As you would be aware, the New South Wales Court of Appeal
handed down a decision earlier this year, Sabanayagam v St
George Bank Limited.1 The case held that if an
insurer declines liability because the worker is no longer totally
or partially incapacitated (section 33 of the Workers
Compensation Act 1987), this is not a "work capacity
decision" under the Act.
When we reported on the case earlier this year,2 we
considered the wider implications of Sabanayagam. We now
update you with new developments following the recent Presidential
decision in D'Er v Glemby International (Aust) Pty
Consideration of Sabanayagam by the WCC
Ms D'Er was a hairdresser who suffered from carpal tunnel
syndrome in her right hand and wrist. Initially she was paid
voluntary payments and then in accordance with a Compensation Court
award. In 2005 lump sum compensation was agreed. Then in 2007 she
received an award from the WCC for ongoing weekly payments, which
were discontinued in 2012 pursuant to (the then) section 59A. The
worker made a further lump sum claim in 2015, and the insurer
issued two section 74 notices disputing entitlement to further lump
sum compensation, but also denying that she was totally
incapacitated. The insurer claimed the worker had fully
At issue was a section 59A decision sent by the insurer to the
worker in November 2012. In it, the insurer made a "work
capacity assessment" that the worker had "current work
capacity" to work in full time work without restriction. The
insurer argued the letter evidenced a "work capacity
decision", or alternatively was the
decision itself, and the WCC had no jurisdiction. The Arbitrator
agreed with the insurer. The Arbitrator determined this matter
after the Presidential decision in Sabanayagam, but before
the Court of Appeal determination.
D'Er – The findings
In light of the decision in Sabanayagam, the WCC found
the Arbitrator had erred:
There was no evidence supporting that a "work capacity
decision" had been made.
The letter did not comply with the Work Capacity Guidelines,
and did not describe itself as a "work capacity
decision". This indicated a lack of intention to make a
The case is also instructive because the worker was an existing
recipient of weekly compensation as at 1 October 2012 by reason for
the 2007 award from the WCC. Because she had not been transitioned
to the new regime for the payment of weekly compensation (and the
decision of November 2012 did not achieve that), she was deemed to
be transitioned from 1 September 2015.4
Sabayanagam has clarified what is and isn't a work
If a worker has fully recovered from their work injury, then
the correct course of action is for a notice in accordance with
section 74 to be issued.
These section 74 notices must be careful to avoid using the
term "work capacity"
On the flipside, work capacity decisions should not reference
section 33 of the Workers Compensation Act 1987.
Decisions that a worker has fully recovered cannot be passed
off as work capacity decisions.
Work capacity decisions need to be made in accordance with the
We will keep you up to date as these new developments
An employer's duty is very high and can include engaging experts to inspect things such as stairways for latent defects.
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