Coles Logistics Pty Limited v Howlett
[2009] NSWWCCPD 6
•20 January 2009
WORKERS COMPENSATION COMMISSION DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR CITATION: Coles Logistics Pty Limited v Howlett [2009] NSWWCCPD 6 APPELLANT: Coles Logistics Pty Limited RESPONDENT: David Russell Howlett INSURER: Coles Group Limited – self insurer FILE NUMBER: WCC 5125 - 08 DATE OF ARBITRATOR’S DECISION: 3 September 2008 DATE OF APPEAL DECISION: 20 January 2009 SUBJECT MATTER OF DECISION: Employer’s application to review award; section 55 of the Workers Compensation Act 1987; whether the Arbitrator erred in her findings on material facts; adequacy of reasons. PRESIDENTIAL MEMBER: Acting Deputy President Deborah Moore HEARING: On the papers REPRESENTATION: Appellant: Lander & Rogers Respondent: Bussoletti Lawyers ORDERS MADE ON APPEAL: (1). Paragraph one of the decision of the Arbitrator dated 3 September 2008 is revoked and the following decision made in its place:
“1.That the Applicant Employer pay to the Respondent Worker weekly compensation at the rate of $302.05 from 1 July 2007 to 24 February 2008; $274.34 from 25 February 2008 to 15 May 2008 and $302.05 from 16 May 2008 to date under section 40 of the Workers Compensation Act 1987. Such payments to continue in accordance with the provisions of the Act.”
(2). Paragraph two of that decision is confirmed.
(3). Credit to the Employer for any payments made to date.
(4). No order as to costs of this appeal.
BACKGROUND TO THE APPEAL
1.On 1 October 2008 Coles Logistics Pty Limited (‘the Appellant/Coles’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision dated 3 September 2008.
2.The Respondent to the Appeal is David Russell Howlett (‘the Respondent /Mr Howlett’).
3.Mr Howlett suffered injuries to his neck and both shoulders as a result of the nature and conditions of his employment with Coles in 2002, as a consequence of which he was rendered partially incapacitated for employment.
4.In proceedings WCC13483 – 06 he was awarded weekly compensation at the rate of $418.62 from 2 August 2006 to date and continuing pursuant to section 40 of the WorkersCompensation Act 1987 (‘ the 1987 Act’). The Arbitrator found that he was fit to perform 30 hours of work per week.
5.On 4 July 2008 Coles filed an Application to review the award pursuant to the provisions of section 55 of the 1987 Act on the grounds that Mr Howlett’s “ circumstances have materially changed…”.
6.The parties attended a conciliation/arbitration hearing on 22 August 2008.
7.On 3 September 2008 a ‘Certificate of Determination’ was issued. The Arbitrator accepted that there had been a ‘change of circumstances’ noting that Mr Howlett had been certified fit to perform more hours of work than previously, and entered the following award:
“1.That the Applicant Employer pay the Respondent Worker weekly compensation at the rate of $230.85 from 23 July 2008 to date under section 40 of the Workers Compensation Act 1987. Such weekly payments to continue in accordance with the provisions of the Act and this determination.
2.That the Applicant Employer pay the Respondent Worker’s costs as agreed or assessed.”
8.Mr Howlett submits, inter alia, that the award ought to have been at the rate of $302.05 and that the Arbitrator merely erred in her mathematical calculation as to his entitlements. Coles does not challenge this submission.
9.However, Coles submits that the Arbitrator made errors including the date upon which the award commenced, and in her assessment of Mr Howlett’s capacity for work in light of the available evidence, and accordingly seeks leave to appeal.
ON THE PAPERS REVIEW
10.Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘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.”
11.Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by both parties 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.
LEAVE
12.Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.
13.The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. Although Mr Howlett submits that the amount at issue on appeal does not satisfy the threshold requirements of section 352(2) since the award commenced on 23 July 2008, there is an issue raised by Coles as to the accuracy of this date. Moreover, the award was expressed to “..continue in accordance with the provisions of the Act…”
14.In the circumstances, I am satisfied that the threshold requirements have been met, and leave to appeal is granted.
THE REVIEW PROCESS
15.The nature of the review process has been succinctly summarised by Deputy President Roche in a number of decisions, and recently in Universal Consultancy Services Pty Ltd v Mrinal Datta [2008] NSWWCCPD 87 where he said as follows [16-18]:
“16.The Court of Appeal considered the nature of a ‘review’ under section 352 of the 1998 Act in Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34; (2006) 4 DDCR 358 (‘Zheng’), where Bryson JA said at [38]:
‘A review is a different process to an appeal and the matters which may be considered and the manner in which they may be considered are somewhat wider. See Boston Clothing Co Pty Ltd v. Margaronis (1992) 27 NSWLR 580 at 584 (Kirby P). An attack, on review or otherwise, on an Arbitrator's discretionary decision in controlling procedure may be based on the test stated in House v. R (1936) 55 CLR 499 at 504 - 505; but that is not the only basis on which the Presidential member may act. The powers of a Presidential member on review are somewhat wider and extend to power to reopen consideration of a matter of which an Arbitrator has disposed; the manner in which the powers of the Presidential member are to be exercised is itself the subject of discretion of the Presidential member.’
17.McColl JA approved this passage in South Western Sydney Area Health Service v Edmonds (2007) 4 DDCR 421; [2007] NSWCA 16 at [134] (‘Edmonds’). To describe the relative weight and relevance of the expert evidence as “a discretionary decision which could only be disturbed on House v The King principles” was described by McColl JA as “an over-generalisation” (at [133]). Thus, on review, a Presidential member is not bound by an Arbitrator’s discretionary decision, but can reach his or her own conclusion.
18.The nature of a review was further considered by the Court of Appeal in State Transit Authority of New South Wales v Fritzi Chemler[2007] NSWCA 249; (2007) 5 DDCR 287 (‘Chemler’) where Spigelman CJ said at [28] and [30]:
‘28.The concept of a review on the merits is wider than the concept of an appeal in a judicial context. There is a well established line of authority on the use of the terminology of ‘review’ instead of ‘appeal’ with respect to the workers compensation system in this State which establishes the breadth of a review on the merits.
30.A Presidential member exercising a power to review a decision must decide whether the original decision is wrong or, as it is often put in the context of administrative appeals on merits, must decide what is the true and correct view. If s/he does so decide then s/he should substitute his or her own views, unless it is an appropriate case to remit. The power to remit is not constrained in the manner for which the Appellant contends.’”
16.Bearing these principles in mind, I turn now to the issues in dispute.
THE ISSUES IN DISPUTE
17.Coles does not dispute the Arbitrator’s principal finding that there had been a “change in circumstances”, although disputes the date of this “change’. Nor does it dispute the following findings:
·That the probable earnings but for injury were $856.45 per week.
·That if Mr Howlett was successful, the Arbitrator’s finding of an ability to earn of $554.40 would result in an award in Mr Howlett’s favour at the rate of $302.05 per week.
18.Coles has identified five grounds of appeal as follows:
“1.The Arbitrator erred…in her decision to review the …award…from 23 July 2008 when the respondent’s capacity to work had increased from 30 hours per week to at least 40 hours per week from 12 June 2007…
2. In the alternative, the Arbitrator erred…in reviewing the rate of the…award…from 23 July 2008 when there was a specific finding by the Arbitrator…that the respondent had a capacity to work 40 hours per week from 23 July 2007.
3.The Arbitrator failed to provide adequate reasons for restricting her review of the …award…from 23 July 2008 when there was medical evidence…of a clear change of circumstances whereby the respondent was able to work in excess of 40 hours per week from 12 June 2007…
4.The Arbitrator erred in finding that the respondent’s actual earnings at Repco between February 2008 and May 2008…was not a true reflection of his base capacity to earn…from at least February 2008…
5.In the alternative, the Arbitrator erred in finding that the respondent’s actual earnings at Repco…was not a true reflection of his actual earning capacity for at least the period February 2008 to May 2008…”
19.These may be summarised as follows:
· The commencement date of the award.
· The earnings at Repco and capacity to earn.
· The adequacy of reasons.
20.In his ‘Notice of Opposition’ filed on 28 October 2008, Mr Howlett concedes that the award should be reduced during the period from February to May 2008 when he was employed at Repco on a full-time basis, but points out that the reduction to “…$274.34 for this period would not meet the threshold set out in section 352(2)(a) of the 1998 Act.”
THE RELEVANT LEGISLATION
21.Section 55 of the 1987 Act provides as follows:
“55 (1) Any weekly payment of compensation may, because of a change of circumstances, be reviewed by the Commission at the request of the employer or the worker or of the Authority.
(2) On any such review-
(a) the weekly payment may be ended, reduced or increased …”
22.Section 40 makes provision for weekly payments during periods of partial incapacity. Relevant provisions are as follows:
“40 (1) Entitlement. The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings , but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.
(2) The reduction in the worker’s weekly earnings is…the difference between:
(a) the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment, and,
(b) the average weekly amount which the worker is earning, or would be able to earn in some suitable employment, from time to time after the injury…
(3) The determination of the amount hat an injured worker would be able to earn in some suitable employment is subject to the following:
(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker;
(b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A…”
23.The Court of Appeal in Mitchell v Central West Health Service (1997) 14 NSWCCR 527 (Mitchell ) set out five steps to be taken when making an award under section 40 as follows:
1.Determine the weekly amount that the worker would have been earning but for the injury. [s.40(2)(a)]
2.Determine the weekly amount that the worker is earning or would be able to earn in suitable employment. [s.40(2)(b) and s.40(3)]
3. Subtract the figure calculated in step 2 from that calculated in step 1
4.Decide whether the reduction so calculated is proper in the circumstances and exercise that discretion accordingly. [s.40 (1)]
5. Make an award in the amount arrived at by step 4.
24.I turn now to the Arbitrator’s decision in the context of the relevant legislation and the matters raised on appeal.
THE ARBITRATOR’S FINDINGS AND REASONS
25.Having set out by way of background a summary of the findings and orders made in the earlier decision (WCC13483-06), the Arbitrator then posed the question: “Is there a change of circumstances sufficient to enable a review by the Commission of the weekly compensation award under section 55(1)?”
26.After noting submissions from both parties, the Arbitrator then set out in detail the contents of a number of medical certificates issued by Mr Howlett’s general practitioner, Dr Monk. In summary, Dr Monk certified Mr Howlett fit for suitable duties for 8 or 9 hours per day for 5 or 6 days per week commencing on 12 June 2007 to 23 July 2008.
27.The Arbitrator concluded at [15] of her ‘Statement of Reasons’ (‘Reasons’) as follows:
“15. I find that a change of circumstances since the award in [sic] 11 December 2006 has occurred as the Worker has been certified as fit for at least 40 hours per week on suitable duties since 12 June 2007 whereas the award was…based on the Worker being fit to work for only 30 hours per week…In fact, the worker has worked full-time for two periods since the award. Thus the Commission has power to review the weekly benefits…”
28.The Arbitrator then embarked on a review of the earlier award by reference to the “…five step process…” set out in Mitchell. There being no issue as to probable earnings remaining at $856.45 per week, the Arbitrator then dealt with Mr Howlett’s ability to earn at paragraphs [18]-[32] of her Reasons. Her findings and reasons I have summarised below:
“18.The relevant dates [for review of the award] are from 23 July 2008 (the date of Dr Monk’s latest ….Certificate and the date of the Reply in this matter) to date and continuing…
19.Dr Monk’s most recent…Certificate dated 23 July 2008 certifies the Worker as fit for 40 hours per week on suitable duties…
20.The Employer also argued that, since the date of the award in [sic] 11 December 2006, the Worker has demonstrated a clear capacity to work full-time duties…as follows:
(a) The Worker commenced his own company, David Howlett Pty Limited, in June 2007 and obtained full time contract work with Energy Australia from June to October 2007. The Worker worked 9 hours per day during this time. This work only ceased when government funding for the program ceased.
(b) The Worker obtained full time work (38 hours per week and up to 54 hours per week) as a Casual Customer & Sales Officer with Repco from February to May 2008.21.In his written Statement dated 22 July 2008, the Worker stated…
(a) He continued to work on light duties at Plowman’s Photographics for 20 -30 hours per week until he was made redundant on 6 April 2007.
(b) In July he formed his own company and sub-contracted work carrying out energy audits…Dr Monk increased the hours he was …fit to work to 9 hours per day 5 days per week to enable him to gain this work. The Worker said it was light work and some days he would work less than 9 hours.
(c) On 25 February 2008 he commenced work with Repco in Goulburn on a full-time basis working 38 hours per week doing sales and delivery work. He asked Dr Monk to increase the hours he was certified fit to work to ‘keep this job’ …Repco gave him one weeks notice on 15 May 2008 ‘due to my inability to increase my hours per day and due to my inability to do after hours stock take and my employment ceased as at that day.’
22.The worker further stated that he was not capable of working 45-54 hours per week; that Dr Monk had only increased the hours he was fit to work to that level on the basis he was undertaking the light work with Energy Australia….he lost the assistance he originally had…with Repco and…the employment with Repco greatly aggravated his symptoms after two months. He said he would not be able to work in similar employment…
23.It would appear that [Mr Howlett] over extended his capacity for work with Repco…However, it does not follow that that he is incapable of working up to 40 hours per week on suitable duties as certified by Dr Monk…
24.I note that the Arbitrator [in the earlier proceedings] stated that ‘It is Dr Monk who has presided over the gradual improvement in working hours for [Mr Howlett] and, in the light of the evidence, her assessment seems eminently sensible and realistic.’ I am persuaded by the Arbitrator’s opinion of Dr Monk…I find that [Mr Howlett] has had the physical capacity to work at suitable duties for 8 hours per day for 5 days per week since 23 July 2007 [sic-2008] (the date of the latest…certificate by Dr Monk).”
29.The Arbitrator then considered at [25] “…the average weekly amount [Mr Howlett] was earning or would be able to earn in some suitable employment”. The following facts emerged:
·From July to 12 October 2007 under contract to Energy Australia he paid himself $381.00 gross per week, working 9 hours per day.
·From 25 February to 15 May 2008 at Repco he earned $582.11 for a 38 hour week, but worked longer hours on occasions.
·Mr Howlett has been unemployed since that time.
30.The Arbitrator accepted Coles’ argument that earnings with Energy Australia did not represent Mr Howlett’s true earning capacity, but rejected its argument that the true earning capacity was up to $827.21 per week, (54 hours per week at $15.32) the amount he earned at Repco [26] – [27].
31.The Arbitrator concluded that Mr Howlett was able to earn $13.86 per hour (the rate he was earning at Plowmans Photographics) for 40 hours per week, “…resulting in a capacity to earn $554.40 per week” from 23 July 2008 to date and continuing. She noted at [28] that “This is close to the wage he earned at Repco for 38 hours per week.”
32.Having considered the availability of suitable work at [29]-[32] no change was made to this finding.
33.At [33] the Arbitrator noted that, deducting the amount of $554.40 from $856.45, resulted in “…a $302.05 per week reduction of earnings.” She declined to exercise her discretion and at [35] commenced to set out her formal findings as follows:
“1.The Worker would probably have been earning $856.45 per week but for his injuries.
2.The average amount the Worker would be able to earn in some suitable employment from time to time, taking into account his ability to earn in the general labour market reasonably accessible to him and having regard to what is “suitable employment” for him, is $554.40.
3.Therefore, the Worker’s reduction in weekly earnings from 23 July 2008 to date and continuing is $302.05 per week
4.Therefore, the Worker’s entitlement to weekly compensation pursuant to subsection 40(2) is to be calculated by subtracting $302.05 from the maximum statutory rate of weekly compensation for a single worker with two dependent children from 23 July 2008 to date and continuing.
5.The resulting weekly compensation to be paid to the Worker from 23 July 2008 to 30 September 2008 under the current WorkCover Benefits Guide Tables is calculated as: Maximum weekly payment after 26 weeks is $374.90, add the additional payment for two dependent children $158.00 and subtract the reduction in weekly earnings of $302.05; this results in a weekly compensation amount of $230.85.
6.The Worker is seeking suitable employment.
7.There is no reason to exercise my discretion.”
34.Accordingly, an award was entered in favour of Mr Howlett at the rate of $230.85 from 23 July 2008 to date and continuing pursuant to section 40 of the 1987 Act.
THE SUBMISSIONS, EVIDENCE AND FINDINGS
The Commencement Date of the Award Issue
35.Coles submits that the Arbitrator should not have restricted her review of the award from 23 July 2008 since Mr Howlett had been certified fit for at least 40 hours work per week on suitable duties from 12 June 2007. Coles submits that the correct interpretation of the Arbitrator’s statement at [15] that “…a change of circumstances since [the prior award] has occurred as the Worker has been certified as fit for at least 40 hours per week…since 12 June 2007…” is that Mr Howlett’s award should be reduced from that date.
36.There is no doubt that Dr Monk certified Mr Howlett fit for suitable duties for 9 hours per day, 5 days per week on 12 June 2007. Further certificates up to April 2008 had similar restrictions. On 23 July 2008 Dr Monk certified Mr Howlett fit for suitable duties for 40 hours per week up to 23 October 2008.
37.However, as Mr Howlett rightly points out in his submissions:
“…there is a distinction between firstly, whether the moving party has satisfied the Commission that there should be a review because of a change in circumstances, and secondly, whether the award should be altered…Section 55(1) provides the jurisdiction to the Commission to review if there has been a change in circumstances. Section 55(2) then provides that upon such review the Commission may end, reduce or increase the award… ”
38.There are a number of authorities dealing with the proper construction and application of section 55 of the 1987 Act. These include George Weston Foods Limited t/as Tip Top Bakeries v Goldsmith (1998) 17 NSWCCR 253; Atlas v Bulli Spinners Pty Ltd [1993] NSWCC 17; (1993) 9 NSWCCR 378; Williams v North Gosford Private Hospital [2004] NSWWCCPD 76; Warner v Northern Coal Fields Community Care Association [2005] NSWWCCPD 27 and Worthington v Alexander [2005] NSWWCCPD 12 (‘Worthington’).
39.The principles established in those decisions were succinctly summarised by Acting Deputy President O’Grady in NSW TAFE Commission –North Sydney Institute v Zuk [2006] NSWWCCPD148 as follows:
“34. …
(i) A section 55 review is not a reconsideration of facts found in the earlier proceedings.
(ii) The review is an examination of circumstances which may have occurred since the original determination.
(iii) If such circumstances represent a change from those prevailing at the date of the original determination there may be grounds upon which a review is made.
(iv) In applying section 55 of the 1987 Act the starting point is an unqualified acceptance of the original decision maker’s findings.
(v) A review will occur only where it is established that circumstances that were before the original decision maker at the time of the award of weekly benefits and upon which the findings in relation to a statutory entitlement were made have changed.
(vi) Relevant ‘circumstances’ are not restricted to consideration of change of medical condition or capacity for work.
(vii) The onus is upon the party seeking review to satisfy the threshold issue of “change of circumstances”.”
40.As Deputy President Fleming said in Worthington, at [22] and [28]:
“22.It is clear from Atlas and George Weston that ‘change of circumstances’ is a threshold issue to be determined prior to review under section 55 of the 1987 Act. It is a gateway to review, not the review itself. Only where a ‘change of circumstances’ is demonstrated is the Arbitrator empowered to review the worker’s substantive entitlements to workers compensation benefits. Sections 55(2) and 55(3) provide that weekly benefits may be ended, reduced or increased following review.
28.In the absence of any authority on the precise meaning to be afforded to the phrase ‘change of circumstances’ it should, in my view, be given it’s ordinary meaning (Cody v J H Nelson Pty Ltd [1947] HCA 17; (1947) 74 CLR 629). Its ordinary meaning must be understood within the context of the 1987 Act. The “change of circumstances” must have relevance to the worker’s entitlement to statutory weekly benefits. As Justice Sheller noted in Weston, the relevant “circumstances” will be those that were before the decision-maker at the time the award of weekly benefits and upon which the findings in relation to a statutory entitlement were made.”
41.In the present case, I am satisfied that the Arbitrator’s acceptance of a “change of circumstances” was supported by the evidence and determined in line with the authorities to which I have referred. But that finding at [15] of her reasons, properly read, does not express a finding as to Mr Howlett’s capacity for work at that time. As Deputy President Fleming said in Sarkem Ltd v Marafioti [2006] NSWWCCPD 235:
“71.The Arbitrator’s express findings on the three ‘sets of circumstances’ do not properly address the task that section 55 of the 1987 Act required of him. The Arbitrator’s task was not to “declare that the 1995 [Compensation Court] finding that there was incapacity . . . had been displaced by subsequent developments before April 2001” … Having found that there had been a change in circumstances that “open the s 55(1) gate to a review” …the Arbitrator framed his further inquiry by asking the question: “has there been a change in circumstances of a character and magnitude that justifies the termination or reduction of Marafioti’s entitlement to weekly benefits?”. This repeats the inquiry already made and does not refer to the provisions of Division 2 of Part 3 of the 1987 Act, as expressly required by section 55(2)(a). Section 55 does not provide an alternative to the other provisions of Division 2 of Part 3 of the 1987 Act (sections 38-40) for the calculation of an entitlement to weekly benefits compensation. Section 55(3) provides that “probable earnings” – a concept integral to the application of section 40, should be calculated as at the date of the review.
…
73.Once a ‘change of circumstances’ was proven by the Insurer, the task of making an assessment of any entitlement should have been made [in] accordance with Part 3, Division 2 of the 1987 Act… the ‘review’ should have addressed the evidence in accordance with an assessment of his entitlement to weekly benefits pursuant to section 40 of the 1987 Act…. The Arbitrator should therefore have structured his ‘review’ of Mr Marafioti’s entitlement in accordance with the five steps of Mitchell”.
42.It is clear from the Arbitrator’s Reasons commencing at [16] that she was reviewing Mr Howlett’s entitlements in accordance with Mitchell. The headnote to [12] states: “Is there a change of circumstances sufficient to enable a review by the Commission of the weekly compensation award under section 55(1).” The headnote to [16] then states: “Review of Worker’s section 40 weekly benefits entitlement since 12 June 2007.” I therefore reject Coles’ submission that the Arbitrator ‘restricted’ her review of the award from 23 July 2008.
43.As Mr Howlett rightly submits:
“It is patently clear from the…[headnotes] …that the finding by the Arbitrator [at 15] …is only relevant to whether there has been a change in circumstances and not a decision relevant to the section 40 assessment…The Arbitrator did not restrict the review from 23 July 2008 but varied the award from that date, a separate and distinct process as required in section 55…”
44.As to Coles’ second ground of appeal, it is again quite clear that the Arbitrator’s reference to 23 July 2007 at [24] is a typographical error. At [24] she stated:
“I find that [Mr Howlett] has had the physical capacity to work at suitable duties for 8 hours per day for 5 days per week since 23 July 2007 (the date of the latest medical certificate by Dr Monk).”
45.The last certificate from Dr Monk was dated 23 July 2008 (see [14]). There was no certificate dated 23 July 2007. There are numerous references by the Arbitrator throughout her determination to “23 July 2008”, and her formal orders and findings set out at [35] reflect this date. In short, contrary to Coles’ submission, there was no “…specific finding by the Arbitrator…that [Mr Howlett] had a capacity to work 40 hours per week from 23 July 2007.” The Arbitrator’s reference to this date seems to me to fall squarely into the category of “obvious error.”
46.In all the circumstances, I am not persuaded that the Arbitrator erred in her approach to section 55 of the 1987 Act. The question of Mr Howlett’s capacity for employment at a particular time and whether the Arbitrator erred in her section 40 assessment is a different issue to which I will now turn.
The Capacity to Earn Issue
47.In a statement dated 22 July 2008 Mr Howlett described his employment activities as follows:
“4. I continued working at Plowmans Photographics until 6 April 2007 when I was made redundant…
19. On 12 June 2007 I saw Dr Monk. At this time I wanted to commence a business and I told Dr Monk that I wanted to try an increase in my hours so that I could have the opportunity of commencing the business. Dr Monk agreed.
22. In July 2007 I proceeded to register a company… and I started my own business doing sub-contracting work…The work involved doing energy audits which involved measuring water flows on taps and shower heads and replacing incandescent light bulbs with energy saver bulbs in residential homes in Goulburn….Dr Monk had increased my hours to 9 hours per day including a lunch break of 1 hour to enable me to do this work…I …worked at my own pace and some days I would work up to 9 hours…and other days…would be less hours. The work was very light and it only involved changing light bulbs and shower heads and measuring water flows on taps. My earnings…were…$381.00 gross per week…The contract only lasted until 12 October 2007…I also spent two weeks not working at all due to a sprained ankle.
31. On 9 November 2007 I saw Dr Monk and she suggested that she maintain the same restricted hours…so as to allow me more scope to find suitable employment…
37. On 22 February 2008 I attended a job interview with Repco in Goulburn…
38. On 25 February 2008 I commenced work with Repco in Goulburn on a full time basis, 38 hours per week doing sales and delivery driver work.
41. On 29 April 2008 I saw Dr Monk and requested that she increase my hours to cover every second Saturday morning for five hours as the Repco management had told me that my job was in jeopardy if I was unable to cover staff shortages…the assistance which had been available to me when I commenced and which was important in view of my …restrictions commenced to decline. Pressure was…put on me to increase my performance and work hours which culminated in my request to Dr Monk…The management also put pressure on me to perform after hours work for stock taking. I found that I was not able to do all of this …within about two months…of my commencing work with Repco my symptoms were getting worse…
43. On 15 May 2008 I was given one weeks notice from Repco due to my inability to increase my hours…and my employment ceased as at that day.
47. I would not be capable of working 45 to 54 hours per week…I would not be able to maintain general employment for those hours.
48. I would not be able to work in employment similar to the Repco job due to my injuries…
49. I feel that my capacity for work is…30 hours per week in employment similar to my position as Mini-Lab Assistant/Photo Technician with Plowmans Photographics. The sub-contract work I did with [Energy Australia] was a very special arrangement as it was very light work and I worked at my own pace and within my own time…”
48.Mr Howlett’s income at Repco was $15.32 per hour for a 38 hour week. His gross income he stated was $582.11.
49.The Arbitrator, in considering the amount Mr Howlett would be able to earn said at [18]:
“The relevant dates are from 23 July 2008 (the date of Dr Monk’s latest…Certificate and the date of the Reply in this matter) to date and continuing.”
50.It is not evident from the Arbitrator’s Reasons as to why this date was considered the “relevant” one. Coles had sought a review of the award from 12 June 2007, the date of Dr Monk’s first certificate. Mr Howlett’s Reply to Coles’ Application was it seems coincidentally filed on 23 July 2008. It is clear from the Reasons that the Arbitrator has inadvertently on occasions referred to Mr Howlett as the ‘Applicant’ and it may be that this mistake caused her to consider the 23 July 2008 date in the Reply as “relevant”.
51.The question thus remains, was this the appropriate date?
52.In my view, it was entirely open to the Arbitrator to find that Mr Howlett “overextended” his capacity for work at Repco, and that he was not in reality capable of performing 45 to 54 hours of work per week. Mr Howlett’s statement was not subject to challenge at the hearing, and certainly suggests that the work was far more arduous than his previous jobs. Moreover, it appears that he had a degree of “assistance” when he initially commenced at Repco, although the nature of that assistance is not made clear.
53.I accordingly reject Coles’ submission that the earnings at Repco of $582.11 per week for a 38 hour week were not a true reflection of his ability to earn at that time. It is indeed “fanciful”, as Mr Howlett submits, for Coles to suggest that Mr Howlett “…would not have commenced working with Repco had the proposed work duties not been deemed suitable.” This statement completely ignores Mr Howlett’s detailed statement as to the true nature of that job. The Arbitrator’s finding at [38] that Mr Howlett was capable of earning $554.40 per week “…close to the wage he earned at Repco…but [taking] into account that he is only certified fit for suitable duties as outlined above…” is consistent with the evidence and I see no basis upon which to revoke this finding.
54.The more difficult question is Mr Howlett’s capacity for work prior to his job at Repco, in particular from 1 July 2007 when his contract with Energy Australia commenced.
55.Although Mr Howlett’s hours of work were increased by Dr Monk to 45 per week in June 2007 to accommodate the sub-contract work with Energy Australia, this work it appears was extremely light. Moreover, as Mr Howlett said, he did not regularly work those hours. The Arbitrator has not addressed the impact of this employment in her assessment, perhaps in the mistaken view that the “relevant” commencement date for review was 23 July 2008. She did acknowledge at [26] that earnings in that employment of $381.00 per week were “…below any normal payment level for unskilled work by an adult…” and were not a true reflection of Mr Howlett’s capacity to earn in suitable employment.
56.This issue was considered by Deputy President Roche in Ranvet Pty Ltd vVasilevski [2008] NSWWCCPD 81 where he noted:
“72. The test for incapacity is conveniently summarised in the text Workers Compensation in New South Wales, second edition, by C P Mills, where the author said, at 285:
‘The question is whether the injury has left the worker in such a position that in the open labour market his earning capacity is less than it was before the injury (Williams v Metropolitan Coal Co Ltd (1948) 76 CLR 431 per Starke J), and it is not limited to the effect on his capacity for his former work (per Dixon J). In Ball v Hunt [1912] AC 496, Lord Loreburn had said that there is incapacity when a man has a physical defect which makes his labour unsaleable in any market reasonably accessible to him, and there is partial incapacity when such a defect makes his labour saleable for less than it would otherwise fetch: see Commissioner for Railways v Agalianos (1955) 92 CLR 390 per Dixon CJ.’ (emphasis added)
73. In Alexander v Ashfield Municipal Council, CA 78/81, 27 October 1982, Hutley JA observed:
‘Capacity is diminished, even though in selected instances the worker can earn as much as he did before, if there are fields from which he is excluded, by reason of the injury, in which he laboured at the time of injury.’
74. The Court of Appeal quoted the above passages, with apparent approval, in Ric Developments t/as Lane Cove Poolmart v Muir [2008] NSWCA 155.
75. …When a worker is employed, his or her actual earnings will be prima facie evidence of ability to earn (Aitken v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20). However, once that employment ceases, the Commission is then required to determine what the worker is able to earn in suitable employment in the labour market which is reasonably accessible (Hamilton v Shelton Iron, Steel and Coal Co (1926) 96 LJKB 295 at 301, applied in Steggles Pty Ltd v Aguirre (1988) 12 NSWLR 693)…The Arbitrator was required to assess that figure having regard to all the evidence and the terms of section 43A of the 1987 Act…”
57.It is clear that Mr Howlett’s capacity for work was still diminished at the time he commenced sub-contract work with Energy Australia. But the fact remains that he had been certified as fit to perform suitable duties for 45 hours per week from 12 June 2007.
58.In Pira Pty Ltd t/as Langdon & Bartley v Tucker (1996) 14 NSWCCR 26 (‘Pira’) the Court of Appeal unanimously held:
“The appropriate amount to be applied under section 40(2)(b) in determining the rate of compensation to be awarded under section 40 is, prima facie, the persons actual earnings after injury 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 made them lower than they should be.”
59.In the present case, Mr Howlett’s accountants wrote to Coles on 8 August 2007 in the following terms:
“Pleased be advised that Mr Howlett, as from the 1st July 2007, is now an employee of Dave Howlett Pty Ltd…
Mr Howlett’s weekly wages are as follows:Gross weekly wages of $381.00
With tax withheld of $81.00 at the highest rate.
This is based upon a 45 hour week.”
60.This arrangement suggests that it was the accountant’s plan that established Mr Howlett’s “earning power” as lower than it should have been, particularly the tax arrangements. It reinforces my view, consistent with the Arbitrator that the earnings with Energy Australia via this company structure were not a proper test of his capacity to earn.
61.At the time of the prior award, Mr Howlett was working 20 hours per week at Plowmans Photographics. Dr Monk had certified him fit for 25 hours as from 3 July 2006 with, as the Arbitrator then noted “…still some room for improvement…”. The Arbitrator then stated: “…while I do not accept that [Mr Howlett] can yet return to full-time work, an extra hour a day would seem to be achievable given that it is now December.” Thus he found Mr Howlett fit for 30 hours work per week. Importantly, he noted that “…the restrictions as to bending and lifting…” remained in place. Those restrictions had initially been set by Dr Chang Wai, Mr Howlett’s previous general practitioner, at “lifting to a maximum of five to six kilograms and two to three hours, four or five days per week.” Minimal bending and minimal repetitive lifting were also prescribed.
62.In the present case, Dr Monk certified Mr Howlett as unable to lift greater than five kilograms in her certificate of 12 June 2007. By 8 August 2007, this had increased to 15 kilograms, and by 29 April 2008 to 20 kilograms. Thus it seems to me that the anticipated “room for improvement” had indeed occurred.
63.I do not accept Mr Howlett’s submission that “…there is no basis to assert that the Arbitrator was bound to make a finding of change in capacity simply because a medical certificate was to this effect…” and that “…there is no basis for elevating the certificates above any other evidence in the matter.” True, there was other evidence on the issue of incapacity, but as the Arbitrator noted, the opinion of Dr Monk was particularly persuasive given her extensive (and apparently successful) treatment of Mr Howlett.
64.All this leads me to the conclusion that there was ample evidence to conclude that Mr Howlett was fit for at least 40 hours work per week in suitable duties from the time he commenced his sub-contracting work with Energy Australia on 1 July 2007. I also accept the Arbitrator’s finding that his earnings of $381.00 per week were not, in this case, prima facie evidence of his ability to earn.
65.Accordingly, the award should be revoked.
66.Although Mr Howlett correctly points out that ground five of Coles’ appeal refers to “capacity” as opposed to “earnings”, my task on review is to determine what is the “true and correct view” of the decision. Similarly, Coles’ challenge in grounds four and five is confined to the findings in relation to the work at Repco. Its challenge to the nature and extent of the award is to a degree set out in grounds one and two but essentially in ground three although couched in terms of ‘inadequacy of reasons’. Although Mr Howlett submits that “…the Employer has dressed this Ground of Appeal up as a ‘failure to give reasons’ when principally it is dissatisfied with the Arbitrator’s finding that the Worker’s incapacity only changed from 23 July 2008”, that does not diminish the substance of the appeal.
The Adequacy of Reasons Issue
67.This issue to some extent has been dealt with in the preceding paragraphs. Again, Coles’ primary submission is to the effect that a change of circumstances equates to a change in capacity. This view is incorrect for the reasons stated previously.
68.Nonetheless, I accept that there are no adequate reasons given for the Arbitrator’s acceptance of 23 July 2008 as the “relevant” date upon which the review commenced. A possible explanation for this I have referred to in paragraph 50 above, but the fact remains that the Arbitrator has failed to disclose the grounds upon which her decision was made.
69.The Arbitrator’s reasons in relation to her assessment of the section 40 award are entirely adequate.
70.Commission Arbitrators have a statutory obligation to provide adequate reasons for a decision. As Mahoney JA said in Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247:
“A judge is not required to make a finding in respect of every fact leading to the final conclusion of fact... nevertheless a judge must distinguish between the essentials and the peripherals...reasons are necessary as an incident to a judicial decision to provide a sufficient explanation of why an order is made. The judge is to apprise the parties of the broad outline and constituent facts of the reasoning upon which he or she has acted... it is necessary that the essential grounds upon which the decision rests should be articulated”.
71.This ground of appeal is therefore upheld.
72.Finally, I note that Coles accepts that there is no legal basis upon which the Arbitrator was entitled to further reduce the award in favour of Mr Howlett by reference to the statutory rate as set out in [35.4] and [35.5] of the Reasons. This is a clear error by the Arbitrator, and this aspect of her award must be revoked.
CONCLUSION
73.The Arbitrator has erred in some aspects of her decision. In line with the powers afforded me by section 352 (7) of the 1998 Act, I propose to substitute my own decision. The findings made by the Arbitrator at [35] are revoked and the following findings made in lieu thereof:
“(a) For the period 1 July 2007 to date and continuing, the Worker’s entitlement to weekly compensation pursuant to section 40 of the 1987 Act is as follows:
1. The Worker’s probable earnings but for injury are $856.45 per week.
2. The average amount that the Worker would be able to earn in some suitable employment from time to time, taking into account his ability to earn in the general labour market reasonably accessible to him and having regard to what is ‘suitable’ employment for him is $554.40, save for the period 25 February 2008 to 15 May 2008 when the Worker was able to earn $582.11 per week.
3. Therefore the Worker’s reduction in weekly earnings from 1 July 2007 to 24 February 2008 is $302.05 per week, and from 25 February 2008 to 15 May 2008 is $274.34. From 16 May 2008 to date and continuing it is $302.05
4. The Employer is to pay to the Worker weekly payments at the rate of $302.05 from 1 July 2007 to 24 February 2008, $274.34 from 25 February 2008 to 15 May 2008 and $302.05 from 16 May 2008 to date and continuing.
5. Credit to the Employer for any payments made to date.
6. The Worker is seeking suitable employment.7. There is no reason to exercise my discretion.”
DECISION
74.(1) Paragraph one of the decision of the Arbitrator dated 3 September 2008 is revoked and the following decision made in its place:
“1. That the Applicant Employer pay the Respondent Worker weekly compensation at the rate of $302.05 from 1 July 2007 to 24 February 2008; $274.34 from 25 February 2008 to 15 May 2008; and $302.05 from 16 May 2008 to date under section 40 of the Workers Compensation Act 1987. Such weekly payments to continue in accordance with the provisions of the Act.”
(2)Paragraph two is confirmed.
(3) Credit to the Employer for any payments made to date.
COSTS
75.I make no order as to costs of this appeal.
Deborah Moore
Acting Deputy President 20 January 2009
I, MARIE JOHNS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DEBORAH MOORE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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