Welcome of the February 2016 Edition of the Edwards Michael Powell eBulletin

The Latest on Work Capacity Decisions – Arbitrators Resist St George Bank Decision

There have been two contrary arbitral decisions since the decision of Sabanayagam v St George Bank Limited [2016] NSW WCC PD 3 (21 January 2016).

Firstly, in Goncalves v Menzie Port Jackson II Pty Limited (22 February 2016) Senior Arbitrator Snell considered a situation where a worker had been transitioned on 3 September 2013, with a Work Capacity Decision finding no current capacity for work, before the insurer issued Section 54 Notices in October 2014 declining any further liability on the basis that the effects of injury had resolved.

The Senior Arbitrator noted that in Sabanayagam Deputy President O’Grady had found Section 74 Notices were not Work Capacity Decisions but inferred that a Work Capacity Decision must have been made because there was a decision to discontinue payments of weekly compensation.

The Senior Arbitrator noted that this was a finding of fact made by the Deputy President and he relied on authority that “a Court will be very hesitant in drawing an inference in that party’s favour from indirect and second-hand evidence, when the party doesn’t call the direct evidence that prima facie it could have called….”.

There was no evidence from the decision-maker and the Senior Arbitrator was not prepared to draw an inference that the Section 54 Notices issued in October 2014 constituted Work Capacity Decisions.

Further, the Senior Arbitrator determined that there were multiple reasons to conclude that the October 14 Notices were not Work Capacity Decisions:-

  • There was no reference in the Section 54 Notices to a Work Capacity Decision being made.
  • The period of notice in the Section 54 Notices was 6 weeks, which was inconsistent with the period of notice required for a Work Capacity Decision (3 months).  It was noted that if the decision was in fact a Work Capacity Decision, then the insurer would have committed an offence under Section 54 in terms of notice provisions.
  • There was no evidence that the insurer had complied with the procedural requirements of the Guidelines for Work Capacity Decisions, including “fair notice” provisions.
  • The substance of the decision related to a dispute in relation to causation, which was excluded from being a Work Capacity Decision by both Section 43(2)(a) [liability dispute] and Section 43(2)(b) [medical dispute] of the 1987 Act.

The Senior Arbitrator also decided that by virtue of the Section 32A definition of “current work capacity”, a decision that a worker has no inability to perform pre-injury employment as the result of an injury (ie. the effects of the injury have resolved) is not a decision about “current work capacity” within the meaning of Section 43(1)(a).

The Senior Arbitrator was therefore not prepared to find that the Section 54 Notices is issued in October 2014 constituted Work Capacity Decisions.

Accordingly, the only valid Work Capacity Decision was dated 3 September 2013 when the insurer found the Applicant had no capacity for work.  Even though the worker was in the Third Entitlement Period, the Senior Arbitrator considered he had jurisdiction to award compensation because it was not inconsistent with the Work Capacity Decision dated 3 September 2013.  In other words, the Senior Arbitrator accepted that insurers have exclusive power to assess Work Capacity after the Second Entitlement Period but, once that assessment has been made, the Commission has jurisdiction to award weekly compensation provided any decision is not inconsistent with a Work Capacity Decision.

Secondly, in Clifford Go v UltraFloor Installations Pty Limited (22 February 2016) Arbitrator Harris considered a similar situation.  A worker was in receipt of weekly compensation at the rate of $768.40 per week pursuant to a Work Capacity Decision dated 1 May 2014 before payments were discontinued pursuant to Section 74 Notice dated 2 June 2015 on the basis of the effects of any injury had ceased.  The Arbitrator declined to follow the decision in Sabanayagam on the basis that that decision was determined on the facts and that factual findings do not create legal precedent.  Looking at the substance of the Section 74 Notice, the Arbitrator found that it was a dispute in relation to liability which is not a Work Capacity Decision.

Unlike in Sabanayagam, where Deputy President O’Grady inferred that a Work Capacity Decision must have been made, Arbitrator Harris determined that the right to review under the Act implied that any Work Capacity Decision must actually be communicated to a worker in order to be effective.

The Arbitrator also considered that the Section 74 Notice should not be regarded as a Work Capacity Decision because the insurer had also failed to comply with procedural requirements mandated for Work Capacity Decisions.

The Arbitrator rejected a submission that the Section 74 Notice was a decision about a worker’s “current work capacity” within the meaning of Section 43(1)(a) and was therefore a Work Capacity Decision.  The Arbitrator relied on the definition of “current work capacity” in Section 32A of the 1987 Act, being “a present inability resulting from an injury such that the worker is not able to return to his or her pre-injury employment but is able to return to work in suitable employment”.  The Arbitrator determined that this definition was inconsistent with the insurer’s argument that the worker had fully recovered from the effects of the injury and was able to return to pre-injury employment, because a worker who has fully recovered could return to pre-injury employment.

This case also involved consideration of the Commission’s jurisdiction to award compensation during the Third Entitlement Period.  Arbitrator Harris accepted that once an insurer has made an assessment of Work Capacity then the Commission has jurisdiction during the Third Entitlement Period provided it does not make a decision inconsistent with the Work Capacity Decision.

Implications

The decision of Deputy President O’Grady in Sabanayagam v St George Bank Limited is being given limited effect because it was a decision made on the facts of that particular case and is therefore not a binding legal precedent.

When there is doubt on the face of the document, the Commission is unlikely to draw an inference that a particular decision constitutes a Work Capacity Decision in the absence of evidence from the decision-maker.

Decisions will be objectively considered to determine whether they are in substance Work Capacity Decisions, or disputes in relation to liability.

In order to constitute a Work Capacity Decision, that terminology should be used, the requisite notice period should be given, the decision should be communicated to the worker, and the procedural requirements (eg. fair notice provisions) of the Act and Guidelines should be satisfied.

Decisions relating to causation, including whether the effects of injury have resolved, are disputes in relation to liability and/or disputes that can be the subject of a Medical Dispute and are therefore not Work Capacity Decisions.

Once an assessment of Work Capacity has been made by an insurer, the Commission has jurisdiction to make an award of compensation, including during the Third Entitlement Period, provided the decision is not inconsistent with a Work Capacity Decision.