The decision in Grixti v Linfox Australia Limited [1] provides clarity to self insureds under the Comcare scheme as to their possible financial exposure to pre-license liabilities and is consistent with the High Court’s 2007 decision in Andrews [2]- that is, the SRC Act (as far as it can) preserves a worker’s pre-license entitlements under State and Territory workers compensation legislation.
On behalf of Linfox, DibbsBarker successfully identified and ran the case of Grixti as a test case to clarify the extent of a licensees exposure to pre-license events.
In Grixti, Federal Court Judge Buchanan and Dr Alexander, sitting as members of the Administrative Appeals Tribunal, have clarified that a licensee under the Comcare scheme cannot be held liable for events occurring before its license to self-insure came into force.
The facts
Mr Grixti during the course of his working life was exposed to noise capable of causing hearing loss. From 1973 to 1989 he worked for the Public Transport Commission of NSW as a mechanic. The evidence showed that during the course of this employment, Mr Grixti sustained an 11.2% binaural hearing loss.
In 1993, Mr Grixti commenced employment with Linfox during the course of which he was again exposed to noise as a truck driver and at various sites that Mr Grixti would deliver to, such as construction sites.
During April 2006, Mr Grixti was assessed as suffering from a hearing loss above the earlier 11.2% loss and on 30 June 2006, he made a claim against Linfox under the NSW Workers’ Compensation Scheme. That claim was rejected by the insurer on the basis that Linfox had become self insured under the Comcare scheme on 3 April 2006. Mr Grixti then claimed directly against Linfox and the matter eventually made its way to the AAT.
The decision
In the proceedings, Linfox submitted that its liability under the SRC Act was limited by the scope of the license granted to it by the Safety, Rehabilitation & Compensation Commission (SRCC) and the terms of the SRC Act. Although Linfox argued that hearing loss was an injury for the purposes of the Act, it also argued that even if hearing loss was determined to be a disease, Linfox could not possibly be held liable under the SRC Act for events occurring before the commencement of its license.
Ultimately, the AAT agreed with this view. While finding that Mr Grixti suffered from a disease for the purposes of the SRC Act, the Members turned to the terms of Linfox’s license to assess whether it would be liable for that disease, stating.
‘The liability imposed on a corporation, such as the respondent, to pay compensation is identified by the scope of its authority to accept liability. The SRC Commission may also determine that a licensee may accept liability arising from injury before the license came into force (s108(3)), but there is no suggestion it has done so, either generally or so far as the respondent particularly is concerned.’
The Tribunal noted that the SRC Act obliged the SRCC to determine the scope of a licensees license to accept liability to pay compensation. This was done within the license and, having regard to the terms of the license itself, the Tribunal stated:
‘In our view the respondent was not authorised by this license, in accordance with s108(3), to accept liability or pay compensation arising from events before the license came into force. To the contrary, it was explicitly denied any such discretion or authority. It follows that it was not, during the currency of this license, authorised or liable to pay compensation referable to an “injury” suffered before 3 April 2006.’
In light of this finding, Mr Grixti could not succeed with his claim. The hearing loss sustained by him after the commencement of Linfox’s license was, at its best, 4.7% and therefore did not meet the threshold of 5%.
In reaching their decision, the Members noted that s108A(7) of the SRC Act had the effect of both excluding and preserving the operation of State and Territory laws and that, subject to what local workers compensation legislation may provide the SRC Act did not affect any pre-existing rights.
While not expressing a concluded view, the Members noted that it was unlikely that s17 of the Workers Compensation Act 1987 (NSW) had the effect of excluding Mr Grixti’s entitlement to compensation at the State level.
Impact
The decision will require self-insureds to give careful consideration to those types of injuries which straddle the commencement of a license to self-insure under the SRC Act, such as hearing loss, so that only those events which occur during the period of the license are considered in assessing entitlement to compensation.
It should also have a beneficial impact on reserves set aside for liabilities under the Comcare scheme and may require licensees to re-visit their estimates.
Footnotes
- Grixti v Linfox Australia Limited [2009] AATA 566
- Attorney-General (Victoria) v Andrews (2007) 230 CLR 369
