Arrowcrest Group Pty Ltd v Nguyen [2000] SAWCT 121

4 S 30A only operates in the case of:-

"A disability consisting of an illness or disorder of the mind".

The real issue on this appeal is what Parliament meant this to encompass.

5 In Federal Commissioner of Taxation v F. H. Faulding and Co. Ltd. [1950] HCA 42; (1950) 83 CLR 594, the Court considered the words in the Sales Tax (Exemptions and Classifications) Act 1935-1948, item 36(3) which made certain products exempt from tax, including:-

"Essences, concentrates and cordials, consisting wholly or principally of juices of Australian fruits, for the making of non-alcoholic beverages; non-alcoholic beverages consisting wholly of juices of Australian fruits."

6 At first instance Rich J. had held each of the cordials under consideration had satisfied the exemption because they consisted principally of juices of Australian fruits, those juices supplying the element which gave the cordials their distinctive quality. That conclusion was overturned on appeal.

7 Latham C.J. made the following observation about Rich J's. conclusion:-

"The difficulty which this view meets is found in the words `consisting of'. The reference is not to the principle characteristic of the cordial considered as a cordial, but to the content of the cordial. In the phrase `consisting wholly or principally of juice of Australian fruits' the word `wholly' necessarily requires the application of a quantitative standard. The word `principally' must, in my opinion, be similarly construed." (my emphasis)

8 In Universal Press Pty. Ltd. v Federal Commissioner of Taxation (1989) 90 ALR 332, Gummow J. considered an argument concerning whether a street directory was exempt from sales tax. The publishing company submitted the directory was not a, "book consisting wholly or principally of maps". That argument was rejected by His Honour. In the course of his analysis, he made reference to Faulding's Case and stated (339):-

"...counsel for the Commissioner said that the High Court decision had to be understood in the setting in which there appeared the words "consisting wholly or principally of ...". The question was the identification of that of which the cordial consisted. That directed attention to identification of ingredients. Here, one was concerned with the characterisation of the finished product, namely a book, and of the contents of the book. The task might be a simple one because one readily might be able to say that the book contained nothing but maps and so consisted wholly of maps. If that was so, the exemption would be lost. But, counsel submitted, the exemption would be lost also if the book comprised varied contents, but one could characterise it in a qualitative sense as consisting principally of maps; it would be the maps which provided the essential character in any street directory.

In my view, there is much to be said for the submission by counsel for the Commissioner. If it had been necessary for me to do so, I would have accepted those submissions. However, as I have indicated, given the meaning I have attached earlier in these reasons to the expression `Books consisting wholly or principally of maps (including road and tourist maps ...)', as applicable to the street directories with which I am concerned here, my conclusion is that, even on the simply quantitative basis urged by the taxpayer, the exemption does not apply. That conclusion follows from the rejection of the taxpayer's submission as to the limited meaning to be given in the present context to the word `map'." (my emphasis)

9 Those authorities indicate that the words, "consisting of", are concerned with the qualitative or essential character of the object, in this case the illness or disorder claimed by the worker. If the worker claims to have suffered an injury, rightly characterised as a morbidity of the mind, then the claim must overcome the provisions of s 30A to be compensable. However, where a worker claims a physical injury that results in complications of a psychological type that is not the target of the provision. It does not call into play the requirements of s 30A.

11 This is an appeal by Arrowcrest Group Pty Ltd ("the employer") against the decision of a learned Deputy President who found that Ve Quoc Nguyen ("the worker") was entitled to an assessment of compensation pursuant to s 43 of the Workers Rehabilitation and Compensation Act 1986 ("the Act") in respect of a compensable disability sustained by him in November 1995 and the decision by her to set aside determinations made by the employer to reject claims for compensation and to discontinue the worker's weekly payments of income maintenance.

12 On 13 November 1995 the worker suffered an injury in the course of his employment with the employer to his lower back and left leg. The employer contended this injury was no more than a temporary aggravation of an ongoing degenerate condition in the worker's lower spine and that as the effects of the injury had been spent, it was entitled to reject further claims and to invoke s 36 of the Act to discontinue the worker's weekly payments and was also entitled to reject claims made for compensation pursuant to s 43 of the Act on the ground that no permanent disability existed.

13 The asserted error of law upon which this appeal is based was the learned Deputy President's failure to apply s 30A of the Act in this case. It is accepted by the employer that the worker suffers from the debilitating effects of a psychiatric condition which the learned Deputy President found to be "severe depression and abnormal illness behaviour". Her Honour found that that depression was a consequence of the injury that the worker sustained on 13 November 1995. She concluded that the physical and psychological consequences of that injury have resulted in the worker being totally incapacitated for work such that there was no basis upon which the employer could seek to invoke s 36 of the Act. She further concluded that in physical terms the worker had suffered a permanent disability, which had been amplified by the psychiatric condition. She applied the decision of Workers Rehabilitation and Compensation Corporation v Lu (1995) 183 LSJS 193 in concluding that it was appropriate to take into account the extent to which the physical disability had been amplified by psychological components. She ultimately concluded that the worker had suffered a 25 per cent permanent loss of the full and efficient use of his lumbar spine and a 10 per cent permanent loss of the full and efficient use of his left leg at or below the knee.

S 30A provides as follows:-

"A disability consisting of an illness or disorder of the mind is compensable if and only if -

(a) the employment was a substantial cause of the disability; and

(b) the disability did not arise wholly or predominantly from -

(i) reasonable action taken in a reasonable manner by the employer to transfer, demote, discipline, counsel, retrench or dismiss the worker; or

(ii) a decision of the employer, based on reasonable grounds, not to award or provide a promotion, transfer, or benefit in connection with the worker's employment; or

(iii) reasonable administrative action taken in a reasonable manner by the employer in connection with the worker's employment; or

(iv) reasonable action taken in a reasonable manner under this Act affecting the worker."

14 It was the employer's case that a proper application of this provision would have led to the conclusion that the psychological aspects of the worker's condition were not compensable on the ground that the worker would be unable to discharge the onus of establishing that employment was a substantial cause of the disability.

15 The learned Deputy President rejected that approach. She referred to the decision of Karasaridis v. Kastoria Fur Products (1984) 37 SASR 345, which dealt with an application by a plaintiff to amend her statement of claim after the expiration of the time limit for commencing such an action to include as part of the claim for damages a secondary psychological condition. Jacobs J in allowing the amendment concluded that no extension of time was required because the secondary psychological condition was part of the original injury.

16 In adopting that reasoning the learned Deputy President stated thus:-

"In order to establish an entitlement for continuing income maintenance the worker must establish that he has continued to be incapacitated by the compensable disability. In that context the asserted adjustment disorder with depressed mood is merely one of the steps in the causal chain to establish a work caused incapacity. In those circumstances he does not have and has not alleged, a disability `consisting of an illness or disorder of the mind' and therefore section 30A has no relevance to his claim."

17 Thus the issue that arises on appeal is whether s 30A of the Act applies in any case where part of the asserted disability can be said to comprise of an illness or disorder of the mind.

18 As a specialist Tribunal dealing with workers' compensation cases we feel qualified and permitted to observe that it is a common phenomena for workers who have suffered physical injuries arising out of their employment and which are the subject of disputes about their entitlements under the Act, to develop psychiatric conditions such as depression, anxiety, neurosis and the like. In Workers Rehabilitation and Compensation Corporation v Lu (supra) Doyle CJ noted in passing at 197 after reference to the judgment of Bray CJ in Rosmini v Chrysler Australia Limited (1973) 6 SASR 212, the medico-legal difficulties associated with mental illnesses and mental injuries. We also feel qualified and permitted to observe that in many case where there is an underlying physical disability it is often difficult to discern what aspects of the resultant disability are attributable to the physical consequences of the disability and what aspects are attributable to the psychological consequences of the disability. Doyle CJ said as much in Lu (at 201) where he said:-

"Equally relevant is the practical difficulty of separating the consequences of a physical injury from the consequences of a mental injury. That is not to say that it will be difficult in every case, or that it is impossible to do so, but in many cases it would be a difficult exercise."

19 It is one thing for Parliament to decide that disabilities that are solely of a psychiatric nature are to be subject to more stringent requirements before being determined to be compensable for the purposes of the Act. It is another thing altogether for it to decide that whenever there is a psychological complication to a physical disability, that psychological complication has to be identified and isolated and subjected to a different test of compensability than the physical consequences of the disability.

20 We think that the reasoning of Doyle CJ in Lu when reflecting upon Parliament's intentions in respect of the statutory provisions under consideration there are apposite to the provisions under consideration in this case. His Honour said:

"I do not think that Parliament could have intended the radical change which it would have produced if it were the case that the Third Schedule now was to be confined to compensation for the specified disabilities to the extent attributable to a physical injury. That would be a major change in the approach taken. It needs to be understood that it would apply not only to cases in which the specified disability was entirely attributable to a mental injury, but also to cases in which it was attributable to a mental injury consequent upon a physical injury such as the present case. As a mental injury may well be, and often is, the product of a physical injury it would be an odd result if one were required in such a case to separate the results of the two injuries. Indeed, as a matter of strict analysis, one would be dealing simply with the consequences of an initial physical injury."

21 We do not think that Parliament could have intended the radical change that would result if the interpretation of s 30A is as is suggested by the employer.

22 In coming to this conclusion, like Doyle CJ, we place `some reliance on the fact that employees' compensation legislation has always been construed favourably to the worker: see Bird v Commonwealth [1988] HCA 23; (1988) 165 CLR 1 at 9 Deane and Gaudron JJ (dissenting)". S 30A is a provision of limitation. There is no warrant to give it an expansive interpretation. It should be limited to cases that fall squarely within its ambit, they being cases that exclusively involve illnesses or disorders of the mind. It does not apply to a physical injury simply because that injury has a psychological component.

23 All of the arguments that were agitated by the employer on appeal were underpinned by the assertion that the learned Deputy President erred in failing to apply s 30A. Here, the learned Deputy President found as a fact that there was an underlying physical condition. As this appeal is limited to a question of law: s 86(1), and as there was some evidence to support that finding, that finding cannot be impeached. As a result of that finding the learned Deputy President was right to conclude that s 30A did not apply.

24 Having concluded that the learned Deputy President made no error of law in her approach the appeal must fail. There is therefore no need for us to canvass the other matters that were raised on appeal.