ALCAN AUSTRALIA LTD v JORDAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, MEAGHER and HANDLEY JJA 18 April, 21 June 1995 [1995] NSWCA 12 WORKERS COMPENSATION — S11(2) award — Need for mutuality — Effect of post 1987 injuries- partial incapacity — discretion to avoid overcompensation — worker not entitled to separate awards of weekly compensation for separate disabilities from same injury. The respondent commenced working for the appellant in its aluminium refinery in 1981. In 1982 he developed "pot room asthma" as a result of his exposure to fumes and was assigned to light duties. He injured his back at work in 1986 and in 1989 and on the latter occasion he also injured his knee but was still able to perform his light duties. However his asthma got worse and by April 1990 the work he had been doing since 1982 had ceased to be suitable. He was then dismissed. The trial judge found that the worker's asthma and not his back and knee injuries had prevented him from continuing to work at the refinery. He held that the worker had two continuing partial incapacities and relevantly made two awards. The first under s11(2) from 3 April 1990 and continuing was based on the worker's asthma and the second under s40 of the 1987 Act based on his orthopaedic injuries. Both were challenged and the worker cross-appealed against the judge's refusal to make separate awards for each orthopaedic incapacity. The worker's injury from asthma having occurred prior to the 1987 Act s11(2) was available for the resulting incapacity but with the repeal of the 1926 Act the section was not available for further injuries. Under Schedule 6 Pt4 CL4(3) of the 1987 Act the worker's incapacity due to his back injuries had to be treated as resulting solely from the 1989 injury. The employer submitted on appeal that the further orthopaedic incapacities destroyed the mutuality which was central to its obligation under s11(2) to provide suitable employment for its partially incapacitated worker. Held: (By majority) 1. The worker's orthopaedic injuries significantly restricted his capacity for work and the employer had no obligation to provide work suitable for a man with those disabilities in addition to that caused by his asthma. This destroyed the mutuality central to the employer's obligation under s11(2) and the award under that section must be set aside. Sydney City Council v Ince (1989) 16 NSWLR 690 applied. (2) (Unanimously) The s40 award must also be set aside because the s11(2) award, the s40 award, and the worker's residual capacity resulted in him being better of financially than if he had never been injured. Bevan v Energlyn Colliery Co [1912] 1 KB 63 and Australian Iron and Steel v Elliott (1966) 67 SR (NSW) 87 applied. (3) (Unanimously) The cross-appeal seeking separate awards under s40 for the knee and back injuries should be dismissed as the Act did not require or authorise separate awards of weekly compensation for multiple disabilities resulting from one injury. (4) (Unanimously) The matter should be remitted to the Compensation Court for the making of fresh awards under s11(1) in respect of the worker's asthma and under s40 in respect of his orthopaedic injuries. ORDERS 1. Appeal allowed with costs. 2. Cross-appeal dismissed with costs. 3. Set aside the award made by the Compensation Court as if the respondent's incapacity for work were total from 3 April 1990 and continuing, and the award on the basis of the respondent's partial incapacity from 3 April 1990 and continuing. 4. Remit proceedings to the Compensation Court for the making of separate awards on the basis of the respondent's separate partial incapacities consistent with these reasons. 2 UNREPORTED JUDGMENTS 5. The respondent to have a certificate under the Suitor's Fund Act in respect of the costs of the appeal. Gleeson CJ I have had the advantage of reading in draft form the judgment of Handley JA. I agree with the orders proposed by his Honour and with his reasons for those orders. Meagher JA I have read carefully the draft judgment of Handley JA. I agree with it except on one point. I do not, with respect, agree with what his Honour says on the s11(2) award. The sequence of the salient facts was: First injury (pot room asthma) September-November 1982 First back injury 21 August 1986 Second back injury and knee injury 11 March 1989 Termination of employment 2 April 1990 The essential reason why Handley JA says no award should have been made was that there was a lack of mutuality. The existence or lack or mutuality is something which must be determined as at the date of the termination of the employment. Its existence or non-existence is a question of fact. In the present case the worker's evidence was that he wanted, and was capable of doing, work for his employer when the latter dismissed him. His Honour believed him, and I cannot see why he was not entitled to. Indeed, in their final submissions to the judge, both counsel for the worker and counsel for the employer agreed that mutuality did exist. It is true that after his dismissal, when he was working for his brother, his back collapsed to the point where he was virtually incapable of work. But that seems to me to be irrelevant. That was not, on the evidence, his state on the day of his dismissal. It is also true that each of the back injuries either took place after the 1987 Act came into force or is to be treated as if it had. But that also seems to me to be irrelevant, as there was no finding by O'Meally CCJ that either injury affected the worker's ability to perform the light duties he was performing at the time of his dismissal. Handley JA The proceedings before the Court comprise an appeal by the employer and a cross-appeal by the worker from awards made by O'Meally CCJ. The worker commenced working for the appellant at its aluminium smelter at Kurri Kurri on 7 September, 1981. Some six months later he first noticed symptoms of "pot room asthma'. Some months later still his capacity for work began to be affected and in December 1982 he was assigned during normal time to light duties away from the pot room. After some date in 1985 the worker ceased performing overtime because this was worked in the pot room. However at that stage his pay was made up by the employer. On 21 August, 1986 the worker suffered a back injury when lifting a heavy object at work but was able to continue working. On 11 March, 1989 he injured his left knee and back when he lifted a gas bottle, slipped and fell between a platform and a fork lift truck. He was later referred to a specialist, Dr Laird, who performed an arthroscopy on his left knee in September, 1989. Apart from his absence due to this procedure he lost no other time from work as a result of his orthopaedic injuries. His employment was terminated on 2 April, 1990. The URJ ALCAN AUSTRALIA LTD v JORDAN (Handley JA) 3 Judge accepted the worker's evidence that it was his pot room asthma and not his back and knee injuries which prevented him from continuing to work at the refinery. The Judge found that as a result of pot room asthma the worker had been partially incapacitated for work from some date between September and November 1982. He also found that as a result of the back injuries the worker was unfit for work involving lifting heavy weights or repeated bending, sitting or standing for long periods. Indeed the Judge said he was unfit for any work which imposed forces or stresses on his spine. He also found that as a result of the knee injury the worker was unfit for work which required him to traverse rough or uneven ground, regularly climb up or down stairs or ladders or apply forces or stresses to the knee. He said work as a truck driver would be unsuitable because of the gear changing required. The Judge concluded that the worker had three separate partial incapacities and he made three awards. The first was under s11(1) of the 1926 Act for his pot room asthma during the closed period from 24 February, 1986 to 2 April, 1990. This compensated the worker for loss of overtime after the employer ceased to make up his pay. It was not challenged. The second under s11(2) of the 1926 Act from 3 April, 1990 and continuing compensated the worker "as if his incapacity for work were total" and was also based on his pot room asthma. The third for partial incapacity under s40 of the 1987 Act was based on his orthopaedic injuries. The employer challenged both these awards and the worker's cross-appeal challenged the refusal of the Judge to make separate awards for each orthopaedic incapacity. S11(2) AWARD Pursuant to Schedule 6 Pt2 CL1 the 1987 Act also applied to injuries received before its commencement. Schedule 6 Pt4 CLS provides that s11(2) of the former Act applies in respect of incapacity for work occurring after the commencement of the new Act resulting from an injury received before its commencement. Thus s11(2) continued to be available in respect of the incapacity due to pot room asthma. S15 of the 1987 Act deemed the worker to have received an injury from his asthma when incapacity resulted. This as the Judge found was at some date between September and November 1982. S11(2) as in force after the 1980 amendment provided: "An employer shall provide suitable employment for his injured worker during the worker's partial incapacity for work but, if the employer fails to do so, the worker shall be compensated as if his incapacity for work were total..." The Judge found: "... it seems plain to me that in terminating his employment, or in otherwise failing to provide him with work which was suitable, bearing in mind the nature of his pot room asthma and his concomitant incapacity, the respondent failed in its obligation under s11(2) of the former Act." The Judge then considered the decisions of this Court in Biegelmann v Eglo Engineering (1979) 2 NSWLR 522 and Sydney City Council v Ince (1989) 16 NSWLR 690 and concluded: "The result of the 1980 amendment and of the decision in Ince, it seems to me, is that it is now possible to have an award based upon s11(2) at the same time as an award in respect of partial incapacity, that is, in the circumstances of this case, one fixed by reference to s40". 4 UNREPORTED JUDGMENTS The employer submitted that s11(2) imposed no obligation on it to provide suitable employment because the worker had additional incapacity due to his orthopaedic injuries. The knee injury occurred on 11 March, 1989 after the commencement of the new Act. Although one of the worker's back injuries predated the new Act a second back injury occurred on 11 March, 1989. Schedule 6 Pt4 CL4(3) of the 1987 Act in force at that time provided: "Tf a period of incapacity for work resulted both from injury received before the commencement of... this Act and an injury received after that commencement, the incapacity shall, for the purposes of this clause and CL6, be treated as having resulted from the injury received after that commencement." It was common ground that this provision applied so that the worker's incapacity due to his back injury must be treated as resulting solely from the 1989 injury. The worker's actual and fictional injuries after the repeal of s11(2) in 1987 thus left him with additional partial incapacity which in itself attracted no obligation under s11(2). The employer submitted that its only obligation under s11(2) was to provide suitable employment "during the worker's partial incapacity' due to pot room asthma. Relying on Sydney City Council v Ince at 704 it submitted that the worker's additional incapacity because of his orthopaedic injuries destroyed the mutuality central to s11(2) because he was not able to undertake work suitable for a man with only pot room asthma. In Ince's case the worker suffered successive injuries in the employment of different employers which gave rise to separate incapacities. He sought suitable employment from both, was refused, and later obtained s11(2) awards against both employers. The s11(2) award against the first employer was set aside on appeal. In the passage from Ince's Case at 704 relied upon by the appellant Clarke JA said: "The conclusion that the worker was suffering from two separate partial incapacities, while justifying the making of two awards under s11(1), does not, in my opinion, support... the making of two awards under s11(2). The reason why this must be so is that the second partial incapacity... by definition REDUCED FURTHER THE WORKER'S WORK CAPACITY WITH THE CONSEQUENCE THAT HE COULD NO LONGER ESTABLISH THE MUTUALITY NECESSARY TO SUPPORT AN AWARD UNDER s11(2). Although he could... demonstrate a readiness and willingness to undertake work which was suitable having regard to his partial incapacity flowing from the first injury he would not, by reason of his additional incapacity, be able to establish his ability to do that work". (emphasis supplied) The issue is whether the worker was able on and after 3 April, 1990 to perform work which was suitable "having regard to his partial incapacity flowing from his first injury" (above). Senior counsel for the worker sought to meet this point by relying on the Judge's finding that the worker's employment "was terminated not because of difficulty he was having in carrying out his work by reason of injury to his back or leg, but because of his asthma condition". The Judge found that the employer had been complying with its obligation under s11(2) since 1982 and that the 1986 and 1989 injuries had not prevented him from performing his light duties. Accordingly it was submitted the requirement of mutuality was satisfied, the obligation under s11(2) was not performed after 3 April, 1990, and the award should not be disturbed. I was initially impressed with this submission but further reflection has caused me to change my view. Although there was evidence which would have supported a finding that the worker suffered a progressive increase in his partial URJ ALCAN AUSTRALIA LTD v JORDAN (Handley JA) 5 incapacity due to pot room asthma from 1982 onwards and in particular after the commencement of the new Act which might have created a further difficulty in supporting the s11(2) award that point was not argued and there is no need to consider it. Nevertheless, as the Judge found, by April 1990 the work the employer had been providing had become unsuitable. Under s11(2) the employer was bound to provide suitable employment - that is employment in an environment which would not aggravate his asthma. In my opinion the worker's orthopaedic injuries become relevant at this point. On the Judge's findings they significantly restricted his capacity for work, and the employer had no obligation to provide employment which was suitable for a man with both incapacities. In these circumstances I have come to the conclusion that the worker's incapacity due to his orthopaedic injuries destroyed the mutuality which is central to the employer's obligation under s11(2). Because the employer had no obligation under s11(2) in respect of the incapacity caused by the worker's post 1987 injuries the present case is indistinguishable in principle from that of the first employer in Ince's Case. The obligation of that employer under s11(2) was negatived by the existence of further incapacity which imposed no obligation on it under the section. This worker also had further incapacity which did not impose any obligation on the employer under the section. In my opinion therefore the award under s11(2) should be set aside. AWARD UNDER s40 The Judge found that the worker was partially incapacitated as a result of his orthopaedic injuries. He found that the weekly amount which the worker would probably have been earning but for the injury in the same or some comparable employment was $579 per week (s40(1)(a), but this was subject to an indexed statutory cap). He found that the worker could still earn in his partially incapacitated condition $350 per week (s40(1)(b)). This produced a differential in April 1990 reduced by the statutory cap to $183.60 per week which represented the maximum which could be awarded. The Judge had still to consider what was the "proper" amount which should be awarded "'in the circumstances of the case" not exceeding that difference (s40(1)). He awarded the full amount notwithstanding the worker's entitlement under his s11(2) award to $183.60 per week. The two awards and the worker's residual earning capacity of $350 per week gave a total of $717.20 per week which exceeded by a considerable margin the sum of $579 per week which the Judge found he would probably have earned if uninjured. The statutory direction to award "an amount not exceeding the difference... (that) shall bear such relation to... that difference as may appear proper in the circumstances of the case" has a long history in worker's compensation legislation. In Bevan v Energlyn Colliery Co [1912] 1 KB 63 at 71 Fletcher-Moulton LJ said: "Proper for what? Proper compensation for the incapacity in question." This test was applied by Sugerman JA, speaking for the Court, in Australian Iron and Steel v Elliott (1966) 67 SR (NSW) 87. As his Honour said at 93-94: "At this stage the inquiry is factual, and it becomes necessary to ascertain what loss the injured worker has in fact sustained by reason of his partial incapacity". 6 UNREPORTED JUDGMENTS His Honour must have overlooked this principle when making the subject award because he clearly overcompensated the worker who, on his Honour's findings, was better off financially than if he had never been injured. In my opinion this award must also be set aside. WORKER'S CROSS-APPEAL In his cross-appeal the worker challenged the refusal of the Judge to make separate awards under s40(1) in respect of the worker's incapacities due to his knee and back injuries. The knee injury and the second back injury occurred on 11 March, 1989 but the effect of the transitional provisions in the 1987 Act is that the worker's first back injury is also deemed to have occurred at that time. In my opinion these constitute a single injury for the purposes of the Act. See s9(1) and s33 and the definition of injury in s4. The partial incapacity of an injured worker which is compensated for under s40(1) must therefore take into account all consequences of that injury. The Act neither requires nor authorises separate awards under s40(1) in respect of separate disabilities resulting from a single injury. The trial Judge was correct in refusing to make separate awards in respect of the knee and back injuries and I would dismiss the cross-appeal. ORDERS The worker has two distinct partial incapacities resulting from separate injuries and is entitled to separate awards under s40(1). See Sydney City Council v Ince (1989) 16 NSWLR 690 at 697-698, 701. This entitlement has significant practical consequences, not only for the reasons explained in Ince's Case but also because of the indexed statutory cap in s40(1)(a). This cap may cause under compensation but its effects will be diminished or removed if a worker is entitled to separate awards. In my opinion the following orders should be made: 1. Appeal allowed with costs. 2. Cross-appeal dismissed with costs. 3. Set aside the award made by the Compensation Court as if the respondent's incapacity for work were total from 3 April 1990 and continuing and the award on the basis of the respondent's partial incapacity from 3 April, 1990 and continuing. 4. Remit proceedings to the Compensation Court for the making of separate awards on the basis of the respondent's separate partial incapacities consistent with these reasons. 5. The respondent to have a certificate under the Suitor's Fund Act in respect of the costs of the appeal. 1. Appeal allowed with costs. 2. Cross-appeal dismissed with costs. 3. Set aside the award made by the Compensation Court as if the respondent's incapacity for work were total from 3 April 1990 and continuing, and the award on the basis of the respondent's partial incapacity from 3 April 1990 and continuing. 4. Remit proceedings to the Compensation Court for the making of separate awards on the basis of the respondent's separate partial incapacities consistent with these reasons. 5. The respondent to have a certificate under the Suitor's Fund Act in respect of the costs of the appeal. Counsel for the Appellant: PR CALLAGHAN SC/AR REOCH Instructed by: PW TURK AND ASSOCIATES URJ ALCAN AUSTRALIA LTD v JORDAN (Handley JA) Counsel for the Respondent: PR CAPELIN QC/J KEARNEY Instructed by: MORONEY RUTTER AND MANTACH