Roberts v GM Holden Ltd [2010] SAWCT 28

7

The certificates of incapacity giving rise to the claim related to a left shoulder injury. The certificates are described in the extract of the determination set out below. It is not clear when they were presented by the worker to the compensating authority, and whether separately or together, but whatever the case, as noted in the determination itself, they were accepted by the compensating authority as a claim or as claims by the worker for income maintenance.

8

As it happened, when the compensating authority came to issue its determination on 31 August 2009, the worker had not been at work since May 2009, for he had been suspended from that time whilst allegations against him of misconduct were being investigated. The investigation resulted in the worker's employment being terminated on 12 August 2009 on the grounds of serious and wilful misconduct.

9

The determination of 31 August 2009 relevantly read as follows:

"General Motors Holden Limited is a self insurer for the purpose of the Workers Rehabilitation and Compensation Act 1986 (the Act). You have provided prescribed medical certificates of Dr Gavin Nimon certifying you as totally incapacitated from 23 July 2009 until 23 August 2009 both inclusive and subsequently prescribed medical certificate of Dr Nimon certifying you as fit to return to modified/other duties from 24 August 2009.

The basis of the period of certification of total incapacity was for you to undergo an operation on your shoulder, the cost of which operation has been agreed to be met by GM Holden.

We also note that on 12 August 2009 your employment with GM Holden Limited was terminated for serious and wilful misconduct. But for your misconduct, GMH would have provided to you suitable duties upon your clearance to return to work.

Based upon the above, and on the provisions of section 36(1)(e) and (f), section 36(1a)(f) and (g) of the Act, we have determined:

the prescribed medical certificate of Dr Nimon is accepted by GM Holden Limited as a claim by you for income maintenance;

such a claim is accepted for the period 23 July to 23 August 2009 only;

any further claim for income maintenance is rejected on the basis that you are fit for modified duties, but such duties are not being provided to you as a consequence of your breach of the obligations of mutuality by your conduct and the termination of your employment for serious and wilful misconduct.

The full text of section 36 is enclosed."[4]

10

The determination was disputed by notice of dispute dated 16 September 2009. The dispute notice asserted that the determination sought to discontinue the worker's income maintenance payments and should be set aside on various grounds, including that the determination was invalid. Ms Cameron confirmed the disputed decision on 31 August 2009. The document she issued in that regard contained a "description of decision confirmed" in the following terms: "Closed period acceptance dated 31/8/2009, relying on S 36 in relation to limitation of liability".

11

Both parties agreed that the resolution to the issue turned on the proper characterization of the determination. In that regard the worker submitted that the claim was treated by the compensating authority as a claim for income maintenance for an ongoing incapacity commencing from 23 July 2009, rather than as two discrete claims, each based upon the period covered by the two certificates presented.

12

The worker contended that the determination comprised two decisions with respect to the one claim. The first was to accept the claim with respect to incapacity which commenced on 23 July 2009. The second and so called "sequential" decision was to discontinue the entitlement to weekly payments said to be "established" by the first decision on the grounds of serious and wilful misconduct and breach of mutuality. The worker contended that as a matter of law and fact this second decision was a decision to discontinue an entitlement to income maintenance founded on s 36 but effected without compliance with s 36 procedures.[5]

13

The worker contended that his notice of dispute challenged only the second decision, being the allegedly invalid discontinuance. In this regard, I consider that the worker is correct as the notice of dispute did not seek to challenge the acceptance of the claim with respect to the first month of total incapacity. In that regard, it cannot be said that the worker is now seeking to raise at a very late stage of the proceedings an alleged defect in the determination which was not adverted to in the notice of dispute. Rather that notice raised the invalidity issue in a timely way.

14

As to the matter of law, the worker contended that s 36 of the Act was the only provision which permitted a discontinuance of an entitlement to income maintenance on grounds of breach of mutuality. It followed that a determination of an entitlement to income maintenance under s 35A of the Act could not be a vehicle for discontinuance of an accepted entitlement on the ground of breach of mutuality.

15

Section 35A of the Act, to the extent that it is relevant for present purposes, provides:

(1) Subject to this Act, a worker is, in respect of a particular compensable disability, entitled to weekly payments while incapacitated for work during the first entitlement period as follows:

(a) for any period when the worker has no current work capacity - the worker is entitled to weekly payments equal to the worker's notional weekly earnings;

(b) for any period when the worker has a current work capacity - the worker is entitled to weekly payments equal to the difference between the worker's notional weekly earnings and the worker's designated weekly earnings.

(4) For the purposes of this section, but subject to subsection (5), the designated weekly earnings of a worker will be taken to be -

(a) the current weekly earnings of the worker in employment or self-employment; or

(b) the weekly earnings that the Corporation determines that the worker could earn from time to time (including, but not limited to, the amount of any current weekly earnings) in employment, whether in the worker's employment previous to the relevant disability or in suitable employment, that the Corporation determines the worker is capable of performing despite the disability,

whichever is the greater, but not to include a prescribed benefit under subsection (6).

(5) Subsection (4)(b) will not apply to a worker who has a current work capacity during any period or periods during which the worker is incapacitated for work and in which either of the following circumstances apply:

(a) the employer has failed to provide the worker with suitable employment and the worker is making every reasonable effort to return to work in suitable employment;

(b) the worker is participating in a rehabilitation and return to work plan which reasonably prevents the worker from returning to employment."

16

The worker contended that it was apparent from these provisions that there were only two conditions to be satisfied for the establishment of an entitlement to income maintenance, namely a compensable disability and a resultant incapacity for work. Thus the worker contended that upon the determination to accept the worker's claim, albeit for a closed period, an entitlement to income maintenance was established, which could not be brought to an end lawfully upon the basis of a breach of mutuality which occurred prior to the determination. It was submitted that the most that the compensating authority could do in light of such an event would be to determine that the quantum of the ongoing entitlement to income maintenance should be reduced to nil.

17

The worker contended that this outcome could have been achieved by a proper application of s 35A of the Act. Having accepted the claim on the basis of an ongoing incapacity from 23 July 2009, and having determined to pay income maintenance at notional weekly earnings with respect to the period of entitlement up to 24 August 2009, the compensating authority could have determined thereafter, not that there was no ongoing entitlement, but that the quantum of the income maintenance payable with respect to the ongoing entitlement was nil. This outcome could have been achieved, contended the worker, by application of the provisions of subs (4) and (5) of s 35A of the Act. Thus, if the compensation authority made appropriate inquiries which caused it to conclude that suitable duties were available to the worker from 23 August 2009 notwithstanding his ongoing partial incapacity, which would have provided remuneration equivalent to his pre-incapacity earnings, it could have determined that the worker could earn designated weekly earnings equivalent to his notional weekly earnings in that employment. It could then have determined that because the worker had not taken up such employment on account of his breach of mutuality, the quantum of his entitlement to weekly income maintenance was nil. This would have avoided an improper attempt to extinguish an entitlement to compensation, which could only be lawfully achieved under s 36 of the Act.

18

Underlying this analysis was the proposition that mutuality is not one of the conditions to be satisfied for the establishment of an entitlement to weekly payments. The worker contended that mutuality is only relevant under s 35A in relation to the question of whether the designated weekly earnings provision applies so as to affect the quantum payable with respect to an existing entitlement under that section. He contended that the compensating authority erred in its determination, because instead of seeking to adjust the quantum of the entitlement on the basis of the alleged breach of mutuality, it determined that there was no ongoing entitlement to income maintenance at all. This misconceived approach was said to be apparent from the absence of any reference to s 35A in the determination, and from the repeated references instead to s 36 of the Act.

19

The worker contended that practical difficulties would arise if a determination could be made under s 35A of the Act which purported to end an entitlement to income maintenance on the grounds of a past breach of mutuality. The result would be, he contended, that in deciding a dispute over a rejected claim for income maintenance, the Tribunal, subject to the issue having been properly raised, would have to consider and evaluate every incident between the date of rejection of the claim and the date of hearing which it was alleged gave rise to a possible breach of mutuality. The worker contended that this could not be the proper approach, and sought support for this proposition from previous decisions of this Tribunal and its predecessor where the effect of alleged breaches of mutuality on a claimed entitlement to compensation had been considered in a context where there was no notice of discontinuance purporting to rely upon that breach of mutuality: Mariano v Local Government Association of South Australia (Tempskill);[6] Hagean v WorkCover Corporation (Hallett Brick Transport Pty Ltd);[7] Griffin v WorkCover Corporation/MMI Workers Compensation (SA) Ltd (N.S.B. Staff Pty Ltd).[8]

20

The worker contended that the decision of the Full Supreme Court in Thuy Thi Vu was distinguishable, in that it was a decision based on the fact that the pre-condition to the alleged entitlement to payment of compensation, being the existence of incapacity, had fallen away by the date of the disputed decision. This was to be contrasted to the present case, where the incapacity continued, and the closed period acceptance was said to be based upon the occurrence of a breach of mutuality, a matter said not to be a pre-condition of an entitlement to compensation under s 35A of the Act.

21

The worker contended that, in any event, as a matter of fact, the disputed aspect of the determination was a decision under s 36 of the Act, given that it stated that it was based, in part at least, on s 36(1)(e) and (f) and s 36(1a)(f) and (g) of the Act. This was reinforced, the worker contended, by the terms of the confirmation of the disputed decision to the effect that the closed period was accepted "relying on s 36 in relation to limitation of liability".

22

Thus it was contended that the disputed decision was a voidable decision due to a failure to comply with the requirements of s 36(3) of the Act. In the circumstances, it was contended that there was no basis to exercise a discretion not to set aside the decision.

23

The compensating authority contended that the determination could not reasonably be construed as a decision to discontinue income maintenance payments because, as a matter of logic, weekly payments cannot be discontinued pursuant to the Act unless the worker is in receipt of weekly payments of compensation.[9] The determination was plainly an acceptance of a claim for compensation for a closed period to 23 August 2009, and a rejection of any further entitlement to income maintenance payments. It was contended that the absence of any reference to s 35A of the Act, and the unnecessary references to various of the provisions of s 36, were not matters which made the determination a notice under s 36 of the Act. In this regard, the compensating authority contended that there was no relevant distinction between the determination in this case and that under challenge in Thuy Thi Vu.

24

The compensating authority submitted that mutuality, in terms of a worker being ready, willing and able to undertake suitable employment, was a condition to establishing an entitlement under s 35A of the Act. Reliance in this regard was placed upon the evolution of the statutory construct of mutuality as set out in RJ Brodie (Holdings) Pty Limited v Pennell,[10] and as applied to the South Australian workers compensation context in cases such as Kelvinator v Jezior.[11]

25

Whilst Ms Cameron suggested that the compensating authority treated the two medical certificates of Dr Nimon as separate claims for separate periods of incapacity as specified in each certificate, this is not what one draws from the terms of the determination itself. Whilst paragraph 1 of the determination refers to "the prescribed medical certificate" being accepted as a claim by the worker for income maintenance, in context this appears to be a reference to a claim for income maintenance for the period encompassed by the two certificates.[12] That is, the two certificates were treated as a claim for payment of income maintenance with respect to the period covered by the certificates. This interpretation is supported by paragraph 2 of the determination, which states that "such claim" is accepted for the period 23 July to 23 August 2009 "only", the implication being that the claim made was taken to encompass the larger period covered by the two certificates, with only part of it being accepted.

26

This is, in part at least, the interpretation of the determination for which the worker contended, although in my view this does not support the conclusion that the determination involved a first decision being an acceptance of an entitlement, and a second decision to discontinue the entitlement accepted by the first decision. In my view this is an artificial approach to the determination. There was a decision to accept part of the claim only, being the period of total incapacity from 23 July 2009 to 23 August 2009. That limited acceptance was accompanied by a rejection of any further claim on the basis of the asserted breach of mutuality on 12 August 2009. There was no acceptance of an entitlement to income maintenance beyond 23 August 2009 and no purported discontinuance of any such entitlement by a sequential decision.

27

In my view the compensating authority was entitled to approach the determination in this way, for I consider it is correct in submitting that mutuality, in so far as it involves a partially incapacitated worker being ready, willing and able to carry out suitable employment, is a condition to an entitlement under s 35A of the Act.

28

This is consistent with the approach taken by the Full Supreme Court in Jezior, where the provisions of s 35 of the Act as it stood at the time were considered. Subsection (2)(a) of that provision required that a partial incapacity for work over a particular period was to be treated as a total incapacity for work unless it was established that suitable work for which the employer was fit was reasonably available to the worker. Cox J considered various decisions dealing with legislation in similar terms, including s 11(2) of the New South Wales legislation, and noted that in Brodie v Pennell the High Court took the view that provisions of this nature involved an element of mutuality in the context of an entitlement to "continuing benefits".[13] He also considered South Australian cases which addressed predecessors to the current legislation, including s 67 of the Workmen's Compensation Act 1971 and s 35 of the Act as it was initially enacted. He said:

"... Nevertheless the same element of mutuality in the contract of employment underlies all three provisions. Conduct on a worker's part, independent of any injury, there is inconsistent with the degree of cooperation that is essential to an effective working relationship may take his case outside the ambit of s 35. Perhaps it is more difficult to fasten on particular words in s 35(2) in which the notion of mutuality is implied, but that does not matter. Besides, the expression 'reasonably available' is probably adequate for that purpose. It is hardly to be supposed that an employer, in order to avoid having a partial incapacity treated as a total incapacity, is obliged to restore an injured worker to the payroll when it is plain that worker will behave in a fashion that is fundamentally destructive of the required mutuality - by persistently disobeying instructions, say, or by assaulting his fellow workers or by repeatedly flouting the safety rules. ..."

29

Section 35A has no equivalent provision to any of the former versions of s 35(2) of the Act, and the difficulty Cox J noted in Jezior of fastening on particular words in the current legislation in which the notion of mutuality is implied is perhaps present to a greater degree. However, in my view, properly understood, the provisions of s 35A(4)(b) and s 35A(5) of the Act imply such a notion. The compensating authority was in effect contending that the worker was not, due to his breach of mutuality, making every effort to return to work in suitable employment, and that accordingly suitable employment was therefore not provided. The underlying notion of mutuality as a condition of an entitlement in these circumstances remains, as a result of which I consider it was open to the compensating authority in the circumstances of this case, to accept liability for a closed period of total incapacity and reject the claim founded on the certificate of partial incapacity. Accordingly, I do not accept an essential aspect of the worker's argument, namely that as a matter of law the determination could not be a determination made under s 35A, but only under s 36 of the Act.

30

In Thuy Thi Vu the worker had lodged a claim for compensation on 23 November 1987, asserting that she sustained a back injury at work entitling her to income maintenance and medical expenses pursuant to ss 30, 32 and 35 of the Act. The Workers Rehabilitation and Compensation Corporation ("the Corporation") made some interim payments of compensation pending a final determination of the claim. On 29 December 1987 it issued a determination to the effect that income maintenance payments would be authorised for the period from 23 November 1987 to 2 December 1987, a lesser period than that in relation to which interim income maintenance payments had already been made to the worker. The determination was challenged before the Workers Compensation Appeal Tribunal which found that the interim payments to the worker in November and December 1987 were weekly payments made pursuant to s 35 of the Act which were discontinued by the determination of 29 December 1987 in breach of s 36 of the Act.

31

Prior J, with whom the other members of the Full Supreme Court agreed, accepted that the Corporation's letter of 29 December 1987 should be characterised as a "determination of a claim". He then said:

"I agree with the submissions put by counsel for the Corporation that by the letter of 29 December, the Corporation made a determination of a claim. That determination resolved to pay income maintenance. I do not think that was any proposal to discontinue or reduce weekly payments as much as that a determination of the liability gave rise to a determination of the claim under s 53. The reference to subs (1)(b) of s 36 in the letter of 29 December did not convert the matter to one which called for the application of subs (3) of that section. To take account of the matter referred to in par (b) of subs (1) and s 36 is not to rely upon that paragraph to discontinue weekly payments. In this case the Corporation made a determination by invoking powers conferred upon it under s 106 of the Act to delay a final determination. The final determination discharged the Corporation's duty under s 53. There was no discontinuance of weekly payments but an identification of the period for which liability to make payments was admitted and determined."

32

In the circumstances, I can see no relevant distinction between an acceptance of a claim for a closed period as in Thuy Thi Vu on the basis of a conclusion that incapacity had ceased, and the acceptance of a claim for a closed period of total incapacity with a rejection of a claim for a subsequent period of partial incapacity on the basis of a conclusion that there was no entitlement due to a prior breach of mutuality. The determination now in dispute was a decision for the purposes of s 53 of the Act. It identified the period for which liability to make payments was admitted and rejected a claim for payments beyond that period. At the time the determination was made, the worker was not in receipt of income maintenance payments, and had no entitlement at that stage capable of being discontinued. Further the determination to accept the claim for the closed period did not of itself create an entitlement beyond that period which was unlawfully discontinued. In light of these conclusions, I do not consider that the various decisions mentioned above to which the worker referred are of any particular assistance.

33

There is no doubt that the determination, on its face, is confusing and gives the misleading impression that it purports to be a notice given under s 36 of the Act. However, the reference in the determination to various provisions of s 36 should be treated in the same way as the inappropriate reference to s 36(1)(b) was in Thuy Thi Vu, namely that although the section was taken into account in making a decision, it was not relied upon to discontinue weekly payments. It is true, as the worker contends, that the determination here refers to the decision being "based" upon certain of the provisions of s 36, and that the confirmation decision explicitly refers to a reliance upon s 36 in relation to limitation of liability. However, these references do not convert the determination to reject the further claim from 23 August 2009 into a decision to discontinue an entitlement pursuant to the provisions of s 36.

34

As a matter of fact and law the determination was not a determination under s 36 of the Act. The aspect of the determination disputed by the worker stands as a rejection by the compensating authority under s 53 of the Act of the worker's claim to an entitlement to income maintenance from 24 August 2009. The application for an order that this aspect of the determination be set aside on the ground of invalidity is dismissed. Accordingly the hearing of the dispute over the merits of the determination should proceed.

Parties are advised that if a party wishes to appeal against any part of this decision which is appealable pursuant to s 86(1) of the Act such appeal must be filed with the Registrar in accordance with the form titled Notice of Appeal within 14 days of the delivery of this decision and must be served on all parties.

It is the practice of this Tribunal to publish its reasons for decision in full on the Internet. If any party or person contends that these reasons for decision should not be published in full the party or person must make an application within seven days of the delivery of these reasons. The application shall be by an Application for Directions with a supporting affidavit and should be addressed to the presiding member(s). If no such application is lodged within the time specified these reasons will be published in accordance with the Tribunal's usual practice.

[1] As recorded at a directions hearing on 14 May 2010.

[2] (1988) 9 SASR 585.

[4] The notice then provided details of review rights as required. A full text of s 36 was provided as the notice states. As can be seen, the notice made no reference to s 35 or s 35A of the Act, nor were copies of those provisions provided.

[9] WorkCover Corporation/Employers Mutual Limited v Trask [2007] SAWCT 15.

[10] [1968] HCA 73; (1969) 117 CLR 665.

[11] (1988) 49 SASR 592.

[12] As conceded by Ms Cameron in her evidence - tr 7.

[13] Per Kitto, Taylor, Windeyer and Owen JJ at 669 - 670.