May, Roshana --- "One claim' policy clarified by the New South Wales Court of Appeal" [2015] PrecedentAULA 75; (2015) 131 Precedent 34

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‘ONE CLAIM’ POLICY CLARIFIED BY NSW COURT OF APPEAL

By Roshana May

A decision handed down on 27 August 2015 by the NSW Court of Appeal in the matter of Cram Fluid Power Pty Limited v Green^[1] (Cram Fluid) has clarified the meaning of ‘one claim’ for the purposes of s66(1A) Workers Compensation Act 1987 (NSW). It has effectively confirmed that the government’s ‘one claim policy’ applies irrespective of the date of injury.

THE POSITION REGARDING PERMANENT IMPAIRMENT COMPENSATION IN NSW PRIOR TO THE CRAM FLUID DECISION (27 AUGUST 2015)

Prior to 19 June 2012

Prior to 19 June 2012, the right generally existed for all workers to pursue a claim for permanent impairment compensation and pain and suffering compensation (collectively called ‘lump sum compensation’) in addition to other benefits (for example, weekly payments, medical expenses) in respect of an injury. Those rights were given in ss66 and 67 of the Workers Compensation Act 1987 (the 1987 Act). There were effectively two ‘schemes’ – one affecting coalminers, and one affecting the balance of NSW workers. The rights of workers in both schemes were broadly similar, particularly in relation to claims for ‘permanent impairment compensation’.^[2]

The 2012 amendments: Three schemes

As a consequence of the 2012 amendments to the workers’ compensation legislation, the NSW workforce was effectively fractured into three ‘groups’^[3] covered by three ‘schemes’ of benefits: They are:

• Coalminers: those workers working in or about a (coal) mine;

• The ‘exempts’: police, paramedics, and firefighters ‘exempted’ from the 2012 legislative amendments; and

• The ‘non-exempts’: workers not covered by the categories above and who fall under the 2012 legislative amendments and the ‘current scheme’.

Coalminers’ workers’ compensation rights and entitlements are preserved in the pre-27 November 2001 version of the legislation. They have an entitlement to s66 permanent impairment compensation for which there is no threshold, and they can bring more than one claim for permanent impairment (in respect of the same injury). They are entitled to claim pain and suffering compensation if their s66 claim is valued at $10,000 or greater. Their rights are not affected by the 2012 amendments to the workers’ compensation legislation or scheme, or the decision in Cram Fluid.

The ‘exempts’ retain rights and entitlements preserved in the pre-2012 legislation. They have an entitlement to s66 permanent impairment compensation for which there is no threshold (exceptions are for hearing loss and psychiatric injury). They can bring more than one claim for permanent impairment (in respect of the same injury). They are entitled to claim pain and suffering compensation if their degree of impairment is 10 per cent or greater. Their rights are not affected by the 2012 amendments to the workers’ compensation legislation or scheme, or the decision in Cram Fluid.

The ‘non-exempts’ group, which covers the great majority of NSW workers. They are affected by the 2012 amendments to the workers’ compensation legislation which, in relation to permanent impairment claims, introduces an impairment threshold of ‘greater than 10 per cent’,^[4] the ‘one claim policy’^[5] and removal of pain and suffering compensation.^[6] Their rights are affected by the recent decision in Cram Fluid.

THE ‘ONE CLAIM’ POLICY

The NSW government’s Issues Paper, April 2012,^[7] which preceded the 2012 Amendment Bill^[8] highlighted a concern with injured workers making multiple ‘top up’ lump sum compensation claims. The scheme’s actuary predicted an increasing drain on scheme funds. The issue was the subject of a recommendation^[9] of the Joint Select Committee Inquiry into the NSW Workers’ Compensation Scheme in June 2012. The government did not follow the recommendation and instead introduced a ‘one claim policy’.

The ‘one claim policy’ is contained in s66(1A) of the 1987 Act (as amended in 2012):

‘Only one claim can be made under this Act for permanent impairment compensation in respect of the permanent impairment that results from an injury.’

The amending Act included a savings and transitional provision, clause 15 of Part 19H to Schedule 6 to the 1987 Act, which states: ‘the 2012 Amending Act extends to a claim for compensation made on or after 19 June 2012 but not to such a claim made before that date’.

Subsequently, in October 2012, a Transitional Regulation^[10] provided clause 11 to Schedule 8 of the Workers Compensation Regulation that affected the operation of clause 15. Clause 11 relevantly provided that: ‘The amendments made by Schedule 2 to the 2012 amending Act extend to a claim for compensation made before 19 June 2012, but not to a claim that specifically sought compensation under s66 or 67 of the 1987 Act.’^[11]

Effect of the one claim policy prior to Cram Fluid

Goudappel

The effect of the policy was discussed in the decisions of Goudappel v Adco Constructions Pty Ltd, a matter that travelled from presidential decision in the Workers Compensation Commission to the High Court.^[12] Mr Goudappel received an injury at work in April 2010. The injury resulted in permanent impairment (evaluated at 6 per cent whole person impairment (WPI)) for which he made a claim specifically for permanent impairment compensation on 20 June 2012. There were three relevant facts: the injury was received in 2010 (before the 2012 legislative amendments); his impairment was evaluated below the new impairment threshold introduced with the 2012 legislative amendments; and his claim specifically seeking permanent impairment compensation was made after 19 June 2012 (the date from which the 2012 amendments took effect).

As a consequence of the presidential decision made on 22 October 2012, Mr Goudappel was denied permanent impairment compensation. Further, from 22 October 2012 all specific claims for permanent impairment compensation made on or after 19 June 2012 by workers in similar circumstances suffered the same fate and were denied.

Mr Goudappel appealed to the Court of Appeal and, in a decision dated 29 April 2013, his claim was found to be ‘valid’. The Court of Appeal answered the question relating to the application of the one claim policy and the new impairment threshold to claims for compensation pursuant to s66 ‘made on and after 19 June 2012 where a worker has made a claim for compensation of any type in respect of the same injury before 19 June 2012’ in the negative. Put simply, Mr Goudappel had made a claim for compensation benefits immediately following his injury in April 2010 and by virtue of that claim was exempted from the operation of the amendments to s66. As a consequence of this decision, all claims specifically for permanent impairment compensation made on or after 19 June 2012 where the worker had previously made a claim for any type of compensation prior to 19 June 2012 were allowed and paid.

Adco Constructions sought and was granted special leave and, on 16 May 2014, the High Court answered the ‘question’ differently and to the detriment of Mr Goudappel. With reference to a Transitional Regulation,^[13] the High Court found that the 2012 amendments to s66 ‘apply to claims for compensation pursuant to s66 of the Workers Compensation Act made on and after 19 June 2012, where the worker has not made a claim specifically seeking compensation under s66 or s67 before 19 June 2012’.

Those workers in a similar position to Mr Goudappel were again bound by the 2012 amendments. A new question then arose as to the application of the amendments to those workers who had made claims specifically seeking compensation under s66 or s67 before 19 June 2012.

Caulfield

This was answered by decision of a Deputy President of the Commission on appeal in the matter of Caulfield v Whelan Kartaway Pty Limited.^[14] Mr Caulfield had sustained injury to his right knee on 9 August 2005, and following surgery in 2009 claimed permanent impairment compensation under s66 in 2010. Mr Caulfield’s impairment was evaluated by an approved medical specialist (AMS) and he was awarded compensation in respect of 8 per cent WPI in November 2010 (his claim before 19 June 2012 ‘specifically seeking compensation under s66’). In March 2011, Mr Caulfield underwent further surgery and subsequently on 29 August 2012 made a claim for further permanent impairment compensation. The subsequent claim was disputed, with the arbitrator finding that there had been no significant deterioration in the worker’s condition to substantiate a further claim, giving rise to an estoppel. The arbitrator did not consider the effect of the Goudappel decisions on the application of the 2012 amending Act to Mr Caulfield’s claim.

In determining the effect of the 2012 amending Act on Mr Caulfield’s claim, the Deputy President accepted the appellant’s submission that the amendments introduced by the 2012 amending Act ‘did not apply to Mr Caulfield’; that ‘the clear words of the High Court are that the amendments do not apply where the worker has made a claim for s66 prior to 19 June 2012’. The Deputy President opined that this exclusion was not limited to one set of proceedings for s66 compensation:^[15]

‘It follows that, applying the text of the legislation, having regard to its context and history, as Mr Caulfield ‘specifically sought’ compensation under s 66 before 19 June 2012, the amendments to s 66 in the 2012 amending Act do not apply to him and his claim is entitled to be determined without regard to the restrictions in the new s66. In other words, he is not caught by the new threshold and not restricted to making only one claim for permanent impairment compensation.’ [At 40].

Following the Caulfield decision, workers who had claimed s66 permanent impairment compensation prior to 19 June 2012 were able to pursue at least one further claim for further permanent impairment compensation on or after 19 June 2012.

The decision in Caulfield was followed, up until the Court of Appeal decision in Cram Fluid Power Pty Ltd v Green was delivered on 27 August 2015.

The position, therefore, immediately before the Cram Fluid decision, was that a worker injured prior to 19 June 2012 who had, prior to 19 June 2012, made a claim specifically for permanent impairment compensation pursuant to s66, was exempt from the amendments to s66 (the impairment threshold and the one claim policy) and could pursue claims for further permanent impairment compensation on or after 19 June 2012.

THE POSITION IN NSW SINCE 27 AUGUST 2015: CRAM FLUID POWER PTY LIMITED v GREEN [2015] NSWCA 250

The Court of Appeal handed down its decision in Cram Fluid on 27 August 2015. The decision dramatically changes the interpretation of the 2012 amendments to s66.

The facts of the matter are uncontested and involve a worker, Mr Green, who sustained an injury to his back on 24 May 2005. Mr Green made a claim for compensation against his employer, Cram Fluid Power Pty Ltd, within six months of his injury.

On 14 December 2010, he made a claim specifically for permanent impairment compensation under s66, which was resolved by means of Complying Agreement^[16] for 7 per cent WPI in 2010 (‘the 2010 Claim’) before the ‘critical date’ (19 June 2012).

Mr Green’s condition deteriorated and he had spinal surgery in September 2012. After undergoing surgery and on 29 October 2013 (after the ‘critical date’) Mr Green made a claim for further permanent impairment compensation under s66. This claim (‘the 2013 claim’) was for 22 per cent WPI, with credit sought for the amount paid in respect of the 2010 claim.

The 2013 claim was not resolved by agreement and Mr Green commenced proceedings in the Workers Compensation Commission. The arguments revolved around the amendments to s66 of the 1987 Act and specifically the one claim policy and its effect on workers’ entitlements to pursue subsequent claims for permanent impairment compensation under s66.

The arbitrator concluded that Mr Green was not precluded by the 2012 Amending Act from bringing his 2013 claim and remitted the matter for referral to an AMS for assessment of the degree of impairment.

On appeal, President Keating identified the issues as:

‘whether the transitional provisions, which are expressed to exempt certain claims from the application of the amending Act, apply only to claims that are pending or unresolved as at 19 June 2012’; and

‘whether the limitation of ‘only one claim’ contained in s66(1A), is intended to mean one claim in respect of an injury or one claim following the introduction of the amending Act and amending Regulation’.^[17]

President Keating confirmed the arbitrator’s determination, finding that the one claim limitation introduced by the 2012 Amending Act did not apply to Mr Green’s 2013 Claim (following Goudappel in the Court of Appeal and the High Court and following Caulfield), and that s66(1A) applied only prospectively to claims for lump sum compensation made on or after 19 June 2012. He specifically rejected the appellant’s submissions in relation to the construction of the Transitional Regulation and the words ‘only one claim’ in s66(1A), finding that those words mean ‘only one claim for lump sum compensation from the date of the amendment’ [author’s emphasis].

On appeal to the Court of Appeal, two issues were identified:

1. Whether the one claim limitation in s66(1A) applied to Mr Green’s 2013 Claim;

2. Whether the words ‘one claim’ in s66(1A) are to be interpreted as meaning only one further claim may be made on or after 19 June 2012.

As a further issue, the Court of Appeal considered the operation of s66A(3) of the 1987 Act, which appeared to provide a right of review of a claim where resolution was by means of a Complying Agreement.

The judgment expressed the issues in this way:

‘The question raised by the first issue, is whether the 2013 Claim is a “claim for compensation made on or after 19 June 2012” to which the one claim limitation in s66(1A) applies, or is “a claim for compensation made before that date”, within the meaning of the transitional provision in cl 15 of Pt 19H of Sch 6 to the 1987 Act’.^[18]

‘The second issue is whether s66(1A) should be construed to mean that only one “further” claim for lump sum compensation can be made after the commencement of the 2012 Amending Act, as Keating P held, or whether Mr Green’s 2013 Claim is not maintainable, because he has already made “one claim” for lump sum compensation under the 1987 Act, namely his 2010 Claim.’^[19]

It was held per Gleeson JA (Beazley JA and Emmett JA agreeing):

1. The 2013 Claim is a ‘new claim’, a ‘different claim’ to the 2010 claim although arising out of the same injury.^[20]

2. The 2013 Claim is not one saved by clause 11 of Schedule 8 (that is, it is not ‘a claim which specifically sought permanent impairment compensation under s66 ... made before 19 June 2012’).^[21]

3. Section 66(1A) operates on facts antecedent to the 2012 amending Act coming into force, including the existence of an earlier claim for permanent impairment compensation under s66. You do not read into the section the word ‘further’ such that it means ‘one further claim’ for permanent impairment compensation.^[22]

4. The Commission’s power under s66A(3)(c) to award additional compensation is not independent of a worker’s entitlement to receive compensation under s66. Hence, s66A(3)(c) only operates where the further claim was made before 19 June 2012 and remains unresolved.

5. Accordingly, the 2010 Claim was Mr Green’s one claim for permanent impairment compensation and s66(1A) disentitles him from making his 2013 Claim for further permanent impairment compensation.

CONCLUSION

The decision clarifies that except for ‘extant claims’ – those claims for permanent impairment compensation or further permanent impairment compensation made prior to 19 June 2012 which remain unresolved – a (non-exempt) worker has only one claim ever for permanent impairment compensation in respect of an injury, regardless of the date of injury or how many claims have been made prior to 19 June 2012.

The consequence of the decision is that injured workers who had made a claim for permanent impairment before 19 June 2012, which has resolved, cannot pursue further permanent impairment compensation.

Application

The decision applies to claims for permanent impairment compensation in relation to physical and psychological injuries for non-exempt workers.

Does the decision apply to hearing loss permanent impairment claims?

It can be implied from Cram Fluid that the interpretation of ‘one claim’ applies to hearing loss claims where the deemed date of injury is on or after 1 January 2002. This is more so as a consequence of the Court of Appeal decision in Sukkar v Adonis Electrics Pty Ltd,^[23] where the plurality confirmed that a claim for further hearing loss permanent impairment compensation was, by virtue of the s17 deeming provision, a new claim for a new ‘injury’.^[24]

Claims for permanent impairment compensation for hearing loss (industrial deafness) where the deemed date of injury is prior to 1 January 2002 have been treated as exempt from the amendments to s66 (and 67) by virtue of the appeal decision in BP Australia Ltd v Greene (Greene).^[25] The Deputy President accepted the argument that transitional and savings provisions introduced with the 2001 amendments to the 1987 Act including Schedule 6, Part 18C, clause 3, which preserved an earlier form of s66 in respect of injuries occurring before 1 January 2002, had not been specifically repealed by the 2012 Amending Act and therefore the amendments to s66 made by the 2012 Amending Act did not apply to claims for hearing loss compensation where the deemed date of injury was prior to 1 January 2002.

In a recent presidential decision of BHP Billiton Ltd v Bailey (Bailey),^[26] where permanent impairment compensation was agreed for a pre-2001 hearing loss injury (applying Greene), Part 18 C clause 3 was found to have no relevance, nor did it operate to exempt the worker from the 2012 amendments to s67 of the 1987 Act; rather, its work was ‘limited to preservation of s66 entitlement in accordance with the pre-2001 form of that section’.

While not specifically addressed by the Court of Appeal in Cram Fluid, the Court’s observation ‘that the exemption provided by cl 11 from the new s66(1A), is directed to those “claims” for compensation which answer the relevant description, not the “claimant” or “worker”, nor the “injury” to the worker’ suggests that the decisions in Greene and Bailey should be distinguished.

What about the power to award ‘additional compensation’ in s66A(3)?

In Cram Fluid, the 2010 claim had resolved by means of a Complying Agreement under s66A of the 1987 Act. Section 66A(3) provides that, in such circumstances, the Commission may award additional permanent impairment compensation; and, relevantly, if it is established since the agreement was entered into that there has been an increase in the degree of permanent impairment beyond that so agreed.^[27]

The Court of Appeal discussed the apparent conflict between the ‘one claim limitation’ in s66(1A) and the Commission’s power to award additional permanent impairment compensation under s66A(3). To resolve the conflict, the Court invited an examination of the hierarchy of the provisions in order to ascribe each provision ‘the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme’.^[28]

The Court opined that ‘following the introduction of s66(1A), s66A(3) only has a limited operation with respect to claims for lump sum compensation additional to that payable under a complying agreement, where the further claim is made before 19 June 2012’.

Regard should be had to the recent appeal decision in Rebecca Robin-True v Stella Maris College [2015] NSWWCC 179; A1-000244/15 (28 September 2015), in which a senior arbitrator had found (pre-Cram Fluid) that s66A(3) had continuing operation despite s66(1A). Ms Robin-True sought additional compensation under s66A(3), having resolved a claim for permanent impairment compensation made after 19 June 2012 by means of a Complying Agreement. On appeal, the Deputy President considered and adopted Gleeson JA in Cram Fluid: ‘the one claim limitation in the new s66(1A) [must] be taken to be the leading provision and the Commission’s power under s66(3A) must give way to it’. He opined that the observations on the operation of s66(3A) in Cram Fluid are dicta and bind the Commission, adding ‘seriously considered dicta’ by an appellate court, which is not ‘plainly wrong’, should be accepted by a lower court (or tribunal)’.^[29]

COMMENTARY

There will be a number of workers fortunate enough to have ‘topped’ up their permanent impairment compensation prior to the Cram Fluid decision during fluctuating periods of beneficial interpretation of s66(1A).

There are a much greater number of workers injured prior to 19 June 2012 whose condition will deteriorate over time and who are now deprived of the right to any further permanent impairment compensation to appropriately and fairly compensate them for their injury. That right was, at the time of resolving their permanent impairment claim, a continuing right which they could assert when and if their impairment increased.

The decision brings unpleasant finality to a period of great uncertainty as to the application of the one claim limitation. Unfortunately, the decision also confirms that the 2012 Amending Act has retrospective application to injuries sustained and claims made prior to 19 June 2012, an application denied by the government.^[30]

POSTSCRIPT

On Monday 26 October 2015 the Minister responsible for Better Regulation, Mr Victor Dominello, announced that in response to the Cram Fluid decision a ‘new regulation’ will be made ‘to enable injured workers who made a claim for lump sum compensation before 19 June 2012, to make one further claim if their condition significantly deteriorates’. He announced that the new regulation, expected to commence in November 2015, ‘will address a potential disadvantage for injured workers who made a claim before 19 June 2012, on advice that they could make a further claim if their condition deteriorated...There is no time limitation for making the claim or restriction on minimum increase in a claimant’s level of permanent impairment’.

At the time of writing, the regulation had not been gazetted or circulated for consultation.

Roshana May is a lawyer in Sydney. She is the NSW ALA State President.

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^[1] Cram Fluid Power Pty Limited v Green [2015] NSWCA 250, a decision of President Keating dated 17 December 2014.

^[2] Major reforms were introduced on 27 November 2001 preserving the scheme as it immediately existed beforehand for coalminers and creating a new scheme for other workers.

^[3] See the Workers Compensation Legislation Amendments Act 2012. Most provisions took effect from 19 June 2012.

^[4] Section 66(1) of the 1987 Act.

^[5] Section 66(1A) of the 1987 Act.

^[6] Contained in Schedule 2 of the Workers Compensation Legislation Amendment Act 2012.

^[7] NSW Government Issues Paper, April 2012, p19. Option for change 10. ‘Only one claim can be made for whole person impairment: It has been suggested that such a measure might ensure that workers’ injuries are stabilised providing them with appropriate compensation. It may also reduce the ability of fraudulent or exaggerated injuries to meet the meet [sic] thresholds.

^[8] The Workers Compensation Legislation Amendment Bill 2012.

^[9] Joint Select Committee on the NSW Workers Compensation Scheme, Report 1 – June 2012, p79, Recommendation 12: That the NSW government ensure that, under the Workers Compensation Scheme, after the determination of a claim for whole person impairment, only up to two further claims be permitted and in each case only if there has been a deterioration of whole person impairment of at least 5 per cent since the last determination.

^[10] The Workers Compensation Amendment (Transitional) Regulation 2012, specifically Schedule 1 [5].

^[11] Schedule 2 is the schedule of the Amending Act dealing with permanent impairment claims.

^[12] Goudappel v Adco Constructions Pty Limited [2012] NSWWCCPD 60; Goudappel v Adco Constructions Pty Limited [2013] NSWCA 94; Adco Constructions Pty Limited v Goudappel [2014] HCA 18.

^[13] The Workers Compensation Amendment (Transitional) Regulation 2012, specifically schedule 1 [5].

^[14] Caulfield v Whelan Kartaway Pty Limited Decision of DP Roche [2014] NSW WCCPD 34, 11 June 2014.

^[15] Ibid, at 36-7.

^[16] Section 66A, Workers Compensation Act 1987.

^[17] Cram Fluid Power Pty Ltd v Green, see note 1 above at [1]-[2].

^[18] Ibid at 53.

^[19] Ibid at 54.

^[20] Ibid at 84.

^[21] Ibid at 91.

^[22] Applying Sukkar v Adonis Electrics Pty Ltd [2014] NSWCA 459.

^[23] [2014] NSWCA 459, 22 December 2014.

^[24] Cram Fluid, see note 1 above at 95-8.

^[25] [2013] NSWWCCPD 60, a decision of Deputy President Roche, dated 11 November 2013.

^[26] [2015] NSWWCCPD 48, a decision of Deputy President O'Grady dated 19 August 2015.

^[27] Subsection 3(c) of s66A.

^[28] Cram Fluid, see note 1 above at 105-8.

^[29] Following MacFarlan JA in Kendirjan v Lepore [2015] NSWCA 132 at [33].

^[30] ‘O'Farrell denies plan to rein in $4 billion WorkCover deficit is retrospective – lawyers say he's wrong’, Sydney Morning Herald, June 20, 2012; NSW Legislative Council Hansard, Wednesday 20 June 2012 at 13195, 13208.