Favetti Bricklaying Pty Limited v Benedek and Anor

By a summons filed on 13 January 2016 Favetti Bricklaying Pty Limited (“the plaintiff”) seeks the following orders:

The summons pleads the following particulars of the second defendant’s decision:

The summons was supported by an affidavit of Greg Guest, solicitor of 26 May 2016, which was read without objection. The factual summary below is drawn largely from the contents of that affidavit.

The State Insurance Regulatory Authority (“the Authority”) made submissions to the Court as Amicus Curiae.

On 5 October 2005, Milan Benedek (“the first defendant”) was injured whilst employed by the plaintiff as a bricklayer. On 5 November 2008 a complying agreement under s. 66A of the Workers Compensation Act 1987 (NSW) (“the WCA”) was entered into between the plaintiff, the first defendant and QBE Workers’ Compensation (NSW) Limited (“QBE”). That agreement noted that the first defendant had suffered a 14% whole person impairment as a consequence of his injuries, and recorded the following amounts of compensation payable to him as follows:

The first defendant executed the agreement on 13 November 2008.

On 6 April 2015 the first defendant’s solicitor wrote to QBE enclosing a report of Dr Patrick of 4 April 2015, which was prepared following Dr Patrick’s examination of the first defendant on 9 March 2015. Dr Patrick recorded the nature of the first defendant’s injury to be a work related back injury, with effect on the lower limbs, mainly the right lower limb. Dr Patrick stated (inter alia):

Having recorded his findings on examination, Dr Patrick concluded (inter alia):

In his letter of 6 April 2015, based upon the report of Dr Patrick, the first defendant’s solicitor particularised a further claim for compensation as follows:

The first defendant’s solicitor sought a concession from QBE that in light of the findings of Dr Patrick, the second defendant’s level of whole person impairment now exceeded 15%. The letter concluded:

On 7 May 2015, the first defendant’s solicitor wrote to QBE and advised that he had been instructed to bring a claim for work injury damages. QBE responded by letter of 28 May 2015 denying liability for the first defendant’s claim under s 74 of the Workplace Injury Management and Workers Compensation Act 1988 (NSW) (“the WIMA”). In short, QBE asserted that the injury to the thoracic spine asserted by the first defendant was not related to his employment as required by s. 9A of the WCA and further, that the first defendant had not sustained any permanent impairment over and above that for which he had already been compensated. The letter noted that the first defendant had been assessed at QBE’s request by Dr Casikar on 8 May 2015 who had formed the view that the first defendant’s condition was due, in the main, to degenerative disease of the lumbar spine and diabetes. The letter went on to explain that Dr Casikar had assessed the first defendant’s whole person impairment at 10%.

On 28 October 2015 the solicitor for the first defendant served an application for assessment of the first defendant’s injury by an Approved Medical Specialist (“AMS”). On 11 November 2015, the plaintiff’s solicitor wrote to the solicitor for the first defendant, and to the second defendant, in the following terms:

In his response of 19 November 2015, the solicitor for the first defendant took issue with the proposition that the second defendant did not have power to refer the matter to an AMS until the issue of liability had been determined, and asserted that the Workers Compensation Commission (“the Commission”) had no jurisdiction to hear and determine matters for the purposes of a work injury damages claim.

On 20 November 2015 the solicitor for the plaintiff responded by taking issue with the proposition that the Commission did not have jurisdiction. Having set out a number of legislative provisions, including the provisions of s. 321 of the WIMA, the plaintiff’s solicitor stated:

On 2 December 2015 the second defendant wrote to the parties in the following terms:

On 2 December 2015 the plaintiff’s solicitor wrote to the second defendant seeking a reconsideration of the matter, and taking issue with the second defendant’s interpretation of the legislation. In particular, the plaintiff’s solicitor took issue with the proposition that s.321(4)(a) of the WIMA prevented the referral of a medical dispute concerning permanent impairment, suggesting that if the legislature had intended this to be the case it could have said so clearly. It was pointed out that under the legislation, a “medical dispute” was not limited to a claim for permanent impairment. It was further submitted that “the plain reading” of s. 321(4)(a) of the WIMA applied to a broader class of claims than those for permanent impairment compensation. The letter concluded by asserting that the Commission had the necessary jurisdiction and that the decision to refer the matter to an AMS was an error.

On 7 December 2015, Padmini Sundaraj, the Co-ordinator of Dispute Management at the Commission, forwarded the plaintiff a referral to an AMS. That referral was in the following form:

On 7 December 2014 the solicitor for the plaintiff wrote to Ms Sundaraj objecting to the referral on the basis that (inter alia):

On 9 December 2015 the second defendant responded to the plaintiff’s solicitors and confirmed her earlier decision. In doing so, the second defendant stated (inter alia):

The plaintiff’s solicitor responded to the second defendant on 9 December 2015, addressing the second defendant’s observations regarding s. 329 of the WIMA, and re-stating his position as to the proper interpretation of s. 321(4)(a). On 11 December 2015 the solicitor for the first defendant wrote to the second defendant, effectively submitting to her that her decision should stand, and that the matter should be referred to an AMS. The solicitor for the plaintiff responded on the same day by referring the second defendant to further authority, before again confirming his position regarding the interpretation of s. 321(4)(a).

On 15 December 2015 the second defendant wrote to the plaintiff’s solicitor rejecting his submissions and confirming that the matter would proceed to an assessment by an AMS. The present proceedings were then commenced on 13 January 2016.

The scheme of workers compensation in New South Wales is governed by two statutes, namely the WCA and the WIMA. The WCA contains (inter alia) provisions relating to a worker’s entitlement to compensation, the benefits payable, common law remedies and other related matters. The WIMA provides for (inter alia) the effective management of work-related injuries. The WCA is to be construed with, and as if it formed part of, the WIMA.

I was taken to a number of the provisions of each of the WCA and WIMA in the course of argument. Those provisions are set out below.

Part 2 of the WCA includes s. 9 which is in the following terms:

Section 4 defines the term “injury”:

Under s. 9 of the WCA no compensation is payable in respect of an injury other than a disease injury unless the relevant employment was a substantial contributory factor to the injury.

Provisions are made for compensation benefits in Part 3 of the WCA. In particular, s. 66 is in the following terms:

Part 5 of the WCA deals with common law remedies. Section 150B is the following terms:

Section 151 preserves common law and other liability, except to the extent that the WCA Act otherwise expressly provides, in the following terms:

Modified common law damages are dealt with in Division 2 of Part 5, which includes s. 151H in the following terms:

One of the objects of the WIMA is to provide for the effective management of work-related injuries, and compensation for workers in respect of such injuries. The Act establishes processes for making claims for compensation, mediating disputes and determining whether the degree of whole person impairment resulting from an injury is sufficient to meet the threshold to enable a worker to recover damages (namely a whole person impairment of at least 15%).

Part 2 of Chapter 4 of the WIMA contains provisions in relation to notice of injury and claims for compensation. The term “claim” is defined in s. 70 as follows:

Division 6 of Chapter 4 of the WIMA sets out the jurisdiction of the Commission and of a Court. Under s. 105, and subject to the Act, the Commission is given exclusive jurisdiction to examine, hear and determine all matters arising under the two Acts as follows:

Chapter 7 of the WIMA contains various definitions including the definition of “work injury damages” which is in the following terms:

Division 4 of Part 3 is entitled “Claims for lump sum compensation and work injury damages”. Section 280A is in the following terms:

Section 280B is in the following terms:

Further, s. 281 is in the following terms:

Section 282 is in the following terms:

Part 4 of Chapter 7 includes provisions in relation to the determination of disputes in connection with claims for compensation. Section 288 is in the following terms:

Section 289(3) is in the following terms:

Further, s. 293 is in the following terms:

Under s. 312 of the WIMA proceedings in respect of a claim for work injury damages may be taken in any court of competent jurisdiction, subject to other provisions in Part 6. Division 2 of Part 6, entitled “threshold for awards of damages” contains provisions in relation to the threshold for the commencement of court proceedings. The threshold is that a worker must have been assessed as suffering from at least 15% degree of permanent impairment under Part 7 of Chapter 7 of the WIMA: s 313 of the WIMA and s. 151H of the WCA. Section 313 of the WIMA is in the following terms:

Section 314 of the WIMA is in the following terms:

Part 7 of Chapter 7 of the WIMA makes provision for medical assessment. Section 319 contains a number of definitions including the definition of the term “medical dispute”:

Section 321 makes provision for the referral of a medical dispute for assessment:

The Commission is established by s. 366 of the WIMA and exercises jurisdiction conferred by both Acts, as well that conferred by subordinate legislation in the form of the Workers Compensation Regulation 2010 (NSW).

There are various provisions of the WIMA (notably s. 368 and s. 375) which set out the constitution of the Commission. In particular, s. 375 is in the following terms:

As to the role of an Arbitrator, s. 355(1) is in the following terms:

Pursuant to s. 294(1) of the WIMA, if a dispute is determined by the Arbitrator, the Arbitrator must as soon as practicable after the determination of the dispute issue the parties to the dispute with a certificate as to the determination.

The principal issues raised in the present case centre upon the proper construction of s. 321(4)(a) of the WIMA, and the powers of the Registrar of the Commission to refer a medical dispute concerning the degree of whole person impairment of a worker for assessment, in circumstances where there is an issue of liability which has not yet been determined.

These issues, in turn, give rise to further questions concerning the relationship between:

In short, it is the plaintiff’s position that:

The plaintiff further argues that the construction of the legislation adopted by the second defendant in the present case would, if followed, produce one or more perverse results. The plaintiff submitted that such a construction could lead to a conclusion that where a matter proceeded to the District Court due to the worker having reached the threshold of at least 15% for an injury for which liability has been declined, a defendant would be left without any ability to raise a threshold issue by relying on s. 151H of the WCA. It is also the plaintiff’s position that would be perverse for the District Court to find itself effectively bound by a certificate issued by an AMS in relation to the degree of permanent impairment, without any opportunity to refer the matter back for further assessment.

In written and oral submissions in support of the plaintiff’s position, senior counsel took the court through the legislative provisions which are set above. It will be apparent that of all of those provisions, it is the construction of s. 321(4)(a) of the WIMA which is primarily in issue.

Senior counsel submitted that the construction of s. 321(4)(a) should necessarily begin with a consideration of its text, as well as a consideration of the context in which it appears in the WIMA. It was submitted that such an approach required that s. 321(4)(a) be read, not in isolation from the WIMA of which it forms a part, but in the context of the WIMA as a whole. Senior counsel stressed that a primary objective of statutory construction is to construe the relevant provision so that it is consistent with the language and the purpose of all of the provisions of the statute, thus avoiding irrational, unjust and absurd consequences.

Senior counsel submitted that the WCA and the WIMA should be regarded as beneficial or remedial legislation and that as a consequence, it was necessary to construe such provisions liberally. It was submitted that any anomalies or ambiguities in the legislation should be resolved in favour of a construction which achieved the fundamental purpose of providing compensation to injured workers in full measure.

With these general principles in mind, senior counsel for the plaintiff made a number of submissions as to the proper construction of s. 321(4)(a) of the WIMA.

Firstly, it was submitted that the second defendant’s construction of s. 321(4)(a) of the WIMA was inconsistent with its plain text. It was submitted that such text prohibited referral of a matter to an AMS in circumstances where:

Senior counsel submitted that the language of the section should be given its natural and ordinary meaning, and that the word “concerning” as it was used in the section was indicative of a broader rather than narrower class of dispute. It was submitted that the text of the section made it clear that there could be no referral to an AMS for assessment of a medical dispute concerning permanent impairment where there was an issue as to liability that had not been determined by the Commission, constituted by an Arbitrator.

It was further submitted that there was nothing in the context in which s. 321(4)(a) appeared in the WIMA which suggested any other construction. On the contrary, it was submitted that the immediate context of s. 321(4)(a) was one which was consistent with the construction which was urged.

It was further submitted that there was nothing in the context of the legislative regime as a whole (i.e. the regime constituted by the WCA and the WIMA) which suggested any alternative construction, and that a dispute as to injury was plainly a matter within the jurisdiction of the Commission.

Further, it was submitted that such a construction of s. 321(4)(a) was consistent with the language and purpose of s. 322A(2) of the WIMA, which provided that the certificate given by the AMS in connection with an assessment of the degree of permanent impairment of an injured worker was the only certificate which could be used in connection with any further or subsequent medical dispute about the degree of permanent impairment of the worker as a result of the injury.

It was further submitted that having regard to the overall purpose of the legislative scheme, the construction of s. 321(4)(a) which was advanced by the plaintiff was one which avoided the perverse result of:

Senior counsel for the plaintiff further submitted that the determination of the second defendant was beyond power. It was submitted that s. 151H(4) of the WCA provided, in relation to work injury damages claims, that the degree of permanent impairment resulting from an injury was to be assessed as provided by that section, along with Part 7 of Chapter 7. It was submitted that the term “results from an injury” pre-supposed that liability for such “injury” within the meaning of s. 4 of the WCA had been determined or was not disputed, such that the permanent impairment to be assessed was that which resulted from the relevant injury. It was submitted that in the present case, the effect of the determination of the second defendant in terms of the proposed referral was to direct the AMS to assess permanent impairment, regardless of such statutory requirements.

It was submitted that in all of these circumstances, I should conclude that in a work injury damages claim where liability is in issue, the Commission had jurisdiction under s. 105 of the WIMA to determine such issue and, following any such determination, had jurisdiction to refer the degree of permanent impairment of the worker as a result of the injuries for which liability had been determined to exist to an AMS for assessment.

The essence of the submission made by counsel for the first defendant was that properly viewed, the decision of the second defendant was not one which was made pursuant to s. 321 of the WIMA at all, but was in fact one which was made pursuant to s. 151H of the WCA (set out at [30] above).

Counsel for the first defendant further submitted that in dealing with the issues raised, it was necessary to focus on the nature of the assessment carried out by an AMS. He emphasised, in particular, that an AMS does not assess the injury as such, but rather assesses the extent of the impairment(s) resulting from it. In this respect, it was submitted that some analogy was to be drawn between the present circumstances and those considered by Fullerton J in Michael v State of New South Wales [2011] NSWSC 231 which, it was said, supported the first defendant’s position.

Counsel for the Authority did not take issue with the plaintiff’s outline of the general principles applicable to the task of statutory construction. However, it was submitted that the application of those principles led to a different conclusion for a number of reasons.

Firstly, in terms of the text of s. 321(4)(a) of the WIMA, it was submitted that the effect of the plaintiff’s submission was that it was incumbent upon the Commission to determine liability to pay statutory compensation, even if that liability was not in issue. In this regard, it was submitted that the position advanced on behalf of the plaintiff was contradicted by the plain words of s. 321(4)(a), which applied a restriction only where liability was an issue and had not been determined by the Commission.

Secondly, it was submitted that contextual considerations presented difficulties in terms of the construction advanced on behalf of the plaintiff. It was submitted, in particular, that the division between the Commission’s functions as arbitrator of entitlements to statutory compensation, and the traditional role of the courts in determining rights and liabilities at common law, provided an important matter of context. It was submitted that no express provision had been made in the legislation that would bind the court in determining a claim for work injury damages to respect, or adhere to, the Commission’s view as to whether or not there was an injury, where the only claim being pursued was one for damages. It was submitted that the absence of an express provision as to the status, in court proceedings, of the Commission’s determination of liability was a matter telling against the plaintiff’s suggested construction.

Thirdly, it was submitted that s. 321(4)(a) of the WIMA did not contemplate that the Commission should determine the initial question of whether the injured worker was, in fact, suffering from an injury. Rather, it was submitted that the provision referred to the determination of a different and wider inquiry, and that the question of liability was not to be equated with the question of whether an injury had occurred.

It was further submitted that the legislative history of the relevant provision also tended to confirm the interpretation which had been adopted by the decision maker.

Finally, it was submitted that the construction advanced on behalf of the Authority, far from producing an unintended or absurd result, in fact produced a result which reflected the intended operation of the legislation, namely to have the threshold issue determined by an AMS. It was submitted, in particular, that this was the express effect of s. 151H(4) of the WCA which required that, for the purposes of s. 151H(1), the degree of permanent impairment resulting from an injury was to be assessed as provided by that section, and Part 7 of Chapter 7 of the WIMA. It was submitted that this being so, an employer was nevertheless entitled to contend before a court that the alleged injury was not an injury for the purposes of the legislation.

The competing positions of the parties obviously give rise to an issue of statutory construction. The principles to be applied to the task of statutory construction may be summarised as follows:

Section 319 of the WIMA (set out at [44] above) defines the term “medical dispute”. In light of the correspondence sent on behalf of QBE on 28 May 2015 (referred to at [11] above) there is, in the present case, clearly a medical dispute within the meaning of s. 319(c).

The effect of s. 321(1) of the WIMA is to confer a power on a Court, the Commission or the Registrar, to refer a medical dispute for assessment. However the discretionary power conferred on the Registrar to do so is limited by (inter alia) s. 321(4)(a) which prohibits the power to refer such a dispute from being exercised in respect of a medical dispute “concerning permanent impairment” if:

The word “concerning” within the phrase “concerning permanent impairment” is necessarily a wide one. It is defined in the Concise Oxford Dictionary as meaning “about”. There is no warrant, in my view, to ascribe a narrow meaning to the phrase. It connotes a broad class of dispute.

Section 321 of the WIMA forms part of an enactment, the objects of which are directed, in part, to the establishment of a scheme of management of work related injuries. As senior counsel for the plaintiff pointed out, the issue of liability to which s. 321(4)(a) refers must, given the context in which the provision appears, be an issue of liability arising under either WCA or the WIMA. Issues of liability may arise in a number of different circumstances under the legislation. They include the fundamental liability to pay compensation.

In the present case, QBE gave notice under s. 74 of the WIMA denying liability. In doing so, QBE took the position that the plaintiff was not entitled to any compensation over and above that which he had already received. The effect of that notice was to put in issue QBE’s liability to pay compensation to the first defendant. There was no subsequent determination of liability by the Commission.

In these circumstances, the relevant criteria having been met, the plain text of s. 321(4)(a) did not allow the second defendant to determine that the matter should be referred to an AMS.

The conclusion reached by the second defendant as to the construction of s. 321(4)(a) would, if adopted, lead to results which in my view are unlikely to have been intended by the Parliament. For example, such a construction could result in an employer being forced to defend a work injury damages claim in respect of an injury for which it was not liable on the basis that it had no connection at all with the worker’s employment. Further, pursuant to s. 322A, only one assessment can be made of the degree of permanent impairment of an injured worker. Adoption of the second defendant’s construction of s. 321(4)(a) would mean that a court could find itself bound by a certificate issued by an AMS which related to injuries for which the employer was not found to be liable, in circumstances where there was no power to refer the matter for a further assessment.

I am unable to accept the submission advanced on behalf of the first defendant that the second defendant’s determination should be viewed as having been made pursuant to s. 151H of the WCA. This is so for a number of reasons. Firstly, s. 151H of the WCA does not incorporate a power of referral. Secondly, the correspondence between the parties is completely inconsistent with the proposition that the matter was referred by the second defendant to the AMS pursuant to s. 151H. Thirdly, the decision in Michael upon which counsel for the first defendant referred is of no assistance, for the simple reason that Fullerton J was giving consideration to a completely different legislative scheme than that which I have been required to consider.

The submissions of the Authority were based, at least in part, on the proposition that the construction advanced by the plaintiff impermissibly elided liability to pay statutory compensation and liability to pay work injury damages. On this basis, it was submitted that the plaintiff’s construction of s. 321(4)(a) of the WIMA was contradicted by the plain words of the section.

In my view, that approach tends to overlook both the facts of the present case and the scheme which is created by the legislation. It is apparent from the correspondence referred to at [11] above that QBE denied liability on the basis that the first defendant did not sustain any injury to his thoracic spine on 5 October 2005. Liability under the legislation can only arise if there is an injury. The liability referred to in s. 321(4)(a) is not, as was submitted on behalf of the Authority, limited to liability to pay statutory compensation. As I have noted, liability can arise in a number of different ways. The construction of s. 321(4)(a) advanced by the plaintiff simply recognises the obvious, namely that the existence of an injury is a fundamental prerequisite to any liability under the legislation.

In reaching her determination, the second defendant made reference to the decision in Junsay v Uncle Toby’s Company Limited [2009] NSWWCCPD 71 as authority for the proposition that the Commission has no jurisdiction to determine matters which are related to a claim for work injury damages. Contrary to the position adopted by QBE, the employer in Junsay accepted liability (at [5]). The present issue of statutory construction which is before me simply did not arise for consideration in that case. In any event, I am not able to conclude that the Commission has no such jurisdiction. That the Commission has that jurisdiction is evident from an analysis of the relevant statutory provisions.

Section 105(1) of the WIMA (set out at [33] above) confers upon the Commission exclusive jurisdiction to examine, hear and determine matters arising under the WIMA and the WCA. Section 105(2) provides that the Commission does not have such jurisdiction in respect of matters arising under Part 5 of the WCA (dealing with common law remedies) except for the purposes of, and connection with, the operation of Part 6 of Chapter 7 of the WIMA (my emphasis).

Sections 313 and 314 of the WIMA (set out at [42] and [43] respectively above) prevent the commencement of court proceedings for damages where there is a dispute as to the degree of permanent impairment of the injured worker, unless the degree of permanent impairment has been assessed by an AMS. For that purpose, there will be a threshold dispute if:

Unless and until that dispute is resolved, the District Court has no jurisdiction. The resolution of the dispute depends upon the issue of a certification by an AMS assessing a degree of permanent impairment of at least 15%.

Under s. 319 of the WIMA, the “medical dispute” in the present case is a dispute concerning the degree of permanent impairment of the first defendant. Pursuant to s. 321(4)(a), the Registrar has no power to refer the matter for an assessment by an AMS where liability is in issue and has not been determined by the Commission. That necessarily presupposes that the Commission has the jurisdiction to resolve the issue of liability prior to the matter being referred to an AMS. The AMS, in turn, is called upon to assess the level of permanent impairment for the injury for which liability has been determined.

In exercising that jurisdiction the Commission is, pursuant to s. 105(2) of the WIMA, exercising its jurisdiction to “examine, hear and determine” matters for the purposes of, and in connection with, the operation of Part 6 of Chapter 7 of the WIMA. In my view, there is nothing contained in either the WCA or the WIMA which reflects an intention on the part of the Parliament to restrict the jurisdiction of the Commission in the way determined by the second defendant.

As I have noted, the Authority relied on the legislative history to support the construction it advanced. Legislative history cannot displace the meaning of the statutory text, nor is the legislative history and end in itself: Jonson v R [2016] NSWCCA 286 at [18] per Bathurst CJ (the other members of the court agreeing) citing Consolidated Media Holdings (supra). For the reasons that I have already set out, the meaning of the statutory text is in my view plain and not displaced by any aspect of the legislative history to which I was taken.

Finally, I accept the submissions of the plaintiff that the second defendant’s referral was beyond power. Such a referral was, in my view, clearly inconsistent with the provisions of s. 151H(4) of the WCA. The term “injury” as it appears in that section can only mean injury for which liability has been determined. To conclude to the contrary would lead to the unintended consequence of allowing an assessment of permanent impairment of an injury to be undertaken, in circumstances where no liability for that injury may ever attach to an employer.

For all of these reasons, the relief sought by the plaintiff should be granted.

I make the following orders: