Cronje v Leighton Contractors Pty Ltd - [2015] NSWWCCPD 16

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:	Cronje v Leighton Contractors Pty Ltd [2015] NSWWCCPD 16
APPELLANT:	Guill Cronje
RESPONDENT:	Leighton Contractors Pty Ltd
INSURER:	CGU Workers Compensation (NSW) Ltd
FILE NUMBER:	A1-3829/14
ARBITRATOR:	Ms D Moore
DATE OF ARBITRATOR’S DECISION:	31 October 2014
DATE OF APPEAL DECISION:	3 March 2015
SUBJECT MATTER OF DECISION:	Claim for weekly compensation for psychological injury; whether s 74 notice disputed current work capacity; whether Arbitrator erred in determining that worker had no economic incapacity from a specified date; failure to give reasons; failure to determine claim for weekly compensation in accordance with the legislation; ss 32A, 35 and 37 of the Workers Compensation Act 1987, as amended by the Workers Compensation Legislation Amendment Act 2012; need to apply the new terminology introduced by the Workers Compensation Legislation Amendment Act 2012; relevance of post-injury work in worker’s own business; assessment of ability to earn in suitable employment where worker effectively self-employed; relevance of earnings of worker’s own business
PRESIDENTIAL MEMBER:	Deputy President Bill Roche
HEARING:	On the papers
REPRESENTATION:	Appellant:	Taylor & Scott Lawyers
Respondent:	BBW Lawyers
ORDERS MADE ON APPEAL:	1. Paragraphs 1, 2, 4 and 5 of the Certificate of Determination of 31 October 2014 are confirmed. 2. Paragraph 3 of the Certificate of Determination of 31 October 2014 is revoked and the matter remitted to a different Arbitrator for re-determination of the appellant worker’s entitlement to weekly compensation from 1 April 2014 to date and continuing. 3. No order as to costs.

INTRODUCTION

This appeal concerns whether the worker’s capacity to work was an issue properly before the Senior Arbitrator, that is, if it was a matter disputed in the s 74 notice and, if it was, whether the Senior Arbitrator erred in deciding that the worker had no entitlement to weekly compensation after a date and in giving no reasons for that finding. For the reasons explained below, the first point is unsuccessful but the second and third are upheld. As a result, part of the claim must be re-determined.

BACKGROUND

The appellant worker, Guill Cronje, worked for the respondent employer, Leighton Contractors Pty Ltd, as a plumber. On 15 August 2012, he suffered a needle stick injury while pumping water out of a sediment pond. He reported the incident and saw the company doctor. Blood tests were arranged and Mr Cronje was certified fit for work.
As a result of the needle stick injury, Mr Cronje developed major depression, which forced him to stop work at the end of January 2013. The insurer accepted the claim and paid weekly compensation until 3 October 2013, having disputed liability in a s 74 notice dated 22 August 2013.
Essentially, liability was disputed because:
(a) any incapacity within the meaning of s 33 of the Workers Compensation Act 1987 (the 1987 Act) which may have resulted from any work-related injury ceased by 3 July 2013;
(b) Mr Cronje was fit for his pre-injury duties, and
(c) Mr Cronje’s conditions, paranoid schizophrenia, obsessive compulsive disorder and substance abuse disorder, were not work related.
In a later s 74 notice, dated 13 June 2014, the insurer disputed that Mr Cronje had received a primary psychological injury and asserted that, in any event, any work aggravation had ceased and any incapacity was not consistent with the injury on 15 August 2012.
In February 2014, Mr Cronje established Insight Plumbing & Excavations Pty Ltd (Insight Plumbing), a licensed plumbing company that specialises in earth moving and excavations. It is unclear if Mr Cronje is employed by that company, but it is clear that its income is generated solely by Mr Cronje’s labour in working an excavator and driving a tip truck. In other words, it is a one-man company.
Though formed in February 2014, Insight Plumbing did not start operating until 1 April 2014. The company’s profit and loss statement for the financial year to 30 June 2014 reveals a total income of $25,354.01 but, after deduction of expenses, a loss of $10,033.61.
In an Application to Resolve a Dispute filed in the Commission on 28 July 2014, Mr Cronje claimed weekly compensation of $1,159.56 per week from 3 October 2013 to date and continuing, lump sum compensation, and compensation for hospital and medical expenses.
After a contested arbitration on 17 October 2014, the Senior Arbitrator delivered an oral decision on 30 October 2014 in which she found that, as a result of the needle stick injury, Mr Cronje suffered from a major depressive disorder, a primary psychological injury, the effects of which were continuing. Consistent with that decision, the Commission issued a Certificate of Determination on 31 October 2014 in the following terms:
“1.The applicant sustained a primary psychological injury arising out of and in the course of his employment on 15 August 2012 to which his employment was a substantial contributing factor.
2.Award for the applicant at the rate of $1,159.56 pursuant to section 37 of the 1987 Act from 4 October 2013 to 12 December 2013 and then at the rate of $409.56 per week from 13 December 2013 to 31 March 2014.
3.The applicant has no economic incapacity since 1 April 2014.
4.The respondent is to pay the applicant’s reasonably incurred section 60 expenses.
5.The permanent impairment dispute is remitted to the Registrar for referral to an Approved Medical Specialist for assessment of whole person impairment in respect of a primary psychological condition resulting from injury on 15 August 2012.”
Mr Cronje has challenged the Senior Arbitrator’s determination that he had no economic incapacity, and therefore no entitlement to weekly compensation, from 1 April 2014. None of the Senior Arbitrator’s other findings or orders have been challenged. (I note in passing that on 5 December 2014 an Approved Medical Specialist (AMS) assessed Mr Cronje to have a 15 per cent whole person impairment as a result of his injury.)

ON THE PAPERS

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.”
Having regard to Practice Directions Nos 1 and 6, the documents that are before me, and the submissions by the 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.

ISSUES IN DISPUTE ON APPEAL

The issues in dispute in the appeal are whether the Senior Arbitrator erred in:
(a)     allowing the respondent to “put economic incapacity in issue” (issues in dispute at the arbitration);
(b)     determining that Mr Cronje “had no incapacity (physical and/or economic) from 1 April 2014” (current work capacity/ability to earn);
(c)     determining that Mr Cronje had an ability to earn $500 per day (current work capacity/ability to earn), and
(d)     failing to provide adequate reasons for finding that Mr Cronje had no economic incapacity from 1 April 2014 (current work capacity/ability to earn).

ISSUES IN DISPUTE AT THE ARBITRATION

Submissions

Though counsel appeared for Mr Cronje at the arbitration, his solicitor, Mr Ray McClenahan has prepared the submissions on appeal. Mr McClenahan submitted that though the s 74 notice of 22 August 2013 put “incapacity” pursuant to s 33 in issue, it did not expressly or impliedly suggest that Mr Cronje’s ability to earn was greater than either 80 or 95 per cent of his pre-injury average weekly earnings (AWE).
The notice relied on a report from Dr Vickery, consultant psychiatrist qualified by the respondent, to the effect that Mr Cronje’s condition was constitutional and not attributable to his employment and any incapacity was not related to the needle stick incident. The notice did not annex any evidence relevant to Mr Cronje’s ability to earn and the evidence in support of the declinature under s 33 dealt solely with the “genisis [sic] of the cause of [Mr Cronje’s] ongoing incapacity”.
Mr McClenahan said that counsel for the parties at the arbitration identified the issues to be whether Mr Cronje had an “ongoing … work related psychological injury” (T12.9–15) and whether it was a primary or secondary psychological injury under s 65A of the 1987 Act.
He contended that, in the result, Mr Cronje is prejudiced by the Senior Arbitrator allowing the respondent to argue that his ability to earn, as demonstrated by his business income, was greater than 80 or 95 per cent of his pre-injury average weekly earnings. He said that accounting evidence could have been “acquired to determine the exact nature and extent of [Mr Cronje’s] business losses” over the financial year 2014 and expected losses over 2015.
The respondent’s solicitor, Mr Daniel Wilkins, who also did not appear at the arbitration, has submitted that the s 74 notice put incapacity in issue and that the onus was on Mr Cronje to establish an incapacity as a result of his injury.

Discussion and findings

The submission that Mr Cronje’s incapacity was not in issue is plainly wrong and is rejected.
The s 74 notice of 22 August 2013 stated:
“Any incapacity within the meaning of s 33 of the Workers Compensation Act 1987 (‘the 1987 Act’) which may have resulted from any work-related injury ceased by no later than 3 July 2013.
Since at least 3 July 2013, the injury alleged has not resulted in any incapacity for work within the meaning of s 33 of the 1987 Act.”
This statement was based on, among other things, evidence from Dr Vickery. In his report of 19 April 2013, Dr Vickery said that Mr Cronje was recovering from a major depressive disorder and “the aggravation should cease in 3 month[s] or so”. In a supplementary report of 1 May 2013, he said that Mr Cronje could “return to his pre-injury employment with [the respondent]”. Dr Vickery added, though it was not referred to in the s 74 notice, that “Mr Cronje should have the capacity to return to work in a controlled sedentary environment part time in May 2013”.
The s 74 notice also referred to Dr Vickery’s report of 3 July 2013, in which, contrary to his earlier report, the doctor diagnosed Mr Cronje to be suffering from paranoid schizophrenia, obsessive compulsive disorder and substance abuse disorder, which were primarily constitutional in nature and no longer work related. However, Dr Vickery added that Mr Cronje was “unfit for employment”, though the ongoing incapacity was not consistent with the injury on 15 August 2012.
Thus, though Dr Vickery gave conflicting opinions about Mr Cronje’s capacity/incapacity, the s 74 notice clearly identified incapacity as an issue in dispute. Though its grounds for putting that issue in dispute were flimsy, to say the least, and the s 74 notice was, as usual, poorly drafted, the insurer put Mr Cronje on notice that it disputed incapacity. That being so, it was for Mr Cronje to establish that he had an entitlement to weekly compensation as a result of a compensable work injury. That meant establishing that he either had no current work capacity or a current work capacity, and that, applying the legislation, he had an entitlement to weekly compensation.
It is correct that, at the arbitration, counsel for the respondent, Mr Craig Tanner, identified (at T12.20) the issues as being whether Mr Cronje has an ongoing psychological injury and whether it was a primary psychological injury or a secondary psychological injury. However, that was not the end of the matter. Mr Tanner submitted at length (from T31.31 to 41.9) on the issue of incapacity, noting that, though there was evidence that Mr Cronje was unfit to work as a plumber, there was no evidence that restricted the number of hours he could work in suitable employment.
Counsel for Mr Cronje at the arbitration, Mr Austin, did not object to any of Mr Tanner’s submissions on the ground that they dealt with an issue not in dispute, or that they took him by surprise and caused him prejudice. He also submitted on the nature and extent of Mr Cronje’s incapacity. In the course of Mr Austin’s submissions, the Senior Arbitrator said that, from the financial records tendered, it was difficult for her to work out what Mr Cronje was earning in his business. At the Senior Arbitrator’s invitation, the arbitration was briefly adjourned while Mr Austin obtained his client’s instructions on that issue.
At the resumption of the arbitration, the Senior Arbitrator recorded (at T48.9) that Mr Cronje said that he hired a Komatsu excavator at $80 per hour, charged $250 a load for the “tipper” truck, and that lease payments were $2,300 per month. Doing some “rough calculations”, Mr Tanner submitted, as summarised by the Senior Arbitrator, that Mr Cronje could “earn about 500-odd a day [after expenses] and that’s the value of his labour” (T48.20).
In response, Mr Austin submitted that Mr Cronje’s actual earnings were zero (T49.10). This submission was based on the profit and loss statement for Insight Plumbing, which revealed a loss of $10,033.61 in the financial year ending 30 June 2014. Therefore, Mr Austin contended it was artificial to refer to any of the figures (for the company).
The above analysis demonstrates that, even if the s 74 notice was defective, which I do not accept, the case was run on the basis that incapacity was in issue. Mr Austin raised no objection to that course and it is not open to argue on appeal, for the first time, that the Senior Arbitrator erred in permitting that issue to be argued. As the Commission has attempted to explain in dozens of decisions, parties are bound by their conduct at the arbitration (University of Wollongong v Metwally (No 2) [1985] HCA 28; 59 ALJR 481) and it is not open to attempt to conduct the case on a different basis on appeal.

CURRENT WORK CAPACITY/ABILITY TO EARN

Submissions

Mr McClenahan submitted that, in large degree, this error stems from the decision to allow the respondent to “broaden the dispute during submissions and argue ability to earn”. He noted that the Senior Arbitrator, on a number of occasions, pointed to a lack of up-to-date medical evidence dealing with incapacity. However, the issue in the s 74 notice concerned the genesis or cause of Mr Cronje’s incapacity (and whether the injury was “primary or secondary”), not his ability to earn, Dr Vickery noting that Mr Cronje was “not fit for work”.
Mr McClenahan said it was not clear whether the Arbitrator found that Mr Cronje had no physical incapacity from 1 April 2014 or just (no) economic incapacity, noting that (at T17.18–18.5) the Senior Arbitrator appeared to suggest that there was no evidence of ongoing incapacity and that the evidence from Dr Teoh, consultant psychiatrist qualified by Mr Cronje, was at odds with Mr Cronje’s statements.
To the extent that this reasoning amounted to a finding that Mr Cronje was no longer physically incapacitated, the Senior Arbitrator erred. She accepted the evidence from Dr Teoh and Dr Malik, the treating psychiatrist, that Mr Cronje suffered a primary psychological injury. Dr Teoh’s evidence on incapacity was that Mr Cronje was fit for suitable duties and not fit for work as a full-time plumber. Similarly, the treating general practitioner, Dr Somasundaram, stated in his report of 3 March 2014 that Mr Cronje was not fit for his earlier plumbing job but “could try a totally different job in an entirely new environment”. Dr Vickery stated that Mr Cronje was incapacitated and “not fit for work”.
Mr McClenahan submitted that the Senior Arbitrator found, after considering the invoices produced by Insight Plumbing, that Mr Cronje had an “ability to earn … $500 per day” and that he had “no economic incapacity as a result of the injury”. He contended that there was insufficient evidence to support this finding, noting that the company’s profit and loss statement showed gross business income of $25,354 and expenses of $35,387, producing a loss of $10,033. He said that the Senior Arbitrator failed to explain the basis for her finding that Mr Cronje would earn $500 per day.
Mr McClenahan argued that the Senior Arbitrator did not deal with the evidence that demonstrated that expenses were greater than the income and the business made a loss in 2014. He said that, prima facie, the evidence demonstrated that Mr Cronje’s earnings were nil and that the respondent did not adduce evidence to contradict that. He contended that the Senior Arbitrator erred not making this finding or explaining why she did not accept this to be the case.
Mr McClenahan submitted that the Senior Arbitrator failed to give reasons for dismissing Mr Austin’s submission that, since the evidence was that Mr Cronje’s income was nil, it was appropriate to inquire as to Mr Cronje’s ability to earn as a labourer or plant operator on the open labour market.
Mr Wilkins submitted that the Arbitrator found that Mr Cronje was able to earn, in suitable employment, a sum greater than 80 per cent of his pre-injury average weekly earnings and that that finding was consistent with Mr Cronje’s medical evidence. He contended that the Senior Arbitrator “outline[d] her reasons”. She discussed the evidence from Drs Malik and Teoh and then addressed Mr Cronje’s statements and the issue relating to hours. The Senior Arbitrator concluded, noting the surveillance material, that there was no evidence to suggest Mr Cronje was limited in the hours he could work. He noted that “there is a dearth of evidence” from Mr Cronje in relation to the issue of incapacity.

The Senior Arbitrator’s reasons

The Senior Arbitrator accepted that Mr Cronje was unfit from 12 September 2013 to 12 December 2013, and that he was entitled to an award at the agreed rate of $1,159.56 (80 per cent of Mr Cronje’s pre-injury average weekly earnings). Presumably this was based on an (unstated) assumption that, during the relevant period, Mr Cronje had no current work capacity.
With respect to the period from 13 December 2013 to 31 March 2014, the Senior Arbitrator accepted that Mr Cronje was “partially incapacitated” (T19.3). She found that, in this period, he was able to work 25 hours per week earning $30 per hour, that is, $750 a week. Accordingly, presumably applying the formula in s 37(3)(a), she concluded that Mr Cronje was entitled to weekly compensation of $409.56 per week in this period.
The finding that Mr Cronje was “partially incapacitated” should, more accurately, have been a finding that he had a current work capacity, as defined in s 32A. That is, that he had an inability to return to his pre-injury employment but was able to return to work in suitable employment. Nothing turns on the incorrect terminology and neither party has challenged the awards covering the first two periods. However, given the changes introduced by the Workers Compensation Legislation Amendment Act 2012 (the 2012 amending Act), it is important to note, and apply, the new terminology.
Dealing with the period from 1 April 2014 to date, the Senior Arbitrator noted Mr Tanner’s submission that, based on the financial records, Mr Cronje had an ability to earn $500 per day. She did not accept Mr Austin’s submission that, as Mr Cronje was working under a company structure, he therefore had nil earnings and the Senior Arbitrator should look at his ability to earn as a labourer. She noted that she was required to look at his “ability to earn on the labour market” (T18.25). Given that Mr Cronje operated complex machinery, and had started his own business, which he was capable of running despite some ongoing symptoms, she did not accept that she should look only at his ability to earn as an “ordinary labourer” (T18.26).

The Senior Arbitrator then quoted (at T19.18) Mr Cronje’s evidence in his statement of 13 October 2014 that his business was running at “a complete loss”, as his work hours and times varied from 16 hours to 24 hours a week. She also noted his evidence that, sometimes, he did not work at all or turned away work because he did not feel “confident or stable leaving home” (T19.23) and preferred to stay at home. She noted, from surveillance evidence tendered by the respondent, that Mr Cronje was able to “get out and work with the tipper and the excavator” (T19.26), which was the kind of work he said he was able to do.
After dealing with Mr Cronje’s entitlement from 12 December 2013 to 31 March 2014, which has not been challenged, the Senior Arbitrator said, starting at T20.6:
“I find since 1 April 2014 [Mr Cronje] has no economic incapacity as a result of the injury on 15 August 2012 and thus no entitlement to ongoing weekly compensation. As I said, I do that on the basis that my task is to look at his ability to earn and I think that it is a credit to him that he’s been able to get these skills and get on with his life and start this business but I’m not persuaded at this stage despite those business losses that he has an ongoing economic incapacity.”

Discussion and findings

I have dealt with Mr McClenahan’s complaint that the Senior Arbitrator erred in allowing the respondent to “broaden the dispute”. Mr Cronje’s capacity/incapacity was an issue in dispute and both sides submitted on it. The Senior Arbitrator was not only entitled to deal with it, she was required to do so.
Mr McClenahan’s reference to Dr Vickery’s evidence that Mr Cronje was not fit for work is of limited relevance. That opinion was expressed in a report dated 3 July 2013. Clearly, Mr Cronje’s circumstances changed significantly between that date and the commencement of his business in early 2014. In any event, the doctor’s opinion did not determine the issue of Mr Cronje’s entitlement to weekly compensation, which required consideration of the relevant legislation in the context of the evidence overall, both lay and expert.
Mr McClenahan’s complaint that it was unclear if the Senior Arbitrator found that Mr Cronje had no physical incapacity or if she found that he had no economic incapacity is without substance. It is obvious, from the passage quoted at [40] above, that the Senior Arbitrator found that Mr Cronje had no “economic incapacity” from 1 April 2014. It is also clear, from her reasons overall, that she accepted that Mr Cronje continued to suffer the physical and emotional effects of his psychological injury. That finding was clearly correct and has not been challenged. (It is also consistent with the AMS’s assessment on 5 December 2014 that, as a result of the injury, Mr Cronje has a 15 per cent whole person impairment.)
The submission that the Senior Arbitrator found that Mr Cronje had an ability to earn $500 per day was inaccurate. She merely noted Mr Tanner’s submission to that effect. She did not say if she accepted or rejected that submission. This leads to Mr McClenahan’s main complaint, namely, that the Senior Arbitrator failed to provide adequate reasons for finding that Mr Cronje had no economic incapacity from 1 April 2014.
The extent and scope of a trial judge’s (or Arbitrator’s) duty to give reasons depends upon the circumstances of the individual case (Mifsud v Campbell (1991) 21 NSWLR 725 at 728 per Samuels JA (with whom Clarke JA and Hope AJA agreed)). The obligation to give reasons is related to and dependent upon the submissions presented to the judicial officer.
The submissions at the arbitration dealt extensively with Mr Cronje’s ability to earn, and whether he was entitled to an award of weekly compensation beyond 1 April 2014, and the Senior Arbitrator was obliged to engage with them and explain which she accepted and which she rejected. Other than to note that Mr Cronje had established his own business, and that he was capable of working in that business, the Senior Arbitrator gave no reasons for finding that Mr Cronje had no economic incapacity from 1 April 2014. The only possible explanation is that she accepted Mr Tanner’s submission that Mr Cronje could earn $500 per day. However, if that was so, she did not explain why she did so.
To the extent that the Senior Arbitrator considered Mr Cronje’s ability to work, she noted his evidence that his hours varied between 16 and 24 per week, and that, because of his symptoms as a result of his injury, sometimes he did not work at all or turned away work. She also said that there was “no evidence really that [Mr Cronje] is limited in his hours of work”, noting the invoices from Insight Plumbing, which showed that he was capable of working an eight-hour day. She added that she expected Mr Cronje would be able to “increase and improve his business” (T19.33). There are three points to note about these comments.
First, the statement that there was “no evidence” that Mr Cronje was limited in his hours of work was inconsistent with Mr Cronje’s evidence that his hours varied between 16 and 24 and that sometimes he did not work at all or turned work away. Though the Senior Arbitrator’s statement may have been consistent with the medical evidence, which did not address the number of hours Mr Cronje could work, the Senior Arbitrator did not restrict her comment to the medical evidence.
Second, while the invoices did show, as Mr Cronje conceded, that he could work an eight-hour day, they did not show that he had been consistently doing so for five days per week.
Third, the Senior Arbitrator had to determine Mr Cronje’s entitlement to weekly compensation at the date of the arbitration. Therefore, the fact that Mr Cronje might be able to “increase and improve his business” was irrelevant to that determination.
These matters have not formed the basis of any specific challenge on appeal and I say no more about them.
Instead, Mr McClenahan has challenged the Senior Arbitrator’s lack of reasons. That challenge would be more accurately described as a failure to properly determine all issues in dispute. However it is characterised, the challenge is made out. It was only by making certain unexplained assumptions about Mr Cronje’s ability to earn that the Senior Arbitrator could have concluded that he had no economic incapacity beyond 1 April 2014. That was an error because it did not explain the “essential ground” for that part of the Senior Arbitrator’s conclusion (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 per McHugh JA at 280).
If the Senior Arbitrator based her conclusion on an acceptance of Mr Tanner’s submission that Mr Cronje could earn $500 per day, that was an error because, as explained below at [62]–[66], it approached Mr Cronje’s entitlement to weekly compensation on the wrong basis.
I do not accept the submission by Mr Wilkins that the Senior Arbitrator found that Mr Cronje was able to earn, in suitable employment, a sum greater than 80 per cent of his pre-injury average weekly earnings, and that that finding was consistent with the medical evidence. The Senior Arbitrator made no such finding. She merely said that “since 1 April 2014 [Mr Cronje] has no economic incapacity as a result of the injury on 15 August 2012” (T20.6). Moreover, the medical evidence did not address the hours that Mr Cronje could work and Mr Cronje’s evidence was that, because of his injury, he did not work full-time in his business.
Mr Cronje’s entitlement to weekly compensation fell in the second entitlement period. As, it seems, he has returned to work for not less than 15 hours per week, the Senior Arbitrator’s task was to apply the formula in s 37(2)(a): (AWE x 95%) – (E + D). The reference to “AWE” is a reference to Mr Cronje’s pre-injury average weekly earnings.
“E” is defined in s 35(1) as:
“the amount to be taken into account as the worker’s earnings after the injury calculated as whichever of the following is the greater amount:
(a) the amount the worker is able to earn in suitable employment,
(b) the workers current weekly earnings.”
“D” (a deductible amount) is defined in s 35(1) as:
“the sum of the value of each non-pecuniary benefit (if any) that is provided by the employer to a worker in respect of that week (whether or not received by the worker during the relevant period), being a non-pecuniary benefit provided by the employer for the benefit of the worker or a member of the family of the worker.”
In determining “E”, the task is to determine the amount the worker “is able to earn in suitable employment” and the worker’s “current weekly earnings”. The term “suitable employment” is defined in s 32A and the term “current weekly earnings” is defined in s 44I. On the evidence, it is impossible to know Mr Cronje’s “current weekly earnings” with Insight Plumbing, or even if he is employed by that company. In any event, one looks at the higher of the two figures for “current weekly earnings” and ability to earn in “suitable employment”.
Therefore, even if Mr Cronje’s current weekly earnings with Insight Plumbing are nil, and the company is running at a loss, that will be of limited, if any, relevance to the assessment of “E”. The Senior Arbitrator had to determine the amount Mr Cronje is “able to earn in suitable employment”. That assessment is conducted having regard to the definition of suitable employment in s 32A, which provides:
suitable employment“, in relation to a worker, means employment in work for which the worker is currently suited:
(a)     having regard to:
(i) the nature of the worker’s incapacity and the details provided in medical information including, but not limited to, any certificate of capacity supplied by the worker (under section 44B), and
(ii) the worker’s age, education, skills and work experience, and
(iii) any plan or document prepared as part of the return to work planning process, including an injury management plan under Chapter 3 of the 1998 Act, and
(iv) any occupational rehabilitation services that are being, or have been, provided to or for the worker, and
(v) such other matters as the WorkCover Guidelines may specify, and
(b)     regardless of:
(i)      whether the work or the employment is available, and
(ii) whether the work or the employment is of a type or nature that is generally available in the employment market, and
(iii) the nature of the worker’s pre-injury employment, and
(iv) the worker’s place of residence.” (emphasis in original)
It follows that an assessment of the profitability of Mr Cronje’s business is not the exercise required by the new weekly compensation regime introduced by the 2012 amending Act. In determining the amount a worker “is able to earn in suitable employment”, it is necessary to have regard to, among other things, the nature of the incapacity and the details provided in the medical information. In considering the nature of Mr Cronje’s incapacity, it will be appropriate to consider his current activities with Insight Plumbing and the medical evidence.
For the period from 1 April 2014, the Senior Arbitrator merely concluded that Mr Cronje had no economic loss and that she was not persuaded that, despite the business losses, Mr Cronje had an ongoing economic incapacity. That approach did not adequately explain the basis of the Senior Arbitrator’s conclusion. More importantly, it did not determine the dispute in accordance with the legislation. It follows that the claim for weekly compensation from 1 April 2014 must be re-determined. In view of the state of the medical evidence, that re-determination will have to be at another arbitration before a different Arbitrator.
One further matter requires comment, as it will be relevant at the re-determination. The submission that Mr Cronje is able to earn $500 per day is unsustainable and involves an incorrect approach to the assessment of his ability to earn in suitable employment. That amount was arrived at by looking at the gross amount paid to Mr Cronje’s company and deducting some of the company’s expenses (lease payments). It represented an amount to cover the provision of a worker (Mr Cronje) and expensive equipment (an excavator and/or truck). Thus, while it included a component for labour, it also included a return on capital and a component for profit. That is not the correct measure of a worker’s ability to earn.
When assessing a worker’s ability to earn, the legislation directs attention to the worker’s ability to earn in “suitable employment”. Suitable employment means “employment in work for which the worker is currently suited”. As explained in Wollongong Nursing Home Pty Ltd v Dewar [2014] NSWWCCPD 55 at [59]:
“The word ‘employment’ is not defined in the legislation. Its common meaning is ‘the state of being employed’. However, ‘worker’ is defined. It means, subject to specified exclusions, ‘a person who has entered into or works under a contract of service or a training contract with an employer’ (s 4 of the 1998 Act). In context, the phrase ‘employment in work’, in the definition of suitable employment, ‘in relation to a worker’, must refer to real work in the labour market. That is, it must refer to a real job in employment for which the worker is suited.”
Thus, one must look to the worker’s ability to earn in suitable work or employment as an employee. That will often be quite different to the income generated by a company or business, which involves, among other things, a return on capital and an allowance for profit. That is not to say that a worker’s activities in his or her own company or business, post-injury, will be irrelevant. Those activities will provide a guide to the worker’s ability to earn in suitable employment. However, the value of those activities must be determined by reference to the value of that work or employment, as an employee, in the labour market. Naturally, in making that assessment, each case will depend on its own facts.
The proper approach, in a case such as the present, is to consider the cost to Mr Cronje’s company (or another company) of employing a person to do the work he currently performs or is fit to perform. That means determining:
(a)     the number of hours Mr Cronje is working or, having regard to the restrictions that have resulted from his accepted psychiatric injury, is able to work;
(b)     the capacity in which he works, that is, the nature of his activities and the level of skill and training required to perform those activities, and
(c)     the market value of that work.
This assessment is made “regardless” of “whether the work or employment is available” (see (b) in the definition of suitable employment in s 32A). Thus, if a worker is working 15 hours per week, whether in his or her own business or for another employer, but is found to be capable of working 25 hours per week, it is the higher figure that is used to calculate “E”.
Adopting this approach, it is not open to conclude that Mr Cronje’s ability to earn is $500 per day, or anything like it. The proper approach is to look at his ability to earn as a plant operator/tipper driver, taking into account the nature of the equipment he operates and the hours he is able to work, having regard to his incapacity and the medical evidence, and to then apply the correct formula in s 37. As the medical evidence is generally unhelpful on this issue, the parties will be required to call further evidence dealing with Mr Cronje’s current work capacity in general and the hours he is capable of working in suitable employment in particular.
It follows from the above analysis that the complications that arise when a worker returns to work in his or her own business, as highlighted in Cage Developments Pty Ltd v Schubert [1981] 2 NSWLR 227; [1983] HCA 37; 151 CLR 584 and J & H Timbers v Nelson [1972] HCA 12; 126 CLR 625, are largely eliminated under the new weekly compensation provisions. The task now requires an application of the appropriate formula in either ss 36, 37 or 38, depending on which entitlement period applies. Assuming that the worker has a “current work capacity”, the essential function is to determine what the worker “is able to earn in suitable employment”, regardless of whether that work or employment is available.

CONCLUSION

For the reasons explained above, the appeal is successful and the claim for weekly compensation from 1 April 2014 to date and continuing must be re-determined before a different Arbitrator. It will be necessary for both sides to address the state of the evidence prior to the re-determination. It should be clearly understood that, at the re-determination, it is not open to the respondent to argue that Mr Cronje has recovered from the physical and emotional effects of his injury. The only issue is whether, on the correct application of the legislation, he is entitled to weekly compensation from 1 April 2014 and, if so, the quantum of that compensation.

DECISION

Paragraphs 1, 2, 4 and 5 of the Certificate of Determination of 31 October 2014 are confirmed.
Paragraph 3 of the Certificate of Determination of 31 October 2014 is revoked and the matter remitted to a different Arbitrator for re-determination of the appellant worker’s entitlement to weekly compensation from 1 April 2014 to date and continuing.

COSTS

No order as to costs.

Bill Roche
Deputy President

3 March 2015

I, KATHRYN CAMP, 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