8.11.3 Section 39(14) continues to have effect in Transitional Cases

Section 39(14) of the 1971 Act continues to have effect, in relation to claims for lump-sums payable under the 1971 Act, despite the repeal of the 1971 Act. This was confirmed by the Full Federal Court in Hoyle v Telstra Corporation Limited (1997) where the Court held that S39(14) had substantive and not procedural effect. The Court rejected an argument that the transitional provisions in Part X of the SRCA had rendered S39(14) of no effect:

We are not persuaded that the changes in policy are sufficient to override the language of Sections 124(3) and 124(4), read in the light of the general principle, discernible in Section 124 as a whole, that an employee whose entitlement has a nexus with a period before the Commencing Day is not intended to be in a better position in respect of a permanent impairment simply because of the enactment of the Compensation Act and the repeal of the 1971 Act. The changes are not such as would indicate that there was a legislative intention to give to an employee who was totally incapacitated at the Commencement Day, the right to recover a lump sum payment under Section 24 of the Compensation Act which that employee would not have been entitled to recover under Section 39 of the 1971 Act if the Compensation Act had not been enacted.

The consequence of the appellants' contentions, of course, would be that, upon the commencement of Part X of the Compensation Act, the appellants immediately became entitled to a lump sum payment under Section 24 of an amount under Section 39(3) to which they had not, because of the effect of Section 39(14), previously been entitled. The scheme of Section 124 suggests that it is improbable that that consequence was intended. For the reasons indicated above, the language of Sections 124(3) and 124(4), read in the context of the whole of Section 124, indicates the contrary.

It follows that the appellants have no entitlement to compensation under Section 24 of the Compensation Act. Our reasoning in reaching that conclusion is not significantly different from the reasoning of Sackville J. His Honour concluded that effect must be given to Section 39(14), being part of the 1971 Act at the time when the impairment occurred, in determining the employee's entitlement to compensation of a lump sum for the purposes of Section 124(3)(b). That is to say, there may be an entitlement to compensation but, on the findings made by the Tribunal, the amount of compensation payable is nil.

Accordingly, absent a finding that the appellants had ceased to be totally incapacitated for work, Sections 124(3) and 124(4) preclude both appellants from having any entitlement to compensation under Sections 24 and 27 of the Compensation Act. Since there has been no such finding, there is no entitlement under those sections. Both appeals must therefore be dismissed.

Note that the Court accepted that an amount of lump-sum compensation could become payable if S39(14) ceases to have effect in a particular case, for example because a member ceases to be totally incapacitated or is no longer likely to become totally incapacitated. Circumstances where S39(14) ceases to have effect, possibly giving rise to entitlement to a transitional PI payment include:

• a member (including a former employee) ceases to be totally incapacitated, this may be demonstrated for example by the member commencing part-time work
• a medical report indicates that the member (or former employee) is no longer likely to become totally incapacitated from their pre-1988 injury
• a member who is totally incapacitated turns Age Pension age and is therefore no longer entitled to weekly incapacity payments because of S23(1) of the Act (this is not applicable to former employees whose entitlement to incapacity payments continues after age 65). .