Issue 9: September 2016

Trustees for the Roman Catholic Church for the Diocese of Bathurst v Hine [2016] NSWCA 213

ESTOPPEL – issue estoppel by consent orders – where finding also made by consent that respondent had “fully recovered” from effects of any psychological injury – where subsequent claim for compensation for permanent impairment – where existence of asserted issue estoppel inconsistent with statutory scheme as to jurisdiction of Workers Compensation Commission – whether consent orders gave rise to issue estoppel for purposes of determining that there was any “medical dispute” as to permanent impairment and as to how such a dispute should be resolved

WORKER’S COMPENSATION – claim to compensation for permanent impairment under s 66 of the 1987 Act – appeal from decision of Presidential member of Workers Compensation Commission remitting claim for medical assessment of degree of permanent impairment as a result of injury – whether findings in same or earlier proceedings between parties binding for purpose of determining claim for permanent impairment – operation of ss 293 and 321 of 1998 Act

Meagher, Leeming and Simpson JJA

18 August 2016

Facts:

The worker had made earlier claims for weekly compensation and medical expenses that were resolved and consent orders were made that included a finding that she had “fully recovered” from the effects of any psychological injury. The worker had made a claim for damages for permanent impairment under ss 66 and 67 of the 1987 Act in respect of a psychological injury sustained in the course of her employment. When the worker made the present claim for lump sum compensation, the employer contended that it had the benefit of an issue estoppel precluding the worker from denying that she had fully recovered and maintained that there was no dispute as to whether she was permanently impaired. The employer succeeded at first instance before a Commission Arbitrator. The worker then appealed to a Presidential member.

The Deputy President concluded that applying s 65 of the 1987 Act, it was “not open for an Arbitrator, even by consent, to make a finding which by inference determines that no whole person impairment resulted from the injury suffered by the worker”. The employer appealed.

The issues in dispute on appeal were:

(a) whether the appellant had the benefit of the claimed issue estoppel, by reason of the Commission’s finding, so as to require the worker’s second claim be dismissed (grounds 1 and 3). That question turned on the Commission’s jurisdiction to make a finding that was binding between the parties for the purpose of determining whether there was any medical dispute as to permanent impairment, and, if so, as to how that dispute should be resolved, and

(b) whether the Deputy President’s conclusion as to the application of s 234 was correct and, more relevantly, provided any basis for denying the efficacy of an issue estoppel that otherwise arose (ground 2).

Held: The Deputy President’s determination was confirmed.

Meagher JA (Leeming and Simpson JJA agreeing)

Leave to appeal

1. The decision appealed against was interlocutory and required leave under s 353(4)(a) of the 1998 Act. Leave to appeal was granted as one of the questions before the Court was the subject of conflicting decisions of Presidential members of the Commission, being whether findings and orders in the same or earlier proceedings can give rise to an issue estoppel for the purpose of determining a medical dispute concerning a claim to compensation for permanent impairment [5].

Discussion

Issue estoppel

2. Justice Meagher discusses the authorities on the difference between res judicata and issue estoppel (Blair v Curran [1939] HCA 23; 62 CLR 464 (Blair) at 532; Outram v Morewood [1803] EngR 498; (1803) 3 East 346 at 355; [1803] EngR 498; 102 ER 630 at 633; Jackson v Goldsmith [1950] HCA 22; 81 CLR 446 (Goldsmith) at 466 referred to) [22].

3. These principles apply to judgments and orders made by consent (Isaacs v Ocean Accident and Guarantee Corporation Limited [1958] SR (NSW) 69 at 75; Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502at 508 (Chamberlain); Goldsmith at 467 referred to) [23].

4. With respect to factual questions, the issue estoppel applies only to what are described as “ultimate” facts and does not extend to “mere evidentiary facts” (Goldsmith at 467 per Fullagar J; Blair at 532 per Dixon J (as his Honour then was)) [24].

5. An ultimate fact may be found by the Court or tribunal, or admitted or agreed between the parties for the purpose of determining the matter directly in issue (Hoystead v Commissioner of Taxation [1926] AC 155 at 165, 170) [25].

A tribunal having jurisdiction to decide finally

6. It was not in contest that a final determination of the Commission constituted by an Arbitrator was capable of giving rise to an issue estoppel (Kuligowski v Metrobus [2004] HCA 34; 220 CLR 363 at [22]; Administration of Papua and New Guinea v Daera Duba [1973] HCA 59; 130 CLR 353 at 453 referred to) [27].

7. Section 105 of the 1998 Act provides that subject to that Act, the Commission has “exclusive jurisdiction to examine, hear and determine all matters arising under” the 1998 Act and the 1987 Act. Those matters include disputes “in connection with” claims for compensation referred to the Commission for determination (ss 287, 288, 289, 289A of the 1998 Act) [28].

8. Disputes in relation to these claims are dealt with by the Commission constituted by an Arbitrator (the 1998 Act, s 375(1)). Section 350 makes provision for the finality of the Commission’s determination of such disputes [29].

A tribunal having jurisdiction to decide a matter conclusively and for all purposes

9. The finding which the appellant said the worker was precluded from contesting in later proceedings in the Commission concerning her claim for permanent impairment was that she had fully recovered. The appellant contended that finding was as to an ultimate fact and made in the exercise of the Commission’s jurisdiction to determine the worker’s disputed claims for weekly compensation and medical expenses [33].

10. However, as McHugh JA observed in Cachia v Isaacs (1985) 3 NSWLR 366 at 387, not all final decisions of ultimate issues by subordinate tribunals are binding as issue estoppels [34].

11. That is because, as Jordan CJ explained in Ex parte The Amalgamated Engineering Union (Australian Section); Re Jackson [1937] NSWStRp 53; 38 SR (NSW) 13 at 17, the issue estoppel extends to such matters as are necessarily determined only if the court or tribunal “has jurisdiction to determine these matters for all purposes between the parties, ie, jurisdiction to determine them directly and immediately as well as merely incidentally”. Whereas that will ordinarily be the position in relation to a superior court, it is not necessarily so in relation to inferior courts or tribunals with limited jurisdiction (see further at 19–20. See also Attorney General for Trinidad and Tobago v Eriché [1893] AC 518) [35].

12. Thus it is necessary to consider the purposes for which any quality of “finality” is ascribed to decisions of a statutory body such as the Commission (Maurice Blackburn Cashman v Brown [2011] HCA 22; 242 CLR 647 at [40], referred to) [38].

Did the appellant have the benefit of an estoppel that entitled it to have the respondent’s permanent impairment claim dismissed?

13. The worker’s position with respect to the question of the Commission’s jurisdiction was that whilst its exclusive jurisdiction to determine her disputed claims to weekly compensation and medical expenses extended to making any findings necessary for it to do so, those findings could not bind the parties (or any medical assessor) with respect to the existence or resolution of a medical dispute as to permanent impairment [39].

14. Under s 66(1) of the 1987 Act a worker “who receives an injury that results in permanent impairment” is entitled to receive compensation calculated by reference to the degree of permanent impairment [40].

15. The Registrar’s exercise of the power of referral under ss 293(3)(a) and 321(4)(a), and compliance with the direction in s 293(2), are subject to the limitation, that the Registrar may not refer for assessment under Pt 7:

“(a) a medical dispute concerning permanent impairment (including hearing loss) of an injured worker where liability is in issue and has not been determined by the Commission, ...” [45].

16. A question arose as to what the expression “where liability is in issue” meant. Neither of the alternative constructions (“liability” is a general liability to pay whatever form of compensation the worker is entitled to for a work related injury and “liability” being a reference to a liability to pay compensation of a particular kind (within one or more of Pt 3, Divs 1 to 5 of the 1987 Act) or to pay such compensation in a particular amount) would be consistent with the scheme of the Acts insofar as it requires that any dispute concerning the degree of permanent impairment “that results from an injury” be assessed under Pt 7 of Ch 7. As Emmett JA observed in Bindah v Carter Holt Harvey Woodproducts Australia Pty Ltd [2014] NSWCA 264at [111] that is a matter which must be established to found an entitlement to compensation under s 66(1). That “liability” is here used in this more general sense is confirmed by other matters to be assessed under Pt 7 which include whether any impairment is permanent and whether any permanent impairment is due to a previous injury or pre-existing condition, each a matter relevant to establishing an entitlement to compensation under ss 66 and 67 of the 1987 Act [46], [48].

17. If, as the appellant contended, it had the benefit of an issue estoppel, but a medical dispute in relation to the claim for permanent impairment arose nonetheless, there was then a question as to whether the direction to the Registrar in s 293(2) (which is in accordance with s 65 of the 1987 Act) can be “overridden or defeated” by the estoppel. The answer to that question must be “no”. The private law right constituted by the estoppel cannot prevent the operation of a statutory provision in such imperative terms: Chamberlain at 510; and Griffiths v Davies [1943] 1 KB 618 at 621. See also Spratt v Perilya Broken Hill Ltd; Spratt v Rowe [2016] NSWCA 192 at [46] (per Leeming JA, McColl and Gleeson JJA agreeing) which recognises the operation of similar medical assessment provisions in Pt 3.4 of the Motor Accidents Compensation Act 1999(NSW) as abrogating a common law issue estoppel “to the extent that it would otherwise preclude a medical assessor from performing the tasks imposed on him or her” by that Act. Accordingly, it was critical to the appellant’s success in the appeal that the issue estoppel prevented a medical dispute from arising [51].

Whether any issue estoppel arose?

18. The jurisdiction conferred on the Commission by s 105 of the 1998 Act, subject to the exceptions in s 105(2) and (3), is to determine a limited class of matters. Those matters include disputed claims for compensation for permanent impairment. However where an aspect of any such dispute concerns the degree of permanent impairment resulting from an injury for which the employer is liable, the Commission is required to refer that medical dispute for assessment and must determine the disputed claim in accordance with that assessment. Its jurisdiction to determine that claim does not extend to making or acting on its own assessment or finding in relation to such a medical dispute. Nor does that jurisdiction permit it to rely on such an assessment or finding as determining whether there is a medical dispute to which Ch 7, Pt 7 of the 1998 Act applies [53].

19. The relevant finding was made in proceedings for the determination of disputed claims to weekly compensation and medical expenses. No claim for lump sum compensation was made. Had such a claim been made and had it involved a dispute as to the degree of permanent impairment, the Commission’s jurisdiction did not permit it to determine that medical dispute by reference to its own findings; or that by reason of those findings there was no real or bona fide medical dispute. That was so irrespective of whether those findings were made in the course of determining the other claims, or in relation to the claim for lump sum compensation. In either case, if there was a medical dispute, it had to be referred for assessment, and decided by the Commission in accordance with that assessment [54].

20. The appellant’s first argument did not address whether the Commission’s jurisdiction extended to making the finding relied on for the purpose of determining whether there was a medical dispute and, if there was, how that dispute was to be resolved. Any finding of the Commission made in the earlier proceedings, or in the proceedings in which the lump sum compensation claim was made, could not bind the parties (or an assessor) in either of those respects. Whether a medical dispute existed was a jurisdictional fact depending on the true character of any dispute between the parties. If there was such a dispute concerning permanent impairment it was required to be resolved in accordance with a medical assessment under Pt 7. The appellant’s second argument did not take the matter any further. Whilst the Commission has jurisdiction to decide collateral or incidental matters, that jurisdiction does not extend to deciding those matters for all purposes within that limited jurisdiction. Meagher JA agreed with the Deputy President’s conclusion that the issue estoppel contended for did not arise. Ground 1 was rejected [56].

Whether in the face of the asserted estoppel there could be no medical dispute

21. The issue estoppel relied on by the appellant could not deprive the dispute between the parties of its character as a medical dispute. The first of the reasons referred to in the insurer’s s 74 notice described the relevant issue as being whether the worker had fully recovered from the effects of the psychological injury. That was plainly a medical question about which there was a dispute. The second reason given asserted that the estoppel was determinative of that dispute. The estoppel was not in substance or in terms directed to denying the existence of any underlying dispute, and did not prevent the medical dispute from arising [58].

22. Meagher JA also rejected the appellant’s argument that the asserted estoppel would have prevented there being a “medical dispute”, which in accordance with s 293(2) was to be referred for assessment under Pt 7. Ground 3 was rejected [59].

Remaining issues and arguments in the appeal

23. The Deputy President’s reliance upon s 234 of the 1998 Act as providing a basis for setting aside the Arbitrator’s award proceeded on a wrong premise and was misconceived. It was no part of the appellant’s case that any agreement between the parties operated to prevent the worker from contesting the consent findings or pressing her claim for lump sum compensation. The appellant’s argument that there was an issue estoppel was founded on the consent orders and the consent finding as recording a matter necessarily decided by those orders. Ground 2 was made out but did not affect the outcome of the appeal [60].

24. The worker’s second argument was of no practical significance because it was not her case that there had been any relevant change in the circumstances applying at the time of the Arbitrator’s award. Her argument was that the consent finding was not in accordance with the true facts, and not that the circumstances as to her impairment had changed between the date on which that finding was made and the time of the Arbitrator’s determination of her second claim [62].

D’Er v Glemby International (Aust) Pty Ltd [2016] NSWWCCPD 42

Monetary threshold in s 352(3) of the 1998 Act; interlocutory decisions – s 352(3A) of the 1998 Act; leave pursuant to s 289A(4) of the 1998 Act; application of the principles in House v R [1936] HCA 40; 55 CLR 499; ‘work capacity decisions’ and the application of Sabanayagam v St George Bank Limited [2016] NSWCA 145; jurisdiction of the Commission in matters involving ‘existing recipients of weekly payments’ – s 43(3) of the 1987 Act

Snell DP

31 August 2016

Facts:

The worker sustained an injury to her right hand and wrist in 1991. In 1992, the Compensation Court ordered that the worker receive weekly payments of compensation. In 2005, an agreement was registered pursuant to s 66A of the 1987 Act for lump sum compensation in respect of 19 per cent whole person impairment and for pain and suffering. In 2007, in proceedings in the Commission, the worker received an award for the payment of weekly compensation. On 10 December 2012, the respondent employer ceased paying the weekly payments following the issue of a s 54 notice relying on the former s 52A on the basis that the worker was asserted to be partially incapacitated and the worker was not seeking suitable employment.

The worker made a claim for further lump sum compensation, in which liability was denied in two s 74 notices. The insurer denied that the worker was incapacitated and said that she had work capacity, or that any incapacity was not due to a work related condition. The worker commenced proceedings in the Commission seeking weekly payments of compensation and a further sum pursuant to s 66 of the 1987 Act for an additional 11 per cent whole person impairment and for pain and suffering.

In a hearing before a Commission Arbitrator, the employer submitted that a letter sent to the worker dated 29 November 2012 was a work capacity decision. This was the first time that issue had been raised. It had not been raised in the s 54 or s 74 notices, the Reply, or at the teleconference. The Arbitrator found that the letter constituted a work capacity decision and that by operation of s 43(3) of the 1987 Act, the Commission lacked power to determine the claim for weekly compensation or to make an award that was inconsistent with the work capacity decision. The worker appealed.

The issues in dispute on appeal were whether the Arbitrator erred in:

(a) granting the respondent leave, pursuant to s 289A(4) of the 1998 Act, to raise the issue of ‘jurisdiction’, and

(b) finding that the insurer’s correspondence dated 29 November 2012 was a ‘work capacity decision’, pursuant to s 43 of the of the 1987 Act.

A further issue in dispute was raised by the appellant in its submissions in reply. That issue was that even if the respondent had made a ‘work capacity decision’, ss 43(1) and (3) of the 1987 Act did not prevent the Arbitrator determining the s 52A issue.

Held: The Arbitrator’s determination was revoked in part and remitted to another Arbitrator for re-determination on the issue of the appellant’s weekly entitlements from 10 December 2012 to 31 August 2015.

The grant of leave pursuant to section 289A(4) – ground one

1. The Deputy President accepted that ground one related to a discretionary order, and the principles in House v The King [1936] HCA 40; 55 CLR 499 (House v The King) had application. The respondent’s argument, in respect of s 43(3) of the 1987 Act, was based on a single document, the insurer’s letter to the worker dated 29 November 2012. The hearing on 24 November 2015, in submissions, was the first reference to the unnotified matter. It was a matter which, in the respondent’s submission, was asserted to deprive the appellant of the right to have her dispute, about the application of s 52A and the associated claim for weekly payments, dealt with by the Commission on its merits. Such tardiness on the part of the insurer, in how and when it raised the matter, was quite unacceptable. It was a significant factor weighing against exercise of the discretion pursuant to s 289A(4) in its favour [76], [80], [83].

2. Did the Arbitrator fail to give sufficient weight to these matters? The Arbitrator referred to the various factors set out in Mateus v Zodune Pty Ltd t/as Tempo Cleaning Services [2007] NSWWCCPD 227, which were potentially relevant to the s 289A(4) application. The Arbitrator took relevant matters into account, and gave them appropriate weight. He did not take irrelevant matters into account. He referred to the relevant legal principles and applied them. He did not make an error of legal principle. He did not make a material error of fact. The result was not “so unreasonable or so unjust as to suggest that one of the above categories of error occurred”. The appellant had not persuaded the Deputy President that the Arbitrator was in error, applying the principles in House v The King. Indeed, the appellant did not specifically address those principles in her submissions. Ground one was rejected [84], [89]–[90].

The finding of a ‘work capacity decision’ – ground two

3. The challenge to the Commission’s jurisdiction rested on the proposition that the insurer made a ‘work capacity decision’ within the meaning of s 43 of the 1987 Act. Section 43(3) applies to a ‘work capacity decision’, not a ‘work capacity assessment’. The insurer’s letter dated 29 November 2012 did not purport to constitute a ‘work capacity decision’, it stated at the outset “we have made a work capacity assessment”. As the Arbitrator correctly observed, the letter did not specify any consequences of the assessment, it did not purport to give notice that weekly compensation was to be reduced or discontinued [132]–[133].

4. As in Sabanayagam v St George Bank Limited [2016] NSWWCCPD 3, the Arbitrator inferred aspects of the decision. The letter did not specifically deal with the question of whether the appellant had a “present inability” arising from an injury such that she was “not able to return to … her pre-injury employment”. This is a necessary part of the definition of ‘current work capacity’ in s 32A of the 1987 Act. The Arbitrator inferred “that the insurer had made a decision to that effect”, based on the absence of the work of a hairdresser (the worker’s occupation when she was injured) from the listed work capacities, for which the appellant was said to be fit, in the letter [143].

5. In the current matter, as in Sabanayagam v St George Bank Limited [2016] NSWCA 145 (Sabanayagam No 2), the only evidence of any relevant decision was to be found in the notice. The Arbitrator’s finding was that a ‘work capacity decision’ was made, at some time prior to the letter dated 29 November 2012. There was no evidence going to the making of any such decision. The Arbitrator erred in finding the existence of such a decision, in the absence of evidence: Sabanayagam No 2 at [118], Bruce v Cole (1998) 45 NSWLR 163 at 187G–188B. The evidence did not support a finding that a ‘work capacity decision’ was made by the insurer, “on or shortly before 29 November 2012”. It followed that ground two succeeded and the appellant’s appeal was upheld [150].

6. Given the absence of evidence going to the existence of a decision, prior to the letter dated 29 November 2012, the inference drawn by the Arbitrator at [66] of his reasons was not, in the Deputy President’s view, available (Sabanayagam No 2 at [119]). It followed that, even if the evidence had otherwise supported a finding that a ‘work capacity decision’ was made prior to that letter, it was not established that the decision in the notice was a decision about the appellant’s current work capacity [153].

7. Although not conclusive, the insurer’s failure to comply with relevant Work Capacity Guidelines at the time, and its failure to describe the letter dated 29 November 2012 as a work capacity decision notice, were consistent with a lack of intention to make a work capacity decision [161].

The further issue raised by the appellant

8. The further issue was first raised in the appellant’s submissions in reply. It was not accompanied by any application for leave to amend the grounds of appeal, or to raise a further issue. There were no submissions going to whether leave should be granted, and on what basis. The practice of raising new issues in submissions in reply has been described by Roche DP as “improper”: NSW Police Force v Gurnhill [2014] NSWWCCPD 12 at [30], Volkswagen Financial Services Australia Pty Ltd v Mokohar [2016] NSWWCCPD 13 at [14]. The Deputy President referred to Bale v Mills [2011] NSWCA 226 at [57] [168]–[169].

9. The Deputy President declined to grant leave to the appellant to rely on the further issue as it had not been demonstrated it was in the interests of justice that leave be granted or explained why it had not been raised before the Arbitrator [170].

Other matters: jurisdiction and the transitional provisions

10. The further issue which the appellant sought to raise went to the operation of s 43 of the 1987 Act, and the extent to which a work capacity decision (had one been made) would affect the ability of the Commission to deal with the weekly payments claim [172].

11. The insurer’s letter, dated 29 November 2012, indicated that the assessment which it contained was pursuant to ss 32A and 44A, and Sch 6, Pt 19H, cl 8(5), of the 1987 Act. Its statement that the appellant had a “current work capacity to work in suitable employment” was a reference to the definitions in s 32A. It could not validly have been a reference to concepts such as partial and total incapacity, a decision on such matters would have been outside the powers conferred on the insurer. Similarly, its reference to the employment for which the appellant was “currently suited” could only, validly, have been a reference to ‘suitable employment’ on the basis of the definition in s 32A. A purported finding on what was ‘suitable employment’ pursuant to the former s 43A of the 1987 Act would have involved decision making, by the insurer, “that the legislation does not entrust to it” [192].

12. Even if the letter dated 29 November 2012 was taken to have evidenced a ‘work capacity decision’ (the Arbitrator’s finding, and the position the respondent sought to defend on this appeal), it was difficult to see any valid basis on which s 43(3) of the 1987 Act prevented determination by the Commission of the dispute before it [196].

Recyclit Enviro Chutes Pty Ltd v Axisa [2016] NSWWCCPD 41

Absence of transcript of extempore reasons for decision; statutory duty to give reasons; s 294 of the 1998 Act and r 15.6 of the 2011 Rules; constructive failure to give reasons

Keating P

25 August 2016

Facts

This matter concerned whether an appeal under s 352 of the 1998 Act could proceed in the absence of a transcript of the Arbitrator’s extempore reasons for decision. The grounds of appeal challenged the adequacy of the Arbitrator’s reasons. There was also a challenge to his acceptance of lay and medical evidence to find the worker suffered injury to his thoracic spine in the course of his employment.

In particular the appeal concerned a complaint regarding the Arbitrator’s acceptance of the worker’s uncorroborated evidence of contemporaneous complaints of injury in the absence of recorded complaints of injury, that is, the findings on the worker’s credit were in issue.

Held: The Arbitrator’s determination was revoked and the matter was remitted to another Arbitrator for determination afresh.    

Consideration

1. The statutory requirement to provide a statement of reasons is found in s 294 of the 1998 Act and the matters to be included in a statement of reasons are governed by r 15.6 of the 2011 Rules [21]–[22].

2. The absence of the recorded reasons for decision amounts to a constructive failure to give reasons as required by s 294 and r 15.6. This constitutes an appealable error and it is immaterial whether that failure was occasioned by human error in the operation of the sound recording equipment, administrative failure or technical failure. (Fraternity Bowling & Recreation Club Ltd v Sartor [2004] NSWWCCPD 47; Thompson v Expamet Pty Ltd t/as T & G Sheetmetal Services [2005] NSWWCCPD 14; Nepean Rubber Moulding Pty Ltd v Veljanoski [2014] NSWWCCPD 3 and Endeavour Energy v Ohmsen [2014] NSWWCCPD 6 considered and applied) [23]–[25].

3. Contrary to the respondent’s submission, the President found that the appellant was under no obligation to attempt to rectify the absence of the transcript of reasons or to attempt to reconstruct the Arbitrator’s reasons. No adverse inference could be drawn against the appellant for not doing so [28].

4. The President observed that attempts to reconstruct reasons, to correct the absence of a transcript of reasons, had been found inadequate, due in part to the Arbitrator’s lack of recall (Fraternity Bowling & Recreation Club Ltd v Sartor [2004] NSWWCCPD 79) [27].

5. There may be occasions where the absence of a transcript of evidence given before the Arbitrator can be overcome on appeal (for example: Aluminium Louvres & Ceilings Pty Ltd v Xue Qin Zheng [2006] NSWCA 34). However, it is more likely that the absence of a transcript of extempore reasons would be fatal to a Presidential member discharging his or her functions to consider and determine an appeal under s 352 of the 1998 Act [29].

6. The nature of the alleged errors compounded the difficulty in proceeding with the appeal. Where a Presidential member is required to determine issues involving credit and the adequacy of reasons that task is frustrated by the absence of recorded reasons. It followed that the appeal succeeded and the matter was remitted for determination afresh [30]–[31].

Reichardt v Aurrum Pty Ltd [2016] NSWWCCPD 39

Psychological injury; s 11A of the 1987 Act; reasonable action taken with respect to discipline; whether action to suspend worker and initiate an investigation into an allegation of serious misconduct was reasonable; failure to comply with Practice Direction No 6; submissions not put to Arbitrator; application of principles in Brambles Industries Ltd v Bell [2010] NSWCA 162; 8 DDCR 111

Keating P

10 August 2016

Facts

The appellant worker, an assistant in nursing, was accused of serious misconduct involving an elderly resident of a care facility where she was employed. Upon receipt of that information the employer promptly initiated an investigation and reported the matter to the police. The employer also promptly informed the worker of the allegations and investigation in an after-hours phone call. The worker subsequently suffered a psychological injury.

The appeal challenged the Arbitrator’s finding that the employer’s actions were reasonable and therefore the employer was entitled to rely upon a complete defence under s 11A of the 1987Act to the worker’s claim for compensation. The issues in dispute on appeal were whether the Arbitrator erred in:

(a) finding that the employer’s actions with respect to the making of the after-hours phone call were reasonable;

(b) finding that she could not be satisfied of the existence of an alleged statement by the colleague who reported the alleged misconduct to the employer;

(c) failing to weigh the respective interests of the parties, and

(d) failing to find that the worker was a vulnerable person prior to the injury.

Held: The Arbitrator’s determination was confirmed.

The reasonableness of the after-hours phone call

1. The President found that the matters the appellant sought to rely on going to the objective reasonableness of the employer’s conduct in respect of the phone call were not matters the subject of submissions before the Arbitrator. Therefore, it was not an error of law for the Arbitrator not to have referred to them (Brambles Industries Ltd v Bell [2010] NSWCA 162; 8 DDCR 111) [57].

2. The President also found that the Arbitrator’s finding that there was nothing said during the phone call that was unreasonable in terms of its tone or manner was consistent with the evidence of the worker and the manager who made the phone call and was properly made [58].

3. Contrary to the appellant’s submission, the President found that the Arbitrator did not err in the scope of her enquiry into the phone call itself or err in asking the wrong question. (Northern NSW Local Health Network v Heggie [2013] NSWCA 255 (Heggie); Irwin v Director General of School Education (unreported, Compensation Court of NSW, Geraghty CCJ, 18 June 1998, No 14068 of 1997 (Irwin) considered and applied) [59]–[64].

4.The President found that the Arbitrator considered all the relevant factors. The Arbitrator correctly found that it would have been unreasonable to wait until the worker next reported for duty, four days after the complaint was initially made, to advise her of the allegations. As the Arbitrator correctly noted, by that time it would have been conceivable that the worker could have heard of the allegations due to the police investigation [67].

5. The Arbitrator objectively weighed the competing obligations of the employer to its staff, the residents, many of whom were elderly, their families, and the worker. That was the correct approach to the assessment of the reasonableness of the employer’s actions, and one that has been consistently applied in the Commission (Irwin) [68].

6. The allegations made against the worker were extremely serious. The events were observed and reported by an independent witness. In view of the employer’s competing obligations it was open to the Arbitrator to conclude that the institution of an investigation at the earliest opportunity was reasonable. It was also open for the Arbitrator to conclude that the employer’s actions in informing the worker of the allegations and of the internal investigation at the earliest opportunity were also reasonable. Those actions struck a fair balance when dealing with the employer’s competing duties. It followed that those findings were open on the evidence and did not involve error [69].

The alleged statement of the complainant

7. The appellant alleged a number of errors of fact and law in relation to the Arbitrator’s treatment of the alleged written statement of the complainant. She alleged that the Arbitrator erroneously found that the complainant had not provided a written statement soon after the events complained of. The existence of such a statement would have assisted the worker to argue unreasonableness by delay in acting upon the statement [72].

8. The only reference in the evidence to a statement by the complainant was contained in a letter from the employer’s director of human resources. The Arbitrator concluded that she could not place any weight on the letter and gave a series of reasons for reaching that conclusion, including the fact that the letter contained a number of errors [73].

9. The President accepted the Arbitrator’s reasons. He found that it would be inconsistent with the complainant’s reluctance to bring the allegations forward to report the matter that the complainant prepared a written statement of her own volition. The President also observed that the evidence indicated that the director of human resources re-interviewed the complainant in a “face to face” meeting where she again described the details of the alleged incident. This was inconsistent with the apparent existence of a written statement prior to the initial complaint. It followed that the Arbitrator’s conclusions regarding the reliability of the evidence of the director of human resources and the weight it should be given were open on the evidence and did not involve error [79]–[81].

10. The appellant’s submissions failed to identify any “incontrovertible facts or uncontested evidence” to support such submissions or that the Arbitrator’s finding was “glaringly improbable” or “contrary to compelling inferences” (Fox v Percy [2003] HCA 22; 214 CLR 118) [87].

11. As the Arbitrator correctly observed, the appellant did not argue that, due to any delay by the employer, the worker heard of the allegations by rumour in the workplace before being officially notified. It followed that even if the Arbitrator erred in finding that on the balance of probabilities there was no statement made prior to after-hours phone call it would have had no bearing on the ultimate outcome [89].

Weighing up process

12. Contrary to the appellant’s submissions, the Arbitrator identified and applied the correct test of reasonableness as set out in Irwin. The Arbitrator took into consideration the relevant factors in assessing the reasonableness of the employer’s actions. Assessed objectively, it was open to the Arbitrator to find that those actions struck a fair balance in dealing with its competing obligations based on the facts known to the employer at the time those actions were taken (Heggie) [94]–[96].

The worker’s alleged vulnerability

13. The appellant submitted that the employer’s actions were not reasonable because the worker was in a vulnerable state at the time of the after-hours phone call because she had been bullied at work that day and had notified the employer about the incident. The evidence revealed that the worker may have made an attempt to report an allegation of bullying to the employer but no such report was ever made. Therefore, if the worker was in a vulnerable state the employer could not have known about it at the time of the after-hours phone call [97]­–[98].

Kirunda v NSW Police Service [2016] NSWWCCPD 40

Leave to extend time to appeal; admission of fresh evidence; alleged errors in fact finding; s 11A(1) of the 1987 Act; duty to give reasons

Snell DP

11 August 2016

Facts:

The worker worked in the Criminal Records Section of the respondent. He had been seconded to numerous different positions at the respondent, mainly in the Office of General Counsel. The worker alleged that there were over 43 events, which involved the various conduct of at least 18 employees of, or people associated with, the respondent, bullying and harassing him, which resulted in the worker sustaining a psychological injury. There was a 44th incident pleaded, where the worker was assaulted whilst he was on a recess. The worker claimed weekly compensation, a general order in respect of expenses under s 60 of the 1987 Act and lump sum compensation for 19 per cent whole person impairment.

On 3 June 2015, a Commission Arbitrator (Arbitrator Harris) found that the worker had been assaulted on 27 August 2012 in circumstances which fell within s 11 of the 1987 Act.

For unrelated reasons, another Arbitrator (Arbitrator Wynyard (the Arbitrator)) subsequently determined the rest of the matter. The Arbitrator, in essence, rejected the worker’s complaints and found that the events that were alleged to be motivated by bullying and harassment were not to be made out. Putting aside the assault on 27 August 2012, the Arbitrator held that the allegations had not been demonstrated to be anything more than reasonable requests in relation to, variously, transfers, promotions, demotions, performance appraisals, discipline or the eventual dismissal of the worker. The Arbitrator made an award for the respondent.

The worker appealed against the finding that the respondent had established a defence pursuant to s 11A of the 1987 Act, and the finding that the assault on 27 August 2012 did not aggravate his psychiatric injury and was not an independent source of liability against the respondent.

The issues in dispute on appeal were whether the Arbitrator erred in:

(a) making his factual findings. There was an associated ground that the Arbitrator failed to give adequate reasons for rejecting the worker’s evidence and accepting that of the respondent;

(b) his factual findings relating to the assault on 27 August 2012 and relevant medical evidence, and

(c) failing to apply the rule in Jones v Dunkel [1959] HCA 8; 101 CLR 298. Did he fail to take into account the lack of response of the respondent to the worker’s evidence, and “the advantages enjoyed by the Respondent in relation to the appellant”?

Held: The Arbitrator’s determination was revoked and the matter was remitted to another Arbitrator for re-determination.  

Threshold matters

1. The appeal was filed out of time. Whilst the worker was a solicitor, he did not practise in the area of workers compensation. The Deputy President, on the worker’s submissions on why leave to appeal should be granted, was satisfied that if the worker lost the right to appeal, this would work demonstrable and substantial injustice. The time to appeal was extended (Gallo v Dawson [1990] HCA 30; 64 ALJR 458 applied) [40]–[49].

2. The worker sought to adduce fresh or new evidence in his Application to Appeal. The worker also filed a number of sets of submissions and further evidence without the leave of the Commission. After examining each application, the Deputy President refused the worker’s applications to admit fresh or new evidence (CHEP Australia Ltd v Strickland [2013] NSWCA 351 applied) [50]–[111].

The finding that the assault on 27 August 2012 did not result in psychological injury (Ground 2)

3. The factual conclusion reached by the Arbitrator overlooked material facts, in particular the evidence of the attendance on Dr La (general practitioner) on 29 August 2012 and the history then recorded. This gave rise to appealable error unless it could not possibly have affected the result: Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141 at [16], Toll Pty Ltd v Morrissey [2008] NSWCA 197; 6 DDCR 561 at [10]. Having regard to the nature of this evidence, and the Arbitrator’s reasoning dealing with this issue, it clearly could have affected the result. Ground number 2 was upheld [140]–[141].

How the matter was conducted, the Arbitrator’s findings on ‘injury’ and the reasons (Ground 1)

4. The application of s 11A(1), in the circumstances, was bound up in the ‘injury’ findings. The precise nature of those findings was opaque. For the defence to apply, it is necessary that the relevant psychological injury results, wholly or predominantly, from reasonable action taken or proposed to be taken by or on behalf of the respondent, with respect to one (or more) of the areas of activity described in s 11A(1) (Manly Pacific International Hotel Pty Ltd v Doyle [1999] NSWCA 465; 19 NSWCCR 181 (Doyle) per Fitzgerald JA (Mason P agreeing) at [4], Temelkov v Kemblawarra Portuguese Sports & Social Club Ltd [2008] NSWWCCPD 96 (Temelkov) at [79]) [143].

5. If the Arbitrator’s finding of a ‘disease’ injury was based on the basis of Dr Smith’s (a treating psychiatrist) view that the worker felt that he had been passed over and that the worker, a highly qualified individual, found that the work was beneath him, which initially caused him frustration before escalating into the condition he now suffered, the Arbitrator’s finding based on s 11A(1) of the 1987 Act could not stand. The Arbitrator’s reasons effectively decided that the respondent’s actions in respect of all of the “matters raised” were reasonable actions in respect of areas of conduct protected pursuant to s 11A(1). The “matters raised” were those set out in exhibit ‘C’ (the list of the 44 events). An ‘injury’ finding, based on Dr Smith’s views was not one of the matters raised in exhibit ‘C’. It had not been relied on in the proceedings. The Arbitrator’s “reasons given” at [84] did not go to such an allegation of injury (Doyle applied) [155]–[157].

6. If an employer does not establish that the relevant action was the whole or predominant cause of the relevant psychological injury, the defence does not succeed, it does not matter whether the action was reasonable or not (see Fire and Rescue NSW v S [2015] NSWWCCPD 50 (S) at [207]). Thus, if the finding of injury was as postulated (that being, as based on the aggravation of a disease, resulting from frustration associated with feeling “passed over”, and being asked to do work which the worker found to be beneath him) one necessary limb of the defence was not made out [158].

7. It was not possible to adequately identify the basis of the finding of ‘injury’ in the worker’s favour, pursuant to s 4(b)(ii) of the 1987 Act. Having regard to how the matter was conducted, the worker relied on the events in exhibit ‘C’ as resulting in the relevant injury, pursuant to the ‘disease’ provisions of the 1987 Act. The Arbitrator rejected the worker’s evidence going to those events, and found that the events were not made out. On the face of it, this was inconsistent with a finding that those events (or any combination of them) caused ‘injury’ by way of the aggravation of a ‘disease’ [171].

8. The finding pursuant to s 11A(1) could only make any sense if the finding of a ‘disease’ injury, by way of aggravation, was based on the events in exhibit ‘C’: Doyle at [4]. However, this would be inconsistent with the specific findings made at [34] and [52] of the reasons. To make contradictory factual findings is “indicative of an erroneous reasoning process” and involves error (Brown v Harding [2008] NSWCA 51 at [31]) [175].

9. The only apparent alternative basis for the finding of ‘injury’, involving the aggravation of a ‘disease’ within the meaning of s 4(b)(ii) of the 1987 Act, was that suggested by the discussion of Dr Smith’s views at [96] of the reasons. However, this would be inconsistent with the finding pursuant to s 11A(1), and inconsistent with the pleadings and how the matter was conducted [176].

10. Having regard to the reasons given, and the apparently inconsistent findings of fact referred to above, the reasons did not enable a proper understanding of the basis on which the decision was reached. Looking at the reasons given at first instance in that way, the error “is revealed as an error in the process of fact finding” (Waterways Authority v Fitzgibbon [2005] HCA 57; 221 ALR 402; 79 ALJR 1816 at [130]) [180].

11. The Arbitrator’s finding, that s 11A(1) of the 1987 Act applied as a defence, could not stand. The Arbitrator’s findings and reasons did not support the necessary element of the defence, that the relevant psychological injury (the cause of which was, on the findings, obscure) resulted wholly or predominantly from reasonable action taken or proposed to be taken by the respondent, with respect to one or more of the categories set out in the subsection (Doyle at [4]; S at [207]; Temelkov at [79]) [181].

12. Even if it were assumed that the finding of ‘injury’ was based on the 43 events in exhibit ‘C’, and that the finding in the reasons at [84] also related to the events in exhibit ‘C’, the finding pursuant to s 11A(1) was not sound. The finding was a global one, purporting to apply to all of the events described in exhibit ‘C’. Some of these events could potentially have been the subject of a defence based on that subsection. It was quite unlikely that all of them were. It was difficult to see that many of the allegations had the capacity to attract the protection of s 11A(1), from the respondent’s point of view. It was difficult to see how many of the alleged deficiencies by the respondent in this regard, if the allegations were accepted, could be subject to s 11A(1). One of the alleged events, described at “36”, was an action of the insurer [182].

13. It was necessary that the finding pursuant to s 11A(1) be revoked and the finding of injury be revoked. It was unnecessary to deal with the third ground of appeal [185]–[186].

Appropriate orders disposing of the appeal

14. As the matter involved credit issues and subsequent events had transpired including further submissions being sought to be lodged and the issue as to whether a personal injury or disease was pleaded, the Deputy President remitted the matter to another Arbitrator for re-determination [187]–[209].