DEPARTMENT OF MINERAL RESOURCES v BARRETT SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, MAHONEY P and WADDELL AJA 18 April 1996, 6 December 1996 [1996] NSWCA 151 Workers Compensation — Assessment — Incapacity — Deduction for earlier settlement — Liability of subsequent employer Worker (first respondent) suffered injury affecting use of legs while employed in mines — Claim against first employer (second respondent) settled by lump sum payment — Successful proceedings by worker in Compensation Court against Department of Mineral Resources (appellant) and award of compensation by Moroney J — Appeal by Department and cross-appeal by worker against assessment of amount of compensation — Incapacity resulting from earlier injuries — Amount for additional permanent loss of use of leg — Deduction for earlier settlement received — Question of apportionment pursuant to s22 Workers Compensation Act 1987 — Whether can be raised on appeal. Held: appeal dismissed: (i) If there was to be an apportionment it was necessary for that issue to be raised at trial. It was not appropriate, on the material before it, for this Court to attempt that task. (ii) Because the notice of cross-appeal did not contest the right of the judge to make the deduction for the lump sums awarded, it was not necessary for the Court to consider the correctness of that deduction. (iii) The material before the Court did not warrant disturbing the judge's decision at first instance. Clutha Ltd v Danswan (1993) 9 NSWCCR 225; applied.; Department of TAFE v Pitt (1993) 9 NSWCCR 309; JJ Crockett Pty Ltd v Cox (1994) 10 NSWCCR 622; referred to. ORDER: Appeal and cross-appeal dismissed with costs. Gleeson CJ I have had the benefit of reading in draft form the reasons for judgment of Mahoney P. I agree with the orders proposed by his Honour and with his reasons. Mahoney P The worker Mr George William Barrett was injured in the course of his employment in mines in New South Wales. He was affected in the use of both legs at and above the knee. He brought proceedings against his successive employers, Coalcliff Collieries Pty Ltd ("Coalcliff') and Department of Mineral Resources ("the Department"). He came to a settlement of his claims with Coalcliff and with a former employer Australian Iron and Steel Pty Ltd: he was paid $30,000 in relation to that settlement. The proceedings continued against the Department. On 8 August 1995 Moroney J, a judge of the Compensation Court of New South Wales, made orders against the Department, inter alia, under s66 and s67 of the Workers Compensation Act 1987. The Department has appealed to this Court against his Honour's orders. The worker has lodged a cross-appeal. 2 UNREPORTED JUDGMENTS As is not unusual in cases of this kind, a number of issues have been raised by the notice of appeal; the written submissions filed before the oral hearing have presented a case somewhat different from that in the notice of appeal; and, upon the oral hearing, counsel have indicated the issues which are to be pressed. Mr Hislop QC, for the appellant Department, Mr Little for the worker, and Mr Gleeson QC for Coalcliff, have, in their helpful submissions, formulated the issues which now remain for decision. In order to understand the issues it is necessary to refer briefly to the facts. As far as is here relevant, the worker was first employed by Coalcliff. While in the employ of Coalcliff, he suffered a number of injuries. As the judge stated in his judgment, he was struck by a drive chain and injured in the left leg and ankle (February 1965); he was hit by a fall of coal and his left leg was injured (April 1965); he was hit by a fall of coal (August 1965); he injured his left knee (9 February 1984); and he fell and twisted his left knee (13 February 1984). He was, up to October 1987, working underground and was required, in the course of his employment to walk on rough and uneven surfaces. The suggestion was, I think, that this exacerbated the condition of his legs. In May 1986 he had become a safety co-ordinator and a rehabilitation officer, due to the condition of his knees. He had started to favour his right leg a little but his problem was not really with the right leg; it was "to ease the pain in my left leg" that he took that position. In October 1987, he was retrenched from his position with Coalcliff. On 6 December 1988 he commenced with the Department as a mine roadway dust examiner. This work involved visiting mines some four days a week and working on office duties one day a week. The worker said that in 1989, after he commenced work with the Department, his left leg was giving him some concern and he consulted a local orthopaedic specialist. Then his right knee started to cause him concern and he fell in the Ivanhoe Mine in the Western District. In November 1990 there was an operation upon his right knee at the Shellharbour Hospital. In 1991, his evidence disclosed, he had fallen down a sump hole in a colliery and hurt his right knee and in September 1993 there was a further operation upon his right knee at the Strathfield Private Hospital. The judge recorded that on 15 July 1993 the worker had claimed that he had "for a long time been involved in inspection of coal mines, walking on rough ground". This, it was claimed, caused injury to the left and the right knee. On 17 September 1993 he applied to the Compensation Court for compensation. On 14 December 1993 his employment was terminated. In 1994, during the hearing of the application, it was announced that the claim against Coalcliff and Australian and Steel Pty Ltd had been settled and that the worker was to be paid on settlement $30,000. The judge recorded that accordingly application was made "for redemption of all aspects of its liability. The applicant consented to this application. Application was also made to amend the proceedings to include a third respondent Australian Iron and Steel Pty Ltd, a former employer of the applicant in the coal industry". His Honour said: "Liability for all injuries suffered by the applicant prior to his employment with the second respondent [the Department] was, therefore, sought." As his Honour recorded and the exhibited terms of settlement consent indicate, the worker consented to the payment bringing to an end as from | January 1995: "... my right to all entitlements under the Workers Compensation Act 1926 or under the Workers Compensation Act 1987 in respect of the injury(ies) the subject of the Short Minutes which I have or may have in the future including: URJ DEPARTMENT OF MINERAL RESOURCES v BARRETT (Mahoney P) 3 (1) weekly payments of compensation of all kinds including those pursuant to s11(2) in the event of failure by my employer to provide suitable employment; (2) medical, hospital and all such like expenses provided by s10 of the Workers Compensation Act 1926 or s60 of the Workers Compensation Act 1987 (as amended); (3) Any lump sum payable under s16 of the Workers Compensation Act 1926 and any compensation under Divisions 3 or 4 of Pt3 of the Workers Compensation Act 1987." The judge in his judgment recorded the following: "The short minutes of order annexed to the applicant's consent to the redemption application, Exhibit D, provided amongst other things for not only the redemption of the liability for any weekly payments which the first and third respondent might have but also this: Para3 noted that: The worker agrees that the said sum also redeems liability under s10 to s16 of the Workers Compensation Act 1926 as amended and under Divisions 3 or 4 of the Workers Compensation Act 1987, as amended. Para5, Other Orders or Notations, subpara(a): Payment of the lump sum will also redeem the employers liability in respect of injuries and incidents of injury arising out of or in the course of the worker's employment with the employer and the word 'employer' as used before in this sub-paragraph and used again here means the first and third respondents including injury from the nature and conditions of the said employment and including injuries to the head, the whole of the spine, pelvis, both shoulders, both upper and lower limbs, functional overlay and the aggravation acceleration or causation of any disease, including disease of the heart or lungs, but excluding industrial deafness. I approve the redemption application and an award has been entered in accordance with the minutes. In effect, the first respondent paid to the worker the sum of $30,000." His Honour then proceeded with the worker's claim against the Department. His Honour could not then determine the claim because, as he noted, counsel for the Department indicated that it wished to make "submissions in relation to an order or award for apportionment of liability". Those submissions were not then forthcoming. Accordingly, at the Department's request, the proceeding was stood over to allow those submissions to be made. It was relisted on 13 October 1994, 12 December 1994 and 3 February 1995. No such submissions were lodged. Accordingly, the judge ordered the matter to be listed for judgment on 8 February 1995. (He recorded that it was said that submissions had been sent on 7 February 1995 but they had not been received). The judge's findings in respect of incapacity were made as follows: "1. The applicant prior to the date of his retrenchment by the first respondent in October 1987 had received injury to his left leg, in particular that he had also received injury to his right leg. 2. The applicant received, in respect of the injury to the left leg, a payment pursuant to s16 of the 1926 Act. That payment was the sum of $4,400 and it was the subject of a consent award made in File CRO3974 of 1988 by the then Senior Commissioner. The order provided that the respondent in those proceedings, the first respondent in these proceedings, pay the applicant as lump sum compensation under the s16 of the former Act, $4,400 in respect of 20% 4 UNREPORTED JUDGMENTS diminution of the full efficient use of the applicant's left leg, resulting from injury received on 9 February 1984 in the course of the applicant's employment by the respondent. 3. At the time of his commencement of employment with the second respondent, on 6 December 1988, the applicant was disabled but not incapacitated in the sense that he was quite able to perform his duties as an inspector, as described by him in his evidence. The applicant did, however, have a considerable permanent loss of the left leg at or above the knee and probably some permanent loss of the right leg at or above. 4. The applicant did receive the further injuries as alleged arising out of and in the course of his employment with the second respondent between his commencement with that respondent and his retirement on medical grounds in 1993. 5. At the time of the applicant's retirement on 15 December 1993 and since, the applicant has been partially incapacitated for work." It is to be noted that the judge's finding was that, during his employment with Coalcliff, the worker had suffered "considerable permanent loss of the left leg at or above the knee and probably some permanent loss of the right leg at or above". There was, I think, no more precise finding than that as to the injuries suffered during employment with Coalcliff. His Honour then addressed the question: "... from which injury or injuries this incapacity results and any loss results". In doing so his Honour relied principally upon the report of Dr David Millons. His Honour's findings were set forth in some detail. I shall endeavour to summarise those which are most directly of relevance to the issues as they ultimately have been presented. In relation to the issue of incapacity, his Honour concluded that: "... Since 15 December 1993 the applicant has been partially incapacitated for work as a result of all of the injuries alleged in the application for determination; that is, those received in the service of the first respondent and those received in the service of the second respondent." His Honour, having regard to "all of his injuries" assessed his probable weekly earnings uninjured as $900 per week. He then "attempted to exclude from the calculation inability to earn resulting from the level of the incapacity resulting from the earlier injuries which were the liability of the first respondent" and found "the amount to be $400 per week". His Honour made "an award in favour of the applicant based upon his partial incapacity for work resulting from the injuries received in his employment with the second respondent, against the second respondent in the sum of $200 per week from 15 December 1993 to date and continuing...". In relation to the awards made under s66 in respect of the left leg and the right leg his Honour said: "2. The determination in respect of the applicant's claim pursuant to s66 for percentage permanent loss of use of the left leg at or above the knee. Dr Bracken says that the loss was 35%. Dr Millons says the loss is 30%. They are not far apart. Both doctors give opinions as to the causation of the loss. I find Dr Millons' opinions and assessments to be most helpful and I intend to adopt and follow them. Applying then Clutha Ltd v Danswan 9 New South Wales Compensation Court Reports, at 225 and the provisions of Schedule 6, Pt6, cl6, subs(1), I find that the applicant has a permanent loss of 30% of the left leg, resulting from the injuries pleaded against the second respondent and occurring finally on 15 December 1993. URJ DEPARTMENT OF MINERAL RESOURCES v BARRETT (Mahoney P) 5 The amount therefore payable in respect of that injury is the sum of $29,216.25. However, I must then apply the provisions of Schedule 6, Pt6, cl6, subpara(2) and deduct from that sum, the sum of $4,400 previously paid to the applicant pursuant to the provisions of s16. I thus award the applicant $24,816.25 pursuant to s66 for this loss. Interest will be paid thereon at the rate of 6% from 15 December 1993 to date. 3. The determination of the applicant's claim pursuant to s66 for percentage permanent loss of use of the right leg at or above the knee. This determination involves a similar approach to the above but in one respect the approach is distinctly different. That is because no identifiable payment was made to the applicant pursuant to the provisions of the old s16 and the 1926 of the statute (sic) in respect of the loss resulting from the earlier injuries. However, the amount paid in redemption of the first respondent's liability was stated to include an amount for the redemption of such a liability. Having regard to the fact that the applicant and his advisers had the views of Dr Millons available to them and indeed, tendered them at the time of the redemption application and no doubt took those views into account, I do not feel it unreasonable to find that the applicant received, as part of the redemption moneys a payment of $4,400 in respect of a 20% permanent loss of the leg payable under the s16 statute. Thus adopting Dr Millons' findings, I find the applicant has a 40% permanent loss of the right leg at or above the knee, resulting from the injuries received in his employment with the second respondent and culminating on 15 December 1993. Again applying Danswan and Schedule 6, Pt6, cl6, subs(1), the amount payable is $38,955 from which is to be deducted the sum of $4,400 - I award the applicant pursuant to Schedule 6, Pt6, cl6, subs(2), the sum of $34,515 pursuant to s66 in respect of this loss, together with interest thereon at the rate of 6% from 15 December 1993." In relation to s67 (pain and suffering "resulting from the losses") his Honour said: "Here I must have regard for the provisions of Schedule 6, Pt6, cl2, and what was said in Danswan of the approach that I took in Danswan in relation to the way in which the compensation should be awarded in these circumstances. The amount must compensate for pain and suffering in respect of the injuries received after the commencement of Division 4 of Pt3. I have considered the applicant's evidence, that contained in the transcripts of 6 June 1994, particularly at 6. I note the actual pain which he suffers and which he is likely to suffer. I have had regard to the interference with his domestic, sporting, family and social activities, and I note the medical prognosis of surgery. Having regard to all of those things but, however, observing carefully the provisions above-mentioned, I award the applicant the sum of $18,000 pursuant to s67, together with interest thereon at the rate of 3% from 15 December 1993 to date. In relation to the s67 payment of $18,000 I apportion one half of that to the past and one half to the future, and the interest at 3% is on one half of the same." THE DEPARTMENT'S SUBMISSIONS: In its written submissions the Department contended that the judge "should have awarded only such sum as represented the additional permanent loss resulting from the employment with the appellant, namely, 10% in the case of the left leg and 20% in respect of the right leg and that his Honour should have dealt with the question of apportionment in his judgment". It was submitted that, in 6 UNREPORTED JUDGMENTS respect of the s66 order, the medical evidence permitted the Court to differentiate "between the loss resulting from the employment by the second respondent and the appellant": Clutha Ltd v Danswan (1993) 9 NSWCCR 225 at 230 was relied on; and s71 was argued to be applicable. It was submitted that the judge "erred in failing to consider apportionment and the appellant's written submissions". Mr Hislop QC, in his oral submissions for the Department, submitted, first, that, in relation to s66, the nub of the appeal was that the judge should have awarded against the Department only that loss which was attributable to the injuries sustained in its employment. The basis for that submission was what was said by Kirby P in Clutha Ltd v Danswan: at 230. In the Danswan case, the trial judge Moroney CCJ had held that the worker had suffered a relevant loss within s66 and "that that resulted both from an injury received before and after the commencement of" the 1987 Act. In those circumstances, the Court held that the liability for the loss was to be borne by the employer responsible for "the injury received after the commencement of the 1987 Act in its entirety'. In that regard, Kirby P said: "... there is no doubt that cl6 of Pt6 of Schedule 6 to the 1987 Act deems that loss to have resulted from the injury received after the commencement of the 1987 Act in its entirety. This may be artificial. But this area of the law is full of artificial distinctions and applications... Of course, in some cases it will be perfectly possible to differentiate, by medical evidence addressed precisely to the issue, the loss resulting from a pre-1987 injury and a loss resulting from a injury received after the commencement of that Act. In such a case Schedule 6 Pt6 cl6 will not apply. The worker will be entitled only to the loss resulting from the injury received after the commencement of the new statute. Where, however, as here, no such differentiation was found, it is not possible for this Court to manipulate the deeming provision in the Schedule to confine its operation as if it included words such as 'unless the worker has been paid compensation in respect of an injury received before the commencement of that Division'. No such limitation is stated in the clause. It would exceed the legitimate bounds of statutory construction for the Court to imply it. No other provision of the Act, including the transitional provisions, was pointed to by either party to relieve the employer of the consequence of this possibly unjust result. The injustice is highlighted if, as I would believe, there is no authority in the Compensation Court to order or provide for the deduction of compensation already paid under s16 of the 1926 Act in respect of the loss resulting from the injury received before the commencement of the 1987 Act. There may be other bases upon which such payments could be withheld or recovered if paid: cf Miller v CSR Ltd (1993) 9 NSWCCR 121; sub nom CSR Ltd t/as CSR Timber Products (1993) 29 NSWLR 611. These were not explored in the present proceedings. Clearly the result of this determination (which could affect a large number of cases involving multiple injuries happening both before and after the commencement of the 1987 Act) deserves some attention on the part of the Legislature." (Amendment subsequently was made to relevant provisions but those amendments are, the Court is informed by counsel, not relevant for present purposes). URJ DEPARTMENT OF MINERAL RESOURCES v BARRETT (Mahoney P) 7 I come now to what in this regard the learned judge did. It appears from the passages which I have cited from his judgment that his Honour, in respect of each leg, assessed the overall permanent loss which had resulted from the effect of both pre and post 1987 injuries. The Department had been the employer during the period post 1987, ie, the period after the 1987 Act came into effect (1 July 1987). The judge then applied the provisions as they then were of Schedule 6, Pt6, cl6 of the 1987 Act. Those provisions were: "Tf a loss mentioned in the Table to Division 4 of Pt3 of this Act resulted both from an injury received before the commencement of that Division and an injury received after that commencement the loss shall for the purposes of determining the amount of compensation payable in accordance with this Part and this Schedule be treated as having resulted from the injury received after that commencement." (I have put aside the subsequent inapplicable amendment). It was on this basis that the judge made the award against the Department in respect of the 30 per cent (left leg) and 40 per cent (right leg) loss of use to which T have referred. As I have indicated, Mr Hislop QC has pressed that the s66 award should have related only to "that loss which was attributable to the injuries sustained in his employment". This submission was made upon the basis to which Kirby P referred, namely, that it was, as Mr Hislop QC submitted, "perfectly possible to differentiate by medical evidence addressed precisely to the issue, the loss resulting from a pre-1987 injury and a loss resulting from a injury received after the commencement of that Act". I am not satisfied that the judge concluded that it was possible to make a differentiation of the kind referred to by Kirby P. Mr Hislop QC submitted that his Honour had adopted the opinion of Dr Millons and that that doctor had, in his reports, provided the basis for such an apportionment. The judge had, in his judgment, referred to the doctor's report of 21 February 1994 and had cited the following passages from it: "Further to my report to you of even date, permanent loss of efficient use of Mr Barrett's left leg at or above the knee would be of the order of 30%, of which perhaps 10% might affect the normal processes of attrition and the nature and conditions of his work in the mines, 10% the aggravating and accelerating effects of the injury of 1984, and the other 10% of the nature and conditions of his work with the Department of Mineral Resources. Permanent loss of the efficient use of his right leg at or above the knee would be of the order of 40%, with perhaps 20 per cent relating to the nature and conditions of his work and the normal processes of attrition from his time in the mines and the other 20% of his time with the Department of Mineral Resources, including the two aggravating incidents in February 1990 and July 1991." However, in his findings, as I have cited them, the judge purported to apply the Danswan case and the provisions of Schedule 6, Pt6, cl6 to find "that the applicant has a permanent loss of 30 per cent of the left leg resulting from the injuries pleaded against the second respondent and occurring finally on 15 December 1993". (The second respondent was the Department). Findings were made in similar term in respect of the right leg. It is plain from what the judge did that he did not in terms make the differentiation to which Mr Hislop QC refers. That may have been the result of a deliberate decision or, as the submissions I think suggest, because of an 8 UNREPORTED JUDGMENTS oversight. I am not convinced that the judge overlooked the possibility of differentiation to which Kirby P referred. That possibility was one to which the other members of the Court (Meagher and Cripps JJA) did not refer. But I incline to the view that the learned judge did not adopt the differentiation to which Kirby P referred because he concluded that, having regard to the facts and the state of the evidence, no differentiation should be made. Accordingly, it is not necessary for me to consider whether the differentiation suggested by Kirby P is based upon a correct construction of the legislation. Were I considering the evidence afresh, as on a rehearing, I would not be clear as to the precise meaning of what Dr Millons said in the passage cited from his report of 21 February 1994, particularly having regard to the earlier passages from that report to which the judge referred and which he cited in his judgment. In particular, I am not satisfied that the judge accepted what Dr Millons suggested "perhaps" "might" be the position or inferred that it was only 10 per cent of the loss of the left leg which could be attributed in any way to his employment with the Department. The doctor had referred to the effect of his work with the Department in the "aggravation and acceleration of' the degenerative changes to which, in his report of 21 February 1994, he had referred. As I understand the judge's judgment, he did not make the relevant differentiation but applied the then provisions of the Schedule to require that the Department bear the full 30 per cent and 40 per cent respective losses to which he referred. In oral argument, the Court to an extent explored the operation of the relevant provisions of the Schedule. The principles adopted in the Danswan case have, I think, to an extent been applied by this Court in other cases: cf Department of TAFE v Pitt (1993) 9 NSWCCR 309 and JJ Crockett Pty Ltd v Cox (1994) 10 NSWCCR 622. I do not think that this Court should, having regard inter alia to the legislative amendments which had been made, depart from the Danswan decision as it has been understood and as it was applied in the present case. In his oral argument, Mr Hislop QC properly drew the Court's attention to the fact that because an argument based on s71 had been disavowed at the trial, the argument based upon that section before this Court could not be pursued. However, he submitted that, if his previous submissions failed, the trial judge should have considered "apportionment" and that this Court should do so. For myself I am not clear as to what it is suggested that the judge should have done in this regard. I say this against the background of the discussions which took place during the oral submissions before this Court. Mr Hislop QC pointed, properly, to the fact that on the present operation of the provisions, the worker has received, in effect, double compensation. He has received $30,000 from Coalcliff in respect, in a practical sense, of the pre-1987 injuries; but, by virtue of the effect to be given to Schedule 6, Pt6, cl6, the compensation under s66 for his "loss" is to include, in effect, compensation for the result of what occurred pre-1987. He has submitted that there must be a basis of apportionment so that the Department does not have to pay, in effect, for what, by the $30,000, the worker has already been compensated for. Mr Hislop QC pointed to the fact that the judge did deduct $4,400 being compensation received under s16 of the 1926 Act in respect of injuries received during his employment with Coalcliff. Counsel ultimately referred to s22 of the 1987 Act as a source of power to apportion in the manner he submitted. He has conceded that, in the main, no such point was raised below, subject to there having been a reference to the matter in "the oral submissions made at the time". URJ DEPARTMENT OF MINERAL RESOURCES v BARRETT (Waddell AJA) 9 In pursuing the matter in this way, I do not criticise counsel's presentation of the matter to this Court. What occurred at the earlier stage was less than satisfactory. In my opinion, if there was to be an apportionment, if s22 permitted such apportionment, and if it was to be argued that the conditions for the apportionment were fulfilled, then it was necessary that those matters be raised, pursued and established at the trial. As far as appears from the material before this Court, that was not done. For myself, I am not satisfied that there is before this Court material upon which an apportionment, under s22 or otherwise, can properly be attempted. For these reasons, I do not accept that this Court should now attempt such a task. Ihave referred to the significance of the payments to the worker of $4,400 and $30,000. As to the former, the notice of cross-appeal does not contest that, if there was evidence of the payment to the worker of that sum, it was right for the judge to make the deduction that he did. Accordingly, it is not necessary for me to consider the correctness of that deduction. In relation to the sum of $30,000, that sum was paid for a release of the complex of rights, actual or possible, to which reference was made. Though there may be the apparent double compensation to which I have referred, I do not think that the material before this Court establishes whether there was such or, more particularly, the extent of it. It does not appear (for example) whether the sum was paid for release of common law or compensation rights against Australian Iron and Steel Pty Ltd which were of value sufficient to warrant payment of such a sum. I do not think that that material warrants a reconsideration of the orders made by the judge by reason of the worker's receipt of that sum. The cross-appeal, as far as it relates to s40 of the Act, has been abandoned. As far as it relates to the amount of $4,400, it is limited to the claim that there was "no or no proper evidence to entitle his Honour to find that the respondent had been paid $4,400 previously in respect of permanent loss of use of his right leg". The material on which the matter proceeded at the trial in this regard is not clear. But his Honour referred to the amount in his judgment and it may well have been - I think it probably was the position - that this matter was dealt with in argument in the manner in which, sensibly, such matters are dealt with in the Compensation Court. I would not be prepared, on the evidence now before this Court, to disturb what the judge did in this regard. For these reasons I am of opinion that the appeal and the cross-appeal should be dismissed. Each should be dismissed with costs. Waddell AJA I agree with Mahoney P. Appeal and cross-appeal dismissed with costs. Counsel for the appellant: JD Hislop QC Solicitors for the appellant: Hickson Lakeman and Holcombe Counsel for the respondent (1): GF Little Solicitors for the respondent (1): McGuire and McInerney Counsel for the respondent (2): JN Gleeson QC/ADM Hewitt Solicitors for the respondent (2): Sparke Helmore