Gales v Lovett, McCracken & Bray

LEGISLATION CITED: Workers Compensation Act 1987 (NSW) ss4, 15, 51, 65-67. Workers Compensation Act 1926 s 16

CASES CITED: Alto Fords Pty Ltd v Antaw [1999] NSWCA 234, (1999) 18 NSWCCR 246

PARTIES: Frank Albert GALES (Appellant) LOVETT McCRACKEN & BRAY PTY LIMITED (Respondent)

COUNSEL: B G McMANAMEY (Appellant) L KING SC/ P L PERRY (Respondent)

SOLICITORS: Turner Freeman (Appellant) QBE In-House Legal (Respondent)

LOWER COURT JURISDICTION: Workers Compensation Commission

LOWER COURT JUDICIAL OFFICER: Acting Deputy President ROBIN HANDLEY

LOWER COURT DATE OF DECISION: 19 September 2007

LOWER COURT MEDIUM NEUTRAL CITATION: Lovett McCracken & Bray Pty Ltd v Gales [2007] NSWWCCPD 198

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40708/07 WCC 1123-07

HODGSON JA IPP JA HOEBEN J

1 AUGUST 2008 Frank Albert GALES v LOVETT, McCRACKEN & BRAY PTY LIMITED Judgment 1 HODGSON JA: On 19 September 2007, Acting Deputy President Handley revoked a decision made by an Arbitrator in respect of a claim made by the appellant worker for compensation for skin cancer, substituted an award for the respondent employer, and made no order as to costs. The worker appeals from that decision.

Statutory Provisions 2 It is necessary to have regard to certain provisions of the Workers Compensation Act 1987 as they were as at 30 March 2000, and as they became following amendments in 2001 (Act 61 of 2001). 3 First, "injury" was defined as at 30 March 2000 by s4 of the 1987 Act as follows: 4 Definition of "injury"

(a) means personal injury arising out of or in the course of employment,

(b) includes: (i) a disease which is contracted by a worker in the course of employment and to which the employment was a contributing factor, and (ii) the aggravation, acceleration, exacerbation or deterioration of any disease, where the employment was a contributing factor to the aggravation, acceleration, exacerbation or deterioration, and

(c) does not include (except in the case of a worker employed in or about a mine to which the Coal Mines Regulation Act 1982 applies) a dust disease, as defined by the Workers' Compensation (Dust Diseases) Act 1942, or the aggravation, acceleration, exacerbation or deterioration of a dust disease, as so defined.

Par (c) was subsequently amended in a way not material to this decision. 4 Section 15 was in the following terms: 15 Diseases of gradual process - employer liable, date of injury etc

(1) If an injury is a disease which is of such a nature as to be contracted by a gradual process: (a) the injury shall, for the purposes of this Act, be deemed to have happened: (i) at the time of the worker's death or incapacity, or (ii) if death or incapacity has not resulted from the injury - at the time the worker makes a claim for compensation with respect to the injury, and (b) compensation is payable by the employer who last employed the worker in employment to the nature of which the disease was due.

(2) Any employers who, during the 12 months preceding a worker's death or incapacity or the date of the claim (as the case requires), employed the worker in any employment to the nature of which the disease was due shall be liable to make to the employer by whom compensation is payable such contributions as, in default of agreement, may be determined by the Commission.

(2A) The Commission is to determine the contributions that a particular employer is liable to make on the basis of the following formula, or on such other basis as the Commission considers just and equitable in the special circumstances of the case: where:

C is the contribution to be calculated for the particular employer concerned.

T is the amount of compensation to which the employer is required to contribute.

A is the total period of employment of the worker with the employer during the 12 month period concerned, in employment to the nature of which the injury was due.

B is the total period of employment of the worker with all employers during the 12 month period concerned, in employment to the nature of which the injury was due.

(3) Total or partial loss of sight which is of gradual onset shall for the purposes of subsection (1) be deemed to be a disease and to be of such nature as to be contracted by gradual process.

(4) In this section, a reference to an injury includes a reference to a loss or impairment for which compensation is payable under Division 4 of Part 3.

(4A) In this section, a reference to employment to the nature of which a disease was due includes a reference to employment the nature of which was a contributing factor to the disease.

(5) This section does not apply to an injury to which section 17 applies.

Subsection (4) was amended in 2001 by substituting for the words "loss or impairment" the words "permanent impairment". 5 Section 51 was in the following terms: 51 Exit payments by commutation of weekly payments

(2) A liability in respect of any weekly payment of compensation may, with the consent of the worker, be commuted (either in whole or in part) to a lump sum, determined by the Compensation Court, having regard to: (a) any dispute as to liability to pay compensation under this Act, (b) the injury, the age of the worker, the general health of the worker, and the occupation of the worker at the time of the occurrence of the injury, (c) the worker's diminished ability to compete in an open labour market, and (d) other benefits that the worker may be entitled to from any other source.

(2A) The Compensation Court is not to determine a lump sum for the purposes of this section unless satisfied that: (a) the termination of liability concerned is in the best interests of the worker, and (b) the worker fully understands the effect of the termination of liability concerned and has received adequate advice as to the consequences of the termination.

(2B) It is not necessary that the worker consent or agree to, or understand the effect of, a termination of liability under this section if the Compensation Court is satisfied that the worker is unable, by reason of infirmity of mind or body, properly to consent or agree to, or to understand the effect of, the termination of liability concerned.

(3) If: (a) the Compensation Court determines any such lump sum, (b) the worker agrees that payment of the lump sum should remove any liability to make a payment under Division 3 or 4 in respect of the injury, and (c) (Repealed) payment of the lump sum removes any liability to which the agreement of the worker relates.

(5) An agreement as to the commutation of a payment to a lump sum shall not, nor shall the payment of the sum payable under the agreement, exempt the person by whom the payment is payable from any liability under this Act unless the sum has been determined by the Compensation Court in accordance with this Act.

(6) A lump sum may by agreement or order of the Compensation Court be paid to the Authority for the benefit of the worker.

(8) If a liability in respect of weekly payments of compensation is only partially commuted under this section, the balance of the weekly payments continues to be payable under and subject to this Act.

(9) Payment of a lump sum to which liability in respect of any weekly payment of compensation has been wholly or partially commuted under this section or redeemed under section 15 of the former Act (as applied by Schedule 6 to this Act) is taken for the purposes of this Act, the 1998 Act and the former Act (as applied by this Act) to be payment of the compensation concerned in pursuance of the liability to pay the compensation concerned.

Section 51 was repealed in 2001. 6 Division 4 of Part 3 of the 1987 Act included s 65(1) and (2), s 66(1) and s 67(1): 65 Definitions

(1) In this Division: loss , in relation to a thing, means: (a) the loss of that thing, or (b) the permanent loss of the use, or of the efficient use, of that thing.

(2) In this Division, a reference to a loss mentioned in the Table to this Division includes a reference to: (a) the permanent impairment of the back, neck or pelvis or any other permanent impairment added to the Table, and (b) severe facial disfigurement or severe bodily disfigurement, and (c) permanent brain damage, and (d) a disease mentioned in that Table.

(1) A worker who has suffered the loss of a thing mentioned in the Table to this Division as the result of an injury is entitled to receive from the worker's employer by way of compensation for the loss, in addition to any other compensation under this Act, the amount equal to the percentage of $100,000 set out opposite to that loss in that Table.

(1) A worker who has suffered a loss mentioned in the Table to this Division (or 2 or more of any such losses as a result of the same injury) is entitled to receive from the worker's employer by way of compensation for pain and suffering resulting from the loss or all those losses, in addition to any other compensation under this Act, an amount not exceeding $50,000.

…… 7 In 2001, these were replaced by new subsections 65(1), 66(1) and 67(1): 65 Determination of degree of permanent impairment

(1) For the purposes of this Division, the degree of permanent impairment that results from an injury is to be assessed as provided by this section and Part 7 (Medical assessment) of Chapter 7 of the 1998 Act.

66 Entitlement to compensation for permanent impairment

(1) A worker who receives an injury that results in permanent impairment is entitled to receive from the worker's employer compensation for that permanent impairment as provided by this section. Permanent impairment compensation is in addition to any other compensation under this Act.

(1) A worker who receives an injury that results in a degree of permanent impairment of 10% or more is entitled to receive from the worker's employer as compensation for pain and suffering resulting from the permanent impairment an amount not exceeding $50,000. Pain and suffering compensation is in addition to any other compensation under this Act.

Circumstances 8 The worker was employed as a merchant seaman from about 1951. His last employment was with the employer, and he last worked in 1996. During employment as a seaman, he was exposed to sunlight, and this was a substantial contributing factor to the development of skin cancer. 9 The worker suffered a back injury in 1996, and on 20 November 1996 he received an award from the Compensation Court in respect of that injury. 10 On 23 March 1999, the worker filed an Application for Determination in the Compensation Court, seeking lump sum compensation under s 66 and s67 in respect of injuries to his back, neck, both arms and both legs, alleged to have occurred at various dates between 1985 and 1991, and contribution to and aggravation of injuries due to the nature and condition of his employment. The last notice of injuries alleged was 15 July 1991. 11 A Commutation Application was determined on 30 March 2000. The worker signed a consent to this application, which included the following: In giving this consent I appreciate that the payment of the lump sum referred to in the Short Minutes of Order will bring to an end as from 30 June 1984 my right to all entitlements under the Workers Compensation Act which I have or will have in the future in respect of the injury(ies) referred to in the Short Minutes of Order including:

(I) weekly payments of compensation of all kinds including those payable in the event of a failure by the employer to provide suitable employment; and

(2) medical, hospital, rehabilitation and all such like expenses payable under the Act; and

(3) any lump sum payable under the Act for the loss of a part or of a function of my body. 12 The Short Minutes of Order giving effect to the commutation provided for the following amendments to the application for determination: (f) amend paragraph (1) of the Application for Determination to include nature and conditions of employment.

(g) amend paragraph (2) of the Application for Determination to include injury to head, whole of back, neck, pelvis, left arm, right arm, right leg, left leg, both hands, both feet, [indecipherable] anxiety, depression, functional overlay and loss of hearing due to industrial deafness or deafness of like origin, skin cancer, severe facial disfigurement and sever bodily disfigurement and all or any injuries received by the Applicant Worker during the course of his/her employment with the Respondent Employer including injuries arising out of the nature and conditions of that employment, during the period in which the said Applicant Worker was employed by the said Respondent Employer. 13 The Short Minutes of Order went on to state a determination as follows: I Determine that the liability of the employer to make weekly payments … in respect of the injury(ies) referred to in the Application for Determination may be redeemed and commuted in whole as from 30 June 1984 by payment of $35,000 in addition to payments already made.

It then went on to note that the worker agreed that the lump sum "removed liability under Divisions 3 and 4 of Part 3 of the Act". 14 On 12 July 2006, the worker made a claim in respect of twelve per cent whole person impairment resulting from a skin cancer condition. The application described the injury as "skin cancer condition" and gave the date of the injury as 12 July 2006 (deemed). 15 This claim was heard by a Commission Arbitrator and decided on 14 May 2007. The Arbitrator found that, by operation of s 15 of the 1987 Act, the injury, being the permanent impairment, was deemed to have happened on 12 July 2006; and he found that the commutation in March 2000 could not have operated to extinguish a right in respect of an injury which did not occur until 2006. 16 On review, the Acting Deputy President considered that s 15 only applied to determine the deemed date of the injury in order to establish on which employer liability to pay compensation falls; and that the commutation was effective to remove liability for entitlement in respect of linked listed injuries including skin cancer.

Grounds of Appeal 17 The worker relies on the following grounds of appeal: 1. The Acting Deputy President erred in law when he failed to apply the findings of the Arbitrator that the injury occurred on 12 July 2006 when that finding was not challenged.

2. The Acting Deputy President erred in law when he found that the commutation commuted the appellant's entitlement to permanent impairment benefits when those benefits were deemed to have resulted from an injury that occurred after the commutation.

3. The Acting Deputy President erred in law when he failed to consider that the claim for permanent impairment benefits was an injury that occurred after the commutation and was not in law a claim in respect of an injury occurring before the date of the commutation.

4. The Acting Deputy President erred in law when he considered that section 15 of the Workers Compensation Act 1987 (NSW) only applies to determine upon which employer liability to pay compensation falls.

5. The Acting Deputy President erred in law when he found that the commutation applied to an injury that had not yet occurred.

Submissions 18 Mr McManamey for the worker made the following written submissions: In this case there is no dispute that the Appellant suffered an injury within the meaning of S.4 of the 1987 Act. S.15 of the 1987 Act deemed the injury to have occurred 12 July 2006 "for the purposes of this Act." It is not correct to say S.15 only operates to determine a deemed date of injury in order to establish upon which employer liable to pay compensation falls. In Alto Ford Pty Ltd v Antow (1999) 18 NSW CCR 246 the workers compensation was determined by the rates applicable at the deemed date of injury. In Stone v Stannard Brothers Launch Services Pty Ltd [2004] NSW CA 277 the worker was held to be entitled to benefits that did not exist at the time when he was exposed to the circumstances giving rise to his injury. Also in Hallett v Commissioner of Police [2004] 1 DDCR 580 Judge Walker determined that the entitlement of the worker was to be determined applying the verdict of S.11A that applied at the deemed date of injury rather than at the date the events complained of occurred.

It follows that when considering the effects of the commutation in March 2000 S.51 must be read subject to the deeming provision in S.15.

In Mirkovic v Davids Holdings Pty Ltd (1995) 11 NSW CCR 656 Judge Nielsen held that what is commuted is the entitlement to compensation. In that case His Honour was considering the terms of S.15 of the 1926 Act. In this instance the question relates to the commutation of a liability to make a payment under Davison 4. It is important that the power to make a commutation is "in respect of the injury". The consequence is that a worker can only agree that the commutation removes liability in respect of an identified injury. In this instance the subject injury did not occur until July 2006 and accordingly cannot be an injury to which the worker has agreed to commute liability in March 2000.

Because of S.234 of the 1998 Act it is immaterial whether the events giving rise to the injury occurred between March 1981 and July 1996 and it is immaterial whether those circumstances were in the minds of the parties at the time of the commutation agreement on 30 March 2000.

In simple terms on 30 March 2000 the Compensation Court did not have the power to commute a liability in respect of an injury which did not occur until July 2006.

The power to commute a liability other than weekly payments of compensation is contained in S.51 (3). That subsection allows for the commutation of liability under Division 3 or 4 in respect of the injury. Division 4 contains the provisions providing for compensation for non-economic loss. As at March 2000 Division 4 provided for compensation for the loss of a thing or the permanent loss of the use, or of the efficient use of that thing in accordance with the Table of Disabilities. As at March 2000 the Court's power was limited to commuting liability to pay compensation for such a loss. In 2001 Division 4 was amended so that compensation is now paid in respect of permanent impairment assessed in accordance with the American Medical Association guides to permanent impairment 5th edition and the WorkCover Guidelines. A permanent impairment is a different thing to a loss or loss of efficient use (see Ghahreman v Sydney Water Corporation Limited (1998) 16 NSW CCR 115 and Cummins v G James Safety Glass Pty Ltd (1994) 10 NSW CCR 688). In its terms the payment of the lump sum pursuant to the commutation can only commute liability to pay for a loss or loss of efficient use. It cannot have commuted a liability to pay for permanent impairment. In this matter the Appellant is seeking a payment for permanent impairment.

The amendments made to the Application were in respect of injuries "received by the Applicant worker during the course of his/her employment with the Respondent employer including injuries arising out of the nature and conditions of that employment during the period in which the said Applicant worker was employed by the said Respondent employer." In its terms the commutation only applied to injuries that occurred during the period of employment up to July 1996. In its terms it did not apply to any injury occurring after July 1996. This was recognised by the Acting Deputy President at paragraph 47 of his decision when he said "Mr Gale's solicitors contend that the injuries listed in the annexure means injuries that the worker received during the course of or rising out of his employment and during the period of such employment (Red Book 54 J-K). In its own terms the commutation did not purport to apply to an injury which occurred July 2006.

The Acting Deputy President has erred in law in that he has failed to properly apply the provisions of S.15 of the 1987 Act. Furthermore there has been a failure to properly apply provisions of S.51. 19 In oral submissions Mr McManamey referred to the definition of injury in s 4 of the 1987 Act, and submitted that while the circumstances referred to in s 4(b)(i) may have existed in 2000, by virtue of s 15 they did not become an "injury" for the purposes of the Act until the time specified in s 15.

Decision 20 It is clear that an agreement by a worker cannot of itself exclude the worker from entitlement to compensation; and so the question is whether s 51(3) of the 1987 Act had the effect of removing the employer's liability for the compensation claimed by the worker in July 2006. 21 In this case, the worker has, within s 51(3)(b), agreed "that payment of a lump sum should remove any liability to make a payment under Division … 4 in respect of the injuries"; so that the payment of the lump sum did remove "any liability to which the agreement of the worker relates". 22 That gives rise to the following questions: (1) What was "the injury" in respect of which the worker agreed that liability would be removed? (2) Was this the injury in respect of which compensation is now sought? (3) Is the compensation now sought in respect of a "liability to make a payment under Division …4"? 23 As regards the first question, the worker agreed that liability would be removed in respect of: (a) "skin cancer, severe facial disfigurement and severe bodily disfigurement", and also (b) "all or any injuries received by the [worker] during the course of [his] employment with the [employer] and injuries arising out of the nature and conditions of that employment, during the period in which the [worker] was employed by the [employer]." 24 As regards (a), there is no doubt that "skin cancer" was capable of being an injury within par (b)(i) of the definition in s 4 of the 1987 Act, and that the amendment provided by the Short Minutes of Order was intended to and did have the effect of identifying this as such an injury. The reference to severe facial disfigurement and severe bodily disfigurement was plainly intended to reflect the wording of s 65(2)(b), and thus to identify a "loss" within the meaning of s 65 of the 1987 Act, as it then stood. 25 As regards (b), no doubt the worker's skin cancer condition was an injury arising out of the nature and conditions of his employment with the employer; but there is a question as to whether it arose during the period in which the worker was employed by the employer. In my opinion, the better view is that the injury did relevantly arise during the period of employment, and thus falls within these words as well. 26 Thus, in my opinion, subject to the second question, the commutation application and the orders made pursuant thereto were effective to remove liability in respect of the injury so identified under Division 4. 27 Mr McManamey submits that because, under s 15, the date of the worker's skin cancer injury is deemed to be 12 July 2006, this injury could not be an injury in respect of which liability was released in 2000: it had not arisen in 2000, so it could not be any of the injuries referred to in the commutation application and orders made pursuant thereto as being an injury existing in 2000. 28 The case which comes closest to giving support to that submission is Alto Fords Pty Ltd v Antaw [1999] NSWCA 234, (1999) 18 NSWCCR 246. In that case, the respondent had been injured in 1976 while employed by the appellant, when a metallic particle struck his left eye; and in 1978 he settled a claim under s 16 of the Workers Compensation Act 1926 in respect of a ten per cent loss of sight in the left eye (this settlement not involving a commutation under s 51). Subsequently he was employed by other employers, and in 1996 he ceased full-time work. Pursuant to a claim made on 29 July 1996, he was awarded weekly compensation from 1993, and a lump sum payment under s 66 of the 1987 Act in respect of a further forty per cent loss of sight of the left eye and for pain and suffering under s 67 of that Act. 29 The primary judge found that incapacity from the injury occurred in 1992 when the respondent was no longer able to carry out pre-injury employment; but that in respect of the claim for a lump sum payment under s 66 and s 67, the deemed date of injury was the date when the claim was made. The Court of Appeal upheld those findings. 30 However, the Court of Appeal noted (at [13]-[15]) s 15(3) and s 15(4) of the 1987 Act as having the effect that the additional loss of vision would itself be an injury within s 15; and the court accordingly held that the additional forty per cent loss of sight measured in 1996 was an injury which had not caused the incapacity which had occurred in 1992, and thus was deemed to have occurred when the claim was made in 1996. 31 I would comment that some of this additional forty per cent loss must presumably have occurred by 1992; but since not all of it had occurred by 1992, and since under s 15(3) and s 15(4) this total additional loss could be treated as a separate injury, it must be correct to say that the injury consisting of the total forty per cent additional loss could not have caused the 1992 incapacity. 32 On that analysis, Antaw does not support a proposition that s 15(1)(b) can in effect create an injury, simply by deeming an injury to have occurred on a particular date. 33 It could be contended that, if and insofar as permanent impairment from the worker's skin cancer has increased since 2000, this increase is a permanent impairment and thus an injury within s 15(4); and that this injury is deemed to have occurred on 12 July 2006. However, even if that is correct, in my opinion this additional injury would still fall within the category of injury by way of skin cancer, liability in respect of which was released in 2000. 34 Turning to the third question, it is true that "loss" within the earlier version of ss 65-67 is different from "permanent impairment" within the current version. However, in my opinion, so long as Division 3 and Division 4 of Part 3 of the Act cover the same general types of compensation, removal of liability under Division 4 as it existed in 2000 is effective to remove liability under Division 4 as it is following the 2001 amendments. In my opinion, it could not have been the intention of the Legislature, in changing Division 4, to deprive agreements having effect under s 51 of their efficacy in relation to removal of liability under Division 4.

CONCLUSION 35 For those reasons, in my opinion, the following orders should be made: Appeal dismissed with costs. 36 IPP JA: I agree. 37 HOEBEN J: I agree with Hodgson JA and the order he proposes. **********

08/08/2008 - para [8]: "1966" at the end of the second sentence changed to "1996"para [28]: second sentence after the colon the words "and he settled the" changed to "and in 1978 he settled a" and, the following words in parenthesis added at the end of the second sentence "(this settlement not involving a commutation under s 51)" para [30]: after the words "the 1987 Act" the comma is deleted and, after the words "additional forty per cent loss" the words "of sight" are insertedpara [31]: instead of the words "be treated as an injury" it now reads "be treated as a separate injury" - Paragraph(s) [8], [28], [30], [31]

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