Issue:4 April 2012

StateCover Mutual Ltd v Smith [2012] NSWCA 27

WORKERS COMPENSATION – appeal – whether Commission erred in point of law – whether any evidence capable of supporting finding that nature and conditions of employment constituted a substantial contributing factor in relation to worker’s injury – whether insurer who was not formally a party to proceedings before Commission entitled to appeal under s 353 of the 1998 Act – COSTS – appeal costs – whether party who filed submitting appearance entitled to costs of appearing at hearing to seek costs order when had not previously sought consent to such order

Court of Appeal

Beazley JA, Campbell JA and Macfarlan JA

3 March 2012

Facts:

Mr Smith was employed by Parkes Shire Council as a labourer from about 1992 until March 2008. He was required to perform a full range of heavy physical activities, including shovelling, lifting and squatting.

Mr Smith alleged that he suffered injuries to his right knee and lower back as a result of incidents that occurred in the course of his employment on 11 April 2001 and 31 March 2005. He also alleged, more generally, that as a result of the physical nature of his duties in the period from April 2001 to March 2008 he suffered “an aggravation, exacerbation and acceleration” of these injuries. Mr Smith claimed that he had a significant permanent impairment of his back and right knee as a result of these matters.

The arbitrator rejected his claim. On appeal, DP Roche found that, relying on evidence from Dr Huntsdale, Mr Smith had suffered the injuries he alleged on 11 April 2001 and accepted Mr Smith’s more general contention that he suffered an aggravation of those injuries in the course of his employment in the period to March 2008. However, he rejected Mr Smith’s claim that he suffered injuries in an incident that occurred on 31 March 2005.

Until 30 June 2001, GIO General Limited was the Council’s workers compensation insurer. QBE Workers Compensation (NSW) Ltd, the second respondent on appeal, subsequently assumed GIO’s potential liability in respect of that period. StateCover insured the Council in respect of the period commencing on 1 July 2001. It was not on risk when the 11 April 2001 incident occurred but was on risk for most of the subsequent period in which DP Roche found that the injuries were aggravated.

The substance of the appeal was a dispute between two insurers. Mr Smith filed an appearance in the appeal, but in September 2011 he filed a different notice of appearance, whereby he submitted to any order of the court save as to costs. The submitting appearance was filed after Mr Smith’s solicitors had sought, and obtained, the agreement of the appellant’s solicitors that they would not seek costs as against Mr Smith. However, at no time did they seek agreement concerning the payment of Mr Smith’s costs of the appeal. Counsel for Mr Smith appeared at the hearing of the appeal. As he conceded, the only point of his appearance was to seek an order for payment of Mr Smith’s costs.

The issue on appeal was whether there was sufficient evidence before the Deputy President capable of supporting a finding that Mr Smith’s injuries were aggravated in the period April 2001 to March 2008 by reason of the nature and conditions of his employment.

Held:  appeal dismissed

Macfarlan JA (Beazley JA and Campbell JA agreeing)

1. Dr Huntsdale’s report did express the opinion that the nature and conditions of Mr Smith’s employment from 2001 to 2008 substantially contributed to his present condition.  Under the heading “the Medical Liability” in his report, Dr Huntsdale described both the “nature and conditions” of Mr Smith’s service and “the injury he sustained to his knee and back” as substantially contributing factors to his condition.  Bearing in mind the various references elsewhere in the report to “the injury” as that suffered in April 2001, the reference to “injury” quoted above, should be understood as a reference to the injury in April 2001. The reference to “nature and conditions” was a reference to the general character of Mr Smith’s duties in the period from April 2001 until the cessation of his employment by the Council in March 2008. What Dr Huntsdale said was at least capable of being so understood. Therefore DP Roche’s construction of the report in this way was accordingly open to him and justified his finding that Mr Smith’s duties up to March 2008 were a substantial contributing factor in causing his present condition [33].

2. Dr Huntsdale’s statement that “any aggravation should have ceased by now” in relation to the “original injury” (the April 2001 injury) appears to have been saying that the April 2001 occurrence should have ceased to have any impact by the time of his report. That statement did not exclude the possibility that the nature of Mr Smith’s ongoing work duties substantially contributed to his present condition [34].

3. Dr Huntsdale’s observation that “current symptoms in [Mr Smith’s] knee and back are due to degenerative changes” was not inconsistent with the view that Dr Huntsdale expressed earlier that the nature and conditions of Mr Smith’s employment were a substantial contributing factor in relation to his current condition.  His statement that the current condition is “due to degenerative changes” did not mean that the degenerative changes were not, as Dr Huntsdale had earlier indicated, aggravated by the nature and conditions of Mr Smith’s employment [35].

4. Therefore there was evidence to support the finding [37].

First Respondent’s costs

Beazley JA

5. Although there did not appear that any prior request had been made to the other parties for consent to an appropriate costs order, that failure should not result in the first respondent being deprived of his costs. Given the arguments made by the appellant against the granting of a costs order in favour of the first respondent, it was unlikely that a letter requesting the appellant to pay for the first respondent’s costs would have resulted in an agreement to do so [3]-[4].

6. Costs should therefore include costs of appearance at the hearing on 7 February 2012 [5].

Campbell JA

7. The terms of s 56 of the Civil Procedure Act 2005 make clear, the obligation to take steps to achieve the “just, quick and cheap resolution of the real issues in the dispute or proceedings” lies on the parties, as well as the court. It was excessive to brief counsel to appear on the hearing of an appeal, when counsel was able to offer nothing that assisted either his client or the court concerning the substance of the dispute that was to be argued, and when the sole purpose of the appearance was to seek costs, if the elementary precaution of first seeking agreement concerning those costs had not been taken [10].

8. Counsel for the appellant had no notice that counsel for Mr Smith would appear. Once Mr Smith’s counsel sought costs, counsel for the appellant opposed the application. He opposed it even if the costs concerned were those of the appeal alone and were confined to the time of Mr Smith filing the submitted appearance. For the reasons given by Macfarlan JA, Mr Smith should receive his costs of the appeal up to the time of the submitting appearance [11].

Macfarlan JA

9. Mr Smith filed an appearance submitting to such order as the Court might make, other than as to costs. The qualification to the appearance had the effect of preserving Mr Smith’s entitlement to apply for an order for costs. There was no reason why the unsuccessful party on the appeal, the appellant, should not be ordered to pay Mr Smith’s costs of the appeal up to and including the date upon which he filed a submitting appearance. The costs should not extend to cover the application for costs made orally at the hearing of the appeal as it did not appear that Mr Smith made any prior request to the other parties for consent to an appropriate costs order [40].

Lennon v TNT Australia Pty Ltd [2012] NSWWCCPD 18

Question of law; s 17(1)(a)(i) of the 1987 Act; deemed date of injury where the employment concerned spans a period where the employer initially insured under State legislation and subsequently insured under Commonwealth legislation, namely, the Safety, Rehabilitation and Compensation Act 1988 (Cth)

Keating P

30 March 2012

Facts:

The applicant, Mr Lennon, commenced employment with the respondent, TNT Australia Pty Ltd, as a truck driver in September 1997. It was not disputed that Mr Lennon’s employment with TNT exposed him to loud noise resulting in him suffering substantial hearing loss.

GIO General Ltd, as agent for the New South Wales Nominal Insurer, insured TNT Australia Pty Ltd for liabilities arising under the 1987 and 1998 Acts between 30 June 2001 and 30 June 2008. From 1 July 2008, the respondent was licensed under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act).

TNT rejected Mr Lennon’s claim for lump sum compensation due to a binaural hearing loss on the basis that under s 17 he suffered a deemed injury after the employer was licensed under the SRC Act and therefore there could be no liability under the 1987 Act.

The jurisdiction of the Commission to hear the dispute was identified as a preliminary issue and, at the request of the parties, the Arbitrator agreed to refer the question of law to the President for consideration pursuant to s 351 of the 1998 Act.

The WorkCover Authority of New South Wales exercised its right under s 106 of the 1998 Act to intervene in the proceedings.

The question of law for consideration pursuant to s 351 of the 1998 Act was in the following terms:

“Whether by operation of s 17(1)(a)(i) of the Workers Compensation Act 1987 (the 1987 Act), the applicant’s binaural hearing loss is deemed to have occurred on 30 June 2008 when the employer ceased to be insured under the New South Wales Workers Compensation Acts or on 24 March 2011 when the claim for compensation was made, at which time the employer was insured under the Safety, Rehabilitation and Compensation Act 1988 (Cth).”

Held: The question of law was answered as follows: by operation of s 17(1)(a)(i) of the 1987 Act, Mr Lennon’s binaural hearing loss was deemed to have happened on 24 March 2011, when the claim for compensation was made.

Leave

1. The President must be satisfied that the question involves a “novel or complex question of law” before granting leave to refer the question (s 351(3)).

2. The application of s 108A of the SRC Act and s 17 of the 1987 Act involved complex issues of statutory construction and constitutional issues concerning the consequences of inconsistency between State laws and a law of the Commonwealth, particularly in the case of a worker continuing in employment after their employer has ceased to be liable for injuries occurring under NSW legislation after being licensed to insure under the Commonwealth legislation [20].

3. The application of the authorities in the Commission (Horsey v Linfox Transport [2011] NSWWCC 219 at [32], declining to follow Makowski v National Wealth Management Services Ltd [2010] NSWWCC 367) concerning the issues has been inconsistent and, in the absence of the issue being determined by the referral of the question of law, it was likely that the uncertainty as to how the hearing loss provisions are to be applied in the Commission would continue. The question was relevant not only to the parties in the proceedings, but also to other workers in a similar position [21].

4. The President was satisfied that the question posed was both novel and complex and leave to refer the question of law was granted.

5. The following relevant authorities were reviewed:

(a) Russo v World Services & Constructions Pty Ltd [1979] 1 NSWLR 330 (Russo) – The Court of Appeal held that the correct interpretation of s 7(4) of the 1926 Act did not extend to include the Commonwealth as an employer for the purposes of the Act [29]–[34];

(b) Georgiadis v Australian & Overseas Telecommunications Corporation [1994] HCA 6; 179 CLR 297 – The High Court considered the constitutional validity of s 44 of the SRC Act. This section extinguished causes of action for damages against the Commonwealth by employees injured in circumstances where the Commonwealth would otherwise be liable. By majority, this section was held to be invalid by reason of the fact that it affects an acquisition of property other than on just terms [35]–[39];

(c) Hobbs v Costain Australia Ltd (1995) 11 NSWCCR 56 – This case concerned the interpretation of the words “for the purposes of this Act” in s 17(1)(a) of the 1987 Act. The Court of Appeal held that usually an expression is to be given the same meaning throughout a statute, unless the context otherwise requires. However, where to do so results in deprivation of an existing common law right to damages, and further involves such deprivation occurring retrospectively, and produces an injustice to a distinct category of persons, it is not to be presumed that the legislature intended the expression to be given the same meaning so as to produce those effects [40]–[42];

(d) A & G Engineering Pty Ltd v Civitarese (1996) 14 NSWCCR 158; 41 NSWLR 41 (Civitarese) – The application of the deemed injury provisions in s 17 were considered. The Court of Appeal held that the 1987 Act does not have extraterritorial operation so as to make the Northern Territory employer liable as the last employer under s 17. The section operates to make the last employer to whom the legislation applies liable to pay compensation (Russo followed) [43];

(e) Telstra Corporation Ltd v Worthing [1999] HCA 12; 197 CLR 61; 17 NSWCCR 674 (Worthing) – The High Court held that to apply the State law to the claim made by Mr Worthing (for injury in 1993) would qualify, impair and, in some respects negate the application of federal law, therefore by reason of the operation of s 109 of the Constitution, the State law was invalid to the extent of the inconsistency. It was also found that s 118 of the SRC Act is concerned with avoiding duplication of recovery of compensation rather than the protection of concurrent rights to recovery [44]–[55];

(f) Attorney-General (Vic) v Andrews [2007] HCA 9; 233 ALR 389; 81 ALJR 729 – The High Court considered the constitutional validity of various sections of the SRC Act with respect to the issuing of licences to enable Commonwealth authorities and certain corporations to accept liability for, and/or manage, workers compensation claims. The proceedings concerned the licence issued to Optus under the SRC Act which removed the obligation to obtain workers compensation insurance in Victoria. Held, Optus was not subject to compulsory WorkCover insurance in Victoria as a result of the operation of s 109 of the Constitution [56]–[59];

(g) Sexton v Graincorp Operations Ltd [2007] NSWWCCPD 218 (Sexton) – Byron AP found that the Commission does not have jurisdiction in a matter where one of the employers is subject to the SRC Act and not insured for the purposes of the 1987 Act [60]–[62];

(h) Makowski v National Wealth Management Services Ltd [2010] NSWWCC 367 (Makowski) – The deemed date of injury in this case post-dated the date when the company’s compensation liabilities were governed by the SRC Act and therefore, s 108A(7) prevented the application of the NSW legalisation [63]–[64]. See also Milburn v Veolia Environmental Services (Australia) Pty Ltd [2012] NSWWCC 10 [70]–[71], and

(i) Horsey v Linfox Transport [2011] NSWWCC 219 – Allianz insured Linfox up to 2 April 2006 under the 1987 and 1998 Acts. Thereafter, Linfox became self-insured under the SRC Act. The Senior Arbitrator interpreted s 17 of the 1987 Act in a way that promoted the purposes of the Acts, to provide for the compensation or rehabilitation of workers in respect of work-related injuries. Mr Horsey’s claim for industrial deafness was made on 27 September 2010 but the Senior Arbitrator deemed the date of injury as 2 April 2006, under s 17, and found that the last employment to which the 1987 Act applied was employment with Linfox that ceased on 2 April 2006 [65]–[69].

Discussion and findings

6. The Commission’s jurisdiction is limited to hear and determine matters arising under the 1998 and the 1987 Acts (s 105 of the 1998 Act). The Commission has no jurisdiction to determine rights or entitlements arising under the SRC Act [113].

7. The effect of s 108A(7) of the SRC Act in respect of employers who are licensed to accept liability under that Act is to exclude the operation of any State or Territory law relating to workers compensation for injuries sustained after the licence comes into force [114].

8. In order to overcome the application of s 17(1)(a)(i) (which would apply to fix the deemed date of injury as the date when the claim for compensation was made), the applicant submitted that Mr Lennon’s employment with the employer should be seen in two separate and distinct periods by categorising the employer as, firstly, one to which the State Act applied and, secondly, one to which the Commonwealth law applied [117]. Russo and Civitarese were relied on.

9. Russo and Civitarese were distinguishable as there were two employers by whom the workers were employed in employment to the nature of which the injuries were due. In Mr Lennon’s case there was only one employer and, other than the change in the insurance arrangements, his employment did not change. He remained in employment to the nature of which the injury was due at the time he gave notice of injury [118]–[119].

10. The submission by the applicant that it is inconsistent to apply the provisions of the State Act to determine the deemed date of injury only to then conclude that it has no operation was rejected [120]. Unless a claim is assessed by the application of the relevant provisions in the 1987 and 1998 Acts, it is impossible to determine whether there is a liability for compensation and where the liability for it should fall [123].

11. It was submitted that the State legislation should be interpreted in a way that would allow the State and Commonwealth legislation to sit together so as to preserve the worker’s entitlements under the State legislation up to 30 June 2008 [125]. This submission was rejected as it was considered contrary to the principles in Worthing. The State and Commonwealth legislation both provide workers compensation benefits but differ in the quantification of compensation payable. In that context, the High Court held that to apply State law to the claim made by Mr Worthing would qualify, impair and, in some respects, negate the application of Commonwealth law, with the consequences that, to the extent of the inconsistency thereby made out, the State law was invalid [126]. See also Sexton, Dickson v The Queen [2010] HCA 30; 241 CLR 491 at 502 [13]–[14] and Jemena Asset Management (3) Pty Ltd v Coinvest Ltd [2011] HCA 33 at [39].

12. It was submitted that the phrase “for the purposes of this Act” in s 17 limits the operation of the section and should not be interpreted in a manner which deprives workers of rights through its interoperation with the Commonwealth legislation [127]. This was found (at [128]) to offend the literal approach to statutory construction explained by Higgins J in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd [1920] HCA 54; 28 CLR 129 at 161–2.

Was there a termination of the employment contract?

13. The applicant submitted, in the alternative, that the change in insurance arrangements terminated one contract of employment and created another [132].

14. The High Court has rejected the view that a variation of contract necessarily involves its termination. Whether it does or does not depends on the actual or inferred intention of the parties [133] (see N C Seddon and M P Ellinghaus, Cheshire and Fifoot’s Law of Contract (LexisNexis Butterworths, 8^th ed, 2002) at 960).

15. It was not accepted that the fact that there was a change in the insurance arrangements of itself terminated the employment contract at that point. There was no evidence of an intention to vary the contract [135].

Did Mr Lennon have a property vested right on 30 June 2008?

16. The applicant submitted that, as of 30 June 2008, he had a property right to compensation that vested at that time [136].

17. The entitlement to compensation under the State workers compensation legislation only vests when the statute creates a liability or a right to compensation. The liability for or right to compensation vests at the time of injury: Rico Pty Ltd v Road Traffic Authority (1992) 28 NSWLR 679 at 689 and TNT Aust Pty Ltd v Horne (1995) 36 NSWLR 630 at 637. In respect of compensation for hearing loss, the statute creates a liability for compensation when the injury is deemed to have occurred by applying the terms of s 17 [137]–[142].

18. The right to compensation did not vest until the injury was deemed to have occurred, that is, when notice of the injury was given on 24 March 2011 [143].

19. The President noted that the outcome in this case resulted in the unfortunate anomaly that Mr Lennon, and other workers in similar circumstances, may be denied compensation for that proportion of the loss sustained before the insurance arrangements were transferred to the Commonwealth Scheme. In the circumstances, his Honour called for urgent legislative intervention.

Shoalhaven City Council v Schutz [2012] NSWWCCPD 14

Amendments to pleadings; time within which to claim compensation (s 261 of the 1998 Act); procedural fairness; scope of appeal (s 352 of the 1998 Act); seeking suitable employment (s 38A(2) of the 1987)

Keating P

19 March 2012

Facts:

Mr Schutz, worked for the appellant employer, Shoalhaven City Council, as a plant operator (maintenance) from 17 May 1975 until his employment was terminated due to incapacity on 3 April 2009.

On 29 April 1998, while operating a grader, the machine came into contact with a concrete slab which had been covered by a layer of silt. The machine came to a sudden halt, as a result of which Mr Schutz claimed he suffered injuries to his neck and back, and consequential symptoms in his right leg and right arm.

Mr Schutz also claimed that he suffered injuries to his back, neck, right arm and right leg by way of aggravation of a disease condition due to the nature and conditions of his employment. On 25 July 2007, he underwent a spinal fusion of his back. He has not worked since.

The appellant accepted liability for the back injury as a consequence of the incident on 29 April 1998.

The Council denied liability in respect of the remainder of the worker’s claim on the basis that he could not satisfy s 9A of the 1987 Act and, even if injury was found, he would be prevented from recovering compensation in respect of injury to the neck, right arm and right leg due to the provisions of s 261 of the 1998 Act (Notice of Claim).

The dispute before the Commission concerned the worker’s claims for lump sum compensation in respect of the alleged injuries to the neck and the consequential injuries to the right leg and right arm, and in respect of a claim for additional compensation for a closed period while job-seeking.

The Application to Resolve a Dispute did not include the claim for lump sum compensation in respect of injury to the neck as a result of the injury on 29 April 1998. However, this claim was particularised in correspondence from Mr Schutz’s solicitors to the Council’s solicitors and was expressly acknowledged by the Council’s solicitors.

The Arbitrator found in favour of Mr Schutz on all issues. The Council appealed the decision and submitted that the Arbitrator erred, among other things, by:

(a)   denying the appellant procedural fairness in permitting an amendment to the Application to Resolve a Dispute on the second day of the hearing to include an injury to his neck in the incident on 29 April 1998;

(b)   permitting the worker to rely on the neck injury that was statute barred under s 261 of the 1998 Act, and

(c)   finding that the worker’s job-seeking attempts satisfied the provisions of s 38A(2) of the 1987 Act.

Held: Arbitrator’s decision confirmed

Procedural Fairness

1. At the arbitration hearing, over objection by the appellant’s counsel, the Arbitrator allowed the Application to Resolve a Dispute to be amended to include a claim for an injury to Mr Schutz’s neck in the incident on 29 April 1998 [52]. The appellant’s counsel declined an invitation to make an application for an adjournment due to the amendment of the pleadings [53].

2. There was no basis for the appellant’s submission that the Arbitrator invited or allowed “new claims” during the proceedings as the appellant was well aware that the worker was claiming an injury to his neck in respect of the incident on 29 April 1998 and in respect of the nature and conditions of employment [68]. The following supported this conclusion:

(a) the s 74 notice advised Mr Schutz that the allegation of injury to the neck in respect of the injury on 29 April 1998 or as a result of the nature and conditions of employment was denied;

(b) correspondence between Mr Schutz’s solicitors and the appellant’s solicitors referred to the neck injury;

(c) the amended Reply confirmed that the matters in dispute were in accordance with the dispute notice;

(d) Mr Schutz’s statement attached to the Application to Resolve a Dispute expressly referred to an allegation of pain in the neck immediately following the incident on 29 April 1998, and

(e) the doctors’ reports made reference to an injury to his neck or cervical spine [57]–[66].

3. The principles enunciated in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 258 ALR 14 (Aon) did not apply for the reasons outlined at [71].

4. The Arbitrator did not deny the appellant procedural fairness by allowing the amendment.

Prejudice

5. The submission that the appellant was prejudiced by the Arbitrator’s decision to allow the amendment was rejected for the following reasons:

(a) the documents that were exchanged prior to the commencement of proceedings in the Commission demonstrated that the issues between the parties had been clearly identified and understood [82];

(b) the Arbitrator directed counsel for the appellant to the report by the appellant’s own expert witness, Dr Mills, where he had considered and expressed his opinion on the matters that were the subject of the amended pleadings [80];

(c) the appellant did not identify any actual prejudice it suffered as a result of the amendment to the pleadings [83], and

(d) there was no suggestion by the appellant’s counsel at the arbitration that she had any difficulty obtaining instructions [84]–[85].

Notice and Time Limit Issues

6.The appellant’s submissions failed to appreciate the requirements of, and the purpose of, the notice provisions and the distinction between an “injury” and “injurious event” [100]. The distinction between these concepts was discussed in Warwick Hobart t/as Terry White Chemists v Pietrzak [2006] NSWWCCPD 315 (Pietrzak) at [41]:

Once it is accepted that the injurious event occurred, the question of whether certain medical complaints have resulted from that event is one that depends on an assessment of all of the evidence in the case and whether the condition can be said to have resulted from the injurious event (Kooragang Cement Pty Ltd v Bates(1994) 35 NSWLR 452).

7. Although Pietrzak dealt with “injury” in the context of the notice of injury provision (s 254), the principles are equally valid to the concept of injury with respect to the notice of claim provision (s 261) [105].

8. The fact that other body parts, other than the reported back injury, were not mentioned in the initial notification was not a bar to recovery of compensation in respect of those injuries (s 261(3)) (see also Visy Board Pty Ltd v Nguyen [2010] NSWWCCPD 101) [106].

9. Once it was accepted that Mr Schutz injured his neck in the accident on 29 April 1998, and that he gave notice of that accident, it followed that he was considered to have made a claim for “any compensation in respect of the injury concerned” (s 261(3)), even though the initial claim was only for weekly compensation and the claim form only referred to the back [111].

10. The submission of the claim form by Mr Schutz on 20 May 1998 constituted a valid notice of claim with respect to the back and neck injuries and the consequential conditions in the right leg and right arm [116].

Nature and Conditions Claim

11. The Arbitrator concluded that the worker suffered from a degenerative condition affecting both his neck and spine, and that that degenerative condition was a disease process [117]. The evidence disclosed that Mr Schutz’s disease had been aggravated by the nature and conditions of his work [118].

12. The Arbitrator preferred the evidence of Drs Bentivoglio, Fitzsimons and Rosenberg to that of the appellant’s expert, Dr Mills. Dr Mills failed to support his view that there was no impairment of the neck, back, right leg or right arm due to Mr Schutz’s employment with adequate or plausible reasons [119]. The appellant submitted that the Arbitrator erred by not giving sufficient weight to the evidence of Dr Mills [122].

13. The appellant’s challenge essentially amounted to a review of the evidence and the weight attached to certain evidence to seek to establish that the Arbitrator came to an incorrect conclusion. No error was alleged. There was no evidence that the Arbitrator overlooked any material facts or that the probabilities so outweighed the conclusions reached by the Arbitrator that it could be said that her conclusion was wrong [133]. (See the observations of Barwick CJ in Whiteley Muir & Zwanenberg Ltd v Kerr (1966) 39 ALJR 505).

14. The appellant also challenged the reliability of the worker’s statement. There was no evidence to support the submission that the worker’s evidence was unreliable or was “contrary to incontrovertible facts or uncontested evidence” [136].

Section 38 Claim

15. Mr Schutz claimed an entitlement to compensation under s 38 (in addition to compensation he had received under s 40) for a period of partial incapacity from 29 September 2008 to 29 September 2009 on the basis that the appellant failed to provide suitable employment [141].

16. Mr Schutz provided a WorkCover medical certificate of 29 September 2008 that stated that he was permanently fit for modified duties from that date [142]. After a meeting with the appellant where he was told that there were no suitable duties available for him within the Council, he was medically retired on 3 April 2009 [144].

17. The appellant complained that the WorkCover certificate did not comply with the requirements of s 38A(2)(b) [149] and did not provide sufficient information to assist in the determination of what duties were suitable for Mr Schutz [152]. A further WorkCover medical certificate in compliance with that provision was obtained on 30 April 2009 and it was inferred that the certificate was provided to the appellant immediately [150]–[151]. The Arbitrator correctly awarded compensation under s 38 from the date the deficiency in the certificate was rectified, 30 April 2009 to 29 September 2009 [155].

18. Mr Schutz, unsuccessfully, attempted to find suitable work in the Huskisson area by making regular face-to-face inquiries with local employers in relation to the availability of work. The appellant submitted that this approach to job-seeking did not amount to proper compliance with s 38A(2)(d) and relied on Vezitis v Belmont Timbers (NSW) Pty Ltd [1997] NSWCC 14 (Vezitis) in support of this submission. Vezitis was distinguished on the basis that the worker in that case had simply gone to factories and asked for “light duties”, did not participate in rehabilitation and refused to be retrained [177]. Mr Schutz participated in a rehabilitation program and made genuine attempts to find suitable work [178].

19. Section 38A(2)(d) requires that the worker take reasonable steps to obtain suitable employment from some person. There is no requirement that those applications must be in writing [174].

20. The appellant submitted that Mr Schutz had to show that he sought suitable employment during the relevant period of partial incapacity [163]. Mr Schutz was not required to make a further request for suitable employment after the second certificate had been supplied on 30 April 2009. Section 38A(2)(c) merely requires that the worker has requested the employer (or the insurer) to provide suitable employment or it is apparent from the circumstances that the worker is ready, willing and able to accept an offer of employment from the employer. The worker had satisfied the requirements of s 38A by requesting (through his solicitors) suitable employment in writing and during the course of his meeting with senior Council officers on 29 January 2009 [171].

AUSGRID v Butler [2012] NSWWCCPD 19

Section 74 of the 1998 Act; absence of notice; consequence of failure to seek leave to raise liability issue not previously notified; s 289A of the 1998 Act; consent orders; party estopped from raising dispute as to liability; application of principles stated in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589; further loss; s 66 of the 1987 Act; quantification; Sch 6 to the 1987 Act; obligations of State Agency in conduct of litigation; Model Litigant Policy for Civil Litigation.

O’Grady DP

30 March 2012

Facts:

Mr Brian Butler was employed by AUSGRID as a patrolman/street-lighter for a period of 38 years and retired from work in 2004.

In 1994 he commenced proceedings in the former Compensation Court seeking an award in respect of lump sums pursuant to ss 66 and 67 of the 1987 Act for injuries sustained to his left knee (15 per cent loss of use of the left leg at or above the knee ) and his right wrist. These proceedings were settled and consent orders issued on 30 June 1995 awarding Mr Butler $14,478.75 in respect of 15 per cent permanent loss of use of his left leg at or above the knee together with an award of $10,000.00 pursuant to s 67.

On 1 October 2008 Mr Butler made a claim against the appellant in respect of further loss of use of his left leg and right wrist. Whilst the appellant rejected Mr Butler’s claim in respect of his left leg they did not issue a s 74 notice.  Mr Butler made an Application to Resolve a Dispute (Application) in April 2009 seeking orders for a lump sum in respect of “further permanent impairment of the left leg at or above the knee” and a further lump sum for pain and suffering. The Application particularised the date of injury for the left knee as “30 June 1995 (deemed date) or alternatively October 2008 (deemed date)”.

The matter was listed for conciliation and arbitration on 9 June 2009 at which time the parties, both represented by Counsel, reached an agreement concerning the claim. The Arbitrator issued consent orders on 9 June 2009 (amended on 12 June 2009) the first order being that the Application was amended to “delete claim in respect of deemed date of injury of 1 October 2008”. The orders included remitter to the Registrar to refer the matter to an AMS to assess loss of use of the left leg at or above the knee.

The matter was referred to an AMS on 15 June 2009, a copy of the referral was sent to both parties. On 16 June 2009 Mr Butler’s representatives wrote to the Registrar seeking to correct an error in the date of injury stated in the referral. In this letter, Mr Butler’s representatives confirmed that the correct date of injury was 30 June 1995 being a deemed date.  A corrected referral was provided to the AMS which listed the date of injury as 30 June 1995, without specifying that this was a deemed date of injury.  AUSGRID’s representatives did not respond to correct either the original or the amended referral.

A MAC was issued on 16 July 2009. The AMS noted that the he had presumed that the date of injury (30 June 1995) provided in the referral for the left knee was a deemed date as Mr Butler’s injuries had occurred before that date.  The MAC certified as to a 30 per cent permanent loss of efficient use of the left leg at or above the knee.

The matter was relisted before the original Arbitrator who, on 12 November 2009 issued a Certificate of Determination ordering that AUSGRID “pay $14,478.45 for 15 per cent further loss of use of the left leg at or above the knee” and also that it “pay $16,360.00 for further pain and suffering”.

Both the MAC and the Certificate of Determination were the subject of appeal. The MAC was the subject of three Medical Appeal Panels and one application to the Supreme Court. The Arbitrator’s decision was appealed to the Presidential unit, revoked and referred back for rehearing before a new Arbitrator.  The third Medical Appeal Panel confirmed the MAC. The second Arbitrator made the same finding as the first Arbitrator in respect of further loss of use of the left leg at or above the knee (that AUSGRID pay $14,478.45 for 15 per cent further loss of use of the left leg at or above the knee), however, he reduced the payment for further pain and suffering to $3,180. AUSGRID did not appeal the third Medical Appeal Panel, but did appeal the second Arbitrator’s Certificate of Determination (the current appeal).

Held:  Arbitrator’s decision confirmed (amendment made to calculations)

1. The appellant argued that the Arbitrator erred:

(a) in the manner of application of the transitional provisions found in Sch 6 to the 1987 Act;

(b) in determining that Mr Butler received an injury, the deemed date of which being 30 June 1995, and

(c) in determining that ss 74 and 289A were relevant to a determination as to matters which may be raised by the appellant in defence of the claim.

Grounds (a) and (c)

2. The Arbitrator determined that the deemed date of injury was 30 June 1995. It was found that the injury, as formulated was “one involving a single compensable injury caused cumulatively by a process of heavy and repetitive duties inclusive of certain ‘incidents’, requiring loss to be assessed with reference to a deemed date.” [56] The appellant argued that the relevant injury was in 1981, that the transitional provisions therefore applied, and consequently, that the Arbitrator had erred in his finding [65], [68].

3. The Arbitrator did not err in determining that ss 74 and 289A were relevant to a determination of those matters which may be raised by the appellant in defence of a claim. Proper application of those sections to the facts had the consequence that the suggested dispute concerning the transitional provisions could not be referred for determination by the Commission [82].

4. The appellant’s failure to give notice of dispute (s 74), coupled with the application of s 289A (in the absence of any application made under s 289A(4)) gave rise to a procedural bar preventing determination of the proper construction and application of the transitional provisions [83].

5. The MAC before the Arbitrator was conclusively presumed to be correct (further to s 326(1)) [86]. The AMS’s assessment that Mr Butler had a 30 per cent permanent loss of efficient use of the left leg at or above the knee and that no proportion of permanent impairment was due to any previous injury or pre-existing injury or abnormality (s 323 of the 1998 Act) was binding upon the parties. The Arbitrator was therefore correct to enter an award [87].

Ground (b)

6. The Application, before amendment, provided two alleged deemed dates of injury; 30 June 1995 and 1 October 2008. It was open to inference that the appellant agreed to amend the Application by removing the 2008 date so as to obviate any possible argument that the claim for further loss was in respect of a separate injury (s 15(4)), the deemed date of which was 1 October 2008, relying upon the reasoning found in the decision of the Court of Appeal in Alto Ford Pty Ltd v Antaw [1999] NSWCA 234; 18 NSWCCR 246 (per Sheller JA at [25]). One result of the amendment was to remove any prospect of entitlement being calculated at 2008 rates [91].

7. O’Grady DP found that having regard to Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589 and the provisions of s 321(4)(a) of the 1998 Act, the Arbitrator was correct in determining that the appellant was estopped from denying that the deemed date of injury was 30 June 1995 [94].

Model Litigant rules

8. The appellant, AUSGRID, is a State owned corporation whose shareholder is the New South Wales Government. As an agency of the State of New South Wales it is bound by the obligations defined by the Model Litigant Policy for Civil Litigation endorsed by Cabinet. The policy stipulates (amongst other requirements) that litigation should be avoided where possible. Where litigation is unavoidable, it should only be undertaken where litigation is in the public interest, and any such litigation should not rely upon technical defences [102].

9. It was observed that in the present appeal (and preceding appeals) there had likely been a departure from the standards set by this policy [103].

Sekuloska v Sekuloski [2012] NSWWCCPD 10

Deemed worker; Sch 1 cl 2 of the 1998 Act; whether contract existed between husband and wife; intention to enter legal relations; consideration

DP Roche

5 March 2012

Facts:

The respondent (Mr Sekuloski) and the appellant (Mrs Sekuloska) are husband and wife. They live together in a home they own as joint tenants. The home was the subject of a mortgage to RAMS Home Loans in their joint names. In about 2003, they began planning to extend and renovate their home. To fund the work, they decided to borrow money against their mortgage.

They intended that tradesmen would do most of the work, but Mr Sekuloski and other family members would do some work. Mr Sekuloski was to do some carpentry, the brickwork, wall-panelling and finishing work. Whether Mr Sekuloski was under any contractual obligation to perform that work was disputed.

On 16 March 2005, Mrs Sekuloska obtained an owner/builder permit. The paperwork and dealings with the council were in her name because Mr Sekuloski worked 12-13 hours per day five days per week. As holder of the owner/builder permit, Mrs Sekuloska obtained a workers compensation policy with Employers Mutual on 13 May 2005 to cover family members working on the property.

Mr Sekuloski started work on the property in late May 2005.

On 4 September 2005, Mr Sekuloski injured his right leg while working on the property and claimed compensation. In his statement, he said he and his wife agreed that he would do some of the work on the renovations, that she would keep a record of the times he worked, and they “would equal that to $200 a day and add that to the disbursements list when the house was finished”. That money would be paid to him out of the loan account.

Employers Mutual denied liability on the ground that Mr Sekuloski was a joint owner of the property where the injury occurred and not a deemed worker under the 1987 Act.

The renovations were completed in early 2006 or, at the latest, by the time the workers compensation policy was cancelled in September 2006. Family members who worked on the property were paid on 18 August 2006. Mrs Sekuloska paid money to her husband on 30 April 2007 and 11 May 2007, allegedly pursuant to the agreement, by drawing on the joint loan account.

Mr Sekuloski filed an application in the Commission on 6 June 2011, claiming hospital and medical expenses in the sum of $8,910 and lump sum compensation in respect of a 12 per cent whole person impairment.

The issue before the Arbitrator was whether a valid contract had been made between Mr Sekuloski and Mrs Sekuloska. That turned on whether the agreement was supported by valid consideration and whether there was an intention to enter legal relations. Counsel’s “primary submission” was that there was no valid consideration because the money to pay Mr Sekuloski came from a joint account he held with his wife. Therefore, he was paying himself.

The Arbitrator held that, at the time of the accident on 4 September 2005, a valid contract existed between Mr Sekuloski and Mrs Sekuloska and that Mr Sekuloski was a deemed worker under Sch 1 cl 2 of the 1998 Act.

The issues on appeal were whether the Arbitrator erred in:

(a) finding that a contract had been entered into between Mr Sekuloski and his wife in respect of the work being undertaken at the time of the injury;

(b) finding that there had been a necessary intention to create legal relations sufficient to give rise to a relevant contract;

(c) finding that the contract was made for valuable and sufficient consideration;

(d) finding that true and valuable consideration existed in circumstances where Mr Sekuloski had an expectation of payment out of loan funds in circumstances where he was a joint borrower and was jointly or severally liable to repay the loan;

(e) finding that Mr Sekuloski was a deemed worker within the meaning of Sch 1 cl 2 of the 1998 Act, and

(f) failing to give any or any sufficient reasons for her decision.

Held:  decision revoked

The issues before the Arbitrator

1. Mr Sekuloski’s submission that the intention to create legal relations issue was not raised at the arbitration was incorrect. The appellant put Mr Sekuloski to proof as to whether Mr Sekuloski was a party to a legally enforceable contract with Mrs Sekuloska to perform work renovating their jointly-owned property. That required the Arbitrator to consider the principles of contract law. While Mrs Sekuloski’s “primary submission” was that there was no consideration for any contract, her counsel added that intention to enter legal relations was also an issue that Mr Sekuloski had to establish. Mr Sekuloski’s counsel addressed that issue and, after referring to the statements in evidence, submitted there was an intention to enter legal relations [70].

2. The Arbitrator acknowledged counsel’s submission that it was essential that the parties intended to create legal relations and determined that there was an intention to create a legally binding contract. Therefore the issue was before the Arbitrator [71].

Intention to enter legal relations

3. The Arbitrator found that she was unable to accept that Mr Sekuloski was paying himself and added that, on the objective evidence, the parties “demonstrated an intention to create legal relations and mutuality or contractual consensus”. Her reasoning was that, as the builder, Mrs Sekuloska was liable to pay all contractors and workers on site and that, because a contractor had the right to sue Mrs Sekuloska, Mr Sekuloski “had the same rights”.

4. That analysis did not answer the critical question of whether Mr Sekuloski was a contractor. The Arbitrator assumed, without explanation or reasoning, that Mr Sekuloski was a contractor who had the same rights as other contractors. That was the very issue in dispute. The Arbitrator’s statement that, in her capacity as builder, Mrs Sekuloska was the employer of any workers on site did not address whether there was a contract between Mrs Sekuloska and her husband [82].

5. The Arbitrator assumed that, because Mr Sekuloski worked on site, there was an expectation of and an entitlement to payment to be realised on completion of the work. Whether there was such an expectation depended on whether there was a valid contract, which depended on whether there was an intention to enter legal relations supported by real consideration. The assumption that Mr Sekuloski had an expectation of payment was the very issue in dispute and the Arbitrator failed to deal with that issue. Therefore, the Arbitrator erred in failing to expose her reasons for resolving the critical issue [83]-[84].

6. Consideration must move from the “promisee” (Carter, Peden and Tolhurst, Contract Law in Australia, 5^th ed, 2007 [6]-[19], citing Coulls v Bagot’s Executor & Trustee Co Ltd [1967] HCA 3). The “promisee" is the person to whom a contractual promise was made. In this case, Mr Sekuloski was said to be the promisor, who promised to do work for Mrs Sekuloska, the promisee, in return for payment by her of $200 per day. This argument was fundamentally flawed because Mrs Sekuloska never agreed to pay Mr Sekuloski but agreed to drawn down on an account for which Mr Sekuloski had joint liability. It could not be said consideration moved from Mrs Sekuloska [85].

7. To prove a contract, it must be established that the “statement or announcement which is relied on as a promise was really offered as consideration for doing the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement” (Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20; 92 CLR 424 at 456). In other words, there must be a quid pro quo. That was missing in this case. Other than the bald assertion that it was “agreed” that Mrs Sekuloska would keep a record of the times Mr Sekuloski worked on the house and that they “would equal that to $200 a day”, there was no quid pro quo. On any objective view of the arrangement, Mr Sekuloski did not do the work in consideration of a payment of $200 per day. He did the work to improve an asset that he jointly owned with his wife. Mrs Sekuloska offered nothing in return for the work Mr Sekuloski was to do and did not in fact pay anything. The consideration did not come from her but from a loan account for which they were jointly liable, and which Mr Sekuloski repaid from his earnings as a truck driver [86].

8. Family and domestic arrangements do not normally give rise to binding contracts because the parties lack the necessary intention (Teen Ranch Pty Ltd v Brown (1995) 11 NSWCCR 197). That presumption is rebuttable, depending on the circumstances of the case. Although, the courts have found the requisite intention to create legal relations in a domestic or family setting, such cases have turned primarily on “the objective gravity of a step taken by one of the parties in anticipation of the agreement (Wakeling v Ripley (1951) 51 SR (NSW) 183) and those where the arrangements were performed within a legal context, including the use of language favouring an intention to be bound (Southlink Holdings Pty Ltd v Morerand Pty Ltd [2010] VSC 214)” (Sarkis v Moussa [2011] NSWSC 1172 (Moussa) at [38]). None of those factors were present in this matter. Mr Sekuloski did not come close to rebutting the presumption that, in a family or domestic setting, parties do not intend to create legal relations [87].

9. The evidence established that Mr Sekuloski performed vaguely defined work on his home on irregular occasions when he had time. He did not do the work in the expectation of receiving payment from his wife and “payment” was not received until about one year after the completion of the work. The source of the payment was not from Mrs Sekuloska, but from a joint account financed from his work as a truck driver. There was no obligation on him to perform the work on the property. The arrangements were domestic and did not evince a positive indication that legal relations were contemplated [88].

10. Without having regard to the presumption referred to in Teen Ranch, in determining whether the parties intended to enter into legal relations, it was open to take into account the subject matter of the agreement, the status of the parties to it, their relationship to one another, and the surrounding circumstances (Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95). The subject matter was the family home, an asset owned jointly by the appellant and respondent. The parties were husband and wife. The surrounding circumstances were that the renovations would mostly be done by tradespeople and Mr Sekuloski would do “some of the work on the extensions and renovations, like carpentry, bricking, digging (preparing footings) wall panels”. These terms were vague in the extreme and a householder would not reach such an uncertain agreement with a tradesperson. The vagueness of the terms strongly suggested that the parties did not intent to enter legal relations [89]-[90].

11. The unlimited discretion as to performance by Mr Sekuloski was interconnected with the lack of quid pro quo. If Mr Sekuloski had failed to perform any work under the arrangement with his wife, would she have been able to recover from him the additional cost of having someone else do the work, if that person had charged more than she had agreed with her husband? On any objective assessment, the answer was no [91].

Other matters

12. Mr Sekuloski’s submission that the Arbitrator’s error was immaterial was rejected. The error involved a failure to determine the issue in dispute. The Arbitrator assumed that, because Mrs Sekuloska was the authorised builder, she was “the employer of any workers on site”. That was not the issue. The issue was whether Mrs Sekuloska had contracted with Mr Sekuloski [98].

13. Although the submission that Mr Sekuloski would not sue his wife was not raised at the arbitration and not put in cross-examination was correct, that was not a matter that had to be put in cross-examination. The point argued on appeal was that, on an objective view of the undisputed evidence, there was no intention to create legal relations. That conclusion was open on the evidence tendered and involved no unfairness to Mr Sekuloski and no breach of the rule in Browne v Dunn (1894) 6 R 67. The existence of a contract was in issue and was a matter on which the parties were entitled to make legal submissions without the need for cross-examination (New South Wales Police Force v Winter [2011] NSWCA 330) [99].

14. The submission on appeal that an inference should have been drawn that Mrs Sekuloska only paid her husband after getting legal advice was a matter that was not raised at the arbitration. As it was a matter on which the parties could have led evidence, it could not be raised on appeal and the Deputy President had no regard to it. However, the unexplained delay between completion of the work in April 2006 and the payment of Mr Sekuloski in April and May 2007 suggested the parties did not intend their arrangement to create legal relations [100].

15. The test was not what the parties subjectively believed, but what it was that would be “objectively conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened” (Ermogenous at [25]) [102].

Inghams Enterprises Pty Ltd v Jones [2012] NSWWCCPD 17

Boilermaker’s deafness; notice of claim; meaning of “aware that he or she has received an injury”; ignorance; mistake; s 17 of the 1987 Act; sub-ss 261(4) and 261(6) of the 1998 Act

DP Roche

28 March 2012

Facts:

Mr Jones worked for the appellant employer, Inghams Enterprises Pty Ltd as a maintenance crew member between 1981 and 13 July 1998. It was not disputed that was employment to the nature of which boilermaker’s deafness is due. He claimed lump sum compensation for a 6.3 per cent hearing loss and the anticipated cost of hearing aids.

Compensation cannot be recovered unless a claim for compensation has been made within six months after the injury or accident happened (s 261(1), s 65(7)). If an injured worker first becomes aware that he or she has received an injury after the injury was received, the injury is, for the purposes of s 261, taken to have been received “when the worker first became so aware” (s 261(6), s 65(15)).

The failure to make a claim within the time required by s 261 is not a bar to the recovery of compensation if it is found that the failure was occasioned by ignorance, mistake, absence from the State or other reasonable cause and the claim is made within three years after the injury or accident happened, or the claim is not made within three years but is in respect of an injury resulting in death or serious and permanent disablement of the worker (s 261(4), s 65(13)).

The disputes in this case concern when the worker became aware that he had received an injury in the nature of a loss of hearing of such a nature as to be caused by a gradual process (referred to in this decision as “boilermaker’s deafness” or “industrial deafness”), whether he claimed compensation within six months of that date and, if not, whether his failure to claim within time was occasioned by ignorance, mistake, absence from the State or other reasonable cause.

Inghams’ s 74 notice only disputed “need for treatment” and “impairment”. At the teleconference on 22 August 2011, Inghams sought leave to argue that the claim was barred by s 65(7) (s 261(1)) of the 1998 Act, that potential issue having been raised in general (and unsatisfactory) terms in Inghams’ reply filed on 18 July 2011. The reference to s 65 was incorrect as the applicable section dealing with notice of claim was s 261.

The Arbitrator agreed with a submission by counsel for Inghams that, as the s 65(7) (s 261(1)) issue was a “matter of law” it did not have to be raised in the s 74 notice. The Arbitrator erred on that point.  If an insurer disputes liability in respect of a claim, the legislation demands that the reason/s the insurer disputes liability must be clearly stated and the issues relevant to the decision particularised in a s 74 notice.  As the notice issue had not been raised in the s 74 notice, leave was needed (under s 289A(4) of the 1998 Act) before it could be disputed. The Arbitrator did not formally give leave but wrongly proceeded on the basis that it was not a matter that had to be raised in the s 74 notice.

There were five potential dates on which Mr Jones may have become aware he had received an injury (the relevant date):

(a)   13 July 1998, the last day of his employment with the appellant;

(b)   July 2009, when he saw an audiologist to have his hearing tested;

(c)   September/October 2009, when a security guard at Coles (where Mr Jones worked after leaving Inghams) told Mr Jones that he may be able to make a claim for compensation for hearing loss similar to a claim made by the security guard;

(d)   27 January 2010, when Mr Jones saw an audiologist to have his hearing tested and was told he may be entitled to make a workers compensation claim, or

(e)   shortly after Mr Jones received a report from Dr Tamhane, an ear, nose and throat specialist qualified by the worker’s solicitor, dated 16 June 2010 confirming the nature and extent of his hearing loss.

The worker’s solicitor claimed lump sum compensation and the cost of hearing aids on behalf of Mr Jones by letter dated 28 July 2010, after having given notice of injury in a letter dated 4 February 2010. For the claim to have been made within time, the relevant date had to be on or after 16 June 2010.

In the course of the hearing issues arose as to the worker’s credit and the Arbitrator said that, because of inconsistencies in the worker’s statements, his case was “in pieces” and that he should consider discontinuing.

The Arbitrator held that “awareness of injury” for the purposes of s 65(15) of the 1998 Act (s 261(6)) referred to injury as defined by the legislation and not merely awareness of a physical problem (Roads and Traffic Authority of NSW v McNally [2006] NSWWCCPD 359).  He found that Mr Jones had not become aware that he had received an injury until he received a report from Dr Tamhane shortly after 16 June 2010 and that his claim was within time.

If the Arbitrator was wrong on this issue, and Mr Jones became aware he had received an injury more than six months before 28 July 2010, he found that the delay in bringing the claim within time was due to his ignorance as to the requirements for an expert report establishing causality, his ignorance as to time limits and the need to make a formal claim, and his mistaken belief that his solicitor’s letter of 4 February 2010 constituted a claim. He was also satisfied that certain reports Mr Jones had obtained from an audiologist and a subsequent infection in his right ear constituted reasonable grounds for delay.

The issues on appeal were whether the Arbitrator erred in:

(a)     his consideration and determination of the issue of when Mr Jones first became aware that he had received an injury;

(b)     failing to have proper regard to the evidentiary onus carried by Mr Jones in respect of the disputed issues;

(c)     his consideration and determination of what constitutes “ignorance” for the purpose of s 65(13) of the 1998 Act (see s 261(4)), and

(d)     having regard to the state of knowledge of the solicitor for Mr Jones in the determination of the disputed issues.

Held:  Arbitrator’s determination revoke; matter remitted

1. The bald assertion that the worker’s credit was impugned did not go to whether the Arbitrator erred in his approach or conclusion and did not prevent the worker succeeding with his claim. The credit issue related to the mistake by Mr Jones as to when he first attended at Hearing Life. Contrary to his statements, Mr Jones first attended at Hearing Life in July 2009. He readily admitted that was the “detail I forgot about”. That matter was neither one of deliberate dishonesty nor one of Mr Jones being untruthful on his oath. He openly conceded his error. That fact did not mean that the Arbitrator erred in finding in his favour or that he had to find in favour of the appellant [74].

2.The Arbitrator did not conclude that the worker’s evidence was “inherently unreliable”. He said that he was unable to accept the worker’s “statement as an accurate account unless there is corroboration from another source”.  This was in relation to the date of his first attendance at Hearing Life. The Arbitrator then dealt with other evidence [75].

3. The Arbitrator did not conclude that the worker’s evidence was “inherently unreliable” and, having seen and heard Mr Jones give evidence, he was entitled to give the evidence such weight as he thought appropriate. The Deputy President rejected the submission that the worker’s evidence was inherently unreliable and that he therefore had not discharged the onus of proof.  Nevertheless, there were inconsistencies that required his evidence to be considered with care [77].

4. The next complaint was that the Arbitrator erred when he said that he discounted the worker’s evidence in cross-examination. The worker’s solicitor, Mr Khan, submitted that the worker gave no evidence in cross-examination that he was aware by at least January 2010 that he had a compensation claim. However, in submissions, Mr Khan put that Mr Jones first became aware he suffered a compensable hearing loss when he saw Mr McGrade on 27 January 2010. He based that submission on the worker’s statement of 18 October 2011, where he said Mr McGrade told him that he may be able to make a workers compensation claim and the insurer would pay for the cost of hearing aids. The Deputy President did not accept that the Arbitrator confused the evidence of the worker’s knowledge in January 2010 about his hearing loss with the evidence that in January 2009 he knew he had rights in relation to a potential stress claim against Coles, as Mr Khan submitted. While the Arbitrator erred in saying that Mr Jones gave evidence in cross-examination that he was aware he had a compensation claim by January 2010, Mr Jones did give evidence to that effect in his statement of 18 October 2011 and Mr Khan relied on it to support his submission. The Arbitrator then said that he discounted the worker’s answers “in that regard” because Mr Jones did not understand the relationship between his noise related deafness, the problems he had with his left ear and loss of hearing due to ageing [79]-[80].

5. While Mr Jones gave evidence of prior problems with his left ear, he gave no evidence that he did not understand the relationship between his noise-related deafness, the problems he had in his left ear and loss of hearing due to age, and Mr Khan made no submissions along those lines. There was no proper basis for the Arbitrator to discount the worker’s evidence as he did and he erred in doing so [81].

6. By determining that Mr Jones did not become aware of his injury until after the receipt of Dr Tamhane’s report, the Arbitrator decided the case on a basis that was never argued by the worker’s solicitor and without giving the appellant the opportunity to be heard. It is a basic rule of fairness, disregard of which can be an error of law, that a party must have an opportunity to deal with any material ingredient in a Court’s decision-making process (Smith Family v Dafinis (1991) 8 NSWCCR 9) [82].

7. While it is accepted that an Arbitrator is not obliged to decide a case by reference only to the matters put by counsel, and that, in deciding a case, an Arbitrator is entitled to think for himself or herself (Saif Ali v Sydney Mitchell & Co [1980] AC 198 at 212; [1978] 3 All ER 1033 at 1037 per Lord Wilberforce; Klein v Minister for Education [2007] HCA 2; 232 ALR 306 at [38], 315 per Gummow, Hayne and Heydon JJ), if an Arbitrator is minded to determine a case on a basis not argued, he or she is required to give the parties an opportunity to be heard. The Arbitrator erred in failing to do so [84].

8. Inghams’ submission that, in a claim where the injury is boilermaker’s deafness (a loss of hearing of such a nature as to be caused by a gradual process), a worker is aware that he has received an injury when he is aware he has a loss of hearing was not accepted. Because hearing loss of a gradual process can have many different causes, it was not sufficient that Mr Jones was merely aware of a loss of hearing and that he worked in a noisy place. It is neither appropriate nor reasonable to expect workers to “put two and two together”, as was put in cross-examination at the arbitration [86].

9. While the Deputy President accepted Mr Jones’ submissions that a worker must be aware that he has received an injury within the meaning of s 4 before he is aware he had received an injury under s 261, that did not require that Mr Jones be aware that he has a watertight case that was bound to succeed. If that were the test, no worker would be “aware” he had received an injury until he obtained an award of compensation. In general, a worker will be aware he has received an injury if he is aware of facts and circumstances, which, if accepted, give rise to an entitlement to compensation. However, determining awareness of receipt of an injury in the nature of boilermaker’s deafness is more difficult than it is with injuries that result from a specific traumatic or injurious incident [87].

10. The Macquarie Dictionary defines “aware” as “cognisant or conscious”; the New Shorter Oxford English Dictionary has, as its second meaning, “conscious, sensible, not ignorant, having knowledge”. In the context of s 261, the Deputy President said “aware” means knowledge or knowing. There was nothing in the section, or the context of the legislation as a whole, that suggested that a worker must become aware in any particular way [88].

11. The test is an objective one, but is based on the individual worker’s knowledge, not the knowledge of some hypothetical reasonable person. The worker must be actually aware, not constructively aware. In determining when a worker became aware he has received an injury it is necessary to have regard to the worker’s state of knowledge at the relevant time. A worker cannot be said to be aware he has received a work injury if he is unaware of the nature of the condition said to constitute the injury or is unaware that it has been caused by work. Because of the insidious nature of boilermaker’s deafness, and lack of general knowledge in the community of its cause, awareness that a worker has received a s 17 injury will usually require specialised knowledge that will normally come from an appropriate expert in the field [89].

12. In a claim for compensation for boilermaker’s deafness, a worker is aware that he has received an injury to which s 17 applies when he is aware of two things. First, that he has sensorineural hearing loss (boilermaker’s deafness and any deafness of a similar origin (s 17(2)), which is a loss of hearing of such a nature as to be contracted by a gradual process. Second, though liability will ultimately fall on the employer who last employed the worker in employment to the nature of which the injury was due, as opposed to the employer who actually caused the hearing loss, the worker must be aware that his hearing loss has been contributed to by his employment. Each case will turn on its own facts [90]-[91].

13. It is important to note the distinction between the worker becoming aware he has received an injury (s 261(6)), on the one hand, and failing to claim within six months of becoming aware because of one or more of the reasons in s 261(4), on the other. Awareness of receipt of an injury is no more than that. Such awareness does not mean that the worker knows that, to make a successful claim for compensation, expert evidence may be required and that the claim must be made within a certain time, as the Arbitrator said. Lack of knowledge of the claims procedure, the time limits involved, and/or the need for expert evidence will often provide an excuse under s 261(4), but are not determinative of whether the worker is aware that he has received an injury [92].

14. The ignorance referred to in s 261(4) is “ignorance of the rights deriving from the Act and the obligations imposed by it” (Gregson v L & MR Dimasi Pty Ltd [2000] NSWCC 47; 20 NSWCCR 520 at [61]). Mr Jones gave evidence that, even after discussing the matter with the security guard in September/October 2009, he was not aware of “the procedures and the process to be followed to lodge a claim”. That was evidence of ignorance in 2009. However, it was difficult to see, on the current evidence, how Mr Jones could rely on ignorance once he saw his solicitor on 27 January 2010 [93].

15. On the issue of mistake, the difficulty was that, even though, contrary to Mr Macken’s submission, Mr Khan did rely on “mistake” in his submissions at the arbitration, the mistake he relied on was (apparently) the failure to obtain a medicolegal report within six months of 27 January 2010. There was no evidence that that mistake caused Mr Jones to delay in making his claim and it was not open to Mr Khan to rely on that “mistake” [94].

16. However, Mr Jones said that he understood Mr Khan had lodged a claim on the appellant (on 4 February 2010) once he obtained information from Hearing Life. In having that understanding, Mr Jones was mistaken. Mr Khan did not make a claim for compensation until 28 July 2010. The Deputy President did not accept Mr Macken’s submission that the Arbitrator had regard to the state of Mr Khan’s knowledge on mistake, even though it seems that Mr Khan made the same mistake [95].

17. It followed that, if the date on which Mr Jones became aware he received his injury was 27 January 2010, there was evidence which, if accepted, would provide a basis for finding that the claim was not made within six months of that date, namely, because of the worker’s mistaken belief that a claim had already been made. Though the Arbitrator referred to this evidence in his decision, it was not a point on which Mr Khan had submitted, presumably because he believed that the notice of injury form dated 4 February 2010 was also the notice of claim [96].

Other matters

18. The Arbitrator also erred in saying that it “was reasonable to delay making the claim until a report was obtained from an ear, nose and throat specialist following the equivocal results disclosed in the reports of Hearing Life”.  The question was not whether it was reasonable to delay in making a claim, but whether the failure to claim within six months was occasioned by “ignorance, mistake, absence from the State or other reasonable cause” [98].

19. The Arbitrator’s finding that the equivocal reports from Hearing Life and the subsequent right ear infection provided a reasonable cause for the claim not being made within six months of 27 January 2010 was also an error. Mr Jones put no argument to that effect and there is no evidence that the right ear infection played a part in Mr Jones not claiming until July 2010 [99].

Costs

20. As the appellant’s submissions did not comply with Practice Direction No 6, failed to address the real issue, and were substantially without merit, an oral hearing was necessary. Had the appeal been competently prepared, an oral haring would not have been required. In the circumstances, the appellant’s conduct unnecessarily protracted the proceedings and it was ordered to pay part of the worker’s costs of the appeal [106].

Arnold v Holiday Coast Transportation Services Pty Ltd [2012] NSWWCCPD 13

Failure to give reasons; failure to consider relevant evidence; failure to consider the principles in Aitkin v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20; failure to properly assess worker’s ability to earn; relevance of non-work related medical conditions in assessment of compensation for partial incapacity where worker is still employed

DP Roche

13 March 2012

Facts:

Mr Arnold worked for the respondent employer as a taxi and minibus driver since October 1998. He injured his right knee and back when he slipped and fell in the course of his employment on 26 June 2009. As a result of his injury, he suffered various periods of total and partial incapacity.

Mr Arnold’s main injury was to his right knee. He stopped work on 1 July 2009 and remained off work for several weeks before returning on part-time work in August 2009. He continued to have pain and restrictions in his knee. Dr Summersell performed a total knee replacement on 11 January 2010. QBE accepted liability for that surgery. He returned to work on 19 July 2010 and worked full-time until he reduced his hours in January 2011.

His claim before the Arbitrator was for weekly compensation for two distinct periods: the first, for various periods of total and partial incapacity from 26 June 2009 to 19 July 2010 and, the second, for partial incapacity from 19 January 2011 to date and continuing. QBE disputed the quantum of his entitlement to weekly compensation.

The first period was a dispute about the correct current weekly wage rate and was not the subject of challenge on appeal.

The second period concerned Mr Arnold’s entitlement to compensation under s 40 after he had returned to work on suitable duties on reduced hours from mid-January 2011 earning $300 per week. The respondent alleged that any incapacity from 19 January 2011 related to a further injury to Mr Arnold’s right knee when he stepped into a hole in non-compensable circumstances in January 2011 and/or to his unrelated health conditions.

In an amended application, Mr Arnold alleged the further injury to his right knee occurred in December 2010 and was compensable as he was on a journey to his home under s 10. In the alternative, he argued that the incident with the hole had no lasting effect on his knee and was irrelevant to the current claim.

In respect of his unrelated health conditions, Mr Arnold argued that most of those problems pre-dated his injury on 26 June 2009 and did not affect his ability to earn.  He further submitted that, applying Aitkin v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20, his actual earnings were prima facie evidence of his ability to earn.

The Arbitrator found that Mr Arnold had not proved the incident with the hole “occurred as a journey claim” and, in any event, Mr Arnold said, and it appeared the Arbitrator accepted, that that incident only had a temporary impact on his right knee.

Relying on evidence from Mr Arnold’s general practitioner, Dr Knight, who certified Mr Arnold fit for work for 15 hours per week on 15 December 2010 because of his “multiple medical problems”, the Arbitrator did not accept that Mr Arnold’s restrictions (from 19 January 2011) resulted “solely” from his right knee condition. He assessed that, were it only for Mr Arnold’s right knee condition, he “would have put him on a restriction of 30 hours per week”.

He assessed Mr Arnold’s ability to earn to be $600 per week instead of his agreed actual earnings of $300 per week. As probable earnings but for injury were agreed at $929.35, and as he saw no reason to exercise his discretion under s 40(1), he made an award for $329.35 per week from 19 January 2011 to date and continuing.

The issues on appeal were whether the Arbitrator erred in:

(a)     failing to correctly apply step two in Mitchell v Central West Health Service (1997) 14 NSWCCR 526 (Mitchell) relating to the calculation of Mr Arnold’s ability to earn;

(b)     increasing the amount of Mr Arnold’s ability to earn above his actual earnings, contrary to the principles in Aitkin;

(c)     determining that Mr Arnold’s restriction to 15 hours per week was not related solely to his right knee condition;

(d)     failing to give reasons for:

• departing from the principles in Aitkin,;
• why he could not accept that the 15 hours per week restriction related solely to Mr Arnold’s right knee condition, and
• why Mr Arnold’s restriction for work associated with his right knee condition was 30 hours per week.

(e)     finding that Mr Arnold’s restriction for work associated with his right knee condition was 30 hours per week when such finding was against the weight of evidence;

(f)      failing to properly consider or address all the relevant evidence;

(g)     failing to consider and apply the factors in s 43A of the 1987 Act, and

(h)     failing to consider or determine the application or otherwise of s 48 of the 1987 Act in relation to Mr Arnold’s pre-existing medical condition.

Held:  decision revoked

1. While the Arbitrator acknowledged that Mr Arnold had a number of complicated medical problems, whether those problems meant that his earnings after 19 January 2011 were not a proper measure of his ability to earn required an assessment of all of the relevant evidence. There was extensive evidence tendered that the Arbitrator did not consider [95].

2. The Arbitrator did not refer to the majority of the evidence or the issues raised by that evidence. He merely concluded that Mr Arnold had a complicated medical history and a number of significant health problems. Notwithstanding his other medical conditions, Mr Arnold had continued to work full-time until mid-January 2011. A complicated medical history and other medical conditions did not automatically mean that Mr Arnold’s earnings from 19 January 2011 were not a proper measure of his ability to earn [96].

3. Mr Arnold’s oral evidence suggested that his hours were reduced by his boss because he could not “do wheelchairs” because his knees were hurting him. On the other hand, Dr Knight’s clinical notes for 15 December 2010 reveal that Centrelink had asked Mr Arnold to reduce his hours. Dr Knight made no reference to knee symptoms in that attendance on 15 December 2010 and his short report merely referred to Mr Arnold’s “multiple medical problems”. Whether that included the right knee problems was unclear [97].

4. The Arbitrator did not refer to the evidence from Dr Waites and Dr Linjawi to the effect that, notwithstanding Mr Arnold’s heart condition and his blood sugar problems, he was able to work as a taxidriver. Nor did he refer to the evidence from Drs Hopcroft, Billett or Stephen, who all addressed the question of Mr Arnold’s incapacity as a result of his knee injury [98].

5. While an Arbitrator does not have to refer to every piece of evidence, “a failure to examine all of the material relevant to the particular issue” is an error (Hayne J in Waterways Authority v Fitzgibbon [2005] HCA 57; 79 ALJR 1816 at [130]). The Arbitrator erred in failing to examine a substantial body of evidence relevant to the issues in dispute. If the Arbitrator was of the view that Mr Arnold’s actual earnings were not a proper measure of his ability to earn, he had to explain why that was so by reference to the relevant evidence. He did not do that. He merely decided that $300 per week was not a proper measure of Mr Arnold’s ability to earn because he had a number of significant medical problems and his weight may have had an impact on his knees. That did not comply with his statutory obligation to provide reasons for his determination (s 294(2) of the 1998 Act) [99].

6. Although an attempt was made to cross-examine Mr Arnold about his multiple medical conditions, very few specific propositions were put to Mr Arnold and elicited very few relevant answers. One relevant answer was that Mr Arnold went to his boss and said he could not do wheelchairs because his leg was sore and his knees were hurting him, and the boss said his hours “have now been cut”. The Arbitrator did not refer to this important evidence, which was critical in determining if Mr Arnold’s wage after 19 January 2011 was a proper measure of his ability to earn [100].

7. Although the Arbitrator referred to Mr Arnold having been asked why he did not go to see the doctor about his right knee in December 2010, that question was asked in the context of Mr Arnold’s allegation that the hole incident occurred in that month. In any event, the Arbitrator did not refer to Mr Arnold’s response, which was that his knee was hurting [101].

8. The employer’s submission that the Arbitrator set out the essential ground for his finding was not accepted. The Arbitrator said he could not accept that the 15-hour restriction resulted “solely to [sic, from] [Mr Arnold’s] right knee condition”. He did not explain how Mr Arnold’s other health conditions affected his ability to earn. In circumstances where the unchallenged evidence, which the Arbitrator did not refer to, was that Mr Arnold’s heart condition and diabetes did not prevent him from holding a taxi licence, it is difficult to see why the Arbitrator formed the view he did. He failed to consider most of the relevant evidence [104].

9. Given that all of the orthopaedic specialists who examined Mr Arnold felt that he was totally unfit for his pre-injury job as a taxidriver because of his knee injury, albeit based on the wrong history that Mr Arnold was not working, it is difficult to see how the Arbitrator concluded that, having regard to the knee injury alone, Mr Arnold had a capacity to work 30 hours per week. Even if Mr Arnold’s other medical conditions had contributed to a reduction in his capacity to earn, that fact alone would not justify a finding of an ability to work for 30 hours per week based on the knee injury [105].

10. It may have been that Mr Arnold’s inability to work more than his current hours was the result of several concurrent conditions, some work-related and some not. Even if that was so, if, regardless of his other medical conditions, his right knee injury was restricting him to his current hours, he may have been entitled to the full difference between his probable earnings but for injury and his actual earnings. While a worker is only entitled to compensation for so much of his or her loss as has resulted from the injury (Williams v Metropolitan Coal Co Ltd [1948] HCA 8; 76 CLR 431 per Starke J at 444), a loss can have more than one cause (ACQ Pty Ltd v Cook [2009] HCA 28 at [25] and [27]; 237 CLR 656; Calman v Commissioner of Police [1999] HCA 60 at [38]; 73 ALJR 1609; Conkey & Sons Ltd v Miller (1977) 51 ALJR 583). The Arbitrator failed to consider these principles [106].

11. Where a worker is earning after an injury, those earnings will provide prima facie evidence of his or her ability to earn (Aitkin). If it is proved that a worker’s actual earnings are not a proper test of his or her ability to earn, then the worker’s ability to earn on the open labour market must be used. That will occur where it is shown that the worker is “deliberately taking lower-paid work than he could get, or is idling and on this account receiving less than he could be reasonably expected to obtain, or where his actual earnings have been compulsorily reduced by something unconnected with his injury or general earning power” (Aitkin at 23). The Arbitrator failed to apply these principles and merely said he could not accept the 15 hour restriction as a maximum per week resulted solely from Mr Arnold’s right knee condition [107]-[108].

12. If it was appropriate to find that Mr Arnold’s earnings of $300 per week were not a proper measure of his ability to earn, the Arbitrator was required to assess Mr Arnold’s ability to earn on the open labour market. This required him to consider all the relevant evidence and the terms of s 43A. He failed to do that [109].

13. The Arbitrator determined that the hole incident had only a temporary effect and neither side challenged that finding. He appears to have accepted the employer’s submission that Mr Arnold’s other medical conditions caused some of his incapacity. He was wrong to do so without properly considering the principles in Aitkin and the evidence dealing with the effect of the work injury on Mr Arnold’s ability to earn [111].

14. The Deputy President did not redetermine the matter due to the unsatisfactory state of the evidence in this case [113].

Woods v L & R Heritage Roof Restoration Pty Ltd [2012] NSWWCCPD 12

Whether a commutation agreement approved by the Compensation Court of NSW is liable to be challenged, appealed against, reviewed, quashed or called into question by the Workers Compensation Commission

Keating P

12 March 2012

Facts:

Mr Woods, the applicant, was employed as a restoration labourer with the respondent, L & R Heritage Roof Restoration Pty Ltd.

On 18 March 1999, while in the course of his employment with the employer, Mr Woods fell from the roof of a two-storey residence. He suffered a blow to the head and numerous fractures of his thoracic spine.

Approximately 18 months after the accident, Mr Woods began to develop paranoid delusions and began undergoing psychiatric treatment.

On 14 August 2001, Mr Woods filed an Application for Determination in the Compensation Court of New South Wales, seeking orders for the payment of weekly compensation from 18 March 1999 and continuing. The employer disputed the claim.

On 27 March 2002, the dispute came before Truss CCJ in the former Compensation Court of NSW. The parties agreed to a commutation of $80,000 which was approved.

On 24 August 2011, Mr Woods filed an application in the Commission seeking a reconsideration of the commutation agreement approved in the Compensation Court on 27 March 2002. He alleged that, at the time of the commutation application, “the court was not aware of [sic] informed of the applicant’s psychiatric condition”.

The employer questioned the Commission’s jurisdiction to reconsider the approval of the commutation application by the Compensation Court. The Arbitrator referred the question of law for determination by the President under s 351 of the 1998 Act.

The question of law referred for determination was:

“Whether or not the commutation agreement approved by the Compensation Court of NSW on 27 March 2002 is liable to be challenged, appealed against, reviewed, quashed or called into question by the Workers Compensation Commission.”

Held: Leave to refer the question of law was refused.

1. Under s 351(3) of the 1998 Act, the President must be satisfied that the question involves a “novel or complex question of law” before granting leave to refer the question [13].

2. His Honour Justice Sheahan, former President of the Commission, said in Dimmock v State of New South Wales [2004] NSWWCCPD 64:

“16.   The Question of Law procedure envisaged by section 351 is not designed for the determination of matters such as whether a particular Applicant in a particular set of circumstances can successfully argue that the Commission has jurisdiction to deal with a claim for compensation, or that a particular piece of legislation might apply to the facts of the case.

17.    The fact that the determination of such issues in particular cases may be regarded as difficult or ‘complex’, or indeed may be ‘novel’ to particular decision-makers, is not sufficient to attract the provisions of section 351. They fall for determination by the Arbitrator assigned the particular case, and cannot be ‘abdicated’ to the President pursuant to section 351.” [25]

3. The application that gave rise to the referral of the question of law was a reconsideration application under s 350 of the 1998 Act of the commutation decision of Truss CCJ of the Compensation Court of NSW [30].

4. The jurisdiction of the Commission to reconsider decisions of the former Compensation Court of NSW has been considered in three Presidential decisions, Rapley v Briggs t/as Gordon Briggs Drilling [2004] NSWWCCPD 35 (Rapley No 1), Rapley v Briggs t/as Gordon Briggs Drilling [2007] NSWWCCPD 234, (Rapley No 2) and Samuel v Sebel Furniture Ltd [2006] NSWWCCPD 141(Samuel) [26].

5. In these cases it has been consistently held that the Commission does not have the power to reconsider a decision of the former Compensation Court of NSW [26].

6. Leave to refer the question of law was refused.

Kohlrusch v Macquarie Education Group Australia Pty Ltd [2012] NSWWCCPD 15

Appeals; s 352 of the 1998 Act; refusal by Registrar’s delegate to make an interim payment direction; whether delegate determined the correct question; jurisdiction to hear appeal from decision under Div 2 of Pt 5 of Ch 7 of the 1998 Act

DP Roche

22 March 2012

Facts:

Ms Kohlrusch is a schoolteacher. In a claim form dated 7 August 2011 she claimed compensation for a psychological injury. She relied on a WorkCover medical certificate from her general practitioner, Dr Lawrence, dated 3 August 2011. Dr Lawrence diagnosed her with “Post Traumatic Stress Reaction With Depression” and certified her unfit from 18 July 2011 to 10 August 2011. The doctor wrote “Pt feeling threatened by demnds [sic] of headmaster”. Dr Lawrence wrote other non-WorkCover medical certificates on 3, 9 and 16 August 2011 stating Ms Kohlrusch suffered “post-traumatic stress reaction”.

On 11 August 2011, the respondent’s insurer, Employers Mutual NSW Ltd sent Dr Lawrence a pro forma letter requesting, among other things, confirmation of the clinical diagnosis in line with the DSM-IV guideline. Dr Lawrence replied on 18 August 2011 “Depression – but awaiting diagnosis from psychiatrist”.

Employers Mutual advised by letter dated 18 August 2011 that, under s 268 of the 1998 Act, it would not be commencing provisional payments of weekly benefits because of the reasonable excuses that there was insufficient medical information, and the injury was not reported to the employer within two months of the date of injury.

On 31 August 2011, Employers Mutual advised Ms Kohlrusch by letter that, because Dr Lawrence’s response to a request for information was “inadequate”, it had arranged for her to be examined by Dr White, psychiatrist, on 28 September 2011.

Ms Kohlrusch’s solicitor wrote to Employers Mutual on 22 September 2011 stating, among other things, that Dr Lawrence’s certificate was “comprehensive and contains all the information you need to be able to provisionally pay the claim”. He challenged Employer’s Mutual’s statement that there was a reasonable excuse not to provisionally pay the claim. He added that the request to see Dr White was unreasonable because the letter did not set out the reasons for referral, as required by the Guidelines and s 119, and did not provide details as to why Dr Lawrence’s response to the request was inadequate and what steps had been taken to resolve any queries the insurer had with Dr Lawrence.

The parties engaged in further correspondence regarding sufficiency of the medical information provided by Dr Lawrence and whether or not Ms Kohlrusch was required to attend upon Dr White.

As Ms Kohlrusch did not attend upon Dr White, Employers Mutual wrote to her on 28 September 2011, saying that it had “suspended making a liability decision” on the claim until she attended the appointment arranged for 26 October 2011. Further correspondence was engaged in between the parties regarding the sufficiency of medical information provided and the requirement for Ms Kohlrusch to attend upon Dr White.

Mr Brennan served a copy of a report from Dr Selwyn Smith, psychiatrist, date 4 October 2011. Dr Smith stated that the diagnosis of “post-traumatic stress reaction with depression” was consistent with a formal psychiatric disorder closely related to a “Post-traumatic Stress Disorder with depression”. Dr Smith had not seen Ms Kohlrusch.

Ms Kohlrusch lodged an Application for an Expedited Assessment in the Commission on 31 October 2011. She sought weekly compensation from 18 July 2011 to 10 October 2011, plus medical and hospital expenses of $2,000 in respect of an alleged psychological injury. The claim for hospital and medical expenses was ultimately not pressed.

Employers Mutual’s solicitors filed a Reply to the Application for Expedited Assessment (the Reply) on 8 November 2011. The Reply attached a s 74 notice dated 7 November 2011, denying liability on the grounds that Ms Kohlrusch did not sustain any injury arising out of or in the course of employment with the respondent, employment was not a substantial contributing factor to any injury, or, in the alternative, any injury was brought about by the reasonable actions taken by the respondent in relation to performance appraisal and discipline under s 11A of the 1987 Act.

Attached to the Reply was a report from Dr White dated 28 September 2011, in which he said that Dr Lawrence’s certificates indicated that she did not understand the DSM-IV classification because “post-traumatic stress reaction with depression” is not a DSM-IV diagnosis. If Dr Lawrence diagnosed “Post Traumatic Stress Disorder”, that “would be incorrect because Post Traumatic Stress Disorder is an extreme psychiatric reaction to an extreme stressor such as a war experience, rape, or earthquake”.

The matter was referred to a delegate of the Registrar and a teleconference was held on 16 November 2011. The delegate’s notes indicated that the parties agreed the only issue was whether the reasonable excuse of “insufficient medical information” was “current/relevant”. On 29 November 2011, the delegate refused to issue an interim payment direction. The worker appealed.

Held:  appeal was misconceived and dismissed

Jurisdiction

1. The worker’s solicitor submitted that Ms Kohlrusch was entitled to appeal under s 352 because the period of weekly compensation in dispute in Pts 6.2 and 6.3 of the Application “follow a successful determination of the dispute referred to the Commission” and “[t]hey do not represent an Application for an Interim Payment Direction”. He said that the delegate correctly determined that the matter was not one where an interim payment direction could be made and his decision therefore did not “fall under Chapter 7, Part 5, Division 2 or 3, but rather under Division 2A by virtue of Section 304(1) and the delegate thus made a determination of the Commission constituted by an Arbitrator”. Thus, the determination was subject to review or appeal (s 296(2)) and the appeal was brought under s 352 [24].

2. It was clear from the legislation and relevant guidelines that the Registrar’s powers under Div 2 of Pt 5 were limited to the making of an interim payment direction in certain specific circumstances. Those circumstances do not usually extend to the situation where a s 74 notice has issued. In that situation, the usual procedure will be for the matter to be referred to an Arbitrator for final resolution after the filing of an Application to Resolve a Dispute [38].

3. In a limited number of cases, even where the insurer has issued a s 74 notice, the “Expedited Assessment” process in Pt 5 is available to resolve disputes where the past weekly compensation in dispute is for up to a maximum of 12 weeks compensation. In that event, a delegate acting as an Arbitrator may deal with the matter under Div 2A, but he or she is not required to do so. If the matter were dealt with in that way, the delegate would determine all issues in dispute and issue a Certificate of Determination. Such a result would be a final determination and, if either party were dissatisfied with the delegate’s decision, they could appeal under s 352 (Hobden v South East Illawarra Area Health Service [2010] NSWWCCPD 13) [39].

4. In Hobden, on the issue of jurisdiction, the President held (at [34]) that:

in the absence of more express legislative intention to limit the parties’ rights in respect of this Division, the prohibition on an appeal or review of a decision of the Registrar referred in section 296(2) does not extend to decisions made under Division 2A. I am reinforced in that view by the provision of section 304B(4) which expressly provides that, for the avoidance of doubt, the Registrar may under section 371 delegate a function conferred on the Registrar under subsection (1) or (2).

5. While the Application involved a claim for compensation for only 12 weeks and that the period (18 July 2011 to 10 October 2011) was before the Application was filed in the Commission on 31 October 2011, the parties dealt with the matter as an application for an interim payment direction. Neither party submitted that the matter should have been dealt with as a final determination under Div 2A and the delegate made no orders under that Division. Had an order been made under Div 2A, it would have finally disposed of the matter (and all issues in dispute in the s 74 notice) and the Commission would have issued a Certificate of Determination. Neither of those things happened [42].

6. The delegate dealt with the issue argued before him: whether, because there was insufficient medical information, the insurer had a reasonable excuse for not commencing provisions payments. That was dealt with as a Div 2 issue (an interim payment direction). The delegate did not exercise his powers as an Arbitrator under Div 2A to finally determine the worker’s entitlement to compensation for the period claimed.  Had he dealt with the matter under Div 2A, he would have been justified, given the state of the evidence, in making an award for the respondent on the ground that Ms Kohlrusch had not established that she had received an injury. Therefore, as the delegate made no decision under Div 2A, s 296(2) applied and there was no right of appeal to a Presidential member under Div 2A [43]-[44].

7. If, contrary to that view, the delegate was acting as an Arbitrator and made orders under Div 2A, his order dismissing the application did not finally dispose of the parties’ rights and was interlocutory (Licul v Corney [1976] HCA 6; 50 ALJR 439 at 443–444). There is no appeal under s 352 against interlocutory decisions except with leave and the Commission is not to grant leave unless of the opinion that determining the appeal is necessary or desirable for the proper and effective determination of the dispute (s 352(3A)) [45].

8. Having regard to the content of the s 74 notice issued on 7 November 2011, it is clear that the resolution of the “reasonable excuse issue” would not resolve the issues in dispute between the parties. It was therefore neither desirable nor necessary for the proper and effective determination of the dispute that leave to appeal be granted [46].

Did the insurer have a reasonable excuse?

9. The worker’s solicitor submitted that the WorkCover certificate from Dr Lawrence “clearly provides enough medical information to establish that there was an injury and that the injury was employment related”, and that it was not a requirement of the legislation that a psychological injury be categorised in DSM-IV. All that was required was that the injury be a psychological or psychiatric disorder. Nowhere in the delegate’s reasons was it stated what the insurer’s reasonable excuse was, or that it actually had one [48].

10. These submissions were not accepted. The delegate correctly noted the issue to be whether the reasonable excuse of “insufficient medical information” was “current/relevant”. Given the parties’ submissions, that was a correct characterization of the issue before him [49].

11. The delegate said that there appeared to be insufficient medical information available concerning the period of incapacity for which compensation was sought and there was no diagnosis from the psychiatrist referred to by Dr Lawrence. Dr Smith only commented on the terminology in Dr Lawrence’s WorkCover certificate, but had not examined the worker or provided a diagnosis. The medical evidence provided by the worker was insufficient [50].

12. The reasons given by the delegate were open on the evidence and clearly supported his conclusion. The delegate’s reasons must be read as a whole. When that was done, it was clear that, though he did not expressly say so, he accepted that the insufficient medical evidence provided by Ms Kohlrusch provided the insurer with a reasonable excuse for not commencing provisional payments [51].

13. Initially, the only medical information provided to the insurer was in the certificates from Dr Lawrence. Those certificates provided insufficient “medical information to establish there is an injury” as required by the Guidelines for Claiming Benefits because they provided no findings and a doubtful diagnosis [52].

14. While it was not necessary for Dr Lawrence to provide a detailed history in a medical certificate, the issue was not whether Ms Kohlrusch had established an entitlement to compensation, but whether, because it did not have enough medical information, the insurer had a reasonable excuse for not commencing provisional payments. Though the insurer was misguided in believing that a psychiatric injury can only exist if there is a diagnosis that comes within DSM-IV, the delegate’s finding that the medical evidence provided by Ms Kohlrusch was insufficient was open to him. This conclusion follows regardless of the additional medical evidence the parties obtained [53].

15. While it is correct that a worker does not have to establish that his or her condition comes within one or more of the descriptions in DSM-IV, which is only “a ‘diagnostic manual’ for clinical use” (Spigelman CJ in State of New South Wales v Seedsman [2000] NSWCA 119 at [114]), where a doctor has used an unknown term (such as that used by Dr Lawrence in her WorkCover certificate of 3 August 2011), an insurer has a reasonable excuse for declining provisional payments [54].

16. The difficulty with Dr Lawrence’s terminology was not overcome by Dr Smith’s report of 4 October 2011. In circumstances where he did not see Ms Kohlrusch, or have a history of the alleged cause of her condition, it was difficult to see how he could conclude that Dr Lawrence’s opinion was consistent with Ms Kohlrusch suffering post-traumatic stress disorder with depression, a recognised psychiatric condition. Dr Smith did not explain the basis on which he was “sure” that Dr Lawrence expressed the “broad symptomatologies associated with a Post-traumatic Stress Disorder”. Other than saying that Ms Kohlrusch was “feeling threatened by demnds [sic] of headmaster”, Dr Lawrence made no mention of the worker’s symptoms or the circumstances in which they arose [56].

17. Even if the delegate erred in the manner alleged by on appeal that did not lead to the result he sought. The delegate was entitled to decline to make the order sought because a s 74 notice had been issued disputing liability (see cl 47 of the Regulation). In those circumstances, the Interim Payment Guidelines provide that, where the presumption in favour of an interim payment direction does not apply, the Registrar (or her delegate) “will determine how best to deal with the matter and may refer it to an arbitrator for final resolution of the dispute”. That did not happen in this case because the parties asked the delegate to determine the narrow point of whether the insurer had a reasonable excuse for not commencing provisional liability payments. That did not prevent Ms Kohlrusch pursuing her claim by issuing an Application to Resolve a Dispute. Arguably, that should have happened when it became apparent that the period of incapacity in dispute was longer than 12 weeks and that liability to pay compensation was disputed for the reasons set out in the s 74 notice [57].