Work capacity decision or s 74 Notice? That is the question – Sabanayagam v St George Bank Ltd [2016] NSWWCCPD 3

Ms Sabanayagam (the worker) was employed by St George Bank Ltd (St George) and sustained injury to her left knee on 3 October 2006. Liability was accepted for her injury and she was able to return to work. Her position was made redundant by St George but she has been subsequently employed by various other employers. The worker's last employer was Lloyds International. Her position was made redundant by Lloyds International as of 4 March 2013. The worker never returned to work after this.

On 25 November 2013, the insurer made a work capacity decision under s 43(1) of the 1987 Act. The work capacity decision determined that the worker had no entitlement to weekly benefits. The worker sought an internal review of that work capacity decision and, on 31 December 2013, the insurer overturned the decision due to a technical error in the original decision. The 31 December 2013 decision was therefore to the effect that the worker had an entitlement to weekly payments of compensation under s 37 of the 1987 Act of $758.80 per week.

On 20 March 2015, the insurer issued a s 74 notice to the worker. That notice disputed the worker had any incapacity resulting from injury and asserted that she was fit for pre-injury duties. The worker sought a review of this decision on two occasions and the decision was maintained on both occasions by way of further notices dated 26 March 2015 and 9 April 2015.

The worker commenced proceedings in the Workers Compensation Commission (the Commission) seeking weekly payments from the date of cessation following the 20 March 2015 s 74 notice.

On behalf of St George, it was submitted that the worker had no incapacity as a result of her injury and in any event, because the worker had received more than 130 weeks of weekly compensation the Commission had no jurisdiction to determine the dispute because s 38 requires the entitlement to be assessed by the insurer.

The worker submitted that the s 74 notice of March 2015 was not a work capacity decision that amended the work capacity decision of 31 December 2013 and therefore the Commission did have jurisdiction to make an order for weekly payments pursuant to s 38 consistent with that work capacity decision.

At first instance, Senior Arbitrator Catherine McDonald (the Arbitrator), found that the s 74 notice was a work capacity decision and therefore she could not make any decision inconsistent with that noting s 43(3) of the 1987 Act. She further found that the Commission did not have jurisdiction to determine a dispute as to weekly payments after the second entitlement period because entitlement must be assessed by an insurer relying upon the Presidential decisions of Rawson² and Lee³.

There were three grounds of appeal that the Deputy President determined:

1. The Arbitrator erred when she found that the s 74 notices of 20 March 2015, 26 March 2015 and 9 April 2015 were work capacity decisions. 
   
   
2. The Arbitrator erred when she found that the Commission did not have jurisdiction after the second entitlement period in circumstances where the requirements of s 38 had been met in that the insurer had assessed the worker as having no work capacity.
   
   
3. The Arbitrator erred when she considered that the Commission has no jurisdiction to determine a dispute whether a work capacity decision is binding.

In relation to whether the decisions contained in the s 74 notices of March and April 2015 were work capacity decisions, the Deputy President accepted that not all s 74 notices constituting a decision to dispute liability are necessarily work capacity decisions. However, he did find that the insurer's decision as set out in those notices did constitute a work capacity decision.

The Deputy President stated that a decision "about a worker's current work capacity" should be taken to include a decision as to the existence or otherwise of such current work capacity as defined. He reached this conclusion by reading together ss (a) and (f) of s 43(1) of the 1987 Act.

In light of his finding that the decision of s 74 notices in March and April 2015 were work capacity decisions, he stated the effect of the earlier work capacity decision dated 31 December 2013 (giving the worker 80% of the transitional rate) had come to an end. The worker's ground of appeal in relation to the s 74 notices failed.

In relation to the ground of appeal as to the Commission's jurisdiction in the s 38 period, the Deputy President rejected the worker's argument that Lee was not authority for the proposition that the Commission did not have jurisdiction to determine a s 38 entitlement. The Deputy President stated that he believed it was made clear in Lee that the provisions of s 38 had the effect that a worker's entitlement to weekly compensation ceases unless the entitlement is determined by the insurer. The Deputy President noted it was expressly stated in Lee that there was an "absence of jurisdiction to determine the worker's entitlement under s 38…"

The Deputy President stated that he agreed with the reasoning and conclusion reached on the facts in Lee. He confirmed the 1987 Act provides that the insurer determines the entitlement and that the Commission has no power to rule on or determine any such dispute. He noted in the case of disagreement the 1987 Act makes provision for review in s 44BB including judicial review in s 43(1).

The remaining ground of appeal was that the Commission had no jurisdiction to determine a dispute about whether a work capacity decision is binding. This was made because the worker was seeking the Commission make an order in her favour for weekly payments consistent with the 31 December 2013 work capacity decision.

The Deputy President noted that it was not in doubt that the Commission was bound by a work capacity decision (s 43(3) of the 1987 Act). However, as the Deputy President found the s 74 notices of March and April 2015 to be work capacity decisions, this ground of appeal became irrelevant because the subsequent s 74 notices, which he found to be work capacity decisions, found the worker to have no entitlement to weekly payments.

Interestingly, the Deputy President stated that if the facts were different, it may have been arguable that the Commission could make an award consistent with a work capacity decision. He noted it was not necessary to determine that point in this appeal and he did note this was the relief granted by Arbitrator John Wynyard in Kerry Urquhart v Rainbow Home and Respite Service Pty Ltd Matter Number 1106/2015.
The Deputy President rejected each of the grounds of the appeal and therefore the worker's appeal failed.

The Deputy President considered the decision made by the insurer, which they subsequently articulated in the s 74 notice, was a work capacity decision. He stated that a decision articulated in a s 74 notice relating to weekly payments is not necessarily a work capacity decision but it may be considered so if the decision deals with one of the matters set out in s 43(1)(a) – (f) of the 1987 Act.

In practice, this decision suggests that if an insurer wants to dispute liability for weekly payments on the basis that the worker has recovered from injury/no longer has any incapacity resulting from injury or is fit for pre injury duties, the nature of this dispute is a work capacity decision and should be articulated in a work capacity decision notice and not in a s 74 notice.

The decision also confirms that the Commission cannot determine a worker's entitlement under s 38. However, the Deputy President left open to question whether the Commission could nevertheless make an order under s 38 consistent with a work capacity decision.