Court of appeal clarifies the operation of s39

  • TurkAlert
  • Published 14.07.2020
Hochbaum v RSM Building Services Pty Ltd; Whitton v Technical and Further Education Commission t/as TAFE NSW [2020] NSWCA 113

Key Takeaways

The Court of Appeal today handed down its keenly anticipated decision in the matter of Hochbaum v RSM Building Services Pty Ltd; Whitton v Technical and Further Education Commission t/as TAFE NSW [2020] NSWCA 113 (17 June 2020). 

The Court has overturned the WCC Presidential decision in each case and held that the 260 week limit on weekly benefits does not apply to a worker who has 21% WPI or more, regardless of when that threshold is achieved.

Insurers can now expect claims for arrears of benefits from workers who satisfied the 21% WPI threshold sometime after benefits ceased at 260 weeks.

Brief Facts 

One of the most significant changes brought about by the 2012 legislative amendments was the introduction of a five year (260 week) limit on the payment of weekly benefits for all workers with 20% WPI or less (s39 of the Workers Compensation Act 1987).

In many cases, a worker’s degree of impairment will have been determined before the 260 week point and in those cases, weekly benefits will continue or cease depending on whether or not the worker has 21% WPI or more at the time 260 weeks is reached.   

In April and June 2019, in separate decisions, President Judge Phillips considered what should happen if the 21% WPI s39 threshold is obtained at some point after weekly benefits have ceased at 260 weeks. The question for determination was whether the worker is then entitled to receive back payment from the 260 week point, or whether benefits should recommence only from the day that the threshold is established? 

At first instance, Arbitrator Bamber considered the phrase in s39(2) that this section does not apply to an injured worker meant that benefits should be reinstated from the date last paid because s39 “did not apply” in the intervening period. 

In Ms Whitton’s case the intervening period was 25 weeks. For Mr Hochbaum it was almost 30 weeks. 

In each case President Phillips overturned the Arbitrator’s decision, finding in effect, that a guillotine falls at the end of 260 weeks. It remains in place unless and until the worker obtains an assessment at or over 21% WPI. At that point (and only at that point) s39(2) is triggered and the guillotine is lifted, restoring an entitlement to weekly benefits that did not exist the day before. 

Judgment

It was the President’s view that s39(2) should be read alongside s39(3) such that s39(2) could only lift the s39(1) guillotine and restore an entitlement to weekly benefits once the 21% WPI threshold had been agreed or determined. In other words, payments cease at 260 weeks and can only recommence on and from the date the 21% threshold is achieved.   

The Court of Appeal has disagreed, holding that s39(2) asks only whether or not the injury results in more than 20% WPI. It does not ask when the level of impairment was agreed or determined. 

On that reasoning, the Court concluded that:

On the proper construction of s39, the 260-week limit never applies to a worker whose degree of permanent impairment resulting from the relevant injury exceeds 20%, regardless of when that threshold is crossed, and regardless of whether or when it is formally assessed as having been crossed.

Accordingly, in the Court’s view, payments may cease at 260 weeks under s39(1) if the worker’s level of impairment has not been assessed or agreed at more than 20% WPI.

If however, that worker’s level of impairment is later assessed or agreed at more than 20% WPI then s39(2) is satisfied, s39(1) does not apply and that worker is not subject to the 260 week limit on weekly payments. 

Implications

Workers with 21% WPI or more are in an exempt class and not subject to the 260 week limit on weekly benefits. 

This decision clarifies that the relevant question is whether a worker’s injury results in more than 20% WPI, not when it does. 

Insurers can now expect claims for arrears of benefits from workers who satisfied the 21% WPI threshold sometime after benefits ceased at 260 weeks. 

Importantly however, an entitlement to benefits beyond 260 weeks is still subject to the requirements of s38, and (other than for workers with highest needs) still subject to the work capacity process. 

 

Miriam Browne

Special Counsel

P: 02 8257 5869

Email Miriam