January 2023 Special Case Update

Department for Child Protection v Morris [2022] SASCA 131

Topic: The Court of Appeal determines that a totally incapacitated worker can be in breach of their obligation of mutuality
Commentator: Mark Keam

For those of you who have been following our Case Updates over the last 12 or so months, you will be familiar with the matter of Department for Child Protection v Morris.

Ms Morris was in receipt of weekly payments based on her being totally incapacitated for work.  During the time that she was in receipt of weekly payments, the worker was found guilty of various criminal offences.  A Notice was issued in accordance with Section 48 of the Return to Work Act (“the Act”) asserting that the worker was in breach of her obligation of mutuality.

As a further part of the overall interaction between the parties, the worker was also dismissed from her employment for serious and wilful misconduct.  The termination of the worker’s employment was again characterised as being a breach of her obligation of mutuality, so as to again form the basis for another notice to be issued in accordance with Section 48 of the Act, seeking to cease her ongoing weekly payments.

Having gone through a judgment as first instance and on appeal to the Full Bench of the South Australian Employment Tribunal, the matter eventually found its way to the Supreme Court’s Court of Appeal.  The Court of Appeal has determined a Section 48 Notice grounded on a breach of obligation of mutuality can in certain circumstances apply to a worker who is totally incapacitated for work.  This is a significant departure from what had previously been understood to be the applicable law, which was largely to the effect that breaches of obligation of mutuality were only generally associated with an injured worker who had a partial, but not total, incapacity for work. As indicated above, the Court of Appeal’s findings were made in what are considered to be limited special circumstances, and it will not be in every case that a breach of obligation of mutuality will indeed apply to the conduct of a worker who is totally incapacitated for work.  However, and particularly with reference to the consideration of the matter by Justice Doyle of the Court of Appeal, there is a roadmap provided by the Court of Appeal as to the circumstances in which a notice might be issued for beach of obligation of mutuality in the case of a totally incapacitated worker.  In this regard, it is worth quoting, at length, Justice Doyle’s thoughts and rationale for the type of situation where a course of action in these circumstances might be permissible:

Turning more directly to the issue that arises in the present appeal, I agree with the reasoning of Livesey P and Bleby JA to the effect that there is no textual basis for concluding that s 48(3)(g) is confined to workers with a partial, as opposed to total, incapacity for work.  In circumstances where various of the other limbs of ss 48(2) and (3) plainly operate in respect of totally incapacitated workers, there is no basis for any textual implication that precludes s 48(3)(g) operating in respect of such workers.

However, it might nevertheless be argued that, despite the absence of any textual basis for an implication of this nature, the reference in s 48(3)(g) to circumstances which have been “recognised” as a breach of the obligation of mutuality might nevertheless provide the basis for confining the operation of that subsection in an equivalent way.  Whilst not put quite in these terms by the respondent, or in the decisions below, it might be argued that, given the context in which it has previously been recognised and given effect, the concept of mutuality has always been confined to workers with some residual capacity, with the existence and content of the obligation of mutuality thus inherently bound up in the existence of some residual capacity.  In other words, the obligation of mutuality does not exist in the abstract.  Its content and operation can only ever be considered in terms of a worker being ready, willing, and able to exercise some residual capacity.  The effect of this argument would be that whilst the obligation of mutuality under s 48(3)(g) might, in its terms, be capable of application to a worker who is totally incapacitated, it has no meaningful content in respect of such a worker because that duty has (by reason of the context in which it came to be recognised and given content) only ever been recognised, and been capable of being given meaningful content, in the context of a worker with some residual capacity.

In my view, there is some attraction to this argument.  It would avoid some of what the respondent contends would be the harsh, indeed capricious, consequences of the approach contended for by the appellant.  And circumstances such as those in the present case might be addressed through alternative mechanisms, such as by ceasing weekly payments on the basis that the worker has been dismissed from employment for serious and wilful misconduct (s 48(2)(e)), or by contesting the extent of the worker’s incapacity.  But in the ultimate analysis, I am not persuaded this argument can be sustained.

It is true that, by reason of the statutory context in which mutuality came to be recognised and given effect, its operation has not previously been recognised or given effect in respect of totally incapacitated workers.  However, properly understood, I do not think that the notion of mutuality recognised under the predecessor legislation, and now given operation under s 48(3)(g) of the current Act, has ever been entirely bound up in the worker’s residual capacity.  While it has generally been convenient and appropriate to describe the concept of mutuality by reference to the worker’s residual capacity, I do not think it is confined to considerations bound up in the worker’s residual capacity.

As Livesey P and Bleby JA have explained, the notion of mutuality extends to more fundamental matters that are inherent in the employment relationship, and the worker’s employability, more generally.  The compendious requirement that the worker be ready, willing, and able to accept suitable employment is not confined to the worker retaining their physical ability to exploit some residual capacity.  Rather, the requirement of cooperation inherent in the obligation of mutuality requires that the worker remain suitable for employment in a more general and broad sense.  The present case is an illustration of where a worker, by reason of her dishonest criminal conduct, has destroyed her suitability for employment in that more general and broad sense.

The view I have reached is consistent with the notion, inherent in the Act, that the degree of a worker’s incapacity, including whether he is totally incapacitated, is always addressed to a particular point in time.  It is also consistent with the evident purpose of the Act being to require that an injured worker continue to cooperate towards improving or restoring his capacity for work, with a view ultimately, if possible, to returning to work.  In this context, there is nothing surprising about expecting, indeed obliging, even a totally incapacitated worker to retain his suitability for employment in the more general and broad sense that I have described.

I conclude by addressing the respondent’s submission that the construction contended for by the appellant would lead to harsh and capricious results.  There is limited weight that can be afforded to such a contention, given both the contestable nature of the assertions of harsh and capricious results, and the primacy that must be given to the text, context and evident purpose of the legislation when construing s 48(3)(g).  But in any event, to the extent that there is any scope for what the respondent would suggest is unexpected (and hence unlikely to have been intended) harshness, it seems to me that this is largely inherent in the enactment of a scheme which, unlike Kourakis J’s construction of the predecessor legislation in Seal v Transfield (Australia) Services Pty Ltd, unequivocally permits the discontinuance of – and termination of any underlying entitlement to – weekly payments in the event of a breach of the obligation of mutuality, subject only to a restoration of mutuality.  Whilst it might seem harsh that a totally incapacitated worker would suffer this fate where the breach of the obligation of mutuality occurs by reason of supervening events or circumstances outside of the control of the worker, the weight that can be attached to this is very limited in circumstances where it seems to be accepted that the current Act operates to similar effect in the case of partially incapacitated workers (including those with very little residual capacity).

To put this last point in more concrete terms, it seems to be accepted that the effect of the Act is that a worker who is partially incapacitated (including a worker with very little residual capacity, and with very little realistic prospect of ever returning to work in any meaningful way), who then suffers an event or circumstances – such as a heart attack – that renders him totally incapacitated, would be vulnerable to having the entirety of his weekly payments discontinued.  The effect of the appellant’s construction would be merely to extend this ‘harsh’ consequence to a worker who was totally incapacitated at the time of his heart attack.  Understood in this way, it is difficult to see how the assertion of capricious outcomes associated with the appellant’s construction can be maintained.  Any harshness in outcomes flowing from the appellant’s construction is at most incremental upon that which already exists, and of limited significance in construing s 48(3)(g).

Taking His Honour’s comments as a whole, what is considered important is the notion that at all times a totally incapacitated worker or a partially incapacitated worker has an obligation to work towards improving their capacity for work and not taking steps that are inconsistent with achieving that purpose.  Being terminated for serious and wilful misconduct would be a particularly strong reason to conclude that a worker was not continuing to co-operate with improving or restoring their capacity for work, where they no longer have a job available to return to.

His Honour went on to contrast the situation of a notionally totally incapacitated worker, with a partially incapacitated worker who has only a very minimal capacity in that regard, and who might be caught up in an event or circumstances (the example given was having a heart attack) which precludes them from continuing to work – where in reality they were probably not going to be working in any event, but nonetheless were not considered totally incapacitated.

As indicated above, the decision will have limited application to particular facts and circumstances that might apply at the applicable time and particularly might be of more importance in situations where there might only be a temporary incapacity for work, rather than a longstanding and total incapacity for work.  Nonetheless, the judgment provides guidance now for those cases where it might be appropriate to take action pursuant to Section 48 of the Act in any event, even where a worker may be totally incapacitated for work.

As always, should be require any advice on the ramifications of the decision then please don’t hesitate to contact us.

Mark Keam – Editor