Palamadovski v Southern Copper Ltd (No. 2) [1997] NSWCC 5; (1997) 15 NSWCCR 306 (7 February 1997)

[1997] NSWCC 5; (1997) 15 NSWCCR 306

PALAMADOVSKI v. SOUTHERN COPPER LTD (No. 2)

Compensation Court of New South Wales: Burke J

7 FEBRUARY 1997

ASSESSMENT AND AMOUNT OF COMPENSATION - AMOUNT OF COMPENSATION DURING INCAPACITY - LUMP SUM PAYMENTS - TWO INJURIES, ONE PRE-1987 ACT, ONE POST-1987 ACT - PRE-1987 INJURY NOT COMPENSABLE UNDER SECTION 66 - NO SCOPE FOR APPLYING SECTION 68A TO EFFECTS OF FIRST INJURY - NO SCOPE FOR APPORTIONMENT TO A PRE-1987 EMPLOYER OR INSURER - WORKERS COMPENSATION ACT 1987, SECTIONS 22, 66, 67, 68A AND SCHEDULE 6, PART 6, CLAUSES 4, 5 AND 6

G.M.N. FARKAS, for the respondent MMI

T.M. OWER, for the respondent QBE

CUR ADV VULT

BURKE J: An award in respect of losses pursuant to sections 66 and 67 of the Workers Compensation Act 1987 (the 1987 Act) was made for the worker in Wollongong on 3 October 1996. That award was in respect of permanent impairment of the back and a consequential permanent loss of efficient use of the left leg at or above the knee.

The losses were found to result from a back injury in 1994 when the employer was indemnified by MMI. It was also found that the worker received a back injury in 1982 when the employer was indemnified by QBE. The burden of the award was borne by MMI as the insurer at the time of injury from which the losses resulted.

A question arose as to whether the liability then found could be apportioned as between the two insurers of the respondent. Liberty to make written submissions of this question was then reserved. Liberty was also reserved to make submissions regarding the applicability or otherwise of section 68A of the 1987 Act regarding the finding of a deductible proportion to reduce the monetary value of the award in respect of the then found losses.

The first question essentially raised is whether a liability under the 1987 Act for a loss can be apportioned as between the insurer who indemnified the respondent at the time of the injury from which the loss has been found to result and an insurer who indemnified the employer under the Workers Compensation Act 1926 (the 1926 Act) at the time of an injury from which it could be found that the loss partly results. Can an "old" Act insurer be apportioned part of a "new" Act liability?

Mr Farkas representing Manufacturers Mutual advocates such apportionment and submits it is an available remedy and Mr Ower representing QBE maintains that it can't be done. Their views on that question are diametrically opposed. That difference seems to have its principal source in differing views as to the operation of Schedule 6, Part 6, clause 6 of the transitional provision to the 1987 Act.

I made it clear in addresses and judgment that I was satisfied that the applicant manifested no discernible permanent impairment or loss prior to the 1994 injury. Nonetheless, I indicated that I thought it could be open to find that the ultimate impairment and loss had resulted partly from the prior injury. Mr Farkas thought such attitude commendable. Mr Ower was less than impressed.

If apportionment of the section 66 lump sum for the loss is permitted, a related question was whether the sum awarded pursuant to section 67 in respect of pain and suffering resulting from that loss might also be apportioned.

I had really thought that there was little argument concerning the propriety of apportioning part of a "new" Act section 66 liability to an "old" Act insurer or employer. Duck J did so on 24 June 1994 in a matter that went to the Court of Appeal SUB NOM SWITZERLAND INSURANCE v. BURLEY, Court of Appeal, No. 40408/94, 15 September 1995, unreported. Duck J apportioned 30 per cent of the liability to the employer at the time of the 1986 injury and 70 per cent to the employer at the time of the 1991 injury. The Court of Appeal (Mahoney, Priestley and Meagher JJA) dismissed the appeal. Of course, it wasn't argued that the liability couldn't be apportioned, merely that, in the circumstances, it shouldn't be so apportioned. Everyone seems to have assumed apportionment to be a perfectly legitimate process and that it was equally legitimate to apportion new Act liability to an old Act insurer. And this before SUTHERLAND SHIRE COUNCIL v. BALTICA (1996) 39 NSWLR 87; 12 NSWCCR 716.

A similar type of apportionment had occurred in MAYNE NICKLESS LTD v. ROJAS, Court of Appeal, No. 40524/91, 29 March 1994, unreported and passed without dissent in the Court of Appeal. I certainly apportioned part of a 1987 Act liability to an insurer who indemnified in respect of a pre-1987 Act injury in WILSON v. BLAYNEY ABATTOIR COUNTY COUNCIL (1995) 12 NSWCCR 509--that was before SUTHERLAND SHIRE also. Neilson J did similarly in SECCOMBE v. DEMOLON PTY LTD [1995] NSWCC 33; (1995) 12 NSWCCR 409 and the Court of Appeal in the ensuing DEMOLON PTY LTD v. PARBURY BUILDING PRODUCTS (1995) 12 NSWCCR 724 declined to upset that apportionment between old Act and new Act injuries. It really seemed that this question was settled beyond argument.

Linked with the question of apportionment under section 22 of the 1987 Act is the question of the deductible proportion under section 68A of that Act as both are impacted upon by Schedule 6, Part 6, clause 6 to that Act. These three elements seem to be inextricably intertwined.

A series of cases had interpreted the operation of Schedule 6, Part 6, clause 6 prior to the amendment of the Schedule by the Workers Compensation Legislation Amendment Act 1995. That introduced an amended form of the former clause 6(2) effective from 1 September 1995+. That was followed by the introduction of section 68A by the WorkCover Legislation Amendment Act 1995 effective from 20 December 1995. Both amendments were made "for the avoidance of doubt" (see Schedule 6, Part 6, clauses 6(2A) and 6(3) and Schedule 6, Part 6, clause 17) and are applicable in this matter.

Prior to these amendments, cases such as CLUTHA LTD v. DANSWAN (1993) 9 NSWCCR 225, TAFE v. PITT (1993) 9 NSWCCR 309 and JA CROCKETT PTY LTD v. COX (1994) 10 NSWCCR 622 had held that, in respect of relevant losses resulting from injuries before and after the 1987 Act, all losses were cumulated and compensation awarded as though all loss resulted from the relevant 1987 Act injury. A corollary to this approach was that it seemed quite equitable on an apportionment to assign to the pre-1987 Act injury an appropriate proportion of the overall liability. That was, in effect, apportioning to the old Act insurer the portion of the loss from the old Act injury which had been amalgamated with the loss from the new Act injury to produce the ultimate overall loss.

Having provided in clause 6(1) that losses resulting from a combination of injuries received both before and after the commencement of the 1987 Act should be compensated as if the total loss resulted from injury received after such commencement, the amended clause 6(2) of the Part 6 of the Schedule provides:

" (2) However, no compensation is payable in accordance with this Part and this Schedule for the part of the loss resulting from the injury received before that commencement whether or not compensation has been paid or is payable under section 16 of the former Act for that part of the loss."

The two series of amendments made in 1995 by the Workers Compensation Legislation Amendment Act and the WorkCover Legislation Amendment Act seem to indicate that it is a matter of back to the drawing boards on this question of the liability for old Act injuries under the new Act and the apportionment of any new Act liability among old Act and new Act employers or insurers. Such appear to have made a radical change in the position regarding injuries before and after the 1987 Act. CLUTHA LTD v. DANSWAN and its ilk have been legislatively overruled. That is a rather dogmatic statement. It could also appear a rather brave, or very foolish, statement.

As recently as 6 December 1996 the Court of Appeal was still applying the principle of CLUTHA LTD v. DANSWAN in DEPARTMENT OF MINERAL RESOURCES v. BARRETT, Court of Appeal, No. 40090/95, 6 December 1996, unreported. I am, of course, bound by the authority of that Court. However, reading the judgment of Mahoney P (with which Gleeson CJ and Waddell A-JA concurred) makes it clear that the effects of the amendments here considered were not raised before the Court of Appeal. Quite the contrary. Mahoney P notes (at 10):

"Amendment subsequently was made to the relevant provision but those amendments are, the Court is informed by counsel, not relevant for present purposes."

This is quite true. The primary decision of Moroney J in that matter was given on 8 August 1995. That was three weeks before the proclamation of the 1995 amendment to Schedule 6, Part 6, clause 6(2). While the amendment applied as from the commencement of the 1987 Act, it did not apply to matters previously determined by an award as that matter had been.

In those circumstances, I am aware of no authority which would constrain me to adopt a view different to that expressed herein.

So, as far as this matter is concerned, Schedule 6, Part 6, clause 6(2) simply says that no compensation of any sort is awardable under section 66 in respect of a pre-1987 Act loss and that is so whether compensation is or isn't paid or payable under the 1926 Act. In practical terms that means that the Court determines the overall loss after all relevant injuries and then deducts any portion of that loss which derives from an old Act injury and makes an appropriate award pursuant to section 66 in respect of the balance.

Section 68A(1) provides:

" (1) If a loss suffered by a worker as a result of an injury is a permanent impairment of the back, neck or pelvis, no compensation is payable under this Division, by the employer who is liable in respect of the injury, for any proportion of the loss that is due to:

(a) a previous injury for which compensation has been paid or is payable under this Division, or

(b) any other previous injury or any pre-existing condition or abnormality."

Section 68A is picking up the same theme in respect of an impairment or consequential loss as is dealt with in the Schedule in respect of any loss. The integration between the provisions of this section and those of Schedule 6 appears, if not opaque, far from lucid.

Section 68A(1)(a) provides that no compensation is payable for any proportion of a relevant loss due to "previous" injury. The provision is a little ambivalent as to what this other injury is "previous" to. In context it seems it is any injury previous to the injury from which the relevant loss results. That is further qualified by the requirement that compensation has been paid or is payable under this Division in respect of that previous injury. That seems to refer to an injury compensable under the 1987 Act. Since Schedule 6, Part 6, clause 1 provides:

"Subject to this Schedule, Division 4 of Part 3 of this Act applies whether the injury was received before or after the commencement of that Division",

that would appear to encompass any prior injury occurring in compensable circumstances before or after the commencement of the 1987 Act.

Schedule 6, Part 6, clauses 4 and 5 have effectively provided that in respect of such injuries occurring prior to the commencement of the 1987 Act, compensation is payable in respect of any loss that appears in the Table in the 1987 Act, if such loss also appeared in the Table to the 1926 Act, but at the rates provided by the former 1926 Act, and if the particular loss didn't appear in the Table to the 1926 Act, no compensation is payable at all. There was, of course, no provision for compensation for impairments in the 1926 Act.

In this case, as far as section 68A is concerned, Palamadovski has impairment of the back and consequential loss of use of the leg. He suffered injuries before and after the commencement of the 1987 Act. In so far as any part of the impairment is due to the pre-1987 Act injury, the present employer cannot be liable to compensate that portion of the loss. In so far as the loss of use of the leg is concerned, any part of such loss due to the pre-1987 Act injury is compensable but at the rates applicable under the 1926 Act. It would be otherwise, of course, if the prior injury occurred in other employment. In that event, no compensation would be payable by this employer in respect of any impairment or loss of use of the leg resulting from the prior injury. These proportions of the losses become the "deductible proportion" provided by section 68A(2).

Section 68A(1)(b) goes on to exclude from compensation, as a deductible proportion, any proportion of the loss due to any previous injury, pre-existing condition or abnormality. This brings into the deductible proportion any loss, however arising. A worker will not get compensation for the degree of loss resulting from factors other than relevant employment injury.

And of course these losses must be "due to" the factors specified in section 68A(1)(a) and (b).

For decades the concept of causality in the Act was enshrined in the words "results from". True that was a rather like a hippopotamus--difficult to describe but readily recognised when seen. But now in section 22 we have the modified concept of "results partly from" which, unlike the hippopotamus, can be both difficult to describe and to recognise. And now we have "due to" in section 68A providing the deduction of the proportion of a loss "due to" prior injury etc. Not "results from" or even "results partly" from but "due to". The Oxford English Dictionary (OED) takes a large page of small print to explicate the multifarious meaning of "due". Which, if any, is appropriate in this context?

It appears fairly obvious that in section 68A the legislature could not have achieved its apparent intent by referring to the proportion of the loss which "results partly from" the prior injury because they were seeking to excise from the compensation payable that portion which really resulted from that prior injury, not any proportion to which the prior injury was but partially a cause. The prior injury is certainly conceived as a partial cause of the overall ultimate loss. It is sought to excise from that ultimate loss the proportion that is a consequence of the prior injury.

In ordinary English usage the same meaning would be imported by "results from", "due to" or "consequent upon". Each relates a cause to its effect. "Due to" and "results from" are essentially synonymous. I could rewrite the opening words of section 33 from "If total or partial incapacity for work results from an injury" to "If total or partial incapacity for work is due to an injury" without doing any violence to the concepts involved.

The OED gives a variety of meanings to "due". The appropriate one appears to be "in consequence of". "Consequence" is defined, INTER ALIA, as "a thing or circumstance which follows as an effect or result from something preceding" or as "the action or condition of following as a result upon something antecedent; the relation of result or effect to its cause or antecedent". Effectively that suggests a similar meaning of both "results from" and "due to".

There is no inherent difficulty in "due to" meaning "results from" in section 68A. If the provision was referring to the overall loss obviously there would be considerable difficulty in finding that an overall loss resulted from a pre-1987 Act injury and simultaneously that it also resulted from a post-1987 Act injury. But the frame of reference is not the overall loss. The frame of reference in section 68A is but a part of the overall loss. What needs to result from or be due to the pre-1987 Act injury is but an element of the total loss. There could be some semantic and logical problem in finding that an overall loss results from a later injury while finding that a determinable part of that loss can be said to result from, or be due to, an injury earlier in time. One could regard it as rather like the use of "apportionment" in section 22. It doesn't really mean apportionment and we accept that it will suffice to invoke the concept of contribution. So in section 68A, "due to" means "results from" but in a modified sense. But really there isn't much problem. The overall loss, in law, results from the 1987 Act injury. But it is really a composite loss with a number of factors operating in its genesis. It is not a logical problem to say that a discernible part of that composite loss can be said to be due to or result from one particular factor.

Effectively therefore under section 68A, in the context of an impairment and a prior injury before the commencement of the 1987 Act, I am to excise from the final loss as a deductible proportion that proportion of the ultimate loss which is caused by, results from, is due to or consequent upon that prior injury.

That is understandable. In effect the provision, combined with the operation of Schedule 6, says that in respect of prior injuries before the 1987 Act and losses resulting from them no worker will be any better or worse off for the passing of the 1987 Act. If the 1926 Act provided a compensation for the loss as at the date of the injury, then he will receive the compensation that he would then have been entitled to receive (uninflated by the 1987 Act) and if the 1926 Act did not provide such a compensation, then the 1987 Act is not retrospectively thrusting a benefit upon him.

However, pursuant to Schedule 6, Part 6, clause 6(2), that very element of pre-existing loss was already excised from the compensable loss and excluded from any entitlement of the worker. That element could not form part of a deductible proportion from a loss which had been assessed excluding it entirely. Therefore, there should be no further deductible proportion under section 68A because there can be no element of the compensated loss which derives in any way from the prior injury. For section 68A to operate otherwise could be to effectively deprive the worker of double the degree of loss from pre-1987 Act injury and in some cases, where an element of loss is compensable under section 16, perhaps a little less. In relation to pre-existent conditions (including non-employment injuries) and abnormalities, it is, of course, otherwise. Section 68A then has discernible work to perform in regard to losses in the nature of impairments and their consequences. Recent amendment to the provision has broadened the scope of section 68A but that is irrelevant to the present matter.

Applying these concepts to Palamadovski's case seems fairly straight forward. I found that he had losses which resulted from the 1994 injury. I found that he also had a 1982 injury. I found that he didn't have any impairment, and implicitly consequential loss, prior to the 1994 injury. Therefore Schedule 6, Part 6, clause 6(2) required no extraction of any element of loss "resulting from" the 1982 injury because it had all resulted from the 1994 injury.

Section 68A then certainly doesn't authorise the deduction of any element of the ultimate loss "due to" the 1982 injury since, consistently with what has just been stated, the findings made in the original judgment necessarily held that there was no such element in the loss.

When I come to section 22 and apportionment I deal with the degree of the compensated loss which resulted partly from the 1982 injury. If the compensated loss, both by finding of fact and necessary application of Schedule 6, Part 6, clause 6, already excises from the loss compensated any such element of such loss, how can there be anything left to apportion? Palamadovski never had an entitlement under the present Act to any loss, by way of impairment, arising from injury prior to the 1987 Act, so none of the compensated loss could ever be apportioned to an "old Act" employer or insurer.

In the original judgment, I did not hold that any proportion of the losses compensated resulted from or were due to the 1982 injury. Palamadovski had injured his back in 1982, had been off work for a few weeks, resumed and worked for the following 12 years without loss of time from work, had experienced occasional back symptoms on stressful work but did all the things he ever did in the manner in which he had always done so. There was no impairment of function nor does it seem that he was noticeably different after that injury compared to before nor that the 1982 injury had predisposed him to the subsequent injury. The 1982 injury appears irrelevant to his ultimate state. It follows that section 68A and section 22 have no application to the awards made in this matter as the loss derives solely from a single new Act injury.

In general, the practical effect of the above discussion is that a worker can never be awarded compensation under section 66 for any degree of impairment and consequential loss that results from injury occurring prior to commencement of the 1987 Act; there is, therefore, no element of a compensated loss which can be apportioned to a 1926 Act employer or insurer; section 68A cannot operate in that circumstance to provide any deductible proportion of the compensated loss for the effects of pre-1987 Act employment injury. Effectively section 22 serves to warrant the apportionment of liability for weekly payments, medical expenses etc. resulting from injuries both before and after the 1987 Act but never awards for Part 3, Division 4 losses and pain and suffering other than among employers or insurers on risk in respect of injury after the commencement of that Act.

For those reasons, there is no deductible proportion within section 68A in respect of the compensation awarded pursuant to sections 66 or 67. Similarly there is no portion of that award which could be subject to apportionment to QBE.

JUDGMENT ACCORDINGLY

Solicitors for the respondent MMI: AO ELLISON & CO

Solicitors for the respondent QBE: BRUCE & STEWART