JUDGMENT OF: His Honour President Judge WD Jennings, His Honour Deputy President Judge FK Cawthorne and His Honour Deputy President Judge JP McCusker

Referral to the Full Tribunal - Statutory construction concerning the application of s 43(7a) to compensable disabilities that resulted from separate traumas - Facts agreed - Whether supplementary benefit is applicable only where an entitlement to compensation pursuant to s 43 exceeds 55 per cent of prescribed sum arising from one trauma - S 43(7a) Workers Rehabilitation and Compensation Act 1986.

Salmon Street (In Liquidation) v Jorgensen [1991] SASC 2963; (1991) 56 SASR 158

Project Blue Sky Inc v The Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Wilkinson v WorkCover Corporation/Mercantile Mutual (SA) Workers Compensation Ltd (Cheap as Chips) JD71/1998

State of South Australia v Collins [1996] SASC 5535; (1996) 65 SASR 432

Webster v McIntosh [1980] FCA 128; (1980) 32 ALR 603

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297

The Amalgamated Society of Engineers v The Adelaide Steamship Company Limited and Others [1920] HCA 54; (1920) 28 CLR 129

Brennan v Comcare [1994] FCA 1147; (1994) 122 ALR 615

Wang v Minister for Immigration [1997] FCA 70; (1997) 71 FCR 386

Richardson v Federal Commissioner of Taxation (1997) 150 ALR 167

Australia Post v Pac-Rim [1999] FCA 640; (1999) 163 ALR 372

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384

Pepper v Hart [1992] UKHL 3; (1993) AC 593

BHP v Brown (1986) 40 SASR 410

1 This is a judicial determination of a dispute between Momcilo Cedic ("the worker") and WorkCover Corporation ("Corporation") which has been referred directly to a Full Bench of this Tribunal pursuant to s 94A(2) of the Workers Rehabilitation and Compensation Act 1986 ("the Act").

2 The dispute arises from a short, but important point of statutory construction concerning the application of s 43(7a) of the Act to compensable disabilities that resulted from separate traumas.

3 The relevant facts and statutory provisions are set out in the judgment of Deputy President McCusker and I will not repeat them here.

4 The right to compensation provided for by s 43 does not accrue upon the occurrence of a compensable disability. It accrues upon the existence of a permanent disability of a type which is declared to attract the entitlement to compensation in the Third Schedule of the Act. Moreover, it is a right that accrues in respect of each individual permanent disability, all of which create their own cause of action: Salmon Street (In Liquidation) v Jorgensen [1991] SASC 2963; (1991) 56 SASR 158.

5 Thus, the receipt of compensation for a permanent disability arising out of a particular compensable disability, does not of itself preclude the prosecution of a separate claim for lump sum compensation in respect of another permanent disability arising out of the same compensable disability.

6 It might be argued that consistent with this, the supplementary benefit provided for by s 43(7a) only applies to a single permanent disability that results in an assessment which exceeds 55 per cent of the prescribed sum. But, as was pointed out by Deputy President Gilchrist in Watkins v WorkCover A131/1995: "It would be a strange result if the Act discriminated against those traumas that produce multiple disabilities and those that produce a single disability". This led His Honour to conclude that s 43(7a) was not confined to circumstances where the amount payable in respect of a single permanent disability exceeded 55 per cent of the prescribed sum, but that it also applied if the aggregate of permanent disabilities exceeded 55 per cent of the prescribed sum.

7 No doubt in reaching that conclusion, His Honour adopted the approach to statutory interpretation that commended itself to the High Court in Project Blue Sky Inc v The Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355. In a joint judgment by the majority (McHugh, Gummow, Kirby and Hayne JJ) it spoke of the primary object of statutory construction as:-

"... to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. ... In Commissioner for Railways (NSW) v Agalianos [1955] HCA 27; (1955) 92 CLR 390 at 397, Dixon CJ pointed out that `the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed.' Thus, the process of construction must always begin by examining the context of the provision that has been construed."

"However the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning."

9 The Full Bench of the Tribunal had cause to consider the construction of s 43(7a) in Wilkinson v WorkCover Corporation/Mercantile Mutual (SA) Workers Compensation Ltd (Cheap as Chips) JD71/1998. It is clear from the reasoning of the Full Bench that it agreed with the approach taken in Watkins (supra).

10 Once it is accepted that s 43(7a) can apply to the aggregate of more than one disability, there is no logical reason to think that it can only apply to permanent disabilities arising out of the one trauma.

11 The clear purpose of s 43(7a) is to provide additional compensation to workers who suffered significant permanent legacies as a result of compensable disabilities. That purpose, would be to some extent, frustrated, if it was limited to circumstances whereby it could only apply if the permanent disabilities arose out of the one compensable disability. In my view, the reasoning of the Full Bench of the Tribunal in Mitchell v WorkCover JD60/1998, is apposite. Had s 43(7a) been intended only to apply to permanent disabilities arising out of the one trauma, one would have to read into the sub-section after the words "permanent disability" the words "that results from the same event".

12 Again, adopting the reasoning in Mitchell (supra) I am not deflected from this approach by the use of the definite article "the" before the words

"prescribed sum", nor am I particularly troubled by the fact that if permanent disabilities are attributable to compensable disabilities that occur in different years, different prescribed sums might apply. As was said by Doyle CJ in State of South Australia v Collins [1996] SASC 5535; (1996) 65 SASR 432 at 437: "It is inherent in the parliamentary scheme that the manner in which claims will be determined will depend upon the timing of the determination".

13 For these reasons, and the facts in the case before us, I would conclude that the supplementary benefit applies.

15 This appeal concerns the correct interpretation and application of s 43(7a) of the Workers Rehabilitation and Compensation Act, 1986. That provision reads as follows:-

"If the amount of compensation to which a worker is entitled under subsection (2) is greater than 55 per cent of the prescribed sum, the worker is entitled to a supplementary benefit equivalent to 1.5 times the amount by which that amount exceeds 55 per cent of the prescribed sum."

16 To gain the context of this provision I set out the other relevant provisions of s 43 introducing and describing the entitlement created by the Act:-

"(1) Subject to this Act, where a worker suffers a permanent disability and the disability is compensable under this Act, the worker is entitled (in addition to any entitlement apart from this section) to compensation for non-economic loss by way of a lump sum.

(2) Subject to this section, the lump sum shall be a percentage of the prescribed sum determined by reference to schedule 3.

(a) a compensable disability consists of the aggravation, acceleration, exacerbation, deterioration or recurrence of a prior compensable disability; and

(b) compensation by way of lump sum has been previously paid under this section, or a corresponding previous enactment,

there shall be a proportionate reduction in the amount of the lump sum payable under subsection (2) in respect of the disability.

(7) Where a worker suffers two or more compensable disabilities arising from the same trauma, the worker shall not be entitled to receive compensation by way of lump sum under subsection (2) in respect of those disabilities in excess of the prescribed sum.

(a) in relation to a disability occurring in 1987 - $65 300;

(b) in relation to a disability occurring in a subsequent year - a sum (calculated to the nearest multiple of $100) that bear to $62 000 the same proportion as the Consumer Price Index for the September quarter of the immediately preceding year bears to the consumer Price Index for the September quarter, 1985."

17 The applicant now aged 62 is a carpenter. The employer is a furniture manufacturer.

18 On 10 May 1993 the worker suffered an injury to his left hand. He was awarded 40 per cent for his left hand using the 1993 prescribed sum. That is:-

19 On 8 May 1995 by way of s 113(2) the worker claimed hearing loss and tinnitus. He was awarded a binaural hearing loss of 18.1 per cent and 8 per cent impairment of the whole person for the tinnitus. That is:-

(Tinnitus) (100 - 13.575)/100 x (100% x 8%) x $98100

20 The worker made a claim for surgical scarring on 13 March 1995. 3.5 per cent was allowed for the chest scarring and 2.5 per cent for the thumb scarring. That is:-

21 By letter of 5 August 1998 the worker sought the supplementary benefit pursuant to s 43(7a). It was rejected. I set out the relevant parts of that determination dated 20 August 1998 (AB 8):-

"Determinations have previously been made for compensation for non-economic loss as follows:

Whilst the above aggregate percentage disabilities may exceed 55 % the compensation for non-economic loss was a result of separate compensable disabilities/traumas and no single compensable disability/trauma gave rise to a percentage increase in excess of 55%. MMI Workers Compensation (SA) Pty Ltd considers that a supplementary benefit is applicable only where an entitlement to compensation pursuant to section 43 exceeds 55% of the prescribed sum for a single compensable disability/trauma. Therefore, there is no entitlement to a supplementary benefit."

22 Mr T Bryant, of counsel for the appellant, submitted that the purpose of the provision is clear. When a worker sustains a major disability, arbitrarily set at 55 per cent, recognition of that major loss is reflected by increasing the compensation equivalent above 55 per cent by a factor of 1.5. That is recognition by Parliament that a major disability cannot be compared to a lesser disability in a linear sense. Thus the overriding concern of the legislation is that the worker has that level of disability. It cannot be inferred Parliament meant to make a distinction between those who suffer this end result by two or more traumas and those who suffered it in one trauma. To do so would be a manifest injustice.

23 Mr Martin for the respondent argues the construction of sub s (7a) upon principles of statutory construction. He says there is no ambiguity. The compensable disability referred to in the provision cannot be read as the last of the disabilities in a chain of various disabilities. In the ordinary sense it means those attributable to a given trauma.

24 Mr Martin contends only when the meaning is unclear after consideration of the words does the court have recourse to the policy of the Act. Taking an approach reliant on the words certain things necessarily follow. Firstly s 43(1) contemplates a single trauma. Secondly s 43(2) by use of the words "the prescribed sum" cannot mean a range of prescribed sums but rather is contemplating a single item. That is borne out by s 43(11) which recognises varying sums depending on the date the disability occurred. On reading the provision one cannot be left to wonder "which prescribed sum" as must be the case on the worker's argument (see Outline of Argument par 5). Moreover if one is to notionally work backwards, "prescribed sum" is a concept that only has meaning qua a specific trauma/disability (see argument at 14).

25 Mr Martin contended it was erroneous to construe the provisions of a section by utilising regulations made pursuant to the Act see Webster v. McIntosh [1980] FCA 128; (1980) 32 ALR 603 at 606.

26 Cooper Brookes (Wollongong) Proprietary Limited v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 was a case concerning the meaning of provisions in the Income Assessment Act 1936 (Commonwealth). The provision relied on by the taxpayer literally construed allowed him to claim as deductions losses in shares beneficially owned in a holding company. The appellant argued that even if this was a gap or anomaly in the overall purpose reflected in a broader reading of the Act the court had no right to fill it, (304).

27 Mason and Wilson JJ who formed part of the majority made reference to the well known dicta of Higgins J in The Amalgamated Society of Engineers v The Adelaide Steamship Company Limited and Others [1920] HCA 54; (1920) 28 CLR 129 at 161 and stated in respect to that part of the dicta requiring the ordinary and natural sense to be obeyed irregardless of its inconvenience, impolitic or improbability, as follows, (320):-

"The last clause may be taken to suggest that the operation of a statute is not relevant to the ascertainment of its meaning and this is certainly not now the case, if it ever was. Generally speaking, mere inconvenience of result in itself is not a ground from departing from the natural and ordinary sense of the language read in its context. But there are cases in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute.

If the judge applies the literal rule it is because it gives emphasis to the factor which in the particular case he thinks is decisive. When he considers that the statute admits of no reasonable alternative construction it is because (a) the language is intractable or (b) although the language is not intractable, the operation of the statute, read literally, is not such as to indicate that it could not have been intended by the legislature.

On the other hand, when the judge labels the operation of the statute as `absurd', `extraordinary', `capricious', `irrational' or `obscure' he assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.

Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenience operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended."

28 In Newcastle City Council v GIO [1997] HCA 53; (1997) 149 ALR 623 the question related to the meaning of provisions of the Insurance Contracts Act 1984 (Commonwealth) the appellant had a "claims made" policy with the respondent. The issue is whether the introductory words of s 40(1) should be read literally and relieving the insurer of liability. The court held unanimously against that contention.

29 McHugh J in his reasons for decision stated this was partly due to s 15AA(1) of the Acts Interpretations Act 1901 (Commonwealth). It required the court to promote the purpose or object of the underlying Act over other approaches. This provision reflects the command of Parliament in s 22 of the Acts Interpretations Act (SA) 1915 requiring an interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

"Nevertheless, as I pointed out in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423, in applying a purposive construction, `the function of the court remains one of construction and not one legislation'. When the express words of a legislative provision are reasonably capable of only one construction and neither the purpose of the provision nor any other provision in the legislation throws doubt on that construction, a court cannot ignore it and substitute a different construction because it furthers the objects of the legislation."

31 In Project Blue Sky v ABA [1998] HCA 28; (1998) 153 ALR 490 the issue was the validity of the Australian content standard declared by the respondent or whether it contradicted certain trade agreements and protocols. In the joint judgment of McHugh, Gummow, Kirby and Hayne JJ the approach was stated (par 78) as follows:-

"However, the duty of the court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning."

32 In Brennan v Comcare [1994] FCA 1147; (1994) 122 ALR 615 the Full Federal Court dealt with the meaning of transitional provisions where the claim straddled the provisions of the Compensation (Commonwealth Government Employees) Act 1971 and the Safety Rehabilitation and Compensation Act 1988 (Commonwealth). The court had to resolve whether Brennan was entitled to compensation under the 1998 Act on the ground that compensation was payable to him under the 1971 Act. Was the absence of an entitlement under the 1971 Act to a lump sum fatal to a claim under the 1998 Act even though he had a right to weekly payments under the earlier statute? (626). In particular what was the effect of s 124(3) of the 1988 statute?

33 S 24 of the 1988 Act imposed liability upon Comcare where "an injury to an employee results in a permanent impairment". Moreover "for the purposes of determining whether an impairment is permanent", Comcare was obliged by s 24(2) to have regard to:-

(b) the likelihood of improvement in the employee's condition;

(c) whether the employee has undertaken all reasonable rehabilitative treatment for the impairment; and

34 In Brennan's case, a number of "injuries" had been suffered straddling 1 December 1988, the operative date for the 1988 Act. These resulted in a dissectomy performed on 8 June 1988. The reasoning in the lower tribunal fixing the permanent impairment at a date after 1 December 1988 was that it had taken 9 to 12 months after the operation for stabilisation to be reached. It was not until then that the "permanent impairment" could be said to have occurred.

35 This conclusion had been overturned on appeal because the correct question in that court's opinion was whether prior to 1 December 1988 Brennan's impairment was likely to continue indefinitely. If it was then it had the quality of permanency required.

36 In rejecting that result and restoring the original decision, Gummow J in the Full Federal Court expressed caution against the purposive approach (634 - 636). He stated (636):-

"In the end, the function of the court in construing a statute is to give effect to what apparently is `the will of the legislature' as expressed therein. This is so even though as a result of oversight or inadvertence what extrinsic materials show to have been the clear `intention' of the legislature has not been translated into the text of the law: Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518."

37 Other authorities from the Federal Court demonstrate the respective considerations where a purposive approach is argued to overcome the literal meaning: see Wang v Minister for Immigration [1997] FCA 70; (1997) 71 FCR 386, Richardson v Federal Commissioner of Taxation (1997) 150 ALR 167 and Australian Post v Pac-Rim [1999] FCA 640; (1999) 163 ALR 372. In the latter case Weinberg J cited the reasoning of Hill J in CPH Property Pty Ltd v FCT 98 ATC 4983 and that judge's reliance on the following statement of principle in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 to the following effect:-

"... the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses `context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pallnow Pty Ltd (1986) 6 NSWLR 363 at 388, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent."

38 I turn to consider the role of Parliamentary debates. In Burch v SA (1998) 71 SASR 12 the worker suffered a cerebral aneurism while at work. The issue was whether it was a disease. If it was, the absence of a causative relation with the employ defeated the claim. Whether it was categorised as a disease depended on s 3 of the Act. In the course of the reasoning, issue arose as to what materials the court could refer to in aid of interpretation.

39 The majority, Cox and Lander JJ stated, (26) that ambiguity was not the condition permitting the use of the Minister's Second Reading speech, reports of law reform bodies or explanatory memorandum laid before Parliament. It was permissible under common law to have regard to those documents at first instance as an aid to construction of a statute. That is to ascertain the mischief. Any perceived restriction at common law was removed by CIC Insurance Ltd Case (above). Bleby J (dissenting) took a narrower view, (39). Cf Pepper v Hart [1992] UKHL 3; (1993) AC 593. However the Second Reading speech provides little if anything to a greater understanding of this topic, (Hansard 19 March 1992 at 3434, 15 October 1992 869, 28 October 1992, 601).

40 Apart from the observation made at the outset in the proceedings by Mr Bryant and set out above the only other observation is the occasion of the introduction of s 43(7a) coincides with the abolition of common law rights for workers.

41 From that examination of the authorities it is apparent that while the approach of Higgins J in Adelaide Steamship requires modification, there will be occasions when the statute admits of no reasonable alternative construction than the one effected by the words used. That is because either the language is intractable or if not intractable, the operation of the statute read literally does not contradict such an intention by the legislature. If one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended. The will of the legislature is still affected by what is expressed in the text.

42 The words "permanent disability" are construed in the plural as well as in the singular: s 26 Act Interpretation Act 1915. Thus the words may be read as "permanent disabilities".

43 That the words are to be understood as incorporating the singular and the plural is also supported by sub s (7). That contemplates an entitlement resulting from a singular operation of sub s (1) and comprising two or more disabilities together exceeding the prescribed sum. Moreover it contemplates one prescribed amount qua two or more disabilities.

44 Once it is accepted that sub s (1) and the concomitant provision prescribing how that entitlement is to be quantified, sub s (2), encompass a claim for "permanent disabilities" then no more is needed for that aspect of the application of (7a). That is, all it looks at is the product of the calculation in sub s (2).

45 This analysis requires the respondent's argument to confine its objection to disabilities arising from different events. And in particular difficulties arising from the claims that straddle two "prescribed sums". That is because on a reading of sub s (7a) the only factors taken account of are the amount the worker is entitled to under sub s (2), the "prescribed sum" and 55 per cent of that sum.

46 As stated, there is a dilemma if a case involves entitlements straddling different "prescribed sum" periods. In such cases, there is no express indication of which "prescribed sum" is to apply. That is the core of Mr Martin's argument.

47 Sub s (6) is included to prevent in effect double compensation: (see BHP v Brown (1986) 40 SASR 410 for an examination of the equivalent provision in the 1971 Act.) But it employs a reduction from the amount assessed under sub s (2) of the amount previously paid. There is no adjustment for the fact that the earlier assessment was a percentage of a smaller prescribed sum. It is not a percentage less an earlier percentage.

48 Here I interpolate. At first reading some confusion may occur if the words "proportionate reduction" in sub s (6) are construed as a ratio. But the grammar is equally consistent with a meaning of the reduction from the lump sum of that proportion, ie the previously paid amount.

49 I revert to the method employed in sub s (6) to obtain a product. The method is the same employed in sub s (7a) to the extent that it is the amount of compensation that must be calculated as a percentage of the prescribed sum. It is evident in sub s (6) the primary figure to achieve the lump sum from which the earlier is subtracted must be determined by its date. If a similar approach is inferred to the sub s (7a) provision in cases straddling two "prescribed sums", then the latest date is indicated.

50 This approach involves a significant stretch of inference in ascertaining the Parliamentary intention. The degree of inference or imputation it entails warrants consideration of the scheme of the amendments to ascertain what Parliament may have had in contemplation.

51 The scheme of s 43 is constituted by provisions creating entitlements and provisions directing how those entitlements are to be quantified. I am confident that Parliament intended the 1.5 multiplier to apply in all cases of permanent disabilities the amount of which exceeds 55 per cent of the prescribed sum including those which arose from traumas straddling prescribed sum periods. But the key question is, did it intend the "prescribed sum" to be, to use Mr Martin's words, the last in the chain. That is the issue.

52 Once it is accepted the area of difficulty is confined to one of mechanics or putting into effect, in practice, the will of Parliament, rather than whether Parliament intended to create the entitlement at all, it is easier for the Tribunal to draw imputations or inferences as to how that appears to have been contemplated, particularly by reference to other provisions. That is why the method in sub s (6) takes on importance.

53 I accept that Parliament's intention was effectively as described by Mr Bryant. That is, workers with major disabilities should receive an increase in the lump sum due to the degree of their disability and the disproportionate effect of major disability.

54 If the respondent's argument is upheld, there would be cases of workers with significant disabilities caused by work who would not be entitled to the added component, and workers with less disability who would qualify. That would defeat Parliament's purpose.

55 Given such considerations I conclude that sub s (7a) was intended to operate where the disabilities involved straddled "prescribed sums" and further the relevant "prescribed sum" is that of the last disability's date ie for fixing the prescribed sum in sub s (11).

56 Mr Bryant tendered to us a schedule of calculations option A. That progressively took the matter through each disability in its date order. In my view this is unnecessary. The legislation merely asked for the amount of compensation to which the worker is entitled under sub s (2). I understand it not in dispute that this worker is entitled to an amount of $55833.00 under s 43(2). The next step is to take the relevant prescribed sum. In the case at hand the 1995 prescribed sum was $98100.00. Thus the product of dividing $55833.00 into the sum of $98100.00 will determine the issue. That will provide the amount by which 55 per cent is exceeded.

57 In the case before us the worker establishes the differential of $1878.86 and is entitled therefore to 1.5 times that amount, namely $2818.29.