Hee v State Transit Authority of New South Wales [2019] NSWCA 175
Background
On 17 October 2013, the Applicant, Mr Hee, sustained injury to his cervical spine in the course of his employment with the State Transit Authority of NSW.
On 24 January 2014, Mr Hee underwent an urgent cervical laminectomy. He did not work from 24 January 2014 to 31 May 2014, returning to his pre-injury duties on 1 June 2014.
The Applicant was paid weekly compensation for the closed period in 2014 and was awarded lump sum compensation for 34% WPI.
On 17 March 2017, the Applicant made a further claim for weekly compensation pursuant to Section 38A on the basis that he was a worker with highest needs.
Section 38A(1) of the Workers Compensation Act 1987 (‘the 1987 Act’) states:
‘(1) If the determination of the amount of weekly payments of compensation payable to a worker with highest needs in accordance with this Subdivision results in an amount that is less than $788.32, the amount is to be treated as $788.32.’
The claim was disputed by the Insurer and proceeded to the Commission.
On 17 May 2017, a Work Capacity Decision was issued by the Insurer, stipulating that the Applicant had no further entitlement to weekly compensation on the basis that he had no incapacity and had returned to full pre-injury duties. The Insurer submitted that this was irrespective of his level of impairment and the operation of Sections 32A and 38A.
The Respondent submitted that the Commission had no jurisdiction to deal with the dispute pursuant to Section 43(3) of the 1987 Act because the Insurer had made a Work Capacity Decision.
Senior Arbitrator Glenn Capel determined that the Notice issued by the Insurer on 17 May 2017 was not a Work Capacity Decision relying on the decision of Sabanayagam v St George Bank Ltd [2016] NSWCA 145, wherein it was determined that it was a crucial requirement of a Work Capacity Decision for the Insurer to assess the Applicant as having “no current work capacity” or having a “current work capacity” and fit for “suitable employment”. In Hee, the decision that was conveyed to the Applicant was in keeping with a liability dispute rather than a work capacity decision.
Notwithstanding the above, the Arbitrator found that the Applicant was not earning less than his pre-injury wages and was therefore not entitled to any ordinary weekly benefits pursuant to Section 37 In his view, it followed that the operation of Section 38A was not triggered.
The Applicant appealed the Arbitrator’s decision which was dismissed by President Keating, who rejected the Applicant’s proposition that a calculation of a weekly entitlement in the amount of zero constitutes a ‘determination of an amount payable’ and should invoke Section 38A.
The Applicant appealed to the Court of Appeal.
Court of Appeal
The finding that the Respondent had not issued a Work Capacity Decision was not in dispute on appeal.
The Applicant/Appellant advanced the position that, despite returning to his usual rostered shifts he was no longer able to perform overtime work to the same extent as before his injury. This, in the Applicant’s submission, amounted to partial incapacity for work within the meaning of the 1987 Act.
On appeal, Simpson AJA discussed that in order to determine the Applicant’s case, whether he was able to return to his pre-injury employment was an essential question of fact. That finding was also necessary for a determination whether the Applicant had “current [that is, diminished] work capacity” in order to permit a quantification of any weekly amounts “payable” under Section 37(2).
His Honour Simpson AJA summarised the critical error of the Senior Arbitrator in his original decision:
‘It appears to have been assumed by the arbitrator that, because Mr Hee had returned, essentially, to his pre-injury work regime, he had returned to his “pre-injury employment”. Contrary to the STA’s submissions, that was not the finding the arbitrator made. That finding was that Mr Hee had “resumed his full pre-injury duties”. The distinction is, in this case, significant. The arbitrator’s assumption failed to take into account Mr Hee’s claim that he was working less overtime than he had pre-injury, and had therefore not returned to his “pre-injury employment”.’
Accordingly, it followed that if the Applicant had diminished work capacity, the Commission would be obliged to determine in his favour that he was entitled to compensation under Section 37(2) (even if that entitlement is nil), which would then trigger the application of Section 38A.
In a two-to-one decision, the Court of Appeal found in favour of the Applicant and accepted the proposition that, if the amount of weekly benefits is nil then it followed that because zero is ‘less than $788.32’ as stated under Section 38A(1), the Applicant would also be entitled to the minimum weekly amount of $788.32 as indexed.
At paragraph 90 of the decision, White JA notes:
‘…Zero, or an amount less than zero, is less than $788.32. Section 35(2) expressly provides that an amount less than zero is to be taken to be zero. If zero is an amount then the “amount payable” under s 38A(1) can be zero. A zero amount can be the amount of weekly compensation “payable” under s 33 if the worker is not entitled to weekly compensation under s 36 or 37. That is less than $788.32.’
This decision appears to have been made reluctantly by the Court of Appeal, at paragraph 170 Simpson AJA states: ‘I appreciate that this result may well note what the legislature intended. It is the consequence of what has been enacted.’
In paragraph 107, the result was described by Simpson AJA as being ‘perverse’ but ‘consistent with the perversity inherent in the statutory scheme’.
This brings about an interesting circumstance where there appears to be an inverse relationship between a worker’s capacity and their entitlement to compensation.
Practical Examples
At paragraphs 100 – 103 of the judgment, White JA provides examples of the impact of the construction of Section 38A.
Example One
If a worker with highest needs was previously earning $1,000 per week and returned to work earning $800 per week, under Section 37(2) the worker would be entitled to benefits of $950 – $800 = $150 per week. These would be increased under Section 38A to $788.32, giving the worker a weekly income of $1,588.32.
Example Two
If a worker with highest needs was previously earning $1,000 per week and returned to work earning $500 per week, He or she will be entitled to benefits under Section 37(2) of $950 – $500 = $450 per week. This would be increased under s 38A to $788.32, giving the worker a weekly income of $1,238.32.
Example Three
Conversely, if the same worker was seriously incapacitated and had no capacity to work, they are entitled to the statutory rate of 80%, which would be $800 per week. As this entitlement in in excess of the Section 38A amount, no further entitlement under this section arises, giving the worker a weekly income of $800.00.
Conclusion
Accordingly, you can see that a more injured worker is going to be receiving less in weekly compensation than a Worker that can return to work. This occurs because the benefits payable under Section 38A are not adjusted by reference to an injured worker’s other earnings but by reference to the amount of weekly payments of compensation payable to the worker.
At paragraph 104, White JA summarises: ‘…the less compensation payable, because of higher post-injury earnings, the greater are the benefits available under s 38A to a worker with highest needs. The result contended for by Mr Hee is consistent with that outcome.’
The practical effect of this is that a Worker can return to full time work and accordingly have an entitlement of nil per week but still invoke the entitlement under Section 38A. As nil is less than $788.32, Section 38A requires that nil is related as $788.32 and the Worker will receive their normal income and the Section 38A entitlement.
In our view, it would be logical to amend the legislation account for the Worker’s actual earnings in Section 38A to prevent this disconnect between a worker’s actual loss and their subsequent entitlement.
Prepared by Andrew J Kemp, Principal Solicitor and Alisha Dyson, Solicitor.
For further information please contact:
Andrew Kemp
Kemp & Co Lawyers
Post: Level 3, 7 Bridge Street
SYDNEY NSW 2000
Phone: 9241 7799
Email: info@kempandco.com.au