Barclay Bros Pty Ltd v Buch, P.L

[1982] FCA 120

Re: BARCLAY BROS PTY. LTD.
And: PETER LEONARD BUCH
No. NTG 4 of 1982
Workmen's compensation

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NORTHERN TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.
Toohey J.
Sheppard J.

CATCHWORDS

Workmen's compensation - personal injury by accident - incapacity - assessment of partial incapacity payments - assessment of lump sum compensation

Workmen's Compensation Act (N.T.) ss.6, 10(6); cl.(1B) of Second Schedule; Part II of Third Schedule

On appeal from the Supreme Court of the Northern Territory of Australia

No. 679 of 1980

HEARING

DARWIN

#DATE 17:6:1982

ORDER

1. The appeal be dismissed with costs.

2. The cross appeal be allowed by substituting for an award of lump sum compensation on the basis of partial and permanent loss of the efficient use of the right leg above the knee in and for the purposes of the respondent's employment at the date of injury assessed at 30% an award of 70% of loss of the efficient use of the right leg at or above the knee.

3. The appellant pay the respondent's costs of the cross appeal.

JUDGE1

The Court has before it an appeal and cross appeal from a judgment of the Supreme Court of the Northern Territory awarding workmen's compensation to the respondent, both weekly payments for partial incapacity and a lump sum for partial and permanent loss of the efficient use of the right leg above the knee.

The proceedings before the Supreme Court were by way of a hearing de novo (Dare v. Dietrich (1979) 26 ALR 18). They were conducted by way of re-hearing in the fullest sense, making no use of the transcript of proceedings before the Workmen's Compensation Tribunal and calling evidence from the workman and medical and other witnesses. Cf. Uranez (Aust.) Pty. Ltd. v. Hale (1980) 30 ALR 193. The appeal and cross appeal gave rise to several questions which may be stated in this way.

1. Was personal injury by accident caused to the workman?
2. If so, what incapacity for work did the workman thereby suffer?
3. Did the Supreme Court correctly assess the amount to which the workman was entitled for compensation during periods of partial incapacity?
4. Was the Supreme Court's assessment of a 30% loss of efficient use of the workman's right leg above the knee adequate?

Personal injury by accident

The respondent began work with the appellant in January 1976 and on 18 June 1976 he was employed as a leading hand carpenter. On that day, while setting up building work at the Wulagi Primary School, he was in a squatting position marking out a line and moving along in a sideways fashion. On trying to rise from the squatting position he found that he could not straighten his right leg. He had the leg manipulated and straightened by a chiropractor and then went back to work but the knee locked again. After further chiropractic treatment he saw a surgeon Dr. Bromwich who, on 28 July 1976, operated to remove the right medial meniscus.

The respondent continued to have pain in the right knee and decided to see Dr. Toft, an orthopaedic surgeon in Brisbane. Just after his arrival in Brisbane he found he was unable to straighten his left leg. On 18 January 1977 Dr. Toft removed the left medial meniscus, finding a complete bucket handle tear. Dr. Toft also examined the right knee under anaesthetic and, finding very little ligamentous laxity or abnormality, referred the respondent for physiotherapy. The right knee did not respond to this treatment and, having suffered pain for a number of months, the respondent had an operation on his right knee on 19 August 1977. At that operation Dr. Toft found gross degenerative changes which he described as "quite extraordinary" for a man of the respondent's age, particularly in the light of his observations in January 1977. Dr. Toft attributed the rapid degeneration to, in all probability, a low grade infection or septic arthritis.

In September 1981 Dr. Toft again examined the respondent's right leg and found slight quadriceps muscle wasting, a full range of passive movement with pain on forced flexion of the knee joint and severe pain on compression of the patella. Referring to the respondent Dr. Toft said: "He could stand unaided on the right leg, but could not squat or hop on that leg".

There was other medical evidence but the learned Judge accepted the testimony of Dr. Bromwich and Dr. Toft and there was no submission that he erred in doing so.

It was argued by the appellant that the incident on 18 June 1976 could not be described as "personal injury by accident". It was accepted by the appellant that if there had been personal injury by accident to the respondent on that day, it was arising out of or in the course of his employment with the appellant.

The term "injury" is defined by s.6 of the Workmen's Compensation Act to mean "any physical or mental injury and includes aggravation, acceleration or recurrence of a pre-existing injury". It was accepted by the Supreme Court and in argument before this Court that the respondent suffered personal injury by accident on 18 June 1976 if there was a sudden physiological or pathological change in his condition. His Honour found that there had been such a change and in our view he was right in doing so. His Honour's finding, based on the evidence of Dr. Toft and Dr. Bromwich, was that the respondent was unable to straighten his leg on 18 June 1976 because "the meniscus or part thereof became displaced and found its way into the space between the tibia and the femur in the knee joint".

The respondent had, since a fall in 1975, complained of pain in the right knee when squatting or kneeling and, in Dr. Toft's view, it is likely that there was something wrong with the meniscus of the right knee before June 1976. Nevertheless the evidence, which his Honour accepted, was that on that day part or all of the meniscus became displaced and lodged between the two articulated surfaces of the tibia and femur in the knee joint, preventing the leg from being straightened. Dr. Toft rejected the suggestion that the locking of the knee joint was "simply a manifestation of a tear to his medial meniscus which had occurred at some other point in time".

His Honour referred to the event as a pathological change. Whether it was a pathological or physiological change, it was certainly one or the other. In our view the incident of 18 June 1976 upon which the respondent relied in his workmen's compensation claim constituted personal injury by accident arising out of or in the course of his employment by the appellant.
Was there incapacity by reason of the injury?

The appellant accepted that if there was personal injury by accident, there was an immediate incapacity resulting from the injury. But, in its submission, the only incapacity attributable to that injury was one resulting from the respondent's inability to straighten his leg once it became locked. The appellant did not dispute that since 18 June 1976 the respondent had been incapacitated for work or indeed that he is still partially incapacitated. But the argument was that any incapacity not directly attributable to the locking of the knee was the result of a condition that existed well before June 1976.

This submission does less than justice to the evidence and to the findings of the learned Judge based on that evidence. In July 1976 Dr. Bromwich had found no osteoarthritic change in the knee joint nor had Dr. Toft in January 1977. Yet in August 1977 Dr. Toft observed gross degenerative changes in the medial compartment of the knee joint both on the femoral and tibial surfaces with shredded articular cartilage in the joint, very red indurated synovium and early degenerative changes in the lateral compartment. There was evidence from Dr. Bromwich, which his Honour accepted, that osteoarthritis does follow meniscectomy. His Honour's finding that during the period 29 July 1976 to 4 May 1978 the respondent's periods of incapacity were due to rehabilitation from the operations on the right knee, to osteoarthritic and low grade infection in the joint and to the need to obtain treatment for those conditions was amply supported by the evidence of Dr. Bromwich and Dr. Toft. It was not shown to be in error.

In the light of those findings the proper conclusion is that the respondent's incapacity after 18 June 1976 was because of what happened on that day. There is no doubt that the respondent has a continuing partial incapacity for work and that this incapacity is attributable to osteoarthritic changes. As already mentioned, it is a proper conclusion from the evidence that those changes have resulted from the meniscectomy and from low grade inflamation, a form of septic arthritis.
How should partial incapacity payments have been calculated?

The appellant did not challenge the learned Judge's conclusion that from 27 February 1978 until 4 May 1978 the respondent was entitled to compensation for partial incapacity at the rate of $69.30 a week. That is, the appellant did not challenge that figure as a matter of assessment; it did of course challenge the finding that this incapacity was due to the injury sustained in June 1976. As to the period after 4 May 1978, the appellant submitted that there was no material before the Supreme Court upon which the learned Judge could have found any entitlement to compensation for partial incapacity. By reason of cl.(1B)(b) of the Second Schedule to the Act the respondent's entitlement to compensation from 5 May 1978 was

"(ii) the amount, if any, per week by which the weekly amount that he is earning, or is able to earn in some suitable employment or business, is less than the workman's normal weekly earnings".

The learned Judge adopted as "the workman's normal weekly earnings" the wage paid to a leading hand carpenter, fixing that rate at $243.30 a week. The appellant had no quarrel with this figure, the "minuend" referred to by Gibbs J. in Sobania v. Nitsche (1969) 16 FLR 329 at 349. However the respondent had some complaint because, while the weekly rate of $243.30 was effective between 27 June 1979 and 4 January 1980, it had increased thereafter, rising to $299.45 on 22 July 1981. We shall return to the respondent's complaint later in these reasons.

The appellant challenged his Honour's determination of the "subtrahend", the amount which the respondent was able to earn in suitable employment or business. The learned Judge approached that determination in this way. In February 1978 the respondent returned to work for the appellant as a clerk in Brisbane and remained there until 4 May 1978 when he was retrenched. Thereafter he went to live on a small property owned by his father and did some work cultivating strawberries from which he made no profit. In September 1979 he obtained work as a taxi driver, earning between $180 and $190 a week gross. After about 12 months he decided to operate as a self-employed taxi driver, a decision that obliged him to borrow some $22,000 to buy a vehicle and licence. At the time he gave evidence in the Supreme Court (28 September 1981) the respondent had been carrying on that business for about 12 months. He gave evidence that his gross earnings for the year 1980/1981 were $17,000 and that his taxable income was "$4,000 and some hundred dollars".

The learned Judge concluded that this material was insufficient to provide a yardstick of the respondent's earnings or the amount he was able to earn. He decided therefore to take the weekly sum of $190, the respondent's gross earnings while employed as a taxi driver. It was in fact the higher end of the range mentioned.

The appellant criticised this approach, saying that it was not warranted and that his Honour should simply have said that the respondent had failed to establish the components of para.(ii) of cl.(1B)(b) of the Second Schedule to the Act. The respondent's answer was that in the end what his Honour had to decide was the value of the respondent's labour and that in fixing the value at $190 a week, the amount he was earning as an employed taxi driver, he could not be said to have erred.

It is true that if a workman is in fact earning after an injury, the amount of his actual earnings cannot be disregarded; and if it appeared that the respondent's earnings from the taxi business exceeded those as an employed driver he may well have failed to satisfy the onus that lay upon him to establish the relevant difference (J. & H. Timbers Pty. Ltd. v. Nelson (1971- 1972) 126 CLR 625). But it seems to us that if his Honour took as the measure of the respondent's capacity to earn the sum of $190 a week, when his taxable income from the business was just over $4,000, it is hardly for the appellant to complain. No injustice was thereby done to it.

The respondent's complaint is that his Honour failed to take into account increases in the wages paid to a leading hand carpenter. There is no doubt that he did not take those increases into account, although the information was before him in the form of a schedule of payments due under the relevant award. On the other hand it may be assumed that the earnings of an employed taxi driver would have increased since 1979, the year from which the figure of $190 a week was derived. This is not a case where his Honour simply "recoiled" from making a week-to-week comparison (Sobania v. Nitsche at p.351); that information was not available to him and it was for the respondent to make out his case in this respect.

We are of the opinion that, in the circumstances, his Honour's method of assessment should not be disturbed. It is open to either party to seek from the Tribunal a variation of the amount ordered by the Supreme Court for partial incapacity.

It follows then that the appellant has failed to make good any of its challenges to the judgment of the Supreme Court and that the respondent has failed to establish that the Court erred in arriving at a weekly figure of $53.30 as compensation for partial incapacity from 5 May 1978.
Loss of efficient use of right leg

However the respondent also challenges his Honour's award of lump sum compensation on the basis of partial and permanent loss of the efficient use of his right leg above the knee in and for the purposes of his employment at the date of the injury, assessed at 30%. In the respondent's submission, that percentage assessment was in the circumstances too low.

Part II of the Third Schedule to the Act includes as an injury for which lump sum compensation is payable - "Loss of leg at or above knee". Of course what is involved here is loss of efficient use. The learned Judge's assessment was in respect of loss of efficient use of the right leg "above the knee". Neither party complained of this basis of assessment although it was the knee joint itself that had sustained the injury.

No medical opinion was expressed as to loss of efficient use and clearly the matter was very much one of an exercise of judgment. His Honour referred to the duties of a carpenter, considered those that the respondent could not perform, and concluded :

"I am left with the impression that the (respondent) could perform all of the duties which he was previously able to perform, particularly those of a supervisory nature, but he would not be able to sustain those activities for a full working day.".

The respondent's primary criticism of his Honour's assessment was that it placed too much emphasis upon the respondent's capacity to perform physical actions and too little upon his capacity to sustain those actions. Section 10(6) of the Act speaks of "the permanent loss of the efficient use of that part in and for the purposes of his employment at the date of the injury" (emphasis added).

The respondent challenged a statement in his Honour's judgment that his employment was "that of a carpenter mostly in a supervisory capacity." Counsel referred to the context in which the respondent had described his duties, a context which made it clear that he was, in his own words,

". . . employed to measure out and mark foundations and footings and set out form work and construct the form work as well setting out the steel for the floor slabs and supervising other work to a small extent, and general carpentry duties - cutting timber and placement and such things like that".

He now experiences pain in the knee practically all the time, as a result of stress or activity using the joint. Asked by his Honour what it was that he could not now do, the respondent replied.

"I can do just about anything, but if I do it regularly and, you know, after a given time it just gets sorer and sorer and the more I do it, the sorer it gets".

Dr. Toft expressed the view that, because of the condition of the respondent's right leg, he was "totally incapacitated" for the type of work he had described.

In our view his Honour's assessment did not have sufficient regard to the extent to which the respondent's injury has resulted in the efficient loss of the use of the right leg, more accurately that part at or above the knee. In particular he gave insufficient weight to the fact that for all practical purposes the respondent was unable to carry out his previous employment with the degree of sustained effort that work as a carpenter would require. What is required is an exercise of judgment and not an easy one. But in our opinion there has been a permanent loss of virtually the whole of the efficient use of the right leg at or above the knee for the purposes of the respondent's employment as a leading hand carpenter. We accept the respondent's submission that an amount of 70% more accurately reflects that loss.

The appeal should be dismissed with costs. The cross appeal should be allowed by substituting for an award of lump sum compensation on the basis of partial and permanent loss of the efficient use of the right leg above the knee in and for the purposes of the respondent's employment at the date of the injury assessed at 30%, an award of 70% of loss of the efficient use of the right leg at or above the knee. The respondent failed in one aspect of his cross appeal; that was so closely bound up with the appellant's appeal that we do not consider it warrants any special order by way of costs. In those circumstances the appellant should also pay the costs of the cross appeal.