Workers Rehabilitation and Compensation Act 1988 (Tas), ss25(1), 81A(2) - (3).

State of South Australia v Wall (1980) 24 SASR 189; Edgell Birds-Eye v Costello B4/1995; FAI General Insurance Company Limited & Anor v De Saye A23/1992, followed.

Judgment Number: [2001] TASSC 126

1 The respondent made a claim for compensation pursuant to the Workers Rehabilitation and Compensation Act 1988 ("the Act") on 3 April 2001. He claimed that the injury or condition had occurred "since starting at Incat, have had various ear infections, due to earmuff" and that the nature of the "injury or disease" was "infection" which had occurred in the "ears (both)". The accompanying medical certificate stated that the symptoms were "- tinitus (sic) - Discharging ears" and the provisional diagnosis to be "Otitis Externa" which had occurred under the circumstances that the worker "Has only had recurrent otitis externa since commencing work at INCAT & wearing ear muffs".

The past history question was answered "recurrent otitis externa since commencing employment at INCAT".

2 The claim for compensation was disputed by the appellant in accordance with the provisions of the Act, s81A. The employer did not seek to use a right of referral afforded by the Act, s81AA, but stated the reason to be:

"There is no sufficient evidence to substantiate that your injury arose out of and in the course of your employment."

No criticism is made of the form of objection or procedures required by the legislation.

3 On 1 May 2001, the medical practitioner who had treated the respondent and signed the original certificate reported to the appellant's insurer in terms which included:

"Craig has had recurrent otitis externa since commencing work at Incat 27 months ago. He had no problems prior to this and the wearing of ear muffs may be a significant aetiological factor."

4 The disputation was referred for hearing in accordance with the Act, s81A(1)(d). On 24 May 2001, the day preceding the hearing, the respondent's solicitors delivered a proof of the certifying medical practitioner. The proof sought to explain the opinion expressed in the report of 1 May in the following terms:

"I have been contacted by Mr Lockett's solicitor, who indicated to me that the insurer and employer were disputing Mr Lockett's claim for compensation due to the opinion I expressed that 'he had no problems prior to this and the wearing of ear muffs may be a significant aetiological factor'.

The worker's solicitor has explained to me that the Tribunal will be concerned to know whether in my opinion the otitis externa suffered by Mr Lockett was more likely than not caused or substantially caused by his work.

It is my opinion that Mr Lockett's work is the most likely cause of the otitis externa suffered by him. At the time of writing the report of the 1st of May, 2001, I did not appreciate precisely what the Tribunal would be concerned to know and hence did not address this specifically. I now understand that the last paragraph of my report of the 1st of May, 2001 is problematic in a legal context and I am desirous of clarifying my views and hence do so."

Notwithstanding the late delivery of the proof, the appellant did not attempt to have the hearing adjourned.

5 At the hearing counsel for the appellant advanced two bases in support of the contention that there existed a "genuine dispute ... concerning ... liability" (the Act, s81A(3)(c)), namely:

(1) that the inconsistency apparent in the report of 1 May and the proof delivered on 24 May, required a further hearing;

(2) the material, on any approach, permitted a finding that the condition "otitis externa" had pre-existed the employment of the respondent.

6 In support of those contentions the appellant relied upon the difference between the two reports and called evidence from Rowan House, the Rehabilitation Co-ordinator of the appellant, to the effect that:

(1) the respondent commenced work at the appellant's premises in January 1999, but with a different employer;

(2) prior to his employment with the appellant in August 1999, the respondent had been medically examined and had made certain answers during the course of that examination; and

(3) it had been a requirement of employment at the appellant's premises, irrespective of the relationship with the employer, that the respondent "wear ear muffs".

7 A reasonable inference from that evidence is that:

(1) the respondent had contracted an infection described medically as otitis externa;

(2) the infection had commenced at some time while the respondent had worked at the appellant's premises;

(3) the infection had been contracted through the use of ear muffs;

(4) the existence of the infection, if caused by the use of "ear muffs", pre-dated the employment of the respondent by the appellant.

8 The appellant was required to prove the existence of a "genuine dispute". The test for that requirement was stated by the Full Court of the Supreme Court of South Australia in State of South Australia v Wall (1980) 24 SASR 189, a decision concerning a similar or comparable legislative term and approved of in this jurisdiction in FAI General Insurance Company Limited & Anor v De Saye A23/1992 and Edgell Birds-Eye v Costello B4/1995. The test stated in State of South Australia v Wall (supra), was explained by Cox J at 194 in the following terms:

"Bearing in mind the policy of subs(2), there is every good reason, in my opinion, for giving the words 'genuine dispute' a plain and uncomplicated meaning, and not reading into them more than the language of the sub-section will reasonably bear. Requiring the Court to be satisfied that the dispute is a genuine one is a safeguard against allowing a colourable and insincere denial of liability to frustrate the policy underlying subs(1). A less legitimate reason, however, for making things more difficult for the employer has been the interpreting of par(b) of subs(2) so as to require what has been called an 'objective' appraisal of the dispute by the Court with the result that an employer who genuinely disputes his liability might well be told that, notwithstanding his attitude, in the opinion of the Court a genuine dispute about liability does not exist. This kind of thinking has led the Court on occasions to make its own appraisal of the merits of the employer's case, whether as to the law or the facts, in order to determine whether they are sufficient to constitute a dispute within the meaning of the paragraph. No doubt a patently feeble legal argument, or an assertion of facts unsupported by evidence, would more readily disincline the Court to consider the dispute to be a genuine one, so far as the employer is concerned. Otherwise I should not expect the merits of the employer's denial to have any bearing upon the question before the Court. A right to make an application under subs(2) is given to an employer 'who disputes his liability to pay compensation' and, apart from the introduction of the requirement of genuineness, I cannot think that there is any conceptual difference between the criterion upon which the employer may make his application under subs(2), and the criterion by which the Court will in due course determine it under subs(3). In short, if an employer disputes his liability, it follows that, except in the unlikely event of the worker abandoning his claim, a dispute will necessarily exist. So far as the nature of the dispute itself is concerned, it seems to me to require no more than a challenge or contest to the assertion of liability that the worker has made under subs(1). Again, it must not be a frivolous dispute, or one made without adequate inquiry and consideration, or it will run the risk of not being considered by the Court to be genuine, but otherwise the section, in my opinion, does not look beyond the employer's declared attitude.

Taking this view of s53, I am unable to agree with those members of the Industrial Court who have said or implied that an employer's application under subs(2) will inevitably fail if it is not supported by independently obtained evidence. No doubt in many cases the Court would decline to regard the dispute about liability as genuine if it were not the result of reasonable inquiries into the claim including, if appropriate, a medical examination of the worker. Reasonable, of course, does not mean exhaustive. It is to be noted that where a claim is arguable, or where there may simply be inadequate evidence to support it, the employer must move quickly if he is to avoid the risk of making unjustified but irrecoverable weekly payments."

The Tribunal determined that it was not satisfied as to the existence of a "genuine dispute" on the basis of material before it.

9 The ultimate question for the Tribunal had been defined by the Act, s25(1), which states:

(a) a worker suffers an injury, not being a disease, arising out of and in the course of his employment; or

(b) a worker suffers an injury, which is a disease, arising out of and in the course of his employment and to which his employment contributed to a substantial degree within the meaning of section 3(2A),

his employer is, except as is otherwise provided by this Act, liable to pay compensation in accordance with this Act ...".

Issues which the Tribunal would ultimately have been required to determine were:

(1) Was the condition suffered by the respondent an injury or a disease?

(2) Did the condition arise out of, and in the course of, employment?

(3) If the condition was a disease, had the employment contributed to its existence "to a substantial degree"?

10 In relation to the appellant's first reason for contending that a genuine dispute existed, namely, inconsistency within the medical evidence, the Tribunal concluded that there was no inconsistency since:

"Any doubt as to the certifying doctor's opinion as to causation has been over come by the proof of evidence. Given the terms in which the proof of evidence is expressed it ought be given precedence."

It is not necessary, for the purpose of this appeal, to decide whether the Tribunal was entitled to resolve the inconsistency in its consideration of whether there existed a "genuine dispute".

As to the issue of whether the condition had arisen during the course of employment, the employer had placed before the Tribunal a document which recorded the results of a medical examination of the worker conducted in August 1999 before the commencement of employment. That report indicated the existence of "red & inflamed canal - uses cotton buds" in both ears.

11 The Tribunal dealt with this issue in the following manner:

"Accordingly the existence of an indication of the disease (although not to incapacitating degree) affecting the worker's ears in or about August 1999 is clearly explainable on the basis of the requirement to wear ear muffs at the work site prior to that date. It is also consistent with the history given by the certifying doctor in her report of 1st May 2001 that there had been recurrent outbreaks of the disease since commencing at the employer '27 months ago' which aligns closely with the worker's commencement at that work site."

12 That conclusion was incorrect in fact and wrong in law. The evidence was that the respondent had commenced employment with the appellant in August 1999. He had been employed by a different employer at the same work site since January 1999. The evidence of the appellant's Rehabilitation Co-ordinator was that from January 1999, the respondent had been required to wear "ear muffs" whilst on the site. That period coincided with the history given by the respondent to his medical practitioner, and the existence of a condition before the respondent commenced employment with the appellant. On any view of the evidence it was possible that the condition existed before employment with the appellant. The evidence raised the question of whether the condition arose "out of and in the course of ... employment."

The evidence raised another issue of whether the condition amounted to "an injury, which is a disease", in which case a further issue was whether it was a condition "to which ... employment contributed to a substantial degree".

13 On the test applied by the Tribunal, the conclusion was wrong. If that test was either that the employer had to show a strong prima facie or "arguable" case, or that a claimed "deterioration of a condition giving symptoms to a disabling extent that is the relevant injury (disease) for consideration", the Tribunal's approach was contrary to the principles adopted in this jurisdiction (FAI General Insurance Company Limited & Anor v De Saye (supra) and Edgell Birds-Eye v Costello (supra). Reference by the Tribunal to the case of Pasminco Australia Ltd v Fairchild 57/1991, did not provide any authority for the conclusion reached by the Tribunal.

14 Grounds 1, 2 and 3 of the notice of appeal are upheld. It is not necessary to decide ground 4.

The evidence permits me to substitute a finding in accordance with the Act, s81A(3)(c) and (d). It is to the advantage of both parties that such an order be made so that the respondent, in accordance with the Act, s42, can have his claim determined on its merits.

15 The order of the Tribunal is quashed and in substitution thereof, a determination made that there exists a genuine dispute pursuant to the Act, s81A(3)(c) and (d) in the following terms:

(1) The Tribunal considers that a genuine dispute exists concerning the liability of the employer to pay compensation by way of weekly payments and determines that compensation is not to be paid by the employer; and

(2) The Tribunal considers that a genuine dispute exists concerning the liability of the employer to pay the cost of any benefits payable under Division 2 of Part VI in respect of the injury to the worker and determines that the cost of the benefits is not to be paid by the employer.