HRNG ADELAIDE, 11 April 1995 #DATE 8:6:1995 #ADD 4:9:1995

Counsel for appellant Mitsubishi: Mr R C White

Solicitors for appellant Mitsubishi: Fountain and Bonig

Counsel for appellant WRCC: Ms R A Layton QC with

Counsel for respondent: Mr A P Durkin

Solicitors for respondent: Duncan And Hannon

JUDGE1 KING CJ These are appeals on a question of law from a decision of the Workers Rehabilitation and Compensation Appeals Tribunal consisting of Judge J P McCusker.

The appellant, Mitsubishi, is an exempt employer under the Workers Rehabilitation and Compensation Act and therefore possesses all the powers of the Workers Rehabilitation and Compensation Corporation which are relevant to this case; Workers Rehabilitation and Compensation Acts63. The respondent sustained injury in his employment by Mitsubishi on 13 February, 1991. He was in receipt of weekly payments by way of income maintenance pursuant to s35 of the Act until they were discontinued pursuant to a decision made by the appellant on 15 January, 1993. He sought a review of the appellant's decision and the Review Office set aside the decision and determined that weekly payments should continue. This determination was upheld on appeal by Judge McCusker. There are two appeals to this Court, one by the exempt employer and the other by the Corporation.

Judge McCusker, affirming the view of the Review Officer held that weekly payments could be lawfully discontinued only if the discontinuance was authorized by s36 of the Act and that that section does not authorize discontinuance in the circumstances of the present case. Section 36, as it stood at the relevant time, is as follows: "36.(1) Subject to this Act, weekly payments to a worker who has suffered a compensable disability shall not be discontinued unless - (a) the worker consents to the discontinuance of weekly payments; or (b) the Corporation is satisfied, on the basis of a certificate of a recognised medical expert, that the worker has ceased to be incapacitated for work by the compensable disability; (c) the Corporation has, by notice in writing to a worker, required the worker to - (i) submit to an examination by a recognised medical expert nominated by the Corporation; or (ii) submit to the Corporation a certificate from a recognised medical expert certifying that the compensable disability continues, and the worker has failed to comply with the requirement within the time allowed in the notice; or (d) the worker has returned to work; or (e) the discontinuance of weekly payments is authorised or required by some other provision of this Act.

(2) Subject to this Act, weekly payments to a worker who has suffered a compensable disability shall not be reduced unless - (a) the worker consents to the reduction of weekly payments; or (b) the Corporation is satisfied, on the basis of a certificate of a recognised medical expert, that there has been a reduction in the extent the worker is incapacitated for work by the compensable disability, or (ba) reduction is necessary to correct an arithmetical or clerical error; or (bb) where the weekly payments include a component for overtime - the Corporation is satisfied that if the worker had continued in the work in which he or she was last employed before becoming incapacitated, he or she would not have continued to work overtime or the pattern of overtime would have changed so that the amount of overtime would have diminished; or (c) the reduction of weekly payments is authorised or required by some other provision of this Act, (and any reduction made on the basis of this subsection must be consistent with section 35).

(3) Where the Corporation decides to discontinue or reduce weekly payments in pursuance of this section, the Corporation must give notice in writing to the worker containing such information as the regulations may require as to the reasons for the Corporation's decision and informing the worker of the worker's right to have the decision reviewed.

(3a) The notice must be given at least 21 days before the decision is to take effect in any of the following cases: (a) where a decision to discontinue weekly payments is made, without the consent of the worker, on the ground that - (i) the Corporation is satisfied that the worker has ceased to be incapacitated for work by the compensable disability (although the worker has not returned to work); or (ii) the worker has failed to submit to an examination by a recognised medical expert or to provide a medical certificate as required by the Corporation; or (b) where a decision to reduce weekly payments is made, without the consent of the worker, on the ground that -

(i) the Corporation is satisfied that there has been a reduction in the extent the worker is incapacitated for work by the compensable disability; or (ii) the Corporation is satisfied, in the case of a worker whose weekly payments include a component for overtime, that the worker would not have continued to work overtime or the pattern of overtime would have changed so that the amount of overtime would have diminished; or (c) where a decision to discontinue or reduce weekly payments is made under section 37 or 38, and in any other case the notice must be given as soon as practicable after the decision is made (but not necessarily before it takes effect),

(4) Where a worker applies for the review of a decision by the Corporation to discontinue or reduce weekly payments under this section within one month after the worker receives notice of the decision, the operation of the decision is suspended, and the weekly payments must continue or, if the decision has already taken effect, be reinstated (to their previous level), until the matter is first brought before a Review Officer.

(4a) If any proceedings before a Review Officer that relate to a decision of the Corporation under this section are

adjourned, the Review Officer may, subject to subsection (4b), on such terms and conditions as the regulations may prescribe, order that weekly payments be made to the worker for the duration of the adjournment.

(4b) A Review Officer should, in considering whether or not to make an order under subsection (4a), take into account - (a) the reason or reasons for the adjournment; and (b) the conduct of the parties to the proceedings, and may take into account such other matters as the Review Officer thinks fit.

(4c) Any period between the conclusion of a hearing before a Review Officer and the handing-down of the Review Officer's decision is to be regarded as an adjournment for the purposes of subsections (4a) and (4b).

(5) Where, on a review, the Corporation's decision under the section is confirmed, any amounts to which the worker would not have been entitled but for the operation of subsection (4) or (4a) may, at the Corporation's discretion (but subject to the regulations)

(a) be recovered by the Corporation from the worker as a
debt; or
(b) be set off by the Corporation against liabilities

of the Corporation to make payments to the worker under this Act.

(6) If the Corporation makes a weekly payment to a worker on the assumption that the worker is incapacitated for work but the worker has in fact returned to work, the Corporation may, subject to the regulations, recover the amount of the payment as a debt.

(7) If the Corporation overpays a worker by way of weekly payments in consequence of - (a) an arithmetical or clerical error; or (b) an assumption, subsequently found to be incorrect, that a particular pattern of overtime would have continued if the worker had continued in the work in which he or she was last employed before becoming incapacitated, the Corporation may, subject to and in accordance with the regulations, recover the amount overpaid as a debt.

(8) An employer who believes that reasonable grounds exist for the discontinuance or reduction of weekly payments under this section to a worker employed by, or formerly employed by, the employer may, in a manner determined by the

Corporation, request the Corporation to review the circumstances of the case and to discontinue or reduce the weekly payments.

(9) The Corporation must carry out the review as soon as practicable after receipt of the request unless the request

(10) If the Corporation declines to carry out a review in pursuance of a request under subsection (8), or it appears that there has been undue delay in carrying out the review, a Review Officer may, on application by the employer, direct the Corporation to carry out the review, or give such directions as appear reasonable in the circumstances to expedite the review (as the case may require).

(11) The Corporation must comply, or take steps to ensure compliance, with such a direction.

(12) On completing the review, the Corporation must give the employer notice in writing - (a) of the Corporation's decision on the review, and the reasons for its decision; and (b) of the employer's right to have the Corporation's decision reviewed.

(13) This section does not apply in relation to the discontinuance of payments pursuant to Division 4A."

The exempt employee gave a notice purportedly pursuant to s36(1) in the following terms: "WORKERS REHABILITATION AND COMPENSATION ACT 1986

TAKE NOTICE that unless you return to work within 21 days of the date of receipt of this notice MITSUBISHI MOTORS AUSTRALIA LTD proposes to discontinue your weekly payments of income maintenance.

The grounds on which your weekly payments are to be discontinued are: 1. The discontinuance of weekly payments is authorised or required by Section 35(2)(a) as suitable employment for which you are fit is available to you and remains available to you.

MITSUBISHI MOTORS AUSTRALIA LTD by its solicitors BAKER O'LOUGHLIN

TAKE NOTICE that if you are not satisfied with this decision you may within one month of receiving this notice apply to the WorkCover Corporation 100 Waymouth Street Adelaide for a review."

The contention for the appellants on the appeal was that the discontinuance of the payments was excluded from the prohibition contained in s36(1) by the exemption in paragraph (e) where "the discontinuance of weekly payments is authorized or required by some other provision of the Act." It was contended that that authorization or requirement was to be found in s35(1)(a)(ii) and s35(2)(a). Section 35, as it stood at the relevant time, is as follows: "(1) Subject to this Act, where a worker suffers a compensable disability that results in incapacity for work, the worker is entitled to weekly payments in respect of that disability in accordance with the following principles: (a) if the period of incapacity for work does not exceed one year - (i) the worker is, if totally incapacitated for work, entitled for the period of incapacity to weekly payments equal to the worker's notional weekly earnings; (ii) the worker is, if partially incapacitated for work, entitled for the period of incapacity to weekly payments equal to the difference between the worker's notional weekly earnings and the weekly earnings that the worker is earning or could earn in suitable employment; (b) if the period of incapacity for work exceeds one year, the worker is entitled to weekly payments determined in accordance with paragraph (a) for the first year of the period of incapacity and thereafter - (i) the worker is, if totally incapacitated for work, entitled for the period of incapacity to weekly payments equal to 80 per cent of the worker's notional weekly earnings;

(ii) the worker is, if partially incapacitated for work, entitled for the period of incapacity to weekly payments equal to 80 per cent of the difference between the workers notional weekly earnings and the weekly earnings that the worker is earning or could earn in suitable employment that the worker has a reasonable prospect of obtaining.

(2) For the purposes of subsection (1) - (a) a partial incapacity for work over a particular period shall be treated as a total incapacity for work over that period unless the Corporation establishes that suitable employment for which the worker is fit is reasonably available to the worker in respect of that period (but where the period of incapacity extends beyond a period of two

years, this paragraph does not apply to a period commencing after, or extending beyond, the end of the second year of incapacity); and (b) the following factors shall be considered, and given such weight as may be fair and reasonable, in making an assessment of the prospects of a worker to obtain employment - (i) the nature and the extent of the worker's disability; (ii) the worker's age, level of education and skills; (iii) the worker's experience in employment; and (iv) the worker's ability to adapt to employment other than the employment in which he or she was engaged at the time of the occurrence of the disability.

(2a) Where - (a) a period of incapacity for work exceeds two years; (b) an assessment of the weekly earnings that the worker is earning or could earn in suitable employment is made under subsection (1)(b)(ii); and

(c) the worker's actual weekly earnings subsequently exceed the amount so assessed, the Corporation cannot reduce the weekly payments to reflect the worker's actual weekly earnings except to the extent that the aggregate of the weekly payment plus the actual weekly earnings (excluding prescribed allowances) exceeds the notional weekly earnings of the worker.

(3) Subject to subsection (4), where a disabled worker receives from an employer a payment, allowance or benefit in respect of a period of incapacity for work, the weekly payments payable to the worker under this section in respect of that period shall not, unless the Corporation determines otherwise, be reduced to take account of the value of that payment, allowance or benefit.

(4) No reduction shall be made under subsection (3) on account of - (a) any payment, allowance or benefit related to annual or other leave; (b) any payment, allowance or benefit paid or conferred by the employer on the worker's retirement; (c) any payment, allowance or benefit paid or conferred under a superannuation or pension scheme; (d) any payment, allowance or benefit paid or conferred on the retrenchment, or in relation to the redundancy, of the worker.

(5) Weekly payments are not payable in respect of a period of incapacity for work falling after the later of the following dates - (a) the date on which the worker attains the age at which the worker would, subject to satisfying any other qualifying requirements, be eligible to receive an age pension under the Social Security Act 1947 of the Commonwealth; or (b) the date on which the worker attains the normal retiring age for workers engaged in the kind of employment from which the worker's disability arose or 70 years of age (whichever is the lesser).

(6) A worker is not entitled to receive for two or more disabilities weekly payments in excess of the worker's notional weekly earnings.

(6a) If a liability to make weekly payments is commuted into a liability to make a capital payment, the worker is presumed, for the purposes of this section, to be receiving the weekly payments the worker would have been receiving if there had been no commutation.

(6b) If a worker ceases to be entitled to weekly payments

because the Corporation makes a capital payment for loss of earning capacity under Division 4A, the worker is presumed,

for the purposes of this section, to be receiving the weekly payments the worker would have been receiving if there had

(7) In this section:- (a) a reference to a period of incapacity for work is, where the disability results in separate periods of incapacity for work, a reference to the aggregate period of incapacity; (b) a reference to weekly earnings is a reference to weekly earnings exclusive of prescribed allowances."

It was argued that the requisite authorization or requirement was implicit in the provisions of s35. The entitlement to weekly payments is prescribed by s35. When suitable employment became available, thereby causing the entitlement under ss35(1)(e)(ii) and 35(2)(a) to cease, there was an implied authorization, indeed requirement, so the argument ran, to discontinue the weekly payments.

This view of the effect of s35 is directly contrary to the reasoning of the judges comprising the Full Court in GMH v Workers Rehabilitation and Compensation Corporation (1991) 55 SASR 395. That case concerned the right of an exempt employer to reduce the amount of weekly payments because of a change in the overtime component of the wage currently earned by its working employees. It was concerned with reduction not discontinuance of payments. Nevertheless an essential component of the reasoning which led to the decision was the view that the effect of s35 is confined to defining the entitlement to weekly payments and that that section does not of itself require or authorize discontinuance or reduction of those payments.

The same view of s35 was taken by Mullighan J in Workers Rehabilitation and Compensation Corporation v James (1991) 56 SASR 414 and by Mr President Stanley in The Corporation (Linfox Transport Aust) Pty Ltd v Carter (Unreported decision of WCAT, Print A 23/1994, delivered 7 April, 1994) and Turci v The Corporation (Codan Pty Ltd) (Unreported decision of WCAT, Print A 43/1994, delivered 16 June, 1994).

Counsel for both appellants urged this Court not to apply the reasoning in those cases to a case of discontinuance of weekly payments by reason of suitable employment being made available, because, so it was said, if s35 does not authorize such discontinuance there is no mechanism by which the payments can be lawfully discontinued. That argument demands a consideration of the powers which exist in the Act for the discontinuance of weekly payments.

The provision which authorizes the Corporation to review weekly payments is s38. That section authorizes the Corporation to review "the amount of weekly payments" and requires it to do so if requested by a worker or employer. If the request is made by the employer on reasonable grounds, the review must be carried out "as soon as practicable", s36(8) and (9). The power of the Corporation following such review is to "adjust the amount of the weekly payments to take account of any change in the extent of the worker's incapacity for work (insofar as the incapacity is attributable to a compensable disability)." section 38(2). The powers under s38 may be exercised by an exempt employer; s63.

The expression "incapacity for work" is not used with total consistency in workers compensation legislation or in cases decided upon such legislation. In general, however, it expresses a wider notion than physical disability. It has an economic component related to the worker's capacity to earn a living. A worker's qualifications, skills and work experience are all factors in determining the extent of the worker's incapacity for work. Unemployment due to the state of the labour market is not incapacity for work caused by the compensable disability, but the extent of a worker's incapacity caused by such disability must be assessed in the light of the availability of work for which he is qualified and which he is physically capable of performing. I consider that the becoming available of work which the injured worker is capable of performing and which was not previously available, would amount to a "change in the extent of the worker's incapacity for work" within the meaning of s38(3). I doubt whether the expression "incapacity for work" could be given the same meaning in s36(l)(b) or (2)(b) where it is linked to a requirement for a medical certificate. The stipulation in those provisions that the satisfaction of the corporation of a cessation, or reduction in the extent, of incapacity must be based on a medical certificate, suggests that incapacity for work in those provisions may refer to physical disability only. There is room, however, for the view that a medical certificate that the worker is fit for the work which has become available would be sufficient and it is unnecessary to express a concluded opinion on the point. The expression "incapacity for work" in s38 is free of any link with a medical certificate requirement and there is no impediment to the construction which I have adopted of the expression in that section.

The power of the Corporation under s38 is to review "the amount of the weekly payments" and to "adjust the amount". No doubt in some contexts these expressions would be construed in a manner which would require that some amount remained after the adjustment. I think, however, that they permit a construction which authorizes an adjustment of the weekly payments to nil. That construction should be adopted if it "would promote the purpose or object of the Act" Acts Interpretation Act, 1915 s22(1). I think that s38 is the provision intended by the legislature to authorize the review of weekly payments to bring them into conformity with the entitlement prescribed by s35 in the circumstances then existing. If that requires an adjustment to nil, the section should be understood as authorizing that adjustment.

Section 36 prohibits discontinuance or reduction of weekly payments except on the grounds stipulated in the section. The prohibition is expressed to be "subject to this Act" but I do not think that that is significant for present purposes. The grounds in s36 include the authorization or requirement of discontinuance or reduction, as the case may be, by some other provision of the Act. In my opinion s38 supplies that authorization or requirement. Where an adjustment under s38 involves a discontinuance or reduction in weekly payments, the Corporation or exempt employer, in implementing the adjustment, must comply with the procedural stipulations of s36.

I do not accept, for the reasons given, that rejection of the appellants' view of s35 would leave no mechanism for reviewing and discontinuing weekly payments where suitable work has become available.

The construction of s35 advanced by the appellants carries with it the implication, in my opinion, that whenever the entitlement under s35 ceases or diminishes, the Corporation or exempt employer is entitled automatically to discontinue weekly payments. That is plainly contrary to the policy of the Act. The legislature in prescribing procedures for the discontinuance or reduction of weekly payments, has recognized that injured workers are dependent for livelihood upon the weekly payments. Arbitrary cessation or reduction could cause great hardship. Procedures are set in place to protect injured workers against arbitrary cessation or reduction of their means of livelihood. The procedures in ss36, 37, 38, 39 and 41 are designed for that purpose. It is unthinkable that the legislature, having adopted those protective measures, would largely negate them by conferring in s35 a power on the Corporation or exempt employer to discontinue or reduce weekly payments unilaterally and without compliance with the protective procedures.

I consider that the reasoning in the GMH case should be applied to a case such as the present in which it is claimed that suitable employment is available. Judge McCusker reached the correct conclusion. In my opinion, the appeal should be dismissed.

JUDGE2 DUGGAN J I agree that this appeal should be dismissed for the reasons given by King CJ.

JUDGE3 NYLAND J I agree that the appeal should be dismissed for the reasons expressed by King CJ.