"In the text Workers Compensation (New South Wales), second edition, 1979, by C P Mills, the following passage provides what I believe to be a fair summary of the law on incapacity and identifies the proper question to be asked. At page 285 the author said:
'The question is whether the injury has left the worker in such a position that in the open labour market his earning capacity is less than it was before the injury: Williams v Metropolitan Coal Co Ltd (1948) 76 CLR 431 per Starke J, and it is not limited to the effect on his capacity for his former work, per Dixon J.
In Ball v Hunt  AC 496, Lord Loreburn had said that there is incapacity when a man has a physical defect which makes his labour unsaleable in any market reasonably accessible to him, and there is partial incapacity when such a defect makes his labour saleable for less than it would otherwise fetch: see Commissioner for Railways v Agalianos (1955) 92 CLR 390 per Dixon CJ.'
In Alexander v Ashfield Municipal Council, CA 78/81, 27 October 1982, Hutley JA (with Samuels JA agreeing) observed:
'Capacity is diminished, even though in selected instances the worker can earn as much as he did before, if there are fields from which he is excluded, by reason of the injury, in which he laboured at the time of injury.'
Ecowize North PL v Ballard  NSWWCCPD 179. Roche DP.
"The argument is that the test of incapacity is not whether an injured worker has some theoretical earning capacity, but whether there is a practical prospect of that worker being able to obtain work in the labour market reasonably accessible to him or her:Lawarra Nominees PL v Wilson (1996) 25 NSWLR 206 and Moran Health Care Services v Woods (1997) 14 NSWCCR 499.
"Given the arbitrator's finding (not challenged on appeal) that there is no work Mr Ballard has any practical or realistic prospect of obtaining and that his ability to earn is 'nil'.
"it is submitted that the correct award is one for total incapacity. I agree with this submission as it is the only result that can follow as a matter of law from the unchallenged factual findings made.
"As a consequence the arbitrator was in error in making an award in favour of Mr Ballard under s 40 of the 1987 Act, as it was inconsistent with the factual findings made that Mr Ballard has 'nil' earning capacity."
International Aviation Service &c v Arumugham  PD 85. Snell ADP.
"The existence of some theoretical ability to work is not, of course, inconsistent with the existence of total incapacity:see Lawarra Nominees Pty Limited v Wilson (1996) 25 NSWCCR 206; Moran Health Care Services v Woods (1997) 14 NSWCCR 499):"