Australia: Workers Compensation - Lump Sum Claim Must Precede Work Place Injury Claim, Even In Case Of Psychiatric Injury

Last Updated: 23 December 2008
Article by Andrew Spearritt and Samantha Hubbard

Wattyl Australia Pty Limited v McArthur [2008] NSWCA 326

In Brief

The NSW Court of Appeal has decided that a worker must make a claim for lump sum compensation before or at the same time as a claim for work injury damages and that such a claim cannot be waived or abandoned. Further, the Court of Appeal held that the various pre-filing requirements of a work injury damages claim are mandatory for all workers.


John McArthur ("the Worker"), the first respondent in the Court of Appeal proceedings, sustained an injury on 24 March 2000 when he was driving a motor vehicle owned by Wattyl Australia Pty Limited ("the Employer"), the appellant in the Court of Appeal proceedings. The injury occurred when a container of solvent overturned in the boot of the vehicle which then emitted fumes which were inhaled by the Worker. It was alleged that the fumes caused the Worker to lose control of the vehicle and crash into a tree.

The Worker commenced proceedings in the District Court of NSW claiming work injury damages from the Employer. The injuries which the Worker allegedly sustained were of a psychiatric nature. Both parties agreed that a claim for lump sum compensation had not been made by the Worker prior to the commencement of the District Court proceedings.

A claim for lump sum compensation refers to compensation for non economic loss awarded due to an injury received at work, generally obtained from proceedings commenced in the Workers Compensation Commission.

A work injury damages claim has been defined as "an injury to a worker caused by the negligence or other tort of the employer". The legislation only allows for damages in relation to past and future economic loss to be awarded (s 151G of the 1987 Act) which are generally obtained from proceedings commenced in the District Court of New South Wales.

On 26 October 2006, the Employer filed a Notice of Motion requesting that the Worker's claim be dismissed for failure to comply with Sections 280A, 313, 315 and 318A of the Workplace Injury Management and Workers Compensation Act 1998 ("the 1998 Act") and Sections 151B, 151E, 151G and 151H of the Workers Compensation Act 1987 ("the 1987 Act").

Section 280A of the 1998 Act provides:

"A claim for work injury damages in respect of an injury cannot be made unless a claim for lump sum compensation in respect of the injury is made before or at the same time as the claim for work injury damages".

The 1998 Act also contains various procedural requirements that must be met before a work injury damages claim can be made. Such requirements include an assessment of the degree of permanent impairment if there is a dispute as to its extent (s 313), a serving of a pre-filing statement (s 315) and the engagement in mediation processes (s 318A).

District Court Proceedings

Essentially, the Employer's contention was that the Worker was not entitled to bring a claim for work injury damages as a claim for lump sum compensation had not been made, as required by s 280A of the 1998 Act. Further, the Employer argued that the Worker had not complied with the other pre-filing requirements contained in the 1998 Act.

The Worker argued that he was not entitled to bring a claim for lump sum compensation as at the date of injury on 24 March 2000, as his injuries were of a purely psychological nature, rather than physical nature and were expressly prohibited in the applicable workers compensation legislation at the time. In the alternative, the Worker argued that he expressly abandoned or waived any such claim.

In the primary proceedings in the District Court of New South Wales under Judge Balla held that a worker could abandon the right to lump sum compensation, but also that the Worker did not have any entitlement to lump sum compensation as at the date of the accident. Accordingly, it was decided that s 280A did not apply to the Worker's case and the Employer's Notice of Motion was dismissed.

Court of Appeal Proceedings

The Employer filed an appeal against the decision of Judge Balla, arguing that the primary judge was in error on every point.

The Employer submitted that the Worker did in fact have a valid claim for lump sum compensation as at the date of injury for the physical injuries he received in the car accident, being his alleged stutter, brain damage and right hand tremor. It was argued that the proper interpretation of the legislation was to decide whether a claim can be made rather than evaluating its likely success.

The Employer also argued that a worker cannot waive or abandon a claim for compensation under either s 66 or s 67 of the 1987 Act. It was submitted by the Employer that s 280A of the 1998 Act did apply to the present case and that the Worker should be prohibited from bringing a claim for work injury damages until such time as a claim for lump sum compensation had been made.

The Worker repeated his submissions in the court below ,that he was not entitled to bring a claim for lump sum compensation due to the psychiatric nature of his injuries and that accordingly, s 280A and the pre-trial requirements of the 1998 Act did not apply to the Worker. In the alternative, the Worker argued that any such claim was abandoned or waived, relying upon the decision in Kimberly Clarke Australia Pty Limited v Thompson (2006) 67 NSWLR 187.

Decision – Waiver of Claim

In relation to the Worker's submissions that a lump sum compensation claim can be waived, the Court of Appeal noted that the ratio of the decision in Kimberly Clarke was that the obligation to comply with the provisions of the 1998 Act was inapplicable in that case because the claimant seeking damages for nervous shock was the widow of a Worker and was herself a stranger to the employment relationship. The Court therefore distinguished the decision in Kimberly Clarke from the present case on the basis that it related to a widow's death claim rather than a work injury damages claim.

The Court of Appeal held that the statutory obligation to make a claim for lump sum compensation cannot be avoided with a proclamation of abandonment.

The leading judgment was delivered by Beazley JA who rejected the Employer's contention that the Worker's claim was not maintainable because a claim for lump sum compensation had not been brought. Rather, he held that it was proper for the Employer to plead non compliance with the legislation and for a court to strike out the claim exercising its discretionary power. In fact, it was specifically stated by Beazley JA that:

"It is difficult to perceive of a circumstance where a court would not accede to the [Employer's] application to strike out proceedings that did not comply with the procedural requirements of the Act, unless there was some conduct of the [Employer] that was relevant to the exercise of the discretion".

Decision – No Entitlement to Claim

In relation to the second argument of the Worker that he was not entitled to bring a claim for lump sum compensation, Beazley JA rejected the Worker's submissions and held that regardless of the Worker's ability to bring a claim for lump sum compensation, the legislation was clear in its intention to apply to any claim for work injury damages, regardless of the success of any lump sum compensation claim.

It was also held that the legislation was clear in its intention that a work injury damage claim could not be pursued unless a claim for lump sum compensation was made in respect of the same injury before or at the same time. Beazley JA also decided that there was a clear relationship in the legislation between the entitlements provided by the 1987 Act and the procedural provisions of the 1998 Act, which were held to be mandatory.

The Court of Appeal therefore agreed with the Employer that s 280A was applicable and clearly required a worker to make a claim for lump sum compensation before a work injury damages claim could be made.

The Employer's appeal was granted with costs.


  • The significance of this decision is that a worker is bound by the pre-filing requirements of the 1998 Act when bringing a claim for work injury damages, regardless of any decision to waive or abandon a claim for lump sum compensation. This includes the requirement that the parties either agree or the Worker is assessed by an Approved Medical Specialist as having sustained a whole person impairment of 15% or greater, in order to be entitled to bring a claim for work injury damages.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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