Begovic v Tamworth Building Supplies Pty Ltd
[2010] NSWWCCPD 61
•26 May 2010 3 June 2010
| WORKERS COMPENSATION COMMISSION | ||||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | ||||||
| CITATION: | Begovic v Tamworth Building Supplies Pty Ltd [2010] NSWWCCPD 61 | |||||
| APPELLANT: | John Begovic | |||||
| RESPONDENT: | Tamworth Building Supplies Pty Ltd | |||||
| INSURER: | QBE Workers Compensation (NSW) Limited | |||||
| FILE NUMBER: | A2-8841/07 | |||||
| ARBITRATOR: | Mr J McGruther | |||||
| DATE OF ARBITRATOR’S DECISION: | 9 October 2009 | |||||
| DATE OF APPEAL HEARING: DATE OF APPEAL DECISION: | 26 May 2010 3 June 2010 | |||||
| SUBJECT MATTER OF DECISION: | Incapacity; weekly compensation; section 40(2) Workers Compensation Act 1987; calculation of probable earnings but for injury; calculation of amount worker is earning or is able to earn where worker self-employed. | |||||
| PRESIDENTIAL MEMBER: | Deputy President Bill Roche | |||||
| HEARING: | Oral | |||||
| REPRESENTATION: | Appellant: | Mr Peter Long, solicitor, Slater and Gordon | ||||
| Respondent: | Mr Malcolm Batten, counsel, instructed by Paul Watts, solicitor, in-house legal | |||||
| ORDERS MADE ON APPEAL: | The Arbitrator’s determination of 9 October 2009 is revoked and the following orders made in its place: “1. The respondent employer is to pay the applicant worker weekly compensation under section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’) as follows: (i) $94.00 per week from 2 May 2006 until 30 June 2006; (ii) $114.00 per week from 1 July 2006 until 30 June 2007; (iii) $247.00 per week from 1 July 2007 until 30 June 2008; (iv) $155.00 per week from 1 July 2008 until 30 June 2009, and (v) $169.00 per week from 1 July 2009 to date and continuing. 2. The respondent is to pay the applicant worker’s hospital and medical expenses under section 60 of the 1987 Act on production of accounts or receipts. 3. The respondent employer is given credit for weekly payments made for the period of total incapacity following the appellant worker’s surgery on 18 October 2009. 4. The respondent employer is to pay the applicant worker’s costs of the second arbitration, as agreed or assessed. The second arbitration is certified as complex under Item 4 of Table 4 of Schedule 6 of the Workers Compensation Regulation 2003 and an uplift of 20 per cent applies to those costs. Each party is to pay his or its costs of the first arbitration.” | |||||
| The respondent employer is to pay the appellant worker’s costs of the appeal, as agreed or assessed. | ||||||
BACKGROUND
The appellant worker, Mr Begovic, is a musician. Because of family commitments, he started work for the respondent employer, Tamworth Building Supplies Pty Ltd (‘the respondent employer’), as a casual truck driver in January 2002. While carrying building materials in the course of his employment on or about 20 June 2002, he slipped and fell, injuring his back. He reported the injury, but continued working until the respondent terminated his employment in either November or December 2002.
Mr Begovic lodged a claim for compensation on 16 January 2003. The respondent’s insurer, QBE Workers Compensation (NSW) Limited (‘QBE’) accepted liability, paid compensation and arranged for rehabilitation. Mr Begovic’s general practitioner, Dr Diebold, certified him fit for suitable duties from 17 December 2002 because of a low back strain.
In 2004, Mr Begovic sought lump sum compensation in respect of whole person impairment as a result of his injury. The parties settled that claim on 6 April 2004 in the sum of $7,500.00 in respect of six per cent whole person impairment and lodged with the Commission an Application for Registration of Agreement Under S66A.
Dr Diebold certified Mr Begovic fit for his pre-injury duties from 18 January 2006. Mr Begovic then saw a different general practitioner, Dr Croaker, who certified him fit for suitable duties.
QBE declined liability by letter dated 16 February 2006 on the ground that Mr Begovic’s injury was no longer related to his employment and he was no longer incapacitated. The letter said that compensation payments would be made until 30 March 2006. In a letter dated 7 March 2006, QBE said that payments would continue until 18 April 2006.
Under the name of John George Lee, Mr Begovic filed an Application for Interim Payment Direction with the Commission on 17 February 2006. At a teleconference on 8 March 2006, the insurer agreed to make payments up to 18 April 2006. In the end, the insurer made payments until 1 May 2006.
On 21 November 2007, Mr Begovic filed an Application to Resolve a Dispute (‘the Application’) in which he sought weekly compensation in respect of himself and four dependent children from 18 April 2006 to date as a result of injury to his back and legs on 20 June 2002. This claim was amended at the appeal to date from 2 May 2006. The respondent disputed liability on the ground that Mr Begovic was no longer incapacitated.
In a decision delivered on 5 March 2008, Arbitrator Theobold found that Mr Begovic remained incapacitated as a result of his injury and awarded weekly compensation in the sum of $116.48 per week from 1 May 2006 to date and continuing.
The respondent employer appealed that decision. On 24 July 2008, Acting Deputy President Candy upheld the appeal on the ground that the Arbitrator had erred in assessing Mr Begovic’s ability to earn by reference to his hypothetical ability to earn as a truck driver (Tamworth Building Supplies Pty Ltd v Begovic [2008] NSWWCCPD 77). Because of the unsatisfactory state of the evidence, however, the Acting Deputy President could not determine if the Arbitrator had awarded too much or too little compensation. He therefore revoked the Arbitrator’s determination and, to give the worker the opportunity to call further evidence, remitted the matter to another Arbitrator for determination afresh.
The Commission listed the matter for a second arbitration before a different Arbitrator, Mr McGruther, on 15 September 2009. Both parties were represented by the same counsel who appeared at the first arbitration. Mr Begovic tendered additional evidence of his earnings and the matter proceeded with submissions from counsel, but without cross-examination and without any wage information of probable earnings but for the injury.
In a reserved decision delivered on 9 October 2009, the Arbitrator held that Mr Begovic had not established that he suffered from a partial incapacity as a result of his injury. The Commission issued a Certificate of Determination on 9 October 2009 in the following terms:
“The Commission determines:
1. The Applicant’s claim for weekly benefits is dismissed.
2. There is no order as to costs….”
Without legal representation, Mr Begovic sought to challenge the Arbitrator’s determination in an appeal lodged by facsimile on 5 November 2009. After several preliminary directions, I listed the matter for oral hearing on 26 May 2010. Mr Long, solicitor, who did not appear for Mr Begovic at either of the arbitrations, appeared for Mr Begovic and Mr Batten, barrister, appeared for the respondent.
LEAVE TO APPEAL
Monetary threshold
Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’).
It is not disputed that the monetary threshold in section 352(2) is satisfied.
Time
The appeal was lodged by facsimile on 5 November 2009 and again by post on 9 November 2009, resulting in the appeal documents having two “Received” dates. As documents may be lodged with the Commission by facsimile transmission (Part 8.1(4) of the Workers Compensation Commission Rules 2006), the documents lodged on 5 November 2009 were 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
The Commission listed the matter for oral hearing on 19 February 2010. At a teleconference on 17 February 2010, Mr Begovic indicated that he wished to obtain legal representation but had been unable to do so. To allow Mr Begovic time to obtain that representation, I vacated the hearing date. Because of the unsatisfactory state of the evidence and, in particular, the lack of evidence of probable earnings but for the injury, the Commission issued Directions for the filing of further submissions and wage schedules.
Pursuant to that Direction, both parties have sought to rely on additional evidence on appeal. Mr Begovic sought to rely on the following documents:
(a) letter from QBE to employer dated 18 February 2010;
(b) letter from Slater and Gordon to QBE dated 16 March 2010;
(c) letter from QBE to employer dated 16 March 2010;
(d) letter from QBE to Slater and Gordon dated 23 March 2010;
(e) letter from QBE to employer dated 23 March 2010;
(f) letter from Slater and Gordon to QBE dated 26 March 2010;
(g) letter from Slater and Gordon to the Commission dated 31 March 2010;
(h) fax from employer to QBE dated 31 March 2010;
(i) fax from employer to QBE dated 1 April 2010;
(j) letter from Slater and Gordon to the Commission dated 13 April 2010;
(k) additional written submissions dated 13 April 2010;
(l) wages schedule dated 13 April 2010;
(m) extract from Transport Industry – Retail (State) Award “State Wage Case 2008”;
(n) fax from employer to QBE dated 14 May 2010, and
(o) medical certificate by Dr Croaker dated 17 May 2010.
At the oral hearing of the appeal, Mr Begovic’s solicitor withdrew his application to rely on Dr Croaker’s certificate of 17 May 2010.
The respondent also sought to rely on the documents listed at (a), (c), (e), (h), (i), (n) and (o) of [18] above, and the following additional documents:
(a) handwritten note from the employer dated 30 November 2001;
(b) the worker’s tax declaration dated 25 January 2002;
(c) wages schedule dated 9 February 2010;
(d) fax from employer to QBE dated 24 March 2010;
(e) further written submissions dated 27 April 2010, and
(f) further wages schedule dated 27 April 2010.
The Court of Appeal considered the introduction of fresh evidence or additional evidence on appeal in Haider v JP Morgan Holdings Aust Ltd t/as JP Morgan Operations Australia Ltd [2007] NSWCA 158; (2007) 4 DDCR 634 (‘Haider’), where Basten JA referred to Akins v National Australia Bank (1994) 34 NSWLR 155 (‘Akins’) and other authorities. In Akins, Clarke JA (Sheller JA and Powell JA agreeing) stated at 160 that three conditions need to be met before “fresh evidence” can be admitted:
“These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible.”
However, in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116, Heydon JA stated at [15]:
“Even if the three tests stated in the Akins case are applicable and are not satisfied, a question remains: is it just to admit the further evidence in this case?”
In considering an application to rely on fresh evidence or further evidence on appeal, the Commission must balance two competing requirements: the public interest that litigation should not continue indefinitely against the need to ensure that justice is done in all the circumstances of the case. In balancing these matters, the Commission must also keep in mind its statutory duty to act “according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms” (section 354(3) of the 1998 Act).
Having regard to the unsatisfactory history of this matter, in particular the fact that there have been two arbitrations and one previous appeal, and bearing in mind the above authorities and the Commission’s statutory obligation to determine cases according to their substantial merits, I believe it is in the interests of justice that all of the additional evidence sought to be tendered from both parties should be admitted on appeal, and that is the course I propose to adopt.
THE EVIDENCE
Lay evidence
Mr Begovic relied on three statements: the first dated 16 November 2007, the second dated 31 January 2008, and the third dated 26 June 2009. He also relied on his oral evidence at the first arbitration when he gave brief evidence about a claim for compensation he had made in relation to an injury to his right leg (which causes intermittent ulcerations) received whilst in the Navy. He took proceedings in respect of that injury in the Administrative Appeals Tribunal, but received no weekly compensation. In re-examination, Mr Begovic said his leg was improving.
Mr Begovic was born in 1967 and left school in 1984. He joined the Royal Australian Navy as a musician in 1985 and studied at the Navy Conservatorium. He obtained a Bachelor of Music from Melbourne University in 1986. After leaving the Navy in about 1989, he worked as a full-time musician, mainly around the Central Coast, but also touring. He also worked on a cruise ship for about nine months. He had periods when he worked outside the music industry, once for seven months as a purchasing officer for a mine and once for 18 months as an electrical wholesaler.
He moved to the Tamworth area in 1998 and currently lives at Moore Creek, about six kilometres from Tamworth. He toured extensively until he started work with Tamworth Building Supplies in January 2002. He continued to tour in 2002, but only on Thursday, Friday, Saturday and Sunday. He stated that he “would have earned approximately $50,000.00 truck driving” (Mr Begovic’s first statement, paragraph six). He added at paragraph seven:
“7. The other alternative was that after my wife had children, she proposed to stay at home and I would go away touring again and would have anticipated earning well in excess of $100,000.00 per annum.”
Mr Begovic described his fall, which occurred on 20 June 2002, and stated that he noticed immediate back pain that has continued to the present time. At the time of his first statement, he described the pain as “more constant” and as going down his right leg causing a “tingly feeling”. Having a shower or moving around relieved the pain. Bending, lifting, or driving aggravated it. He claimed that, because of his back injury, he was not able to tour or drive a truck.
Following his injury, he reduced his weekend work to one in two weekends and then one in three weekends, which he continued at the time of his first statement in November 2007. He was paid approximately $300.00 to $500.00 for each show, from which he deducted fuel, tax, accommodation and meals. He said that he found touring on the weekends difficult with his back pain and that he could not do more.
Mr Begovic set up a recording studio in 2005/2006 at a total cost of $320,000.00. In his November 2007 statement, he said the studio was operating at its “maximum”, but he was still only getting “one to two days per week” for which he got $100.00 per day.
In terms of treatment, Mr Begovic last saw Dr Diebold in mid-2005 and did not see him at or about the time that Dr Diebold certified him fit for work on 18 January 2006. He has been under the care of Dr Croaker since February 2006.
In his third statement, Mr Begovic said that he has continued to run his own recording studio and to perform as a musician. Artists use the studio for “somewhere between one and three weeks to do the recording” but it is often a “day here and a day there” and not necessarily a one to three week block. When an artist arrives, Mr Begovic sets up the recording equipment, makes sure that the instruments are tuned, gives advice to the musicians, and works the recording and mixing equipment. The artist leaves with a CD, which is sent to Sydney for mastering and pressing.
He said that the studio charged $65.00 per hour and, as the (sound) engineer, he charged $50.00 per hour. Though he charged $50.00 per hour, in “reality it would take [him] at least two hours to charge out that $50”, as he also had to set up the instruments, talk to the musician, and generally make sure he or she was happy and the process was working. As a result, the actual recording time for which he was paid was a “fraction of the time” it took him. If the work in the studio were spread over a year, Mr Begovic estimated that it would be “approximately one to two days per week”. To employ someone to replace him in the studio would cost “about $80 per day”, though it would be difficult to find someone as the studio was very technical and set up in a way that only Mr Begovic can work everything.
In respect of his performance work, Mr Begovic said that he worked under the stage name “Fat Man Don’t Dance” or, during country music performances, “Fat Man Don’t Line Dance”. He generally did two or three shows per week on Thursday, Friday or Saturday nights. He may perform solo, duo, or three piece, depending on demand, employing a drummer or bass player if required. He has found that he cannot drive for more than 45 minutes before it hurts his back. He does not generally do shows outside a two-hour radius as his back “will simply not handle the travel and performance for any longer”, though sometimes it is necessary. He is limited in setting up equipment. He says that he takes painkillers to allow him to work and perform. He has gained weight as a result of being inactive since his injury.
In support of this appeal, Mr Begovic filed additional submissions dated 24 December 2009 in which he claimed his financial figures were only good for 2006 and part of 2007 because since then he had “hardly worked due to the pain from [his] injury”. He also said that he underwent a “lap band” procedure on 18 October 2009 (paid for by QBE) to assist in weight loss to help control his back pain. It is agreed that QBE also paid Mr Begovic weekly compensation while he recovered from that surgery. He added that driving and sitting for longer than 10 to 15 minutes was very painful and uncomfortable. He said that he recorded two albums for two artists, but gave no indication as to when that was. His back pain had worsened since 2005, his work in the studio was limited to “a couple of hours max at any 1 time”, and he has had “minimal income” since 2007.
The evidence includes Mr Begovic’s tax returns for the financial years from 2000 to 2008 inclusive, except for 2001. Acting Deputy President Candy prepared a helpful schedule of Mr Begovic’s earnings, as revealed in his tax records. I have substantially reproduced that schedule below, though I have deleted any payments by QBE and added the figures for 2008. Figures in brackets represent alleged losses.
Year Ended
30 JuneEmployer
Gross
Expenses
Net
Total
2000 Self $98,263 $73,887 $24,376 $24,376 2001 - - - - - 2002 1) Tamworth Building Supplies
2) Self
$36,935
$38,709
Nil
$12,269
$36,935
$26,440
$63,375
2003 Self $37,509 $17,143 $20,366 $20,366
2004 Self $17,364 $19,032 $(1,668) $(1,668)
2005 Self $15,609 $19,575 $(2,934) or
$(3,966)$(2,934) 2006 1) Studio
2) Self$68,929
$23,644$32,831
$27,289$36,098
$(3,645)$32,453
2007 1) Studio
2) Self$38,933
$74,707$45,869
$44,652$(6,936)
$30,055$23,119
2008 1) Studio
2) Self
$14,927
$25,563Total expenses $76,462 $(35,972) $(35,972)
Medical evidence
Clinical records from the Baton Lane Practice (Dr Diebold’s practice) recorded Mr Begovic’s weight in April 1999 to be 124 kilograms. They also referred in November 1999 to Mr Begovic having cellulitis in his right leg and diabetes. They suggest that Dr Diebold last saw Mr Begovic in April 2005.
Mr Begovic received physiotherapy in January and February 2003 from Luke Wakely for a longitudinal ligament strain. On 14 January 2003, Mr Wakely reported that Mr Begovic was responding well to massage, exercises and electrotherapy.
Dr Diebold reported on 27 February 2003 that he first saw Mr Begovic on 17 December 2002. He took a history that Mr Begovic fell and twisted his back while carrying timber in July 2002. Mr Begovic complained of intermittent left lower back pain since that time, which he felt was increased by lying down or prolonged standing. He denied any previous back problem. On examination, flexion was to 60 degrees with good extension, but mild tenderness at the right L5/S1 area. He diagnosed a back strain and certified Mr Begovic fit for suitable duties with no heavy lifting or repetitive bending. He hoped that, with physiotherapy, Mr Begovic would improve, “which was the case as related by Mr Begovic Lee [the worker] when reviewed on the 25 February 2003”. He expected the period of incapacity to be several months.
On 12 March 2003, Dr Diebold reported that he saw Mr Begovic in June 1999 for cellulitis in his right leg. This problem was against a background of stasis dermatitis and poorly controlled diabetes.
An MRI scan on 29 October 2003 revealed the L5/S1 disc to be dehydrated with a small posterior central protrusion not impinging upon the nerve roots or thecal sac. In light of the MRI scan, Ms Young, physiotherapist, noted that Mr Begovic needed to lose weight and to have a very specific rehabilitation program with short and long-term goals.
In response to questions from CRS Australia on 7 November 2003, Dr Diebold agreed that the insurer should cover the cost of a weight reduction program for Mr Begovic.
On 16 December 2003, Dr Diebold stated that Mr Begovic’s injury was consistent with a back strain and associated lumbosacral disc injury. He placed a 10 kilogram lifting limit on Mr Begovic but considered him to be otherwise fit for work. He thought the long-term prognosis was good for a return to unrestricted work, though he may be restricted from heavy physical work by virtue of his body habitus and poor fitness.
Dr Stephen, orthopaedic specialist, examined Mr Begovic at the request of QBE on 16 December 2003. He recorded that Mr Begovic was working in a band as a guitarist/singer. He had done that work part time over the weekends over the last few months, but was going back full time in January. Mr Begovic had always been a musician, but had decided to take up truck-driving because his wife had become pregnant and he could not tour.
Mr Begovic told Dr Stephen that his work with Tamworth Building Supplies required him to deliver hardware supplies for home construction and involved lifting 80 kilogram bags of gyprock and cement. He injured his back when he twisted and fell while carrying timber in June 2002. He continued working for the next six months though he continued to have intermittent low back pain. Though he was doing the same job, a new boss stood him down in December 2002, after which he continued as a part-time musician. His pain persisted and even worsened. His main complaint was of low back pain. His pain was worse with prolonged sitting, lifting and bending.
Dr Stephen thought the MRI showed dehydration of the lumbosacral disc and a small tear of the posterior annulus, but no evidence of nerve root compression. He thought that, consistent with the history given, Mr Begovic would continue to have mechanical low lumbar backache, varying in intensity, into the indefinite future. Mr Begovic would never return to unrestricted duties.
Dr Hopcroft, general surgeon, examined Mr Begovic for medicolegal purposes on 19 March 2004. He took a history of the work accident, recording that Mr Begovic developed low back pain immediately and sciatic symptoms in his right leg over the next 24 to 48 hours. On examination, Mr Begovic had a good range of movement and straight leg raising of 90 degrees. He also had a large area of pre-ulcerous varicose pigmentation over the right shin.
Dr Hopcroft concluded that Mr Begovic had suffered damage to the L5/S1 disc in the fall at work on 20 June 2002 and that damage was the cause of his pain and sciatic symptoms. He felt that Mr Begovic should avoid repetitive bending and lifting activities, as further deterioration in the pathology of the L5/S1 disc was likely, with increasing symptoms.
Dr Kafataris, injury management consultant, provided QBE with a supplementary report on 1 August 2005, he having examined and, presumably, reported on Mr Begovic on an earlier occasion. It is most unsatisfactory that QBE has selectively tendered the supplementary report and not the original report. Dr Kafataris reviewed the MRI report, though not the films, and stated that it was most likely the L5/S1 dehydration was simply degeneration and did not represent an acute injury.
Dr Kafataris contacted the nominated treating doctor (Dr Diebold) and noted that he had not seen Mr Begovic for some time. He relayed to Dr Diebold the results of his assessment and that Mr Begovic was working in the music industry on a regular basis, which involved a degree of manual handling. He told Dr Diebold that there was no definable pathology that would preclude Mr Begovic from returning to pre-injury duties, at least on a trial basis.
In Dr Kafataris’s opinion, Mr Begovic presented with what appeared to be relatively minor lower back pain. He did not accept that Mr Begovic had sustained a serious injury and, from a functional point of view, he had made a full recovery. Recurring backache was common after mechanical spinal injury. Dr Kafataris noted that the functional capacity assessment suggested that Mr Begovic was lifting up to 30 kilograms at home and could lift 27.5 kilograms from floor to waist. He concluded that Mr Begovic was fit to return to his pre-injury duties as a truck driver. Lifting weights of more than 30 kilograms was something that even able-bodied workers should avoid.
Dr Robert Smith, consultant surgeon, examined and reported on Mr Begovic at the request of QBE on 21 October 2005. Mr Begovic continued to live at Moore Creek. Dr Smith took a history of the work accident having occurred in April [sic] 2002 and that Mr Begovic continued his normal duties until Tamworth Building Supplies put him off due to his injuries. He was told that they had no work for him, but he had been working normally until Christmas (2002) though complaining of a sore back, and was told not to come in.
Mr Begovic told Dr Smith that he had his own music business in Tamworth. Initially it was only part time but, at the time of the examination, he carried out full duties working 20 to 30 hours per week with contractors in his music business known as “Fat Line Productions”.
On examination, Dr Smith observed Mr Begovic’s hands to be dirty and “quite calloused”, showing “evidence of doing hard work”. He recorded that there was a “distinct tendency to inconsistency with straight leg raising”. There was no tenderness to moderate pressure over the neck, shoulders, thoracic and lumbar regions. There was no leg wasting. Dr Smith could find nothing “genuinely wrong with” Mr Begovic and he did not consider his alleged condition to be “in the least bit consistent with the history given”. He thought Mr Begovic was “obviously fit for employment according to his inclination” and that there was no objective evidence to justify any work restriction.
In a certificate dated 18 January 2006, Dr Diebold certified Mr Begovic fit for his pre-injury duties from that date.
Dr Hopcroft reviewed Mr Begovic on 11 September 2007. He described Mr Begovic as a classical musician who played the guitar and sang, but was also leaning the piano, having previously played the trumpet in the Navy. Dr Hopcroft understood that he regularly played at events around Tamworth. Mr Begovic complained of ongoing low back pain and right sciatica. His sleep was disturbed. His pain was worse while driving. Driving was an essential part of his “employment programme” as he used a transit van to transport his equipment to various local venues and he was limited to driving up to three hours, as he found that his back and leg symptoms got worse after that distance. Mr Begovic had been running a recording studio since 2005.
Mr Begovic weighed 138 kilograms. He had discussed with Dr Croaker having “lap band surgery”, something Dr Hopcroft thought would be an excellent option. Without reducing his weight to a medically acceptable level, Dr Hopcroft thought Mr Begovic would continue to “see aggravated back pain and aggravation also” to the ulceration of his right lower leg and to his Type 2 Diabetes. Dr Hopcroft recorded that the consultation with Dr Smith lasted “exactly 36 seconds”.
On examination, Dr Hopcroft noted quite marked localised back pain and a marked restriction in movement in all directions including flexion, extension, right and left lateral bending and right to left rotation. He concluded that Mr Begovic continued to suffer from the ongoing effects of L5/S1 disc narrowing and nerve root irritation and advancing spondylosis at the facet joints at that level. The pain restricted his capacity to work, especially to drive any significant distances.
Dr Croaker reported on 1 November 2007 that Mr Begovic’s back injury had resulted in an inability to exercise, contributing to excessive weight gain, which further aggravated his sciatica. Dr Croaker believed that laparoscopic banding of Mr Begovic’s stomach should be undertaken to remove pressure from the L5/S1 nerve root. Mr Begovic weighed 135 kilograms. He was unable to work in his previous employment or work full time. He was fit for light duties for two to three hours per day.
Rehabilitation reports
QBE engaged Ada Maughan & Associates (‘Ada Maughan’), rehabilitation providers, in early 2003. A report from Sue Ash, rehabilitation consultant with that organisation, on 2 April 2003 recorded that Mr Begovic’s work with Tamworth Building Supplies required him to drive a truck, load and unload building supplies, and, occasionally, deal with customers and sales. The respondent terminated his employment on 13 November 2002 and he had commenced unfair dismissal proceedings.
Meredith Wales, rehabilitation consultant/counsellor with Ada Maughan, conducted a vocational assessment on 26 March 2003 and reported on 18 April 2003. She recorded that Mr Begovic’s pre-injury wage was $800.00 to $900.00. She noted that the functional capacity assessment identified Mr Begovic to be fit for medium work and that he could lift up to 25 kilograms. His only restrictions of concern were his inability to sit for longer than one hour, he was to avoid prolonged standing, and he had an inability to work in a prolonged forward-bending position.
Mr Begovic was keen to participate in any form of retraining that would enhance his employment opportunities. His interests included computers and engineering in music. He demonstrated a keen attitude to job seeking with a different employer and had submitted various job applications for truck driving and teaching music at TAFE. Mr Begovic had the following transferable skills:
(a) extensive technical knowledge of musical instruments and sound equipment;
(b) experience in setting up musical performances;
(c) ability to perform and sing in public;
(d) ability to play instruments: trumpet, bass guitar, drums and keyboards;
(e) experience in truck driving and delivery of products;
(f) knowledge of the building industry and supplies;
(g) customer service skills;
(h) ability to document and report stock intake/outputs;
(i) knowledge of stores and ordering stock;
(j) experience in working as a musician in the Royal Australian Navy;
(k) ability to drive a forklift, and
(l) he was licensed to drive a car and truck.
On testing, Mr Begovic reported an above-average level of confidence in performing tasks and everyday activities with his stated pain.
Ms Wales set out the following suitable work options, pay rates and availability in the local labour market:
(a) TAFE music teacher – $50.46 per hour – position recently advertised at Armidale;
(b) singer/entertainer – variable wages, average $701.90 per week – work available especially if registered with agencies;
(c) sound mixer/technician – no wages provided – not likely to be advertised;
(d) delivery driver – award $633.00 – regularly advertised;
(e) storeman – award $470.00 – frequently advertised in Tamworth;
(f) forklift operator – award $470.00 – frequently advertised;
(g) plant operator – award $534.00 per week – further retraining needed – numerous jobs advertised in north and north west NSW, and
(h) sales and promotions – $513.70 or $765.00 – occasionally positions became available.
Mr Begovic reported an increase in his weight and decrease in his level of physical activity.
Debra Dunstan, physiotherapist, conducted a functional capacity assessment on 14 April 2003 and reported on 22 April 2003. She recorded that the respondent employed Mr Begovic on a casual basis from 16 January 2002 to 13 November 2002. His duties required him to lift awkward and heavy items, sometimes weighing between 50 and 60 kilograms. He was told that his employment was terminated because of a downturn in business, but other casual truck drivers were employed after he left the company and he therefore pursued a claim for wrongful dismissal. Mr Begovic found that his back pain caused him to cease work in his other employment as an entertainer, as he found that he could not stand for prolonged periods. He denied ever having had back pain prior to his injury. Mr Begovic had gained six kilograms since ceasing work and weighed 130 kilograms.
Ms Dunstan stated that Mr Begovic’s performance was consistent with the objective physical examination signs. He displayed no overt pain behaviours and did not self-limit on any tasks due to the onset of symptoms, but did report increases in pain (as instructed by the therapist). Ms Dunstan assessed Mr Begovic to be fit for tasks in the medium work range. His main limitations were with postures or positional changes, that is, sitting, standing and bending. She felt that his limitations were a temporary disability and she anticipated recovery.
Ms Ash prepared a return to work management plan on 5 May 2003 in which she noted that “overall” Mr Begovic’s symptoms were improving and his pain and discomfort was much less.
CRS Australia took over the worker’s rehabilitation in June 2003. It was noted that Mr Begovic had applied for a truck-driving position. He did not feel that his pain had eased since February 2003. It was noted in December 2003 that Mr Begovic was in a band and planned to “recommence with his music in January 2004”. His lack of motivation to find work in other industries was also noted and considered to be a reflection of his interest in the music industry and his band.
In her service completion report dated 2 February 2004, Catherine Nancarrow, rehabilitation consultant with CRS Australia, confirmed that Mr Begovic had advised that he would continue his music career. He played his first show on 31 December 2003 and had been “playing every week since then earning substantial income”. CRS monitored his progress for four weeks and he reported that he was coping well with the work. Though he was sore, the pain levels were “manageable”.
THE FIRST ARBITRATOR’S REASONS
The Arbitrator preferred the evidence of Drs Hopcroft and Croaker, and found that Mr Begovic was partially incapacitated from May 2006. He determined Mr Begovic’s probable earnings but for his injury to be $769.66 ($20.25 per hour), the amount the parties agreed (based on payments made by QBE in 2003) was the award rate. In assessing Mr Begovic’s ability to earn, he excluded his earnings from the studio and as a musician, but found his ability to earn to be $303.75 on the basis that, accepting Dr Croaker’s evidence, he could only work for three hours per day five days per week at $20.25 per hour. The difference between probable earnings but for injury ($769.66) and Mr Begovic’s ability to earn ($303.75) was therefore $465.91 per week. He then used his discretion to reduce that amount to $116.48 per week because of Mr Begovic’s obesity, leg ulcers, diabetes, lack of evidence that Mr Begovic had sought suitable employment but rather had chosen to establish a studio, and that, based on the 2006 tax records, Mr Begovic would earn significant income from the studio.
THE FIRST APPEAL
Acting Deputy President Candy upheld the respondent’s argument that the Arbitrator erred in assessing Mr Begovic’s entitlement to compensation under section 40 by reference to his ability to earn as a truck driver rather than by reference to his actual earnings as a musician and a recording studio operator. Due to the unsatisfactory state of the evidence, he was unable to determine if the award made was too high or too low and he remitted the matter to a different Arbitrator for re-determination.
THE SECOND ARBITRATOR’S REASONS
Arbitrator McGruther concluded (Reasons at [45]) that he was not satisfied that Mr Begovic had been incapacitated since 20 June 2002. If he was wrong on that issue, he added that he found Mr Begovic’s evidence with respect to the claim for weekly compensation to be “inconsistent” and “unconvincing” (Reasons at [50]). He observed that Mr Begovic had not produced any documents, such as receipts or cheque butts, in support of his financial position and that the lack of evidence had been the subject of comment by Acting Deputy President Candy in the first appeal.
ISSUES IN DISPUTE
In the appeal filed by Mr Begovic on 5 November 2009, it was alleged that the Arbitrator erred in that he:
(a) failed to consider the nature and extent of Mr Begovic’s injury;
(b) failed to give sufficient and proper reasons;
(c) failed to properly analyse the medical evidence;
(d) wrongly found that the evidence as to earnings was unreliable and insufficient for the purpose of a calculation under section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’), and
(e) made an unreasoned choice in failing to accept Mr Begovic’s medical evidence.
In submissions filed by Mr Begovic’s new solicitors on 13 April 2010, it was alleged that the Arbitrator erred in that he:
(a) found Mr Begovic was no longer incapacitated;
(b) failed to consider or take into account relevant medical evidence, and
(c) found that Mr Begovic had failed to provide evidence of his pre- and post-injury earning capacity.
Essentially, the appeal comes down to whether Mr Begovic remains incapacitated as a result of his accepted injury and, if so, what, if any, entitlement he has to weekly compensation.
SUBMISSIONS, DISCUSSION AND FINDINGS
Incapacity
The Arbitrator’s conclusion on incapacity is contrary to the weight of the objective evidence and cannot stand. The employer has never disputed that Mr Begovic injured his back on 20 June 2002. QBE accepted liability and made voluntary payments of compensation until 1 May 2006. In 2004, it paid $7,500 in respect of a six per cent whole person impairment.
Mr Begovic’s evidence is that he has continued to experience pain in his low back and right leg. His complaints are consistent with the objective findings in the MRI scan in 2003 of a small L5/S1 disc protrusion. These findings are consistent with Dr Hopcroft’s conclusion that Mr Begovic suffered damage to his L5/S1 disc at work on 20 June 2002. Dr Stephen, a specialist qualified by QBE, supports that conclusion.
The MRI scan has demonstrated that the pathology is more than a strain. In the absence of any evidence of prior back symptoms, the only reasonable conclusion is that the disc protrusion was caused by the injury at work in June 2002. I therefore do not accept Dr Kafataris’s conclusion that the dehydration at L5/S1 was simply evidence of degeneration and did not represent an acute injury.
I note Dr Smith’s evidence that Mr Begovic’s hands were quite calloused and showed evidence of hard work. However, this only goes to the extent of any incapacity rather than whether an incapacity exists. Though he referred to the MRI scan in his report, Dr Smith appears to have completely ignored it in formulating his conclusions. Consistent with Mr Begovic’s history to Dr Hopcroft that the examination took only 36 seconds (see [57] above), Dr Smith’s record of his findings on examination was particularly brief and is of limited assistance. I have not found his report to be persuasive.
Dr Diebold issued his certificate of 18 January 2006 after he had not seen Mr Begovic for some months and after a telephone conversation with Dr Kafataris in which Dr Kafataris wrongly said that there was no definable pathology. Dr Kafataris’s opinion was contrary to the weight of the medical evidence that Mr Begovic has a small L5/S1 disc protrusion. In the absence of a further examination, Dr Diebold appears to have based his certification on the assertions by Dr Kafataris. In these circumstances, I do not accept Dr Diebold’s evidence.
The Arbitrator placed undue weight on the fact that Mr Begovic continued to perform his usual duties until the respondent retrenched him in December 2002. That fact may have been relevant to the extent of any incapacity between June and December 2002, but was not determinative of whether the symptoms continued or whether incapacity existed in the labour market reasonably accessible to Mr Begovic.
Given the objective findings on MRI scan, the evidence from Dr Stephen and Dr Hopcroft, and Mr Begovic’s evidence of continuing symptoms, I am comfortably satisfied that the effect of the injury has continued to date and that he has been and remains unfit for unrestricted duties. The extent of his incapacity is another matter.
Given that Mr Begovic’s pre-injury employment with the respondent required him to drive a truck and to lift awkward and heavy items weighing between 50 and 60 kilograms (see [66] above), I find that he is unfit for those duties.
However, whilst I accept that the effect of Mr Begovic’s back injury is continuing, I also note that the disc injury does not impinge on the nerve roots or the thecal sac. No doctor has ever suggested anything other than conservative treatment. As Dr Croaker gave no explanation for his conclusion that Mr Begovic was only fit for light duties for two to three hours per day and set out no details of his findings on examination, I do not accept that he is restricted to that extent.
Mr Begovic has asserted that his back pain has worsened since 2005 (see [35] above). However, in the absence of expert evidence as to his recent condition and as to the cause of the alleged worsening of his pain, I do not accept that he is as incapacitated as he has claimed, or that the worsening is related to the 2002 injury. Though he claimed in his submissions on 24 December 2009 that he had only recorded two albums, there is no evidence of the period over which those albums were recorded. Nor is there any evidence of how long it took to record them or how much Mr Begovic was paid. It is not known why the demand for the studio has decreased, if that is in fact the case. If it has decreased, I do not accept that the decrease has resulted from Mr Begovic’s injury.
The rehabilitation experts placed no restriction on the number of hours Mr Begovic could work and neither did any of the medical experts. I see no reason to do so. His demonstrated ability to lift 25 kilograms (see [61] above) suggests that his restriction was only modest at that time. There is no persuasive medical evidence to suggest that it is any different now. I accept Ms Dunstan’s evidence that Mr Begovic is fit for full-time employment in the medium work range and that his main limitations are with postures or positional changes. That is consistent with Dr Stephen’s conclusion that Mr Begovic is not fit for heavier types of work and with Dr Hopcroft’s evidence that his symptoms restrict his capacity to drive any “significant distances”. Having regard to this evidence, I find that Mr Begovic is fit for full-time employment as a storeman, forklift operator, or some similar work. I am also satisfied that he is fit for work as a sound engineer, but accept that that work is not as readily available as other forms of suitable work. Based on the medical and rehabilitation evidence, I do not accept that Mr Begovic’s ability to work as a sound engineer is limited to a “couple of hours max” at any one time, as he has claimed.
Weekly compensation
Notwithstanding the additional documents filed on appeal, the evidence remains in a most unsatisfactory state. However, given that the matter has already had two arbitrations and one presidential appeal, it is appropriate that it be determined on the evidence presented despite the shortcomings in that evidence. Neither party submitted to the contrary at the oral hearing of the appeal.
To determine Mr Begovic’s entitlement under section 40 of the 1987 Act it is necessary to apply the five steps in Mitchell v Central West Area Health Service (1997) 14 NSWCCR 526 (‘Mitchell’).
Step One
Step one requires the determination of Mr Begovic’s probable earnings but for his injury (comparable earnings) (section 40(2)(a)).
Counsel for Mr Begovic submitted at both arbitrations that the Arbitrator would disregard the income from Mr Begovic’s work as a musician (first arbitration at T12.33 and second arbitration at T8.30). This was because that work was “not income earned as a worker” (first arbitration at T12.38) and because Mr Begovic was “self-employed as a sole trader type musician” (second arbitration T8.31). At the hearing of the appeal before me, Mr Long submitted that, when determining probable earnings but for the injury, I would not look at Mr Begovic’s earnings as a musician, but would restrict myself to his earnings as a truck driver. This was on the basis that Mr Begovic worked as a musician before his injury and continued to do so after the injury.
Whilst I have approached this case on the basis that Mr Long submitted, I note that that approach will not be correct in all cases. C P Mills stated the position as follows in Workers Compensation (New South Wales), second edition, Butterworths, 1979:
“Earnings from several sources, whether as a worker or otherwise, are to be taken into account on both sides of the calculation, ie for post-injury earnings, as well as for pre-injury earnings: Palese v Ciba-Geigy Aust Ltd [1973] 1 NSWLR 146).” (emphasis added)
This statement is likely to mislead. Palese v Ciba-Geigy Aust Ltd [1973] 1 NSWLR 146 is authority that, if a worker is employed under more than one contract of employment at the time of his or her injury, then income from all of those contracts is to be taken into account in calculating probable earnings but for the injury. That does not mean that the Commission will take into account income from all pre-injury sources. Loss of investment income or loss of profits would not be considered because they would not be money earned “as a worker”. However, the value of a worker’s physical or mental efforts as a worker in a business will be relevant (Hill v Bryant [1974] 2 NSWLR 423) and there are two main ways that can be assessed (J & H Timbers Pty Ltd v Nelson [1972] HCA 12; 126 CLR 625; Cage Developments v Schubert (1991) 2 NSWLR 227 at 230). The first method is to assess the net remuneration the worker has received for his or her labour by examining the business accounts and allowing for overheads. The second is to calculate the worth to the business of his or her labour.
Mr Begovic’s second source of income, before and after his injury, was as a self-employed musician. He was a sole trader conducting his own business. Were I to consider Mr Begovic’s post-injury earnings as a musician, as the respondent has urged, it would also be appropriate to consider his pre-injury earnings in that capacity. Those earnings either are in for all purposes or out for all purposes. The respondent cannot have it included for the assessment of ability to earn, but excluded in assessing probable earnings. However, since Mr Begovic’s legal advisers have consistently elected not to rely on his earnings as a musician in determining his entitlement to weekly compensation, I will not consider those earnings in assessing either step one or step two under Mitchell.
In any event, I note that the tax records suggest that Mr Begovic’s income and expenses as a musician have fluctuated significantly over the years; sometimes higher and sometimes lower than his pre-injury earnings as a musician. His alleged net earnings as a musician in the year before the work injury were $26,440.00 (after allowing for expenses that were alleged to have been 31.69 per cent of his gross income). In 2004, his tax return suggested that his expenses exceeded his income by $1,668.00. However, in 2007, his net income as a musician was alleged to have been $30,055.00 (after allowing for expenses that were said to have been 59 per cent of his gross income).
Mr Begovic’s earnings as a musician in 2007 were consistent with the history recorded by Catherine Nancarrow that he earned a “substantial income” from his music (see [70] above). As with his earnings and expenses from his sound recording business, Mr Begovic has not produced any documentary evidence to substantiate his claims. Notwithstanding his evidence of difficulty driving and moving equipment, I am not satisfied that his injury has materially influenced his ability to earn as a musician. In all the circumstances, the decision to abandon reliance on Mr Begovic’s income as a musician was appropriate. It has not adversely affected the final outcome for either party.
At the oral hearing of the appeal, Mr Long submitted that I would find comparable earnings to be $1,616.00 per week. He arrived at that figure by looking at Mr Begovic’s earnings with the respondent up to 30 June 2002 ($36,935.00) and dividing by 23 weeks, the period of time Mr Begovic had been working for the respondent. By my calculations, that comes to $1,606.00 (rounded to the nearest whole dollar). The respondent has not disputed that Mr Begovic earned $36,935.00 as a driver in the six months up to 30 June 2002. However, there is no evidence of his earnings between July and December 2002.
Mr Batten relied on the wages for comparable employees working for the respondent, and on correspondence from Mr Crosland, a representative from the respondent. Mr Crosland wrote to QBE’s solicitor on 24 March 2010 and stated that he had searched the company’s payroll material from 2001 and 2002, but had only located two potentially relevant documents, the worker’s tax declaration and a handwritten note. The handwritten note confirmed that Mr Begovic was hired on 16 January 2002 as a casual “grade 1” under the Transport Industry – Mixed Enterprise Interim (State) Award (‘the Mixed Enterprise Award’) at an hourly rate of $15.11.
Mr Crosland added that, from what he could gather, the respondent hired employees on a casual basis and then, if they worked out, they were offered a full-time position. Mr Crosland wrote again on 31 March 2010 stating that, in the time he had been with the company, it had not employed people under the Mixed Enterprise Award but employed them under the Transport Industry - Retail (State) Award (‘the Retail Award’). He wrote again on 1 April 2010 attaching what he described as “end of year Payroll Advices” for two grade 2 truck drivers, Adam Arnold and Adam Thompson. I have assumed that these drivers performed the same or comparable work to the work Mr Begovic performed. Mr Begovic has called no evidence to the contrary. Mr Thompson left the company in 2007, but it appears that Mr Arnold remained employed at least until June 2009.
In response to a letter from Mr Begovic’s solicitor, Mr Crosland advised on 14 May 2010 that the award rate for a grade 3 truck driver was $621.68 per week ($16.36 per hour) or $20.38 per hour ($774.44 per week for a 38 hour week) for a casual driver.
Assuming that the payroll advices cover a full year (which is doubtful), they indicate the following average weekly payments (including overtime and over award payments) for the following financial years:
2006 $664.00 (Mr Thompson)
2007 Unknown (base rate $580.00)
2008 $816.74 (Mr Arnold)
2009 $625.66 (Mr Arnold)
There are a number of unsatisfactory features about these figures. The documents provided are single pay slips for one-week periods ending 30 June in the financial year concerned. It is not clear that the year-to-date figures cover a full year, as there is no evidence of when Mr Arnold and Mr Thompson started with the respondent. The pay slip for Mr Thompson dated 30 June 2006 gives a year-to-date figure of $28,770.40 plus overtime of $5,195.54. However, the pay for the one-week pay period covered by the pay slip was $1,036.87. This suggests, but it is by no means certain, that the year-to-date figure covered a period of less than 52 weeks. Surprisingly, the respondent has not advised when Mr Thompson started with it.
Mr Arnold’s pay slip for the week up to 30 June 2007 was for $733.33, but the year to date figure is blank. I infer that Mr Arnold only started with the respondent in June 2007. The evidence for that year is therefore incomplete.
Mr Arnold’s pay slip for the week up to 30 June 2008 was for $1,007.73. In that week, he worked 30.4 hours at his base rate ($15.54 per hour), 7.6 hours at time and a half, 9.8 hours at double time, and 3.8 hours at “over award”. His total earnings to 30 June 2007 came to $42,470.58, an average of $816.74 per week. However, his earnings dropped significantly in 2009. The explanation for that may be that, according to the pay slip, he had a workers compensation claim in that year for which he was paid $11,501.07 and would presumably have been unable to work overtime for a period. The respondent has offered no explanation for the significant drop in Mr Arnold’s income in 2009. In particular, it has not suggested that Mr Arnold’s income dropped because of a downturn in work.
The parties have also relied on evidence of the award rate for drivers, but even that evidence is sharply conflicting, with no agreement or evidence on which award applies. In addition, different rates apply to causal drivers compared to permanent drivers. I accept Mr Crosland’s evidence that drivers usually started as casuals and, “if they worked out”, the respondent offered them full-time positions. Given that Mr Begovic had been with the respondent for about 12 months, I infer that he would have been made permanent if that had not already happened by the time he was retrenched.
I do not accept that Mr Begovic’s probable earnings but for his injury should be assessed at $1,606.00. In assessing probable earnings under section 40(2)(a), I am required to determine the “weekly amount which the worker would probably have been earning as a worker but for injury and had the worker continued to be employed in the same or some comparable employment”. The calculation is a hypothetical one that assumes that the worker’s pre-injury employment continued (Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50; Singh v Taj (Sydney) Pty Ltd [2006] NSWCA 330; (2006) 4 DDCR 557).
The evidence suggests that, had he remained uninjured and continued to work in the same or some comparable employment, Mr Begovic’s weekly wage between 2006 and 2009 would have fluctuated between $580.00 and $816.74. However, I am not satisfied that the figure of $580.00 is an accurate reflection of probable earnings in 2007 (because it was obviously a one-off figure), nor that $625.66 is an accurate reflection of probable earnings in 2009 (because Mr Arnold had time off in that year because of a work injury). In all the circumstances, I find Mr Begovic’s probable earnings but for his injury to be:
(a) $664.00 up to 30 June 2006;
(b) $684.00 from 1 July 2006 to 30 June 2007;
(c) $817.00 from 1 July 2007 to 30 June 2008;
(d) $725.00 from 1 July 2008 to 30 June 2009, and
(e) $747.00 from 1 July 2009 date and continuing.
I have arrived at the 2006–2007 figure by adjusting the June 2006 figure by three per cent to allow for general wage movements. I have arrived at the figure for 2008–2009 by adjusting the June 2007 figure ($684.00) by six per cent to allow for general wage movements over two years. The post-July 2009 figure is based on the June 2009 figure adjusted by three per cent. I have rounded all figures to the nearest whole dollar.
Step Two
Step two requires a determination of what Mr Begovic is earning or would be able to earn in some suitable employment (section 40(2)(b)). If a worker is working, then, prima facie, his earnings are taken to be the measure of his ability to earn. In Aitkin v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20 (‘Aitkin’)) Jordan CJ said (at 23):
“If, however, it is proved that his actual earnings are not a proper test, because there is some reason unconnected with his earning power which makes them lower than they should be, the other alternative, what he is ‘able to earn’, must be adopted. This is so where it is shown that he 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: Jones v Amalgamated Collieries; but, if the compulsory outside influence, instead of reducing, increases his actual earnings beyond what his injury would make him otherwise capable of earning, his actual earnings must be taken as the basis: Heaney v B A Collieries. If, however, he is not earning anything, or, for some good reason, what he is earning cannot be treated as a proper basis, regard must be had to the alternative basis provided by the section – what he is ‘able to earn’.”
In J C Ludowici & Son Ltd v Cutri (1992) 26 NSWLR 580 (‘Ludowici’) Kirby P (as his Honour then was) (Handley and Sheller JJA agreeing) said (at 593D):
“2. Parliament included the reference to what the worker ‘is earning’ for a purpose. The phrase cannot be ignored. The earnings are not mere evidence of what the worker is ‘able to earn’. In fact, if the worker is ‘earning’ that will normally be the end of the inquiry. It is only if, for some reason, that amount, where it exists, or existed, is suggested to be an under-estimate or a false measure of the worker’s ability to earn that the alternative inquiry will be embarked upon.”
The Court of Appeal considered and applied Aitkin in Pira Pty Ltd t/as Langdon & Bartley v Tucker [1996] NSWSC 569; (1996) 14 NSWCCR 26 where Beazley JA said (at 31 and 32):
“In Aitkin, Jordan CJ held that the test to be applied in determining the rate of compensation to be awarded under section 11 for partial incapacity was, prima facie, the person’s actual earnings unless it is proved that the worker’s actual earnings are not a proper test, because there is some reason unconnected with the worker’s earning power which makes them lower than they should be.
Jordan CJ stated at 22 that this will occur where a worker is ‘deliberately taking lower paid work than he could reasonably be expected to get, or is idling...or if his actual earnings are compulsorily reduced by something unconnected with his injury or general earning power’. These are instances, or examples, only and do not represent an exhaustive list of the circumstances in which it will be inappropriate to apply the ‘prima facie’ test.
It is clear, not only from the statement of Jordan CJ but also from the manner in which this Court applied the test in Ludowici, that as a first step, one has to approach the matter on a prima facie basis and only move from that basis if the evidence establishes that the actual earnings are not, in the circumstances of the case, a proper test.”
Mr Batten has submitted that the figures in Mr Begovic’s tax returns (summarised at [36] above) do not provide a proper measure of his earnings because:
(a) the tax returns on which they are based were prepared in 2007, several years after the periods they cover;
(b) the tax returns were based on assertions by Mr Begovic and were unsupported by any invoices, accounts or other documentary records, and
(c) the figures were inconsistent with Mr Begovic’s evidence in his statements.
Mr Long responded that the Commissioner for Taxation accepted the figures in the tax returns and the Commission should therefore accept them. I do not find that submission persuasive. The worker carries the onus of establishing his current earnings. In circumstances where he has complete control over his financial records, it was for him to produce proper evidence of his work and earnings for the period of the claim (from May 2006 to date). Acting Deputy President Candy not only made that clear in the first appeal, but set out in detail (at [67]) the nature of the evidence required. In purported compliance with that advice, Mr Begovic tendered a further statement at the second arbitration making general statements about the operation of the studio, the cost of hiring it, and his fee as the sound engineer. He has tendered no records, such as invoices or accounts or diaries, to support his assertions.
At the second arbitration, Mr Batten drew attention to some obvious inconsistencies in the tax records (T38.44–52). For example, Mr Begovic claimed that the studio grossed $14,927.00 in the 2008 financial year and allegedly paid a contractor $24,500.00 in the same period. Mr Begovic has offered no explanation for this discrepancy. Counsel for Mr Begovic conceded at the second arbitration that the figures in the 2008 tax return “would not give an accurate guide as to the worker’s ability to earn” (second arbitration T25.3). I agree. Mr Begovic has made virtually no effort to present the necessary evidence, but merely relied on generalised statements about the operation of his recording studio.
He said the studio charged $65.00 per hour. In addition, he charged $50.00 per hour for his work as the sound engineer, though he worked two hours to “charge out that $50” as, in addition, he had to talk to the musicians and generally make sure they were happy and the process was working. He tendered no invoices or diary entries as to how often the studio was used or how many hours he worked in it. He gave no explanation as to why that evidence was not available. He merely asserted that, if the work in the studio were spread over a full year, it would be “approximately one to two days per week”. This estimate is inconsistent with the income for Mr Begovic disclosed in the tax return for 2008 ($14,927.00). If Mr Begovic only worked in the studio for an average of eight hours per week, at $50.00 per hour he would have received $20,800.00 for a full year without any allowance for the cost of hiring the studio. Whilst there are good reasons for excluding from Mr Begovic’s income the rental income from the studio, as it is a return on capital and not a measure of the value of Mr Begovic’s labour, Mr Begovic has made no attempt to explain the obvious and significant inconsistency in these figures.
In these circumstances, I do not accept that the figures disclosed in the tax returns are a “proper test” of Mr Begovic’s earnings or ability to earn. First, except in the period from May to June 2006, when his income as a sound engineer and from the studio exceeded his ability to earn, the earnings in his tax returns were clearly “an under-estimate or a false measure of the worker’s ability to earn” (per Kirby P in Ludowici). Second, I do not accept that the earnings from May to June 2006 were a proper measure of Mr Begovic’s ability to earn because the income in that period included what was effectively rental income from the studio. That is, it was a return on his $320,000.00 investment to establish the studio, not solely a measure of the value of Mr Begovic’s labour. I therefore intend to determine step two in Mitchell by looking at his ability to earn in the labour market reasonably accessible to him, having regard to the matters in section 43A of the 1987 Act, and by reference to the value of his labour to his sound recording business. Whichever is the higher will be the proper measure of Mr Begovic’s ability to earn under section 40(2)(b) (Hill v Bryant at 428).
Mr Begovic is an experienced musician and has skills as a sound technician/engineer. He has worked as a purchasing officer and has extensive transferable skills that include knowledge of the building industry, customer service experience, the ability to document and report stock intake/outputs, knowledge of stores and ordering stock, and the ability to drive a forklift (see [62] above).
Ms Wales listed several suitable work options for Mr Begovic in 2003 (see [64] above). They included work as a TAFE music teacher, a position recently advertised in Armidale at $50.46 per hour. As it was not identified how many hours per week were available in that position, I have not been able to determine the likely weekly remuneration offered.
Looking at the other jobs listed as suitable, the weekly wages ranged from $470.00 as a storeman or forklift operator, which were “frequently advertised” in Tamworth, to $765.00 in sales and promotion, which were only “occasionally” available. Due to the lack of availability of jobs in sales and promotion, and allowing that wages in that area had a range from $514.00 to $765.00 in any event, I intend to work off the lower figure of $470.00 in determining ability to earn. I have adjusted that figure to allow for general movements in wage rates since 2003. Making that adjustment at three per cent per annum from 2003, the appropriate figure as at May 2006 was $514.00 (rounded to the nearest whole dollar). I have not included the occupation of a plant operator, as further retraining and licensing was required, and, in any event, was unlikely to have been suitable as such jobs require prolonged sitting.
In addition, Mr Begovic has skills as a sound engineer. He said he charged his services at $50.00 per hour in 2009. He worked in the studio “approximately one to two days per week” spread over a year. He did not say how many hours he worked. Given that Tamworth is a regional centre in north western NSW, it is understandable that demand for work as a sound engineer would fluctuate and that work in that field would not be readily available outside Mr Begovic’s own studio. The respondent has not suggested to the contrary. Ms Wales merely stated that such work would not be likely to be advertised. Accepting that Mr Begovic averaged one to two days per week in this work, and assuming 7.6 hours per day, gives an average of 11.4 hours per week (7.6 plus 15.2 divided by two). Allowing $50.00 per hour for 11.4 hours gives $570.00 per week in 2009, which is marginally less than I have found he is able to earn as a storeman or forklift operator from July 2009 (see [121] below).
Having regard to the nature of Mr Begovic’s incapacity (modest), the nature of his pre-injury work (heavy lifting and prolonged driving), Mr Begovic’s age (43), education (Mr Begovic has a demonstrated ability to complete further education at TAFE or university level), his skills and work experience (sound recording, sales, truck driving and sound recording), his place of residence (regional NSW), and the contents of the medical evidence and rehabilitation reports, I find that from July 2006 to date he has been capable of earning the following sums as a full-time storeman or forklift operator:
(a) $514.00 from 2 May 2006 to 30 June 2006
(b) $529.00 from 1 July 2006 to 30 June 2007;
(c) $545.00 from 1 July 2007 to 30 June 2008;
(d) $561.00 from 1 July 2008 to 30 June 2009, and
(e) $578.00 from 1 July 2009 to date and continuing.
Given that I have found Mr Begovic’s ability to earn as a sound engineer was $570.00 in 2009, and, as there is no evidence that the hourly rate for that work has fluctuated over time, I find that his ability to earn at all relevant times up to 30 June 2009 was $570.00 per week. From 1 July 2009 to date and continuing, I find his ability to earn to be $578.00 per week.
Step Three
Step three requires that the figures in step two be deducted from those found in step one. The difference is:
(a) 2 May 2006 until 30 June 2006 $664.00 less $570.00 = $94.00
(b) 1 July 2006 until 30 June 2007 $684.00 less $570.00 = $114.00
(c) 1 July 2007 until 30 June 2008 $817.00 less $570.00 = $247.00
(d) 1 July 2008 until 30 June 2009 $725.00 less $570.00 = $155.00
(e) 1 July 2009 to date and continuing $747.00 less $578.00 = $169.00
Step Four
Step four requires the application of the discretion in section 40(1) to determine the amount of the reduction in the worker’s earnings or earning capacity that is “proper in the circumstances of the case”. Mr Batten submitted at both arbitrations that the Commission would use its discretion to reduce any differential between probable earnings and ability to earn because of Mr Begovic’s:
(a) obesity;
(b) leg ulcers;
(c) diabetes;
(d) failure to seek employment, and
(e) the probability that he would earn more in his studio.
I do not accept that there are any grounds that warrant the exercise of the discretion. Mr Begovic was overweight (124 kilograms) before his accident, but worked full time without restriction. To the extent that his weight might have affected his capacity to earn since, and that is far from clear, I accept that he gained weight as a result of his injury. It is therefore not a discretionary factor. Whilst Mr Begovic has had problems with the ulceration of his right leg and with diabetes, there is no persuasive evidence that either condition has adversely affected his ability to earn. The failure to seek employment is not a ground for exercising the section 40 discretion (Mitchell at 535). Last, Mr Begovic’s ability to work as sound engineer in his studio was a factor I took into account in assessing his ability to earn at step two. It is therefore not a matter that arises in the exercise of the discretion.
I should add that, even if, contrary to my finding, the figure for probable earnings had been found to be $1,606.00 that would have made no difference to the end. In that event, the section 40(1) discretion would have required a substantial reduction to the difference between probable earnings and ability to earn to allow for the fact that comparable drivers with the respondent between 2006 and 2009 earned significantly less than Mr Begovic earned in June 2002.
Step Five
It follows that, as the amounts in [123] above are below the maximum statutory rate of compensation, Mr Begovic is entitled to an award under section 40 in those amounts.
CONCLUSION
Having conducted a review on the merits, I have determined that the true and correct position is that Mr Begovic has been and remains incapacitated for his pre-injury employment as a truck driver, but is fit for full-time suitable employment as a storeman or forklift driver, or some similar work. As QBE has paid for Mr Begovic’s recent lap-band operation and for the period during which he was totally incapacitated because of that surgery, QBE is to have credit for those payments.
DECISION
The Arbitrator’s determination of 9 October 2009 is revoked and the following orders made in its place:
“1. The respondent employer is to pay the applicant worker weekly compensation under section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’) as follows:
(i)$94.00 per week from 2 May 2006 until 30 June 2006;
(ii)$114.00 per week from 1 July 2006 until 30 June 2007;
(iii)$247.00 per week from 1 July 2007 until 30 June 2008;
(iv)$155.00 per week from 1 July 2008 until 30 June 2009, and
(v)$169.00 per week from 1 July 2009 to date and continuing.
2. The respondent is to pay the applicant worker’s hospital and medical expenses under section 60 of the 1987 Act on production of accounts or receipts.
3. The respondent employer is given credit for weekly payments made for the period of total incapacity following the appellant worker’s surgery on 18 October 2009.
4. The respondent employer is to pay the applicant worker’s costs of the second arbitration, as agreed or assessed. The second arbitration is certified as complex under Item 4 of Table 4 of Schedule 6 of the Workers Compensation Regulation 2003 and an uplift of 20 per cent applies to those costs. Each party is to pay his or its costs of the first arbitration.”
COSTS
The respondent employer is to pay the appellant worker’s costs of the appeal, as agreed or assessed.
Bill Roche
Deputy President
3 June 2010
I, TUYET WALLIS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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