Incapacity vs work capacity and the jurisdiction of the Workers Compensation Commission

The Court of Appeal has determined that notice of a decision that denies ongoing liability for weekly payments pursuant to section 33 of the Workers Compensation Act 1987(1987 Act), is not a work capacity decision. As a result, the Workers Compensation Commission (Commission) has jurisdiction to determine a dispute about the denial of liability to pay weekly benefits where an insurer maintains there is no incapacity as a result of an injury.

Background

Ms Sabanayagam suffered a work-related injury to her left knee and left ankle on 6 October 2006. St George Bank Limited, through its Insurer, accepted liability for the injury. The Insurer made a series of work capacity decisions. The last one, dated 24 September 2014, determined that Ms Sabanayagam had no current work capacity.

On 20 March 2015 the Insurer issued notice pursuant to section 74 of the Workplace Injury Management and Workers Compensation Act 1998 (1998 Act) advising of its decision that Ms Sabanayagam’s injury had resolved and was no longer causing her any incapacity for work for the purposes of section 33 of the 1987 Act.

The legislation

Section 105 of the 1998 Act was observed by the Court of Appeal to be a starting point for considering the jurisdiction of the Commission, commencing as that section does with a grant of exclusive jurisdiction to the Commission to examine, hear and determine all matters arising under the 1987 and 1998 Act – subject to any restrictions within the Acts.

Central to the determination of this matter was section 43 of the 1987 Act. Subsection 43(1) defines what constitutes a work capacity decision and provides that these are decisions to be made by an insurer in a final and binding manner. For completeness, subsection 43(3) provides that the Commission does not have jurisdiction to determine any dispute about a work capacity decision made by an Insurer, or to make a decision inconsistent with a work capacity decision.

Section 43(2) lists two types of decisions which are not work capacity decisions being:

1. A decision to dispute liability for weekly payments of compensation,
2. A decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act.

Commission decisions

Arbitrator McDonald found that the notice of decision of 20 March 2015 constituted a work capacity decision and therefore the proceedings involved a dispute about a work capacity decision. On that basis she concluded the Commission did not have jurisdiction to determine the dispute.

Deputy President O’Grady, on appeal by Ms Sabanyagam, confirmed that the notice of decision of 20 March 2015 was (or involved the communication of) a work capacity decision. He decided that a work capacity decision “should be taken to include a decision as to the existence, or otherwise, of such current work capacity as defined“.

On Appeal

Ms Sabanayagam appealed the Deputy President’s decision contending, on several grounds, that the notice of decision of 20 March 2015 was not a work capacity decision and that, thus, the Commission had jurisdiction to determine the dispute.

All three Judges of the Court of Appeal rejected the proposition that the notice of decision of 20 March 2015 was a work capacity decision, or that it was possible to infer the Insurer had made a work capacity decision prior to formulating the notice.

Their Honours reviewed the relevant parts of the legislation, and the contents of the notice, and concluded there was no evidence to show that a work capacity decision had been made in March 2015.

They were influenced by the format of the decision (purporting to be a notice pursuant to section 74 of the 1998 Act), the absence of any process the Insurer ought to have undertaken to make a work capacity decision, and the failure to consider concepts relevant to a determination of whether the worker had a current work capacity or no current work capacity.

Justice Sackville, with whom President Beazley agreed, considered that section 105 of the 1998 Act provided a broad jurisdiction to the Commission. He considered that the insurer’s failure to excite the operation of the exclusionary power contained in section 43 of the 1987 Act by making a proper work capacity decision was sufficient to find that the Commission did have jurisdiction.

Justice Sackville did not accept that the decision constituted “a decision to dispute liability for weekly payments of compensation” such that subsection 43(2)(a) would have operated if he had otherwise found the decision to be a “work capacity decision”. In this regard Justice Sackville expressed his view that section 43(2)(a) was intended to cover situations where the refusal to pay weekly payments of compensation was a consequence of the insurer denying liability on the basis, among other things, that the injured person was not a worker for the purposes of the 1987 Act, or had not suffered a compensable injury.

Basten JA, allowed the appeal on different grounds. He concluded the notice of decision of 20 March 2015 was not a work capacity decision because it was a decision to dispute liability for weekly payments within the meaning of section 43(2)(a).

Discussion

The decision means that the Commission retains jurisdiction to deal with disputes raised on the basis that there is no partial or total incapacity for the purposes of section 33 of the 1987 Act unless there is clear evidence that an insurer has also made a work capacity decision.

However, this decision is probably not the end of the jurisdictional controversy arising from section 43. When Ms Sabanayagam’s dispute returns to the Commission it may still be necessary to consider the limits to the Commission’s ability to make a determination in view of section 43(3), which provides that the Commission is not to make a decision which is inconsistent with a work capacity decision.

The issues which would arise in Ms Sabanayagam’s case are:

1. Is the Commission prevented from making a decision inconsistent with the September 2014 work capacity decision (that the worker had no current work capacity)?
2. Is it relevant that the work capacity decision was six months old at the time of the section 74 notice?
3. Would it make a difference if, since the work capacity decision, the Insurer had obtained new evidence which showed the worker’s condition had improved? Could it then be argued there had been no work capacity decision about the issues which are now before the Commission?
4. The decision in Sabanayagam means the Commission is likely to see a short term increase in Applications to Resolve a Dispute from workers who have been awaiting the outcome of this appeal. It would be timely for insurers and employers to review any notices issued disputing liability pursuant to section 33 of the 1987 Act. Provided they do not refer to work capacity or to the worker having no work capacity then it is likely, using the Court of Appeal formulation, that they cannot be treated as work capacity decisions. On that basis, the Commission would have jurisdiction to consider the dispute so notified.

This article was written by Tim Ainsworth, Partner and Marilyn Cassidy, Senior Associate.