinforced that a regulation which transitions a class of cases from one statutory regime to another is, by definition, “of a transitional nature” within the meaning of provisions modelled on cl 1(1) of Pt 20.
The High Court’s emphasis on parliamentary safeguards (tabling, disallowance, Legislative Review Committee scrutiny) has also been influential. Courts have been less ready to characterise similar clauses as impermissible delegations when those accountability mechanisms are present. The joint judgment’s refusal to apply an across-the-board beneficial construction to transitional provisions has equally been followed; decision-makers must identify the specific purpose of the transitional rule rather than assume every ambiguity favours the worker.
Still-open questions
Several questions remain unresolved by the judgment. First, the precise metes and bounds of the phrase “specifically sought compensation under section 66 or 67” are not exhaustively defined. The Court accepted that Mr Goudappel’s 2010 claim did not meet that description, but left open whether a claim that expressly refers to “permanent impairment” without citing the section number would qualify. Second, the outer limits of cl 5(4)-style deeming powers are not spelt out. While the Court upheld a regulation that overrode a statutory savings clause, it did not decide whether a regulation could, for example, extinguish a right that had already been crystallised by a Commission determination or court order.
Third, the interaction between the regulation-making power and the disallowance mechanism under s 41 of the Interpretation Act remains practically untested in this context. If a regulation is tabled, debated and not disallowed, does that strengthen the presumption of validity or merely confirm procedural regularity? Gageler J’s reasons suggest the former, but the point was not essential to the decision.
Finally, the judgment leaves open whether a regulation made under cl 5 could have effect from a date earlier than gazettal if it purported to do so. Although cl 11 did not backdate, the Court’s analysis of cl 5(1) and (2) indicates that such backdating is possible, yet the precise interaction with s 39(1)(b) of the Interpretation Act (which prima facie prohibits commencement before publication) may require further elucidation in a future case where the regulation expressly chooses an earlier commencement date.
These open questions mean that practitioners must still undertake a close textual analysis of both the enabling clause and the particular regulation in any new transitional regime. The decision confirms that where Parliament has spoken as clearly as it did in cl 5(4), courts will give effect to that language even if the practical result is to remove an entitlement that appeared, at first glance, to have been saved.