Gomez-Soto v Unisure Pty Ltd

Workers Compensation Tribunal (SA)|2003-03-20

1 Various questions of law have been referred to the Full Bench of the Tribunal pursuant to s 94A of the Workers Rehabilitation and Compensation Act 1986 ("the Act").

2 They arise in connection with a judicial determination of a dispute between Enrique Gomez-Soto ("the worker") and Unisure Pty Ltd, for and on behalf of Flinders University of South Australia ("the employer").

4 The worker sustained a compensable disability in December 1992. He had become upset with procedures adopted by the University to deal with complaints that were made about him by students concerning his teaching and assessment of an examination set earlier that year. The disability was accepted as a psychological injury and as a result he came to be in receipt of weekly payments of income maintenance based on his notional weekly earnings that were set at $1110.16 per week.

5 On 2 December 1994 the employer sought to discontinue the worker's weekly payments of income maintenance on the ground that he had ceased to be incapacitated for work. The determination was based upon a medical opinion of a psychiatrist, Dr Alan Cotton. Pursuant to the dispute resolution procedure provided by the Act as it then was, the worker filed an application for a review of the employer's decision culminating in a hearing before a Review Officer.

6 After hearing evidence the Review Officer set aside the determination made by the employer and determined that the worker continued to be incapacitated for work.

7 At the conclusion of his reasons the Review Officer made this finding:-

"I find that the applicant [ie the worker] continues to suffer from a reactive anxiety and depressive state and that, on the balance of probabilities, his condition continues to incapacitate him for his normal duties."

8 The employer appealed the Review Officer's decision culminating in a hearing before the Workers Compensation Appeal Tribunal. After hearing submissions from the parties the Workers Compensation Appeal Tribunal set aside the Review Officer's decision and remitted the matter back to another Review Officer for hearing and determination. The worker appealed the decision of the Workers Compensation Appeal Tribunal to the Supreme Court which upheld the appeal and remitted the matter back to the Tribunal to deal with the outstanding grounds of appeal that had not been dealt with by its earlier decision. By consent, on 12 June 1997 the Workers Compensation Appeal Tribunal made an order dismissing the employer's appeal.

9 On 26 August 1996, shortly after the first decision of the Workers Compensation Appeal Tribunal and before the Supreme Court had heard the worker's appeal, the employer made a determination pursuant to s 42A(4) of the Act to make an interim assessment of the worker's loss of future earning capacity for a period of 12 months from 4 June 1996 to 3 June 1997.

10 At this point it is necessary for us to discuss the relevant terms of s 42A it being the provision pursuant to which the employer's determination was made. With respect, we adopt the analysis of this provision that was made by Lander J in Hill v Workers Rehabilitation and Compensation Corporation [1997] SASC 6178 at par 13 to 28 where he said:-

"Section 42A has a number of similarities to an assessment of damages for loss of future earning capacity at common law. The assessment requires a determination of the notional weekly earnings, less an estimation of income tax, which are then projected over the remainder of the worker's notional working life (s 42A (2)(a)). The projections referred to in s 42A (2)(a) are to be made on the basis of the rates of earnings current at the date of the assessment and without regard to the possibility of future changes in these rates, i.e. inflation is disregarded (s42A (3)(a)). The notional working life is the period over which the worker would have worked assuming that he or she had not been incapacitated, and that period has to be assessed having regard to the contingencies and vicissitudes of life that might in any event have prevented the worker from continuing in employment. The period will not, in any event, be taken to extend beyond the date on which weekly payments would have ceased to be payable upon retirement under s 35(5) of the Act (s 42A (3)(b)).

The capital loss is assessed by reference to a prescribed discount rate, which is prescribed by regulation 8AA(1) of the Workers Rehabilitation and Compensation (General) Regulations at 3 per cent (s 42A (2)(c)). The Act requires that the capital loss will be taken to be 80 per cent of the present value of the loss indicated by the projection of the notional weekly earnings over the worker's notional working life in the value of the money at the date of the assessment (s 42 (2)(c)).

Different considerations apply in relation to the assessment of the capital loss of the loss of future earning capacity when the worker has suffered a partial incapacity rather than total incapacity. Those considerations are matters relevant to someone who retains some future earning capacity albeit diminished.

Whilst the assessment of the capital loss under s 42A is carried out in much the same way as an assessment of loss of future earning capacity in common law claims, there are differences which are important. The major difference is, of course, the fact that the loss of future earning capacity in relation to a claim under the Act is fixed by statute at 80 per cent of the loss as assessed in accordance with the Act. However the assessment under the Act, like the assessment of damages at common law of a diminution in earning capacity, requires an evaluation of medical evidence and the facts and circumstances which bear upon a person's earning capacity and the exercise of that earning capacity.

It can be seen that s 42A assumes that there will be a continuing loss of future earning capacity, either partial or total. Indeed s 42A (1) prevents the assessment of such a capital loss unless the worker has suffered incapacity for work for a period exceeding two years prior to the assessment. The premise underlying the assessment is a total or partial loss of future earning capacity extending over the whole of the worker's notional working life.

The Corporation is not obliged to make a final assessment on the first occasion that it makes an assessment. The Corporation is entitled to make one or more interim assessments of loss as to nominated portions of the worker's notional working life before making a final assessment of loss (s 42A (4)).

That allows the Corporation to make interim assessments over whatever period the Corporation elects to make the assessment, and allows the Corporation to make an assessment over a shorter period of time so as, of course, to allow the Corporation to reconsider, in its next assessment, the extent of the incapacity and the effect of that incapacity upon the assessment of the capital loss for the worker's continuing loss of future earning capacity.

Section 42A (5) (5) allows for any assessment to be paid in a lump sum or, at the discretion of the Corporation, in instalments which are actuarially equivalent to that lump sum.

Section 42A (6) provides that where the Corporation pays or commences to pay compensation under s 42A, the worker ceases to be entitled to weekly payments under Division 4.

That subsection is consistent with the premises underlying s 42A itself. First, s 42A contemplates that a worker has suffered an incapacity for more than two years. Secondly it contemplates that the worker has suffered either a total or partial loss of earning capacity which will extend over the whole of the worker's notional working life. Thirdly it assumes that that loss of future earning capacity can be assessed in accordance with s 42A itself. Fourthly it assumes that an assessment will be made over the whole of the notional working life, although there may be interim assessments which will allow for interim payments. Therefore each interim and the final assessment will have regard to the worker's then circumstances.

In those circumstances it seems to me that, as the Corporation has recognised that the worker has suffered some diminution in his or her earning capacity over the whole of that worker's life, which is capable in the one assessment, or in assessments from time to time, of assessment by capital loss, then the capital loss whether paid in one or more lump sums, ought to be paid in substitution and satisfaction of any claim that that worker would have for weekly payments: Vlouhakis v WorkCover Corporation (1996) 185 LSJS 473; Calvaresi & Rota Forma Pty Ltd v Lawson & Lawson (1995) 184 LSJS 147.

The worker's entitlement to weekly payments ceases as soon as the worker receives an assessment under s 42A because the entitlement to the assessment of a capital loss is substituted for that previous entitlement to weekly payments. As soon as an assessment is made under s 42A the worker thereafter becomes entitled to have the worker's loss of future earning capacity assessed in accordance with s 42A and the worker continues to have that right throughout the whole of the worker's notional working life. The Corporation assumes a liability to continue to assess the loss of future earning capacity of the worker in accordance with s 42A until the end of the worker's notional working life.

At the time that the circumstances giving rise to this Appeal arose s 95 of the Act provided for a review procedure whereby persons affected by a decision of the Corporation could apply to the Corporation for a review of that decision.

Section 42A (9)is in the same form now as it was when the matter was before the Review Officer. It specifically provides for decisions which are not reviewable:

`(9) (1) The following decisions of the Corporation are not reviewable - (a) a decision of the Corporation to make or not to make an assessment under this section (but an assessment is reviewable); (b) a decision of the Corporation as to whether to make a final assessment or one or more interim assessments; (c) a decision of the Corporation as to whether to pay an amount assessed under this section in a single lump sum or in instalments and, if the Corporation decides to pay in instalments, the Corporation's decision as to the frequency of those instalments.'

A worker cannot seek a review of a decision of the Corporation to make or not to make an assessment under the section. That would prevent a worker seeking to argue by way of review that the worker's loss of future earning capacity should be assessed under s 42A, if the Corporation has otherwise decided that it will continue to pay weekly payments under s 35. I think the section also prevents a worker seeking a review of a decision by the Corporation not to make an assessment subsequent to an interim assessment. It was put that s 42A(9)(a) only prevents the review of the first assessment made by the Corporation. The subsection is not clear but I think, on balance, the subsection prevents a worker seeking a review of the decision to make an assessment at all or the failure to make any assessment whether it be the first interim assessment or any subsequent assessment.

I think that is so because the section contemplates, as I have already said, that once an assessment has been made that the Corporation must make further interim assessments and a final assessment to cover the whole of a worker's notional working life. In those circumstances there is no possibility that a worker will not receive the benefits of subsequent assessment to which the worker is entitled. It follows that there is no need for a review procedure in relation to the failure of the Corporation to make assessments subsequent to the first interim assessment..."

11 The employer's ´determination of 26 August 1996 identified the relevant suitable employment as being employment as a lecturer in Spanish (Lecturer Level B) and based upon that, it determined the worker's capital loss for the relevant period was $4254.22.

12 By Notice of Dispute filed on 4 September 1996 the worker disputed this determination. By this time the dispute resolution process provided for by the Act had changed and the matter now was referred, following an unsuccessful attempt to conciliate a settlement of the dispute to an Arbitration Officer. After hearing from the parties the Arbitration Officer upheld the worker's challenge on the ground that the determination was made at a time when the worker was not in receipt of weekly payments pursuant Div 3 Pt 4 of the Act and therefore the compensating authority was unable to comply with the provisions of s 42A. The correctness or otherwise of this decision is not a matter that we have been asked to consider.

13 On 20 November 1997 the employer made a further interim assessment indicating that the worker was suited for employment as a lecturer in Spanish at Level B and assessed his capital loss for the relevant period as being $4254.22. This determination was disputed by the worker and the matter ultimately came before an Arbitration Officer who on 12 May 1999 declared the determination null and void. This decision was considered by the Full Bench of the Tribunal who on 21 December 1999 held that in lodging a Notice of Dispute disputing the s 42A determination the worker necessarily accepted that a s 42 determination had been made. This is one of the matters that is presently before the learned Deputy President and is the subject of this referral.

14 Thereafter the respondent resolved to make a further interim assessment of the worker's loss of earning capacity pursuant to s 42A for the period from 4 June 1998 to 3 June 1999. By determination dated 3 June 1998, the employer determined that the worker was entitled to a capital loss payment for that period of $0.80. In arriving at this figure the employer identified suitable employment as comprising of lecturer in Spanish Level C. This determination was also the subject of a Notice of Dispute that is presently before the learned Deputy President and before us.

15 On 28 May 1999 the employer resolved to make a further interim assessment pursuant to s 42A for the period from 4 June 1999 to 3 June 2000. It again identified suitable employment as being lecturer in Spanish Lecturer Level C and determined the capital loss payment for the relevant period as $0.82. This was also the subject of a Notice of Dispute and is also one of the matters that is presently before the learned Deputy President and before us.

16 On 30 May 2000 the employer resolved to make a final assessment of the worker's loss of earning capacity pursuant to s 42A. The determination asserted to be for the period from 4 June 2000 to 15 November 2009, being the date upon which the worker will reach the age of 65 years. Based upon identified suitable employment as Senior Lecturer in Spanish the determination assessed the worker's capital loss for that period as being $30.17.

17 Underpinning the various determinations presently before the Tribunal is the employer's assertion that the worker has recovered from his previous incapacity for worker as a Spanish Lecturer and that he now has the capacity to perform that work, such that the calculation of his lump sum entitlements pursuant to s 42A should be based upon that premise.

18 The worker contends that for the employer to do so is unconscionable because its determinations in truth amount to no more than an assertion by it that the worker has ceased to be incapacitated for work and that it therefore comprises of no more than a crude attempt to revisit the determination made by the Review Officer on 5 September 1995, which although challenged by the employer, was ultimately not pursued.

19 The worker contends that it is within the inherent power of the Tribunal to strike these various determinations out on a basis that they constitute an abuse of process.

20 In our view there are a number of difficulties with these submissions.

21 The first is that by the lodgment of the various Notices of Dispute that the worker has filed he is presenting himself to the Tribunal as a person affected by a determination of the relevant compensating authority. Consistent with what fell from Walters and Wells JJ in R v Industrial Court (1975) 10 SASR 582 at 586, it seems to us to be an impermissible use of the process for the worker to now contend that the reviewable decisions that he now seeks to impugn are in effect nullities. See also Moody v WorkCover (unreported S5659 delivered 6 June 1996).

22 Secondly the worker seems to be seeking the equivalent of declaratory relief, declaring the determinations null and void. For reasons similar to those explained by the Full Supreme Court in Adelaide Assemblers Ltd v Kutos and Freeway Motors Ltd (1974) 9 SASR 102, we think that this is beyond the relief that the Act bestows upon the Tribunal, it being limited to the exercise of the jurisdiction that is conferred upon it by statute.

23 Thirdly, the worker seems to be asserting that the compensating authority should never have made these determinations. Whether that be right or not, it seems to us that through s 42A(9)(a) Parliament has expressly excluded such decisions from our review.

24 We now turn to consider the other arguments that were put forward by the parties.

25 In the course of the proceedings before the learned Deputy President the employer contended that the issue was not limited to a question simply as to whether or not the worker had a capacity to undertake employment as a lecturer in Spanish. It submitted that it was permissible for it to explore before the learned Deputy President other employment and that if it was found that employment as a lecturer was not suitable or that the worker did not have a reasonable prospect of obtaining such employment, that it was open for it to substitute some other employment and invite the learned Deputy President to make a finding as to some other capital loss representing the worker's future loss of earning capacity. In the alternative, it argued that should the learned Deputy President find that employment as a lecturer was not suitable or that the worker did not have a reasonable prospect of obtaining such employment, its determination should simply be set aside and that thereafter it would be able to make a fresh determination pursuant to s 42A.

26 The worker opposes this. He contends that the employer is bound by the terms of its determinations such that a consideration of other employment is irrelevant. Next, he says, that should it be found that employment as a lecturer in Spanish was not suitable employment or, that the worker did not have a reasonable prospect of obtaining such work, the Tribunal should simply substitute the determinations made by the employer with a determination that the worker is entitled to a capital loss payment based upon 80 per cent of his notional weekly earnings for the relevant periods.

27 In considering these arguments we think it helpful to contrast the terms of s 42A to the similar type of review that can lead to a discontinuance or reduction of weekly payments of income maintenance following the invocation of s 38 and s 36.

28 Under s 38 the Corporation is obliged to give details of the proposed review and to give the worker the opportunity to make written representations before any determination is made. Principles of natural justice compel a conclusion that a worker in such circumstances should not be obliged to face a substantially different case at trial than that which was the subject of the invitation to provide written representation.

29 Pursuant to s 42A there is no equivalent of this preliminary process that potentially enables the worker to influence the outcome of the review. No such notice is required when s 42A is invoked.

30 Moreover unlike a s 38 review that when disputed can lead to an order setting aside the determination on the grounds that it should not have been made, we do not think that such an order can be made in connection with s 42A. Once the compensating authority has elected to invoke s 42A, as Lander J explained in Hill, it is locked in.

31 Although the Act is silent on this, it would, in our view, be a surprising result if, in respect of a whole of working life s 42A determination, a worker was automatically entitled to have his or her capital loss assessed as if he or she was totally incapacitated for work, simply because it was found that the employment identified in the determination was not suitable employment or, that the worker did not have a reasonable prospect of obtaining such work. We think it more likely that parliament contemplated that the Tribunal could, if the evidence enabled it to do so, vary the terms of the determination, not for the period, but for the amount. In exercising that power, we would respectfully suggest that the approach taken by the Workers Compensation Tribunal in Hornhardt v WorkCover Corporation/HIH Workers Compensation (SA) Ltd (NTP Pty Ltd) [2000] SAWCT 157 as reflecting that which should apply in a case such as this. There at par 12, after reference to the decision of the Full Supreme Court in Della Flora v Workers Rehabilitation and Compensation Corporation (unreported S6691 delivered 26 May 1988), it was said:-

"As to the nature of the hearing itself, given the status of the disputed determination, it must be a hearing de novo at which the Tribunal must arrive at its own decision based upon the evidence presented to it and the law as it is at the time of the hearing. Thus, the Tribunal is not constrained by the grounds upon which the determination was made, nor is it limited in making its decision to the facts and evidence available at the time when the disputed determination was made. Subject to compliance with the rules of natural justice and subject to all relevant parties being given an ample opportunity to meet their opponent's case, the Tribunal is entitled to make such determination as is appropriate in the circumstances, having regard to the nature of the issue in dispute, the evidence presented to it, and the law as it is at the time of the making of its determination."

32 In other words, it is for the Tribunal to determine for itself what the proper calculation of the capital loss should be, having regard to the evidence before it. That may, in an appropriate case, lead to an amount that is different to that stipulated by the compensating authority in its determination.

33 Accordingly, we think it was permissible for the employer to make an application to the learned Deputy President to introduce evidence of other occupations that the worker might be suited to perform. It is a matter for the learned Deputy President to determine whether, and upon what terms, that evidence can be introduced.

34 The final issue that we have been asked to rule upon is whether in the hearing of a dispute arising out of the determination pursuant to s 42A of the Act it is permissible for a compensating authority to assert that in fact the worker is no longer incapacitated for work as a result of the previously accepted compensable disability.

35 In our view, the answer to this question lies in the terms of s 42A itself. As we have just noted, it seems to us that having elected to invoke s 42A, the compensating authority is taken to accept that the worker will suffer a loss of future earning capacity for the duration of his working life. After all, in making that assessment the compensating authority is required to project the loss over that period. Lander J makes that point in Hill. Thus, whilst it is open for a compensating authority, through making various interim assessments to reflect upon changes in the level of the worker's incapacity for work, and to adjust its assessment of the capital loss for the relevant period accordingly, it is not, in our view, permissible for it to assert that the incapacity for work has ceased altogether.

36 Accordingly we would answer the questions that have been posed for our consideration thus:-

1 Is it permissible in the hearing of a dispute arising out of a determination made pursuant to s 42A of the Act for the compensating authority to assert that the worker is no longer incapacitated for work as a result of a previously accepted compensable disability?

2 If not, does the Tribunal possess the jurisdiction to enquire into the reasons underpinning a decision to invoke s 42A including the level of incapacity?

3 If so, is it permissible for a compensating authority to make a determination pursuant to s 42A if the reasoning underpinning its decision to do so is a belief that the worker has ceased to be incapacitated for work as a result of the previously accepted compensable disability? Or if the reasoning underpinning its decision to do so is a belief that the work has ceased to be incapacitated for work in the occupation he pursued prior to his compensable disability?

4 If not, is the worker entitled to an order for summary judgment or some other order (and if so what) as a result thereof, on the basis that the determination is an abuse of process, or for some other and if so what reason?

5 Is it permissible in the hearing of a dispute arising out of a determination made pursuant to s 42A of the Act for the compensating authority to assert that employment other than that employment stipulated in that determination is suitable employment that the worker has a reasonable prospect of obtaining and if so, is it permissible in this case?

Answer: It is permissible for the compensating authority to assert that employment other than employment stipulated in the determination is suitable employment but whether it is permissible in this case is a matter for the learned Deputy President to determine having regard to the rules of natural justice and the worker being given an ample opportunity to meet the employer's case.

6 If not, and if it is determined that the employment stipulated in a relevant determination is not suitable employment or that the worker does not have a reasonable prospect of obtaining such employment:

(a) Is the worker automatically entitled to the capitalised value of 80 per cent of his notional weekly earnings? or

(b) Is it permissible for the Tribunal to arrive at some other figure? or

(c) Is it permissible for the compensating authority to make some other determination should the relevant determination be set aside?

The answers to these questions in part depends upon the evidence presented at trial and the findings made by the learned Deputy President.

(a) If the learned Deputy President found that the employment stipulated in the determination was not suitable employment or that the worker did not have a reasonable prospect of obtaining such employment and either did not permit the employer to call evidence of other forms of alleged suitable employment or having done so found that such other employment was also not suitable employment or that the worker did not have a reasonable prospect of obtaining such employment the learned Deputy President would have no findings to support the subtraction provided for by s42A(2)(b) such that the capital loss would be assessed as 80 per cent of the present value of the worker's notional weekly earnings less an estimation of income tax.

(b) If the learned Deputy President found that the employment stipulated in the determination was not suitable employment or that the worker did not have a reasonable prospect of obtaining such employment and permitted the employer to call evidence of other forms of alleged suitable employment and having done so found that such other employment was suitable employment that the worker had a reasonable prospect of obtaining the learned Deputy President would have findings to support the subtraction provided for by s42A(2)(b) such that the capital loss would be assessed as 80 per cent of the present value of the worker's notional weekly earnings less an estimation of income tax minus the amount the worker could earn from such employment less an estimation of income tax.

(c) Once a s42A determination has been disputed it is for the Tribunal, not the compensating authority to determine what the appropriate assessment for the period stipulated should be. We therefore answer to this part of the question : No.

7 Is it permissible in the hearing of a dispute arising out of a determination made pursuant to s 42A of the Act for the parties to adduce and/or rely on evidence of facts that occurred after the date upon which the relevant determination was made?

8 Is it permissible in the hearing of a dispute arising out of a determination made pursuant to s 42 of the Act for the parties to adduce and/or rely on evidence that was obtained after the date upon which the relevant determination was made?

9 Where the worker is receiving weekly payments equal to notional weekly earnings in accordance with s 35 of the Act on the basis of total incapacity for work, is it permissible for the compensating authority to make a determination pursuant to s 42A on the basis that the worker is partially incapacitated for work.

(b) Without first conducting a review of weekly payments in accordance with s 38 of the Act?

10 If the compensating authority is limited to the allegations made in the assessment pursuant to s 42A is the worker similarly limited to allegations made in disputing the assessment as set out in the Notice of Dispute.

Rehabilitation and Compensation Act 1986

At a glance

Court

Decision date

Source

Judgment (74 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)