Lennon v TNT Australia Pty Ltd

Judgment 1BASTEN JA: The applicant, Mr Robert Lennon, has been employed as a driver by TNT Australia Pty Ltd ("TNT") for some 15 years. During the course of that employment he was exposed to loud noise and now suffers a binaural hearing loss, which constitutes a permanent impairment. 2On 24 March 2011 the applicant made a claim for lump sum compensation under the Workers Compensation Act 1987 (NSW) ("the 1987 State Act"). The claim was resisted on the basis that from 1 July 2008 TNT had been licensed under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Commonwealth Act") to make compensation payments in accordance with the scheme provided by the Commonwealth Act. An application was made to the Workers Compensation Commission (NSW) to resolve the dispute. The President, acting pursuant to s 351 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the Workplace Injury Act"), accepted a question of law for determination as a preliminary issue. 3The question was identified in the proceedings before the President of the Commission as follows: "Whether by operation of s 17(1)(a)(i) of the Workers Compensation Act 1987 (the 1987 Act), the applicant's binaural hearing loss is deemed to have occurred on 30 June 2008 when the employer ceased to be insured under the New South Wales Workers Compensation Acts or on 24 March 2011 when the claim for compensation was made, at which time the employer was insured under the Safety, Rehabilitation and Compensation Act 1988 (Cth)." 4In Lennon v TNT Australia Pty Ltd [2012] NSWWCCPD 18, delivered on 30 March 2012, the President answered the question as follows: "By operation of s 17(1)(a)(i) of the Workers Compensation Act 1987, the applicant's binaural hearing loss is deemed to have happened on 24 March 2011, when the claim for compensation was made." 5The present appeal is brought from the answer to that question. The decision being interlocutory, the applicant required leave to appeal: Workplace Injury Act, s 353(4). For the reasons accepted by the President as warranting determination of the question as a preliminary issue in the Commission, and because there are arguable grounds to challenge the correctness of the reasoning in the Commission, a grant of leave is appropriate. It appears to have been assumed that the effect of the answer was that no claim was available under the 1987 State Act. Whether or not that is so, no order has yet been made dismissing the claim. It would have been preferable had the question been formulated in a way which allowed final orders to be made in the event that the question was so answered. 6The question was, however, misconceived for another reason. The formulation of the question no doubt led the President to deal with the matter under the 1987 State Act. Yet it is not in dispute that the applicant is entitled to the compensation claimed under the 1987 State Act, unless that Act is inoperative because inconsistent with a Commonwealth law, pursuant to s 109 of the Constitution. The answer to that question will depend primarily on the scope and operation of the Commonwealth Act. 7The Commonwealth Act provides for workers' compensation for Commonwealth employees, but also allows corporations in competition with Commonwealth authorities or former Commonwealth authorities to enjoy the same conditions in respect of workers compensation as their competitors: Attorney-General (Vic) v Andrews [2007] HCA 9, 230 CLR 369 at [33]-[42]. The liability of TNT under the Commonwealth law depends on the terms of the licence and the terms of the Commonwealth Act. The power to grant licences is vested in the Safety, Rehabilitation and Compensation Commission, established under s 89A of the Commonwealth Act, and is contained in ss 103 and 104. The importance of the terms of the licence flows from s 108(3), which permits the Commission to grant a licence by which the licensee accepts liability in respect of an injury to an employee "occurring at a time before the licence came into force": s 108(1) and s 108A(1). 8The licence was not tendered before the Commission, but it is a public document and a copy, extracted from the Commonwealth of Australia Gazette of 25 June 2008, was provided to the Court by consent. The critical provision, identified in cl 4, authorised the licensee to accept liability in respect of all injuries of any employees of a licensee "where such injuries ... occur within the period of this licence". The licence was expressed to operate for a period of two years from 1 July 2008 until 30 June 2010, but again by agreement of the parties, the Court was invited to assume that the licence has remained in force, pursuant to renewals on similar terms. 9On the basis that the licence covered the kind of injury suffered by the applicant and covered the applicant as an employee of TNT, the critical provisions of the Commonwealth Act were to be found in s 108A, and read as follows: 108A The consequences of a licensee's authorisation to accept liability (1) If: (a) a licensee is authorised to accept liability to pay compensation and other amounts under this Act in respect of particular injury, loss or damage suffered by, or in respect of the death of, some or all of its employees; and (b) such injury, loss, damage or death occurs; then: (c) the licensee is liable to pay compensation and other amounts under this Act in respect of that injury, loss, damage or death; and (d) Comcare is not liable to pay compensation or other amounts under this Act in respect of that injury, loss, damage or death. ... (7) If a licensee who is a corporation is authorised to accept liability to pay compensation and other amounts under this Act in respect of a particular injury, loss or damage suffered by, or in respect of the death of, some or all of its employees after the licence comes into force then: (a) no law of a State or Territory relating to workers compensation applies to a licensee in respect of such injury, loss, damage or death; and (b) any liability or obligation of the corporation under a law of a State or Territory in respect of such injury, loss or damage suffered, or death occurring, before the licence came into force is unaffected. 10The references to "loss or damage" can be ignored; in relation to compensation payments, the Act uses these terms to refer primarily to property damage: ss 14 and 15. The first question raised by s 108A(1)(b) is when the injury "occurs" for the purposes of the Commonwealth Act. Injury includes a "disease": s 5A. "Disease" is defined: 5B Definition of disease (1) In this Act: disease means: (a) an ailment suffered by an employee; or (b) an aggravation of such an ailment; that was contributed to, to a significant degree, by the employee's employment by ... a licensee. 11"Ailment" is defined to mean "any physical or mental ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development)": s 4(1), ailment. The time at which an employee sustains an injury, being a disease, is dealt with in s 7: 7 Provisions relating to diseases ... (4) For the purposes of this Act, an employee shall be taken to have sustained an injury, being a disease, or an aggravation of a disease, on the day when: (a) the employee first sought medical treatment for the disease, or aggravation; or (b) the disease or aggravation resulted in the death of the employee or first resulted in the incapacity for work, or impairment of the employee; whichever happens first. 12It is clear that the hearing loss has not resulted in the applicant's death or incapacity for work; accordingly the date on which the injury was sustained must be either the date when the applicant first sought medical treatment for his hearing loss or the date of the "impairment", whichever happened first. The evidence as to the application of s 7(4) of the Commonwealth Act was limited. A statement made by the applicant dated 5 July 2010 said that he "first noticed [his] hearing loss a couple of years ago": paragraph 14. There was also evidence of an assessment of permanent impairment undertaken on 1 March 2011. No finding has been made (or could satisfactorily be made absent evidence directly addressing the issues) as to when either of these events occurred. Accordingly, the Court must proceed on the basis of contingencies. 13Section 108A(7) adopts different language from that used in s 7(4): it provides that no State law relating to workers compensation applies to a licensee in respect of an injury "suffered by" its employees after the licence comes into force. There being no submission to the contrary, the Court should assume that references in the Commonwealth Act to an injury occurring, being sustained or being suffered all convey the same meaning. 14There was a difference of view as to the proper construction of s 108A(7). Counsel for the Attorney General for New South Wales submitted that the phrase at the end of the chapeau, "after the licence comes into force" applied to the time at which the licensee was authorised to accept liability to pay compensation (and thus came under an obligation to pay it), without backdating under s 108(3). That is an awkward reading of the language, suggesting that the words "after the licence comes into force" should have followed immediately upon the words of obligation to pay amounts "under this Act". The alternative construction is that the temporal clause applies to the time the injury is suffered. As s 108(3) permits liability to extend to injury occurring before the licence came into force, on any view the latter construction is preferable. 15It would follow that a similar construction should apply to the temporal clause "before the licence came into force" at the end of paragraph (b). Not only does that clause follow immediately upon the reference to injuries suffered, but, if it were intended to qualify the liability or obligation of the corporation under State law, it would be necessary to insert the words "which arose" before the temporal clause, in order to give it grammatical effect. The preferable reading is that paragraph (b) refers to an injury which was suffered before the licence came into force. 16As a separate element of the construction of s 108A(7), the phrase "such injury" in each of paragraphs (a) and (b) must refer back to the kind of injuries covered by the licence, as identified in the chapeau, without picking up the temporal clause "after the licence comes into force". 17If, by application of the Commonwealth Act, the injury occurred after the licence took effect on 1 July 2008, the State Act did not apply: s 108A(7)(a). If the injury had, by application of the Commonwealth Act, arisen before the licence came into force, then that Act would not apply to it: that is, s 108A(1) and (7) read together do not envisage a licence applying except in respect of an injury suffered after it comes into force. 18However, if the Commonwealth Act did not apply, it would not be inconsistent with a State Act. Because the tests under s 7(4) of the Commonwealth Act and 17(1) of the 1987 State Act differ, a single injury of gradual onset could be taken to have occurred at different dates under each provision. If, for the purposes of the Commonwealth Act, the applicant first sought medical treatment for his hearing loss or the impairment arose before the date of the licence, the Commonwealth Act would not apply to that injury. According to the President, under the State Act the applicant's loss was deemed to have happened on 24 March 2011, when the claim for compensation was made. If that were correct, the State Act applied in its terms, and TNT was an employer subject to liability under the State Act, regardless of the existence of the Commonwealth licence. Because the State and Commonwealth Acts must each be applied in its own terms, the result is not anomalous. 19The opposite disparity could also arise; that is, the Commonwealth law might determine that the injury occurred after the licence came into force, but under the State law an entitlement may have arisen prior to the licence coming into force, thus creating a liability in the employer under the State law, preserved by s 108A(7)(b). Double compensation is avoided in such circumstances by the Commonwealth Act withdrawing its benefits: s 118(1).

Liability under State law 20There remains a question as to whether the respondent had incurred a liability under the 1987 State Act prior to the licence coming into force. That depends on the operation of s 17(1) of the State Act. The applicant had claimed a benefit under s 66 which provides that "[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" [emphasis added]. 21The right to compensation under s 66 of the 1987 State Act accrues at the time of injury: Bresmac Pty Ltd v Starr (1992) 29 NSWLR 318 at 327, Priestley JA (Handley and Sheller JJA agreeing); TNT Australia Pty Ltd v Horne (1995) 36 NSWLR 630; Perrott v Crisp [1999] NSWCA 239. The form of the relevant provisions has changed, but the approach adopted by this Court has not: Speirs v Industrial Relations Commission (NSW) [2011] NSWCA 206; 81 NSWLR 348, at [85] (Giles JA; Allsop P and Hodgson JA agreeing). 22It follows that a right to compensation, with a correlative "liability" in TNT, arose when the injury occurred, although quantification of the amount payable depended on agreement or an award of the Commission. 23The date of the injury is to be determined under s 17(1)(a) of the 1987 State Act, which provides: 17 Loss of hearing-special provisions (1) If an injury is a loss, or further loss, of hearing which is of such a nature as to be caused by a gradual process, the following provisions have effect: (a) for the purposes of this Act, the injury shall be deemed to have happened: (i) where the worker was, at the time when he or she gave notice of the injury, employed in an employment to the nature of which the injury was due-at the time when the notice was given, or (ii) where the worker was not so employed at the time when he or she gave notice of the injury-on the last day on which the worker was employed in an employment to the nature of which the injury was due before he or she gave the notice. 24The applicant argued before the Commission that his "employment" changed when TNT obtained a licence under the Commonwealth Act. Accordingly, he submitted, the hearing loss was deemed to have occurred under sub-paragraph (ii) on the last day on which he was employed by TNT before it obtained its licence under the Commonwealth Act, namely 30 June 2008. 25The President rejected the applicant's submissions. He concluded that the term "employment" did not depend on whether the employment was covered by the 1987 State Act, but on the physical nature of the employment: Reasons [116]. 26The applicant's submissions proceeded by analogy with, or extension from, two decisions of this Court. In Russo v World Services and Constructions Pty Ltd [1979] 1 NSWLR 330, Mr Russo, like the applicant in the present case, suffered industrial hearing loss. For a period of some five years he was employed by the respondent company and thereafter for a further three years by the Commonwealth Navy. He obtained compensation under Commonwealth law for the aggravation of his deafness after the commencement of his employment with the Navy. The case concerned the liability of the former employer under State law. 27The case arose under the predecessor to the current State Act, namely the Workers' Compensation Act 1926 (NSW) ("the 1926 Act"). The legislation was not in the same form as s 17, but s 7(4) and s 16(1A) had equivalent effects. Thus, in respect of a disease contracted by a gradual process, the former provision stated that "compensation shall be payable by the employer in whose employment the worker is or who last employed the worker". The latter section deemed the injury to have occurred when the claim was made. 28Mr Russo made his claim whilst employed by the Commonwealth: World Services argued that it did not then employ the worker nor was it the person who last employed the worker. 29In this Court, Hope JA (with whom Hutley and Mahoney JJA agreed) noted that the 1926 Act applied to workers employed by or under the Crown, but construed the section as applying only to the Crown in right of New South Wales so that, on its proper construction, the term "employer" in s 7(4) did not include the Commonwealth: p 333C. In that event, the worker had no "employer" within the meaning of s 7 at the date of the application and the company was the last employer and the Commission had properly held the company liable. 30The respondent contended that Russo had no application in the present circumstances, as there had been no change in the applicant's employer, nor had TNT become the Commonwealth. Accordingly, the State Act should not be construed so that the reference to "employment" in s 17(1) did not extend to employment by TNT after it obtained the licence under the Commonwealth Act. It submitted that the applicant had at all times been, and remained, "in an employment to the nature of which the injury was due" and the injury therefore happened at the time when the notice was given. 31The second authority in this Court relied on by the applicant was A & G Engineering Pty Ltd v Civitarese (1996) 41 NSWLR 41. The facts in that case involved, relevantly for present purposes, two periods of noisy employment, the latter being in the Northern Territory. It was common ground that the State Act did not apply in respect of employment in the Territory: Mynott v Barnard [1939] HCA 13; 62 CLR 68, referred to in A & G Engineering at 44. The applicant was the last employer in New South Wales with whom the respondent had worked in noisy conditions. The judgment of Beazley JA (with whom Handley and Sheller JJA agreed) continued: "That being so, s 17 operates so as to make the appellant the last employer. In other words, the appellant is the last employer to whom the legislation applies and is thus liable to pay compensation. This construction of s 17 is confirmed by this Court's decision in Russo.... In that case, the Commonwealth was the last noisy employer and the respondent the noisy employer before that. It was held that, as the Commonwealth was not bound by the provisions of the New South Wales legislation, the respondent was the last noisy employer for the purposes of s 17 and thereby liable to pay compensation." 32The argument for the applicant was that, although there was no change of employer in the present case, TNT changed from being an employer which was covered by the State Act, to one which was not. Accordingly, the reasoning in Russo and A & G Engineering should apply on the basis that the applicant had no "employer" for the purposes of the 1987 State Act after 30 June 2008 and hence at the time he gave notice of his claim. 33Section 17(1)(a), set out at [23] above, does not focus on the "employer" but on "an employment", to be characterised according to the injury; the purpose of par (a) is to identify the time of the injury. However, s 17(1) read as a whole has three purposes in relation to an injury caused by a gradual process, namely: (a) to identify the time at which the injury is taken to have occurred; (b) to identify the person responsible for paying compensation, and (c) to make provision for contribution by other employers. 34The third purpose can be put to one side as not relevant to the construction of the section or the issue in the present case. The second purpose is revealed in s 17(1)(c): (c) compensation is payable by: (i) where the worker was employed by an employer in an employment to the nature of which the injury was due at the time he or she gave notice of the injury-that employer, or (ii) where the worker was not so employed-the last employer by whom the worker was employed in an employment to the nature of which the injury was due before he or she gave the notice .... 35The term "employer" is defined in s 4(1) of the Workplace Injury Act in terms which apply equally to the 1987 State Act (see s 2A of the latter Act): employer includes: (a) the legal personal representative of a deceased employer, or (b) a government employer, or (c) a former employer. Without limiting the meaning of the expression, an employer can be an individual, a corporation, a firm, an unincorporated body of persons, a government agency or the Crown. 36The effect of Russo and A & G Engineering is that the term "employer" does not extend to the Crown in right of the Commonwealth or employers in other law areas within or outside Australia. Because TNT was, from 1 July 2008, no longer an employer to which the obligations of the Act attached, the applicant thereafter did not have an employer for the purposes of the Act. Accordingly, applying the reasoning in those authorities, TNT was liable, not as the worker's employer at the time of giving notice, but as the last employer by whom the worker was employed in relevant employment, before he or she gave notice: s 17(1)(c)(ii). If that is the correct construction of s 17(1)(c), consistency requires that a similar reading be given to paragraph (a), so that the injury was deemed to have happened on the last day on which the worker was employed in a relevant employment before he or she gave notice, which was 30 June 2008. 37One of the arguments which found favour in Russo turned on the operation of s 14A of the Interpretation Act 1897 (NSW), now to be found in s 31 of the Interpretation Act 1987 (NSW). That section requires that an Act "shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of the Parliament". The section then provides that if any provision "would, but for this section, be construed as being in excess of the legislative power of Parliament ... it shall be a valid provision to the extent to which it is not in excess of that power": s 31(2)(a). Thus, in Russo, the obligation so to construe the 1926 Act led to the term "employer" being read as excluding the Commonwealth, even if it were otherwise capable of including the Commonwealth. 38The analogous argument in the present case, which was not fully developed, was that, by virtue of s 31(2)(a), immediately the employer obtained the grant of a licence under the Commonwealth Act it would cease to be an "employer" within the meaning of that term in the 1987 State Act. 39That conclusion must be assessed in the light of the reasoning of the High Court in Telstra Corporation Ltd v Worthing [1999] HCA 12; 197 CLR 61. Mr Worthing had worked for the Australian Telecommunications Commission (at which time he had suffered two injuries to his back) and for Telstra, at which time he had suffered a further injury to his back. The Commission did not exercise the executive power of the Commonwealth, although it would have been liable to suit under s 75(iii) of the Constitution as the Commonwealth or a person being sued on behalf of the Commonwealth: at [15]. The Court accepted that there was nothing in either the 1926 Act or the 1987 State Act which precluded the expression "employer" referring to either the Commission or Telstra, as persons or bodies which employed people: at [17]. Telstra held a licence under the Commonwealth Act, but neither it nor the Commonwealth Attorney submitted that, with respect to the injury suffered whilst Mr Worthing was employed by Telstra, "Telstra was other than an employer within the meaning of the 1987 State Act": at [26]. In respect of each injury, the Court held that the State Act was inoperative by reason of s 109 of the Constitution.

Conclusions 40To construe the 1987 State Act in the present case as not covering employment in respect of which the State Act was inoperative by reason of the operation of s 109 and the Commonwealth Act, would be to adopt a construction of the State Act which was rejected by the High Court in Telstra v Worthing. Although the reasoning of the Court did not address the argument under the Interpretation Act, it did address the application of the reasoning in Russo, which in turn relied upon that provision. At least by implication, it must be assumed that the High Court rejected any extension of that argument which would now allow the 1987 State Act to be read down so as not to include employment by a licensee under the Commonwealth Act. 41There are other reasons for not adopting an expansive operation for s 31(2) of the Interpretation Act. It would, in effect, require a reconstruction of each State provision subject to s 109, so as to provide a variable operation, for example with respect to the Workers Compensation Act, depending upon whether a particular employer had or had not been granted a licence under the Commonwealth Act. Such an approach would not be consistent with standard practice in respect of dealing with questions of inconsistency with Commonwealth laws, despite the common occurrence of provisions equivalent to s 31. 42On the other hand, Telstra v Worthing accepted the correctness of the decision in Russo, which was not challenged by the Attorney General: Telstra at [13] and [20]. Further, Telstra v Worthing was concerned with a series of specific injuries and not with the operation of s 17 of the 1987 State Act. Nor was it concerned with a change in employment, but only with employers, none of which was covered by State legislation. Finally, it was not concerned with the effect, for the purposes of the 1987 State Act, of a single employer obtaining a licence under the Commonwealth Act. 43In this Court, the respondent did not contend that either Russo or A & G Engineering was wrongly decided. The reasoning in Russo was accepted in Telstra v Worthing; A & G Engineering was not discussed. Because Telstra v Worthing was not directed to the problem raised for the first time in this case, it is appropriate for this Court to follow its own unchallenged earlier authorities. That entails the conclusion that the applicant acquired an entitlement under the 1987 State Act as at 30 June 2008. Even if under the Commonwealth Act his injury is taken to have occurred after the licence took effect, his entitlement under State law is preserved by s 108A(7)(b). 44The Court should make the following orders: (1) Grant the applicant leave to appeal. (2) Allow the appeal and set aside the answer to the question given by the President. (3) Answer the question identified for the Commission's determination as follows: (a) Under s 17(1) of the Workers Compensation Act 1987 (NSW), the applicant's binaural hearing loss was deemed to have happened on the last day before the employer's licence under the Safety, Rehabilitation and Compensation Act 1988 (Cth) came into force, namely 30 June 2008. (b) If, under the Safety, Rehabilitation and Compensation Act, the applicant's binaural hearing loss was taken to have occurred after the employer's licence under that Act came into force, that Act applied to the applicant's injury, but any liability or obligation of the respondent under the Workers Compensation Act in respect of the injury occurring before the licence came into force was, by virtue of s 108A(7) of the former Act, unaffected. (c) If, under the Safety, Rehabilitation and Compensation Act, the applicant's binaural hearing loss was taken to have occurred before the employer's licence under that Act came into force, neither that Act nor the licence applied to the applicant's injury. (4) Order the respondent to pay the applicant's costs in this Court. 45MACFARLAN JA: I agree with Basten JA. 46BARRETT JA: I agree with Basten JA's analysis of the issues in this case and with his Honour's conclusions and reasons. The question identified in the proceedings before the President of the Workers Compensation Commission could, in terms, be answered simply by saying that applicant's binaural hearing loss is deemed to by s 17(1)(a)(i) of the Workers Compensation Act 1987 to have occurred on 30 June 2008 when the employer ceased to be insured under the New South Wales Workers Compensation Acts. It is desirable, however, that the more informative answer proposed by Basten JA be given.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 April 2013