Monday 25 August 2025
Introduction
On 15 May 2025, the Court of Appeal of the Supreme Court of South Australia handed down its decision in the matter of Return to Work Corporation of South Australia v Sweeney [2025] SASCA 50.
The case is important for two reasons.
The first is the Court of Appeal made key observations as to the manner in which permanent impairments can be assessed in noise induced hearing loss matters, particularly where the loss is said to be attributable to more than a work-related cause
(at the relevant Hz levels that would normally be adopted).
The second reason is that it has set a precedent for the Return to Work Corporation and Self Insurers to reject claims for legal costs by workers in matters where there is a challenge to either:
- the assessment or the quantum offered in noise induced hearing loss matters; or
- for any lump sum dispute where the worker fails to secure an award beyond a certain range.
The focus of this article addresses the costs aspect, noting the decision of the Full Bench of the South Australian Employment Tribunal (“SAET”) handed down in September 2023 was overturned by the Court of Appeal.
It should be noted that current section 106(7) provisions within the Return to Work Act 2014 (“RTW Act”) finds its origin in the South Australian Workers Rehabilitation and Compensation Act 1986 (“WRC Act”).
The provision was introduced in 1996, along with other changes focused on improving the dispute resolution processes, strengthening rehabilitation programs, and introducing medical panels and the two-year reviews for certain claims. The amendments were based following an independent review of the WRC Act commissioned by the then Minister.
At that time, the dispute process empowered the Conciliation and Arbitration Officers to consider any determination setting a permanent impairment percentage to be awarded and determine the appropriate percentage of impairment based on the factual and medical evidence at what was referred to as an arbitration.
The then introduced Section 93B of the WRC Act provided that if the amount of the lump sum was less than, the same as or less than 10% above the amount offered in conciliation proceedings, the worker was not entitled to costs of the proceedings.
Equally, under section 94C of the WRC Act, if the matter proceeded to judicial review, the Tribunal was empowered to adopt a similar process, with section 94(C)(2)(c) of the WRC Act providing:
“If the amount of the lump sum is disputed by the worker, and the amount the Tribunal proposed to award under this Division is less than, the same as or less than 10 above the amount awarded on an arbitration or offered in conciliation proceedings, the worker is not entitled to costs of the proceedings under this Division.”
The provision was seen as a cost penalty, or at least a disincentive to proceed, and followed a similar provision utilised in the District Court of South Australia for motor vehicle claim disputes.
The provision was again adopted with appropriate amendments to reflect the current dispute resolution process when the RTW Act was introduced. The equivalent provision within the RTW Act provides:
“106 (7) If the amount of permanent impairment compensation is disputed by a worker and the amount the Tribunal awards is less than, or the same as, or less than 10% above, an amount offered by the relevant compensating authority to settle the matter before the matter proceeds to a hearing before the Tribunal, the worker is not entitled to costs under this section (and evidence of an offer made in the course of a compulsory conference or mediation is admissible (without the consent of all parties) in subsequent proceedings for the purpose of applying this provision).”
Facts in Sweeney
The worker in Sweeney lodged a claim for noise induced hearing loss and sought a lump sum entitlement pursuant to section 58 of the RTW Act, having worked 15 years in a noisy workplace operated by the employer.
On examination, three ENT surgeons concluded that the worker not only had a noise induced hearing loss, but she also had a non work related cochlea otosclerosis condition that cause hearing loss at the same frequencies as the noise induced hearing loss..
The medical assessor selected by the worker for assessment purposes under section 22 of the RTW Act considered that the loss was only a 4% whole person impairment. As a result the worker failed to exceed the 5% threshold required pursuant to section 58(2) of the RTW Act for an entitlement to lump sum compensation. As part of the assessment process, the assessor had been asked to assess the worker’s pre-existing or unrelated injury and deduct this impairment from the work related one.
No doubt the worker had an expectation of receiving a lump sum compensation as previous indicative assessments suggested that the whole person impairment was 7.7%. The medical expert had formed the view that there should be a 50/50 approach adopted in splitting the two causes.
For the assessment under section 22 of the RTW Act, the assessor had regard to scientific evidence contained in the risk tables in AS/NZS 1269.4:2014 (“Australian/New Zealand Standard”). The Australian/New Zealand Standard enabled the assessor to reach a conclusion about the level of noise induced hearing loss by reference to the tables that set out the quantum of expected percentage of hearing loss in males and females depending on the years of exposure and the average exposure over an 8 hour shift, and also the percentage of workers exposed to such noise who will be affected. Based on his analysis he concluded the loss would be 4%.
It was this approach that led the worker to challenge the assessor’s methodology.
While the focus of this article is to address the cost provisions, it must be understood that the Trial Judge in the first instance in the SAET formed the view the permanent impairment assessment was not strictly based on the subtraction method and that the assessor could adopt the risk tables. He commented there was no real practical difference in distinguishing what the entitlement should be after discounting for any non work-related cause of impairment. The Full Bench of SAET was not of the same view and considered that the approach adopted by the assessor was erroneous. The Court of Appeal did not agree with the Full Bench of the SAET and were of the view that it was open, when applying the Impairment Assessment Guidelines and notably Chapter 9.2, to adopt a medical judgement and this would include the use of the risk tables.
This decision resulted in the need for the Court of Appeal to consider the decision of the Trial Judge in the first instance as to costs and the operation of section 106(7) of the RTW Act. The Court of Appeal noted that the Trial Judge was of the view that section 106(7) of the RTW Act should apply even though it was argued that strictly speaking the only “offer” was contained in the determination of the Corporation of the nil entitlement. That is, there was no separate offer made after the initial determination. The worker also submitted that section106(7) of the RTW Act did not apply because what was in issue before the Tribunal was a challenge to the methodology used by the assessor and not about the actual percentage of the assessment.
The Trial Judge noted that:
- The issue in dispute that constituted the “reviewable decision” before him was “the determination” made by Return to Work SA (“RTWSA”) and not the assessment of the assessor in isolation.
- That although the worker was seeking referral to an Independent Medical Adviser (“IMA”), she was still seeking to ultimately change the percentage of impairment and therefore section 106(7) of the RTW Act was applicable. The determination itself represented the offer, noting there was no change to any percentage as the Trial Judge was not prepared to refer the matter to an IMA under section 122 of the RTW Act.
- Alternatively, it was noted that RTWSA wrote to the worker on 22 December 2022, during the course of the proceedings, placing the worker on notice that it was maintaining its determination but offering the worker her costs to a specified date. This also constituted an offer for the purposes of section 106(7) of the RTW Act.
The Full Bench of the SAET noted that section 106(7) of the RTW Act required an “offer” to at least be made before section 106(7) could be applied, and that neither the determination nor the separate letter constituted an offer for the purposes of the provision. The lead judgement on this point seemed to suggest that a “positive amount to compromise” was required. Having found that RTWSA had made no offer to settle by way of the determination or the separate letter sent, it was concluded that section 106(7) of the RTW Act did not apply.
Again, the Court of Appeal did not follow the line of reasoning of the Full Bench.
In the first instance, the Court of Appeal queried the way in which the reasoning of the trial Judge had been interpreted. The Court of Appeal formed the view that the Trial Judge had not erred as was submitted by the worker. The preferable view of the Trial Judge’s reasons was that it was the separate letter sent during the course of the proceedings by RTWSA that gave rise to a ruling on section 106(7) of the RTW Act.
The Court of Appeal also noted that the introduction of section 106(7) of the RTW Act may be seen as an encouragement to Compensating Authorities to make realistic offers, as well as an incentive to workers to accept them, if not a disincentive against rejecting them. Accordingly, the requirements for the operation of section 106(7) were satisfied once the Compensating Authority effectively reiterated its determination but offered to settle on the basis that the worker’s additional costs would be covered to a certain date. In the circumstances, the Court of Appeal considered that the Full Bench of the SAET erred in construing section 106(7) as requiring a positive amount needing to be offered by way of lump sum compensation for non-economic loss before s 106(7) could operate.
Finally, the Court of Appeal expressed the view that the provisions of section 106(3) of the RTW Act could still be utilised by the Compensating Authority where the worker’s actions may be interpreted as frivolous and vexatious or considered acting unreasonably in proceedings.
Summary
The outcome in Sweeney suggests that a more flexible approach can be adopted in challenging a worker’s right to their costs, in such cases where the worker is unsuccessful in achieving a higher percentage of lump sum entitlement, after an offer is made to them.
It would be prudent to ensure any “offers” that place the worker on notice of a risk of costs be carefully drafted.