Agha v Pacific National (NSW) Pty Limited
[2006] NSWWCCPD 204
•25 August 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Agha v Pacific National (NSW) Pty Limited [2006] NSWWCCPD 204
APPELLANT: Fawzi Agha
RESPONDENT: Pacific National (NSW) Pty Limited
INSURER:Self Insurer
FILE NUMBER: WCC2217-06
DATE OF ARBITRATOR’S DECISION: 29 May 2006
DATE OF APPEAL DECISION: 25 August 2006
SUBJECT MATTER OF DECISION: Procedural fairness; Interest on arrears of weekly compensation; section 109 Workplace Injury Management and Workers Compensation Act 1998
PRESIDENTIAL MEMBER: Acting Deputy President Bill Roche
HEARING:On the papers
REPRESENTATION: Appellant: C & M Lawyers
Respondent: Bartier Perry Lawyers
ORDERS MADE ON APPEAL: The Arbitrator’s decision at paragraph 27 of his Statement of Reasons for Decision refusing the claim for interest on the arrears of weekly compensation is revoked.
Paragraph 3 of the Arbitrator’s decision is revoked.
The matter is remitted to the Arbitrator for the parties to make further submissions on the terms of the referral to an Approved Medical Specialist and on the calculation of interest on the arrears of weekly compensation, and for the Arbitrator to make such further orders as are appropriate for the future conduct of the matter.
Paragraphs 1, 2 and 4 of the Arbitrator’s decision are confirmed.
The name of the Respondent Employer is amended to read Pacific National (NSW) Pty Limited.
The Respondent Employer is to pay the Appellant Worker’s costs of the appeal.
BACKGROUND TO THE APPEAL
On 26 June 2006 Fawzi Agha (‘the Appellant Worker/Mr Agha’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 29 May 2006.
The Respondent to the Appeal is Pacific National (NSW) Pty Limited (‘the Respondent Employer’), wrongly sued as Pacific National. The correct name of the Respondent Employer has been noted and should now appear on all future documents in this matter.
Mr Agha started work with the Respondent Employer’s predecessor in title, the Public Transport Commission, in May 1978 as a wheel lathe operator. This work involves turning the wheels of railway carriages to ensure that they are properly aligned, balanced and undamaged.
He continued this work until 9 February 2004. On that day Mr Agha and a co worker were in the process of moving a diesel engine when it exploded. As a result Mr Agha run for safety and as he did so he fell twisting his right knee. He ultimately came under the care of Dr Kuo who performed an arthroscopy on his right knee which revealed certain damage to the knee. Over time he noticed an increase in pain in his left knee and his back.
His claim for compensation was initially accepted and compensation payments made until 16 September 2004. Payments ceased at that time on the grounds that the Appellant Worker had recovered from the effects of his injury and was suffering from no work related incapacity beyond that date.
On 5 May 2005 a written notice of claim was forwarded to the Respondent Employer seeking compensation (transcript page 31 line 20). An Application to Resolve a Dispute (‘the Application’) was filed with the Commission on 15 February 2006 alleging injury on 9 February 2004 and injury due to the nature and conditions of employment from 1980 to 2004. The period of nature and conditions was later amended to claim from 1 July 1996 until 9 February 2004. In addition to relying on the frank injury of 9 February 2004 as having caused injury to his right knee and to his back and left knee, the Appellant Worker also relied on the disease provisions in sections 15 and 16 of the Workers Compensation Act 1987 (‘the 1987 Act’) which allegedly “caused, aggravated, accelerated, deteriorated, or otherwise exacerbated” his back, left leg and right leg conditions.
The case was heard in an Arbitration hearing on 16 May 2006 and decided in a reserved decision on 29 May 2006. The Appellant Worker was successful in recovering compensation at the maximum statutory rate under section 40 of the 1987 Act from 19 September 2004 to date and continuing. The Appellant Worker also sought but was not awarded interest on the arrears of weekly compensation.
As a result of the Arbitrator’s determination the matter is to be referred to an Approved Medical Specialist (‘AMS’) to assess the Appellant Worker’s whole person impairment as a result of his found injuries. That referral is currently on hold pending this appeal. The ‘Request for Assessment of Permanent Impairment by Approved Medical Specialist’ (‘the referral’) dated 16 May 2006 was prepared by the Arbitrator and forwarded to the parties.
The Appellant Worker seeks leave to appeal the Arbitrator’s refusal to award interest and the terms of the referral.
LEAVE TO APPEAL
Monetary Threshold
Before proceeding to deal with an appeal the Commission must determine whether the application meets the thresholds in section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’).
Section 352(2)(a) provides that the Commission is not to grant leave to appeal unless “the amount of compensation at issue on the appeal is both” at least $5,000.00 and at least 20% of the amount awarded in the decision appealed.
There are two parts to the present appeal: the appeal against the refusal to award interest and the terms of the AMS referral. No calculations have been made by the parties as to the potential value of the interest on the arrears of weekly compensation. By my calculations the interest comes to less than $5,000.00. Therefore, if this was the only ground of appeal, leave to appeal would be refused.
However, different considerations apply to the terms of the referral to the AMS. What is necessary is that the appeal has the real capacity to put the award of compensation in issue in the appeal. In Fletchers International Exports Pty Ltd v Regan [2004] NSWWCCPD 7 (‘Regan’) it was noted at [27]:
“27. While a decision of an Arbitrator may not concern an ‘award’ of compensation (as in Mawson), the appeal must nonetheless affect an “amount of compensation at issue on the appeal” to pass the threshold test in section 352(2)(b). Purely procedural decisions, such as a decision to adjourn a telephone conference (Tagg v International Flavours and Fragrances (Australia) Ltd [2003] NSW WCC PD 5), a decision in relation to costs only (Grimson v Integral Energy [2003] NSWWCC PD 29), and a decision to schedule a further telephone conference (Falcon v Narellan Enterprises Pty Limited [2003] NSW WCC PD 34) do not meet this threshold criterion. The decision must have a real capacity to put the amount of compensation, determined by reference to the decision or the claim (Sheridan v Coles Supermarkets Australia Pty Limited [2003] NSWWCC PD 3), in issue in the appeal (as in the case of the filing of a ‘Reply’ (ADCO Constructions Pty Ltd v Ferguson [2003] NSWWCC PD21)).”
In Regan it was held that a decision concerning the admission of medical reports and the consequential referral to an AMS had the potential to “put the amount of compensation claimed by the Appellant in issue” (Regan at [28]).
In the present case the amount claimed under section 66 of the 1987 Act is $95,000.00. If only 5.3% of that amount is lost because of an incorrect deduction under section 323 of the 1998 Act then more than $5,000.00 will be lost by the Appellant Worker. In these circumstances I find that the amount of compensation “at issue” in the appeal is in excess of $5,000.00. As no award has yet been made under section 66, section 352(2)(b) does not apply (see Mawson v Fletchers International Exports Pty Ltd [2002] NSWWCCPD 5).
Time
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
I grant leave to appeal.
PRELIMINARY MATTERS
Section 354(6) of the 1998 Act provides:
“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
The Respondent Employer does not consent to the matter be dealt with on the papers but makes no submissions on this point. I have the benefit of written submissions from each party. The appeal raises two discrete issues that are not novel or complex.
Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by the Appellant Worker that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 29 May 2006 records the Arbitrator’s orders as follows:
“1.The Respondent to pay the Applicant weekly benefits pursuant to section 40 of the Act as follows:
i)From 19 September 2004 until 30 September 2004 at the rate of $408.10 per week;
ii)From 1 October 2004 until 31 March 2005 at the rate of $415.60 per week;
iii)From 1 April 2005 until 30 September 2005 at the rate of $422.20 per week;
iv)From 1 October 2005 until 31 March 2006 at the rate of $430.80 per week;
v)From 1 April 2006 at the rate of $439.60 per week and ongoing.
2.The Respondent to pay the Applicant’s reasonable medical expenses pursuant to section 60 of the Act upon production of accounts and/or receipts.
3.The matter should be referred to an Approved Medical Specialist for a Whole Person Impairment assessment, such referral to be in the form provided with these Findings and Reasons.
4.The Respondent to pay the Applicant’s costs as agreed or assessed.” (emphasis added)
ISSUES IN DISPUTE
The issues in dispute in the appeal are whether the Arbitrator:
(a)erred in failing to award interest on the arrears of weekly compensation under section 109 of the 1998 Act, and
(b)denied the Appellant Worker procedural fairness in failing to allow the Appellant Worker to make submissions on the terms of the referral to the AMS.
SUBMISSIONS AND FINDINGS
Review
The role of a Presidential Member on review has been considered by the Commission in many cases. In Ayse Cakir v Western Sydney Area Health Service t/as Parramatta Linen Service [2004] NSWWCCPD 1 it was stated at [49]:
“49. The ‘review’ on appeal, before the Commission, is by way of rehearing, where the powers of the Commission to confirm, revoke or substitute a new decision are exercisable only where it can be demonstrated that the original decision of the Arbitrator is affected by ‘some legal, factual or discretionary error’ (Allesch v Maunz (2000) 203 CLR 172). The Arbitrator’s decision must be read as a whole (Beale v GIO (NSW) (1997) 48 NSWLR 430 at 444), and, without combing it for error (Minister for Immigration and Multicultural Affairs v Wu Shu Liang (1996) 185 CLR 259).”
If is established that the Arbitrator’s decision is affected by some legal, factual or discretionary error the review power in section 352(7) is enlivened in respect of the whole decision. Therefore, if the Arbitrator is found to have been in error in respect of the referral to the AMS, that error will enable a review of the ‘interest’ issue even though that issue on its own would not have satisfied the threshold test in section 352(2)(a).
Interest
At the Arbitration hearing the Appellant Worker’s counsel sought interest on the arrears of weekly compensation (transcript page 29 line one) and submitted that a letter of claim had been sent to the Respondent Employer on 5 May 2005 (transcript page 31 line 20). At page 30 line 54 the Arbitrator sought the assistance of counsel as to which section of the Act gave power to award interest. In a letter dated 17 May 2006 the Appellant Worker’s solicitor wrote to the Arbitrator submitting that the relevant section that allowed interest on arrears of weekly compensation was section 110 of the 1998 Act. In fact that section, as was noted by the Arbitrator in his Statement of Reasons for Decision (‘Reasons’) at paragraph 29(c), deals with the awarding of interest after the award is made. The correct section empowering the awarding of interest on arrears of weekly compensation is section 109 of the 1998 Act which permits an order for the payment of interest “at such rate as the Commission thinks fit on the whole or any part of the sum for the whole or any part of the period before the sum is payable” (section 109(1)). Interest cannot be ordered on lump sum compensation under section 66 and 67 and the section does not permit the giving of interest upon interest. The usual practice with past weekly compensation is to allow interest on the whole of the amount of the arrears of compensation at half the standard rate of interest. The ‘Jamberoo Schedule’ recommends 3% and I believe that rate is appropriate but the parties are at liberty to make further submissions if they feel a different rate should be adopted in the circumstances of this case. If the Appellant Worker received a lump superannuation payout from the Respondent Employer, that is not a matter that would disqualify him from recovering interest under section 109.
The Arbitrator was in error in not allowing interest on the arrears of weekly compensation. He was wrongly referred to section 110 of the 1998 Act by the Appellant Worker solicitor. Whilst that error was unfortunate and unhelpful, it does not eliminate an Arbitrator’s duty to correctly apply the law. The failure to award interest was an error of law which must be corrected.
Procedural Fairness
The Appellant Worker submits that he was denied procedural fairness in the determining of the “terms of referral” to the AMS without being given the opportunity to make submissions about the terms of the referral. Procedural fairness requires that a person whose rights will be affected by any order or decision be given an opportunity to be heard in respect of that order or decision. A denial of procedural fairness is an error of law going to jurisdiction (Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11 (‘Bhardwaj’).
In Inghams Enterprises Pty Limited v Michelle Zarb [2003] NSWWCCPD 15 Deputy President Fleming, after referring to section 354 of the 1998 Act, said:
“25. While this provision modifies the common law rules of procedural fairness in some respects, for instance, in relation to the determination of matters on the papers, it does not alter the fundamental rule that a party is entitled to be heard in relation to the case against it, before the decision-maker exercises the power to make the decision (Twist v Council of the Municipality of Randwick (1976) 136 CLR 106, 110). In this case the Arbitrator expressly told the parties they would have the opportunity to make further submissions on the matter of an award of lump sum compensation, once she had made the relevant finding of fact upon which the issue turned. In my view, it was clearly a denial of procedural fairness to then proceed to determination without allowing the parties to make those submissions. This was not a matter of informality and lack of technicality. There is nothing in section 354 of the 1998 Act which required the Arbitrator in this matter to give the parties the opportunity to make further submissions; however, once she had stated that she was going to follow that course, there is, equally, nothing in the section that excuses her failure to do so.”
In the present case the Arbitrator did not tell the parties that they would have the opportunity to be make further submissions on the question of the referral to the AMS, but in my opinion the parties are entitled to be heard on that matter as it has the potential to significantly affect the Appellant Worker’s ultimate award under section 66 of the 1987 Act. That is especially so where the AMS’s certification on “whether any proportion of the permanent impairment is due to any previous injury or pre existing condition or abnormality” (section 326(1)(b) of the 1998 Act) is conclusively presumed to be correct.
The Respondent Employer submits that the referral to the AMS does not form part of the Arbitrator’s Reasons and final determination and therefore any issues arising from it do not form part of the Commission’s determination. I do not accept that argument. The referral formed part of the Arbitrator’s Reasons at paragraph 29 (3). It also formed part of the formal Certificate of Determination (‘the determination’) at order ‘3’ set out above. That order specifically incorporates the terms of the referral into the determination when it says “such referral to be in the form provided with these Findings and Reasons”.
Whilst there is no objection to the fact of the referral, the Appellant Worker’s objection is to the “terms of the referral”. The objection relates to the issue of whether any proportion of the permanent impairment is due to any previous injury or pre existing condition or abnormality. I presume, because no submissions have been made on this issue, that the point sought to be made is that to the extent that the Appellant Worker has any pre existing conditions in his knees and back, they will largely be as a result of the nature and conditions of his employment over many years. As a result, any deduction under section 326(1)(b) should take into account the extent to which his condition has been caused by his employment with the Respondent Employer from 1996. Without deciding the merits of that issue, that is a matter on which the Appellant Worker is entitled to make submissions before the referral to the AMS. It is not correct to say, as the Appellant Worker’s submissions say, that since the date of injury was found to be 9 February 2004, all things or events prior to that date are irrelevant to the whole person impairment under taken by the AMS. The Commission must still comply with the terms of section 323 of the 1998 Act.
The referral gives a date of injury of 9 February 2004. The Respondent Employer disputes that the Arbitrator made a formal finding that that was the relevant date of injury. The Arbitrator stated at paragraph 13 of his Reasons “the Respondent concedes the original injury claim by the Applicant but says it was operated upon and that the Applicant has recovered”. On my reading of the Reply and the evidence the fact that the Appellant Worker was injured in the course of his employment on 9 February 2004 was not seriously in issue. On this basis it is hardly surprising that the Arbitrator did not expressly make a formal finding of injury on that date. However, having regard to the decision as a whole it is reasonably clear to me that it is implicit in the Arbitrator’s reasons that he did find injury on 9 February 2004 and that, as a consequence of that injury, Mr Agha injured his right knee and developed increasing pain in his left knee and back as a direct result of the right knee injury.
The Respondent Employer has not formally challenged the validity of the Arbitrator’s decision or orders on the ground that there was no formal finding of injury. If such a challenge had been made it would have been rejected for the reasons set out above. It submits that the date of injury has not been determined and needs to be the subject of a further determination or consent agreement. I do not agree with that submission. The Arbitrator has given his decision and findings on injury and, in the absence of a formal challenge, that finding stands.
In my opinion the incorporation of the terms of the referral into the formal determination meant that the Appellant Worker was deprived of the opportunity to make submissions on a matter that has the potential to substantially affect his ultimate award under section 66 of the 1987 Act. Therefore there has been a denial of procedural fairness and that part of the Arbitrator’s decision must be set aside.
DECISION
The Arbitrator’s decision at paragraph 27 of his Statement of Reasons for Decision refusing the claim for interest on the arrears of weekly compensation is revoked.
Paragraph 3 of the Arbitrator’s decision is revoked.
The matter is remitted to the Arbitrator for the parties to make further submissions on the terms of the referral to an Approved Medical Specialist and on the calculation of interest on the arrears of weekly compensation, and for the Arbitrator to make such further orders as are appropriate for the future conduct of the matter.
Paragraphs1, 2 and 4 of the Arbitrator’s decision are confirmed.
The name of the Respondent Employer is amended to read Pacific National (NSW) Pty Limited.
COSTS
The Respondent Employer is to pay the Appellant Worker’s costs of the appeal.
Bill Roche
Acting Deputy President
25 August 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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