Injury: The root of all compensation

Is a worker entitled to be back-paid weekly benefits if they are assessed as having permanent impairment of more than 20% after their benefits cease under s 39(1) of the Workers Compensation Act 1987? The Court of Appeal examined this point of law in the following two concurrent decisions.

 

Author: Chad Farah
Judgment Date: 17 June 2020
Citation: Hochbaum v RSM Building Services Pty Ltd; Whitton v Technical and Further Education Commission t/as TAFE NSW [2020] NSWCA 113
Jurisdiction: NSW Court of Appeal1

Principle


  • The 260-week limit under s 39(1) of the Workers Compensation Act 1987 never applies to a worker whose degree of permanent impairment resulting from the relevant injury exceeds 20%, regardless of when that threshold is crossed.

Background

These two separate, but concurrent cases, concerned Ms Whitton and Mr Hochbaum (the workers), who respectively sustained compensable workplace injuries in 1999 and 2000. Both brought claims for compensation prior to 1 October 2012 and both were 'existing recipients' of weekly benefits as at that date.

The Workers Compensation Legislation Amendment Act 2012, which came into operation around that time, introduced the current version of s 39 of the Workers Compensation Act 1987 (the 1987 Act).

It reads as follows:

(1)    Despite any other provision of this Division, a worker has no entitlement to weekly payments of compensation under this Division in respect of an injury after an aggregate period of 260 weeks (whether or not consecutive) in respect of which a weekly payment has been paid or is payable to the worker in respect of the injury.

(2)    This section does not apply to an injured worker whose injury results in permanent impairment if the degree of permanent impairment resulting from the injury is more than 20%.

(3)    For the purposes of this section, the degree of permanent impairment that results from an injury is to be assessed [by an Approved Medical Specialist]'.

The transitional provisions under the 2016 Regulations provided that, for the purposes of s 39, time did not begin to run until 1 January 2013. Meaning, the 260-week period for all existing recipients, including Ms Whitton and Ms Hochbaum, expired on 25 December 2017.

By Christmas day of 2017, neither of the workers had been assessed as having permanent impairment of more than 20% so as to enliven s 39(2). Their weekly benefits were discontinued the following day.

What transpired next was as follows:

  1. On 18 June 2018, an Approved Medical Specialist issued a Certificate in relation to Ms Whitton to the effect that she had 32% permanent impairment; and
  2. On 16 July 2018, an Approved Medical Specialist issued a Certificate in relation to Mr Hochbaum to the effect that he had 21% permanent impairment.
With the condition under s 39(2) being satisfied in each case, weekly benefits resumed for both workers from the date of the respective Certificates. The question, however, was whether they were entitled to be back-paid for the periods between 26 December 2017 and the date of the Certificates. For Ms Whitton, that was a period of 25 weeks; for Mr Hochbaum, that was a period of 29 weeks.

The workers were successful at Arbitration, in the first instance, but the decisions were overturned following a Presidential appeal in the Workers Compensation Commission.

The workers, in turn, appealed to the Court of Appeal on this discrete point of law.

Court of Appeal

Two competing schools of thoughts were presented to the Court.

On the one hand, the employers argued that s 39(2) exempted the workers from the operation of s 39(1), but only from the day they were assessed as having permanent impairment of more than 20%. On the other hand, the workers argued that being assessed at more than 20% at any point in time exempted them from the operation of s 39(1) in a retrospective fashion.

His Honour Brereton JA, with whom White JA and Simpson AJA agreed, reasoned that:

  1. the wording of s 39(2) does not mandate that an assessment of permanent impairment take place before that subsection can override s 39(1);
  2. it is the 'injury', within the meaning of s 4 of the 1987 Act, that gives life to s 39(2). That is because permanent impairment must ultimately flow from that 'injury' which inevitably pre-dates the 260-week period referred to in s 39(1);
  3. there may be various reasons why the final degree of permanent impairment cannot be ascertained prior to the expiry of the 260-week period, but that is not to say that the 'injury' that existed all along did not result in the ultimate level of impairment within the meaning of s 39(2); and
  4. the entitlement to lump sum compensation, based on permanent impairment under the 1987 Act, is unconnected to the date when that permanent impairment is assessed or agreed, but is rather connected to the date of injury.
The Court summarised the position at paragraph 42, as follows:

'…contrary to the decisions of the President of the Commission, on the proper construction of s 39, the 260-week limit never applies to a worker whose degree of permanent impairment resulting from the relevant injury exceeds 20%, regardless of when that threshold is crossed, and regardless of whether or when it is formally assessed as having been crossed.'

Why this case is important

Three things must be kept in mind.

Firstly, barring a further appeal by the employers to the High Court, this decision does not only enhance the rights of existing recipients of weekly benefits as at 1 October 2012, but rather all workers who satisfy s 39(2) sometime following the cessation of their weekly benefits pursuant to s 39(1).

Secondly, this decision does not mean claims for weekly benefits falling within the s 39 period are no longer defendable. It may still be open to the employer to scrutinise the underlying requirements of incapacity and its connection with the workplace injury within the meaning of ss 33 and 38 of the 1987 Act (which were not in issue here).

Thirdly, claims for back-pay based on this decision are not likely to arise frequently seeing as the vast majority of workers reach medical stability and are assessed for permanent impairment at the behest of competent solicitors within 260 weeks (i.e. 5 years) of a claim being made.

While this decision is important in the way claims are assessed moving forward, it remains to be seen whether it will give rise to an overwhelming number of new claims as has been foreshadowed.


1 White JA, Brereton JA and Simpson AJA.

Contributors

Chad Farah Senior Associate