Welcome to the March 2013 issue of the Edwards Michael Lawyers eBulletin.

Court of Appeal Upholds Employer’s Disease Recovery

In CSR Timber Products PTY Limited v Weathertex Pty Limited [2013] NSWCA 49, the Court of Appeal dismissed an Appeal by a self insurer (CSR) against District Court findings which allowed a Section 151Z recovery action to proceed against a former employer.

The worker successfully obtained an award of the Workers Compensation Commission against Weathertex Pty Limited, insured by Employers Mutual NSW Limited, pursuant to the deeming provisions of the Act, on the basis that Weathertex was the last employer under Section 15 (1) (b) of the 1926 Act.

In circumstances where the evidence established that employment with Weathertex was unlikely to have been causative of the worker’s condition, nasal adenocarcinoma resulting from exposure to wood dust, Weathertex issued Section 151Z recovery proceedings seeking indemnity from CSR, the self insured employer with whom the worker’s exposure to wood dust was most significant.

CSR sought to resist the Section 151Z recovery claim on two grounds. Firstly, it maintained that Weathertex was estopped from findings of the Workers Compensation Commission from proceeding with its Section 151Z action. Secondly, it argued that the terms of Section 151Z (1) did not allow recovery from a former employer.

In relation to the estoppel point, the Court rejected CSR’s position on the basis that the Commission did not make any finding that the carcinoma had not been contracted during the worker’s employment with CSR, and also on the basis that it was not legally necessary for the Commission to make such a finding in order to find Weathertex liable under the Disease provisions of the Act to pay compensation.

In relation to construction of Section 151Z (1), the Court of Appeal found that “employer” in the context of the Section refers to “employer liable to pay compensation”, thus not precluding recovery from a previous employer not liable to pay such compensation.

The Decision is of considerable importance to employers who have attracted a 100% liability for Workers Compensation payments pursuant to the deeming provisions of the Act, in circumstances where actual causation results from a breach of duty of care of an earlier non-scheme agent employer.

Supreme Court Finds Employer Not Liable; Recovery Succeeds

In Ryan v AF Concrete Pumping Pty Limited [2013] NSWSC 113 the Plaintiff, a working Director, suffered injuries, including cognitive impairment, when concrete was expelled through a hose-pipe directly into his face and head.

The Plaintiff sued the operators of the concrete pump, and also the Subcontractor responsible for the concrete spraying aspect of operations, relating to construction of a swimming pool. The Defendants both sued the Plaintiff’s employer, insured by Employers Mutual, for contribution. Employers Mutual issued Cross Claims seeking recovery pursuant to Section 151Z of the 1987 Act.

After a lengthy trial, Adamson J determined that the accident was caused by a casual act of negligence of employees of AF Concrete.

In relation to the conduct of the employee of AF Concrete, Her Honour stated: –

“The conduct of “Spud” was grossly negligent. To expect others to predict and prevent such an act, which immediately preceded its disastrous consequences, is entirely unreasonable”

Her Honour found the Defendants failed to prove that there was any action the employer could have reasonably taken to reduce the risk of injury to the Plaintiff, or that there was any relevant omission on the part of the employer to take reasonable care to provide the Plaintiff with a safe system of work. The claims against the employer therefore failed.

Her Honour also found that the Plaintiff’s conduct was neither negligent nor causative. Accordingly, there was no deduction for contributory negligence.

The employer was not liable to contribute to the Plaintiff damages and received a 100% recovery of workers’ compensation payments, plus interest and costs.

Future Medical Expenses: Injury Issues

In Tolevski v Zanardo & Rodriguez Sales and Service Pty Limited [2013] NSWWCCPD 9, President Keating considered an appeal from an Arbitrator’s Decision that a claim for future medical expenses ought not be referred for assessment by an Approved Medical Specialist pursuant to Section 60(5) of the 1987 Act because the worker failed to prove that he suffered a consequential condition in his hips as a result of an original injury to his knee.

Deputy President Keating noted the mandatory nature of Section 60(5), which requires a claim for prospective medical treatment to be referred for assessment by an Approved Medical Specialist. His Honour also adopted the reasoning of Deputy President O’Grady in Inghams Enterprises Pty Limited v Stanhope [2012] NSWWCCPD 32, that liability questions concerning whether proposed treatment results from an injury and whether treatment is reasonably necessary may only be answered following remitter to the Registrar, for referral to an Approved Medical Specialist, prior to determination of those issues.

The above Decision makes it clear that claims for prospective medical expenses, where there is an issue concerning whether proposed treatment is reasonably necessary, must be referred for non-binding assessment by an Approved Medical Specialist prior to liability issues such as “injury” being determined.

Section 66A Agreements Bind Parties as to all Impairments Resulting from Injury

Employers Mutual successfully resisted an attempt by a worker to claim lump sum compensation in respect of a body part which was not included in a s.66A Complying Agreement: Di Paolo v Cazac Constructions (NSW) Pty Ltd [2013] NSWWCC PD 8.

In 2010 the worker made a claim in respect of a 28% WPI consisting of impairments of both lower extremities and the lumbar spine. The insurer issued a s.74 Notice declining liability for the lumbar spine and subsequently entered into a s.66A Complying Agreement to pay lump sum compensation in respect of a 19% WPI resulting from injury to both lower extremities.

In May 2012, the worker made a further claim in respect of a “combined 24% WPI” consisting of a 6% WPI resulting from injury to the lumbar spine and a 19% WPI resulting from injury to both lower extremities, with an acknowledgment that credit should be given for the monetary amount previously paid in respect of the 19%. It was clear that the worker intended to accept the previous agreement in relation to the lower extremities but to seek lump sum compensation in respect of the lumbar spine which had previously been declined. The insurer declined the claim on the basis of the s.74 Notice previously issued.

The insurer’s Reply filed sought leave to raise a further issue, namely whether the worker was precluded from bringing the claim on the basis that all impairments resulting from the “injury” had been incorporated in the s.66A Complying Agreement and that the worker was bound by that agreement.

It is significant that the second claim for permanent impairment compensation was based upon the same medical report as had been relied upon in the original claim, meaning that there was no suggestion of an increase in the degree of impairment since the s.66A Complying Agreement was entered into and therefore no reliance was placed by the worker on s.66A(3), which provides that the Commission may award compensation additional to that paid under a s.66A Complying Agreement if there has been an increase in the degree of permanent impairment since the agreement was entered into.

The employer’s argument was upheld by the arbitrator and the worker appealed to a Deputy President.

At first instance and on appeal, the worker argued that the s.66A Complying Agreement only covered the body parts referred to in it and that, applying principles of contract law, the circumstances of the case viewed objectively indicated that the worker did not intend to forego his rights to claim for lump sum compensation in respect of the lumbar spine and that it was open to him to do so.

In rejecting the appeal, Deputy President O’Grady made reference to his own decision in CSR Limited v Gonzales [2010] NSWWCC PD 118, in which he found that a s.66A Complying Agreement constituted a final and binding agreement between the parties in respect of all impairments resulting from an injurious event and was not limited to the impairments contained in the agreement. In Gonzales, the worker was aware of the presence of surgical scarring and it had been noted by medical examiners but no assessment of impairment in relation to it had been provided and no claim had been made in respect of it at the time the s.66A Complying Agreement was entered into. Deputy President O’Grady found that it was not open to the worker to bring a further claim in respect of scarring in those circumstances.

This case serves as a strong reminder that a s.66A Complying Agreement binds the parties as to the full extent of all impairments resulting from an injurious event as at the date it is entered into, and that a worker will not be able to subsequently claim in respect of an impairment to a different body part which could and should have been included in the original claim. It is, however, emphasised that this case is of no relevance where a worker asserts that there has been an increase in the degree of impairment which has arisen since the s.66A Complying Agreement was entered into by operation of s.66A(3).

The relevance of this decision might be thought to be limited having regard to the 2012 amendments. There remains, however, considerable controversy as to the operation of those amendments where a claim generally or a claim for lump sum compensation has been made and finalised prior to 19 June 2012.

2012 Amendments – Permanent Impairment Deterioration Claims

In Swan v Tanti Demolitions & Excavations Pty Limited, Arbitrator Wynyard was required to consider whether a claim submitted after 19 June 2012 could be brought for further permanent impairment compensation.

The Parties had signed a Complying Agreement on 18 September 2009 and, the worker sought further compensation by letter dated 21 June 2012.

The insurer disputed liability on the basis that the worker was restricted by Section 66(1A) of the 1987 Act (as amended by the 2012 Amendments) to only one claim for permanent impairment compensation.

The worker relied on Section 66A(3)(c), which allows the Commission to award Compensation additional to that agreed in a Complying Agreement if it is established that there has been an increase in the agreed degree of permanent impairment.

Arbitrator Wynyard noted that Complying Agreements are not a “decision of the Commission” and that they are not amenable to Appeal to a Medical Appeal Panel, thus they occupy a “particular place in the jurisdiction”. The Arbitrator considered that Section 66A(3) provided a mechanism for further compensation to be claimed in the event of deterioration. The Arbitrator did not consider that a “claim” was necessary pursuant to Section 66A(3), but that a claim for deterioration since a Complying Agreement was a matter “in connection with a claim” within the definition of “medical dispute” in Section 319 of the 1998 Act. Thus Section 66(1A) was not applicable.

The Respondent is still within time to appeal the above Decision.

Work Injury Damages Claims for Psychiatric Injuries

The Common Law principles in relation to psychiatric injury are discussed in detail in the Paper “Seeing into the Mind; Liability for Psychiatric Injury at Common Law”. Tim Wardell, Special Counsel, concludes: –

“Koehler established that knowledge of a risk of psychiatric injury, as distinct from an emotional response of “stress” or upset, through complaints directly referring to an adverse effect on health or obvious signs that this was the case, now represents the touchstone of liability in the area of negligence law relating to psychiatric injury arising out of employment”

Tim’s analysis makes it clear that establishing Common Law liability for bullying, harassment and overwork claims is no easy task for a Plaintiff. Click here to view.