Workcover/Allianz Australia (Od and E Pty Ltd) v Steggall [2002] SAWCT 49

4 Fourteen former employees had been terminated over the two years proceeding for breach of the company's alcohol and drug policy, though two had been re-hired some six months later "as the circumstances surrounding their offences coupled with their immaturity and junior positions at the time of their offences warranted that they be given another opportunity" (par 17 of the Deputy President's decision).

5 The Corporation gave written notice to the worker of its intention to discontinue income maintenance payments pursuant to s 36(1)(e) of the Workers Rehabilitation and Compensation Act 1986 ("the Act"). It did so repeating much the same grounds set down in the employer's letter of dismissal. The worker challenged that notice by Notice of Dispute under the Act. He denied being guilty of serious and wilful misconduct.

6 On the issue of serious and wilful misconduct the Deputy President found against him. He stated (par 37 - 39):-

"37 I have no hesitation in finding that the worker's surreptitious bringing of alcohol onto the camp site for his own consumption in knowing breach of the prohibition on alcohol as set out in his terms and conditions of employment constituted serious and wilful misconduct.

38 The worker's conduct was aggravated by the fact that he held a supervisory position and was responsible for setting an example to other workers with respect to the observance of the company's policies generally and this directive in particular.

39 His misconduct was further aggravated by his dishonest denials and deceptive last-minute actions in trying to hide the bottle from Mr McCay, although his conduct then might perhaps be attributed to panic in the knowledge that if caught with the bottle in his possession his job was gone. ..."

7 The worker did not quarrel with this finding. That may well have proved difficult. The issue is not to be approached upon a normative basis: Smith v WorkCover Corporation/MMI Workers Compensation (SA) Ltd (Underdale Metal Processing) Print No JD3/1996 and the company rules, though relevant, are not necessarily determinative of the matter, and Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201. But the Deputy President appreciated this. These matters are determined by the particular circumstances of each case.

8 Nearly three months after his dismissal the worker gained work with a pipe laying company. It was manual work involving ordinary hours and four to six hours overtime per week. He has continued in that employment to the present.

9 Two months after commencing this work the worker's solicitors wrote to his former employer in the following terms (AB Vol 1 at 83):-

We note our client's employment was terminated by your notice dated 25 October 1999. This letter is to seek the reinstatement of Mr David Steggall's employment with OD & E Pty Ltd.

We advise that Mr Steggall is ready, willing and able to return to work with OD & E Pty Ltd on alternative duties, within the capacity for which he is certified fit to perform."

10 The Deputy President concluded that while the dismissal brought to an end the worker's right to weekly payments, that entitlement was restored by the change in circumstances. This issue was dealt with by him in the following terms, (par 52, par 54, par 55):-

"52 There is ample case authority, however, for the proposition that a discontinuance of weekly payments is not forever and that an incapacitated worker's right to weekly payments may be restored if there has been a relevant change of circumstances. ...

54 ... there is in my view no good reason why s 36(1)(e) should be singled out as the lone ground of discontinuance that operates to preclude a worker's right to weekly payments absolutely and for all time. ...

55 Whether there can be shown a change of circumstances sufficient to justify the restoration of a dismissed worker's entitlement to weekly payments will depend on the facts of each case and a consideration of the worker's conduct before and after his dismissal in the context of all the surrounding circumstances and the ramifications for all interested parties. ..."

11 The Deputy President then approached this task by identifying those actions of the worker which offset or contradicted the implications that arose from his serious and wilful misconduct. The Deputy President continued (par 56 - 57):-

"56 In this instance the worker has fairly promptly found himself suitable full-time work as a machine operator/labourer. He has made a good fist of it and has remained in the job now for some 18 months. He has required little, if any, time off on account of his compensable disability. It seems to me that his actions in obtaining and maintaining this employment go a long way towards curing the prejudice to the Corporation caused by his earlier misconduct. It is not, or cannot be, disputed that he has a continuing partial incapacity for work.

57 Taking into account all the facts of this case, I am of the view that the worker's commencement of and continuance in employment since January 2000 amounts to a change in circumstances, as affect all interested parties, sufficient to warrant the restoration of his entitlement to weekly payments as determined by the application of s 35(1). His entitlement should operate from the date of his return to work. ..."

12 Our jurisdiction is limited to questions of law by s 86(1): see Smith (above cited). In this respect, Mr Calligeros, counsel for the appellant, argued that the Deputy President in approaching the matter by considering offsetting factors which occurred following the dismissal, employed an incorrect test in the circumstances (3). This, in argument, was refined by Mr Calligeros to an argument contending confusion of the role and effect of s 36(1)(e) and the various notions taken from the case law in respect to mutuality. Mutuality is dealt with in s 36(1)(f). Serious and wilful misconduct is dealt with in s 36(1)(e). He argued the notion of revival operated in respect to mutuality and not in respect to dismissal for serious and wilful misconduct.

13 The operative provisions are in s 36 and read as follows:-

"36. (1) Subject to this Act, weekly payments to a worker who has suffered a compensable disability must 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; or

(d) the worker has obtained work as an employee, or as a self-employed contractor, that is providing remuneration equal to or above the worker's notional weekly earnings; or

(e) the worker is dismissed from employment for serious and wilful misconduct; or

(f) the worker breaches the obligation of mutuality; or

(g) the worker is, without the Corporation's consent-

(ii) absent from the State for more than two months in any continuous period of 12 months; or

(h) the discontinuance of weekly payments is authorised or required by some other provision of this Act."

14 The provisions dealing with mutuality in s 36(1a) may include the circumstances of a worker, having returned to light duties following an injury, being dismissed for what would amount to serious and wilful misconduct. The case law bears this out. In particular s 36(1a)(e), (f) and (g) highlight this. They state:-

"(e) the worker fails to comply with an obligation under a rehabilitation and return to work plan under this Act; or

(i) to undertake work that the worker has been offered and is capable of performing; or

(g) the worker does anything else that is, apart from this subsection, recognised as a breach of the obligation of mutuality."

15 During the course of argument, counsel referred to s 30B(2)(b) which bars a claim that is wholly or predominantly attributed to serious and wilful misconduct on the part of the worker. Mr Calligeros argued s 30B operates as a permanent bar without revival and there is no reason to deny an equivalent intent to Parliament in s 36(1)(e). S 30B was inserted by s 6 of Act 49 of 1994. However, there is little more than the commonality of the topic of serious and wilful misconduct to link the two and therefore such an argument (4) is unconvincing.

16 The treatment of serious and wilful misconduct under the 1971 Act was dealt with in Zardoukas v General Motors-Holden's Pty Ltd (1975) 42 SAIR 1202. In that case the worker suffered an injury to his right wrist. Following treatment he was provided with light duties necessitating the use of his left hand only. He continued to allege inability to do any work. This was held to be due to malingering (1210) and to be in breach of his contract of employment. The Full Industrial Court stated (1223 - 1224):-

"Whilst we agree that misconduct in itself, in certain circumstances, is not enough to disentitle a workman from receiving compensation, we are by no means convinced that this is a principle of universal application.

We were, for example, referred to the case of Jensen v. RE Jones Ltd 23 BWCC 518 in which the workman was discharged by the employer for misconduct which involved larceny as a servant. There the misconduct bore no direct relationship whatsoever to the capacity of the workman to engage in work activity.

However, in the present circumstances, the very misconduct which brought about the termination of employment was a persistent malingering on the part of the workman and an outright refusal - which has been maintained up to the present time - to engage upon any form of employment within the workman's capacity on the basis that he claims to be incapable of carrying out the work function. In effect, this is a deliberate repudiation in general terms of an invitation to perform work which has been persistently offered to the employee and of which he has been found to be capable - as a deliberate act upon his part in an endeavour to obtain compensation to which he is not entitled.

To suggest that, in such circumstances, a workman who may have some minimal degree of functional incapacity could, by deliberate malingering, convert whatever degree of incapacity he possesses into a total economic incapacity situation to his own advantage is repugnant both to commonsense and the whole tenor and intent of the legislation.

It is nothing short of an ongoing improper repudiation of the duties, not only of his pre-existing contract of employment with the respondent but, indeed, of any potential contract of employment."

17 In Kanoon v Cablemakers Australia Pty Ltd (1975) WCR (NSW) 268 the employer provided suitable employment to a partially incapacitated worker, then dismissed the worker for misconduct. The New South Wales provisions at the time read (s 11(2)):-

"An employer shall provide suitable employment for his injured worker during the worker's partial incapacity for work.

Upon any failure by such employer to provide suitable employment as aforesaid the worker's incapacity for work shall be deemed to be total, and he shall be compensated accordingly."

"The misconduct in my opinion was not of such a nature as to preclude for evermore re-employment in any capacity. The misconduct concerned a fellow-worker. The misconduct in no way involved disloyalty to management or dishonesty. The applicant had carried out his duties to the satisfaction of the respondent in his employment up to the time of his dismissal. Notwithstanding the bad feeling which developed in the section of the factory in which the applicant was employed as a machine operator, I do not see why this would necessarily preclude the necessary degree of co-operation or mutuality between the applicant and the respondent in a clerical section in the respondent's office. ..."

19 The legislation in s 36(1)(e) should be appreciated in the context of the legal rules and notions it borrows from. Serious and wilful misconduct is concerned with the disregard or breach of essential conditions of the contract of service: North v Television Corporation Ltd (1976) 11 ALR 599. It requires that quality of wilfulness, a deliberate flouting of the essential conditions. In Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66 Dixon and McTiernan JJ stated (82):-

"... In the view we take of the circumstances of the case, the motives and intentions of the respondent become all-important; for the significance and sufficiency as a justification of the other items of misconduct relied upon appear to us to depend upon the truth of his explanation or the bona fides of his acts. Further, the effect to be given to all the acts combined, which have been established against the respondent, must in the end be governed by an estimate of his honesty and motives. ..."

20 This test of repudiation is not a subjective one. The motive or intent is to be judged from what the other party would reasonably infer from the acts or words of the renouncing party: Byrnes v Treloar and Another (1997) 77 IR 332 at 335. But the minimum requirement is conduct of the employee that is inconsistent with the employee's contractual obligations; ground for "uneasiness" as to future conduct is not enough: ACI Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and Others (2000) 96 IR 228 at 237. Finally there is an implied term in contracts of employment of trust and confidence, though its absence is determined not by mere assertion of one party without that having a sound and rational basis: Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 at 191.

21 When s 36 was enacted in the 1986 Act, a dismissal for misconduct after returning on modified duties (s 35(2)(a)) was not specified as a ground for discontinuance. However, the payments may well have stopped upon return to work (s 36(1)(a)). To recommence payments after a dismissal required a claim under the then s 53, at which stage the employer would have the opportunity to raise lack of the required features set out in the general law. The fact of dismissal did not prevent recommencement of payments.

22 The provisions introduced in amending Act No. 35 of 1995, s 11, introduced the new s 36, including subs (1)(e). It also introduced specific acts that would constitute a breach of mutuality though retaining the general concept developed in the case law: subs (1a)(g). In the same amending Act, Parliament amended s 58b which was first introduced in 1988: (No. 39 of 1988, s 15). It now read:-

"58b(1) If a worker who has been incapacitated for work in consequence of a compensable disability is able to return to work (whether on a full-time or part-time basis and whether or not to his or her previous employment), the employer from whose employment the disability arose must provide suitable employment for the worker (the employment being employment for which the worker is fit and, subject to that qualification, so far as reasonably practicable the same as, or equivalent to, the employment in which the worker was employed immediately before the incapacity).

(a) it is not reasonably practicable to provide employment in accordance with that subsection (and the onus of establishing that lies in any legal proceedings on the employer); or

(b) the worker left the employment of that employer before the commencement of the incapacity for work; or

(c) the worker terminated the employment after the commencement of the incapacity for work; or

(d) the employer currently employs 10 or more employees, and the period that has elapsed since the worker became incapacitated for work is more than 2 years; or

(e) the employer currently employs less than 10 employees, and the period that has elapsed since the worker became incapacitated for work is more than 1 year."

23 At the same time s 58C required an employer of a worker suffering a compensable disability to give 28 days notice of termination to the Corporation and the worker. This was enforced with a penalty in the event of failure. The notice was not required if the employment was properly terminated on the grounds of serious and wilful misconduct, or the worker was neither receiving compensation nor participating in a rehabilitation program for the disability, or the rights had been exhausted.

24 These considerations enable the scheme of the Act and Parliament's intent in this regard to be appreciated. The most obvious indication is that referred to by the Deputy President (at par 54). Each of the items in ss 36(1)(a) to (d) and (f) to (h) involve the opportunity for revival of the payments upon requisite changes to the situation, (viz the restoration of mutuality or the loss of the further employ or work). That is admitted by Mr Calligeros (8).

25 Further in s 58B, a provision with the purpose of forcing the employer to provide rehabilitation to the worker to lessen the burden of injured workers upon the scheme, (see Arrowcrest Group Pty Ltd v Gill [1993] FCA 541; (1993) 51 IR 270 at 283), a proviso exists in subs (2)(a) expressly relieving that obligation but only if, "it is not reasonably practicable to provide employment" in accordance with subsection (1). That provision overrides any rights and obligations arising from a contractual basis including the effect of dismissal pursuant to terms express or implied.

26 These features are strong evidence that Parliament did not intend the obligation to end if the employer successfully terminates the contract upon the grounds of serious and wilful misconduct. Rather it required the "reasonably practicable" provision to operate and for the entitlement to payment to remain in suspension until the requisite elements regarded as needed for employment were restored. This depends on an understanding of the general law set out herein before and the circumstances of the given case.

27 The result of this reasoning is that there is no inconsistency between the provisions of s 36(1)(e) which enable a discontinuance of payments on the grounds of dismissal through serious and wilful misconduct and an obligation to provide suitable employment for the worker. The duty to provide work is on this authority a stand alone duty. This would appear to justify and accord with the conclusions of the Deputy President in his judgment (par 54). That being the legislative intent, it contradicts the suggestion that was at the centre of the appellant's argument, namely a termination from employment on the grounds of serious and wilful misconduct relieved the employer for all time from any further duty to make weekly payments either while the worker remained partially incapacitated or, indeed, if he became totally incapacitated.

28 The obligation laid down in s 58B is, by its terms, a question of fact to be dealt with by the Deputy President. That in turn depends on his evaluation and conclusions drawn from the circumstances. That is what the Deputy President did on this occasion and to proceed further with the matter would be to embark upon a consideration of facts, not law. That is outside our jurisdiction. The appeal is dismissed.