Cubic Interiors Pty Ltd v Basic - [2006] NSWWCCPD 293

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:Cubic Interiors Pty Limited v Basic [2006] NSWWCCPD 293
APPELLANT:  Cubic Interiors Pty Limited
RESPONDENT:  Michael Basic
INSURER:Employers Mutual Limited
FILE NUMBER:  WCC 4264-06
DATE OF ARBITRATOR’S DECISION:          7 July 2006
DATE OF APPEAL DECISION:  6 November 2006
SUBJECT MATTER OF DECISION: Points not argued at first instance; section 9A of the Workers Compensation Act 1987– need to raise; section 14(2) of the Workers Compensation Act 1987 – serious and wilful misconduct, serious and permanent disablement.
PRESIDENTIAL MEMBER:  Acting Deputy President Michael Snell
HEARING:On the papers
REPRESENTATION:  Appellant: Edwards Michael Moroney
`Respondent: Leitch Hasson Dent

ORDERS MADE ON APPEAL: 1.The decision of the Arbitrator dated 7 July 2006 is revoked and the matter is remitted to another Arbitrator for determination afresh.

2. Costs of the original arbitration hearing to follow the final costs order when the matter is redetermined.

3. No order as to the costs of the appeal

BACKGROUND TO THE APPEAL

On 3 August 2006 Cubic Interiors Pty Limited (‘the appellant’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision dated 7 July 2006.

The respondent to the appeal is Michael Basic (‘the respondent’).

The respondent commenced working with the appellant on 20 July 2005, as a labourer and gyprocker. He would submit invoices to the appellant for hours worked, and was remunerated at a rate of $40.00 per hour plus GST and other allowances. The appellant took no issue that the respondent was a ‘worker’ for the purposes of the workers compensation legislation. As at 18 November 2005 the respondent was working the night shift on a site at the Argyle Shopping Centre in Goulburn, where the appellant was carrying out ceiling fixing, partitions and external cladding. The respondent fell a distance of about four or five metres to the ground. He suffered multiple injuries. The respondent’s claim is one for weekly compensation on an ongoing basis from 18 November 2005, and medical expenses. The issues in dispute, pleaded by the appellant in its Reply, were multifarious, and did little to highlight those matters genuinely in issue. It is clear, from material filed by the parties, and the manner in which the matter was run at the arbitration hearing, the occurrence of the fall was not the subject of any real dispute. The real issue contested at the arbitration hearing was the conduct of the respondent, in particular his consumption of alcohol, prior to the fall. It was contended by the appellant that compensation was not payable in respect of the injury, due to section 14(2) of the Workers Compensation Act 1987 (‘the 1987 Act’).

The arbitration hearing was conducted on 21 June 2006. Both parties were represented by counsel. The respondent gave evidence and was cross-examined. The appellant had relied, in documents attached to its Reply, on statements from eight lay witnesses, who were current or former employees. Two of these people, Dragan Kristic and Drasko Basta, gave evidence and were cross-examined, in the appellant’s case.

The Certificate of Determination, accompanied by the arbitrator’s Reasons, is dated 7 July 2006. The respondent’s solicitors wrote to the Registrar of the Commission on 7 September 2006, advising the appellant had not made any payments of compensation to the respondent, pursuant to the award of 7 July 2006, advising the respondent was in an “impoverished state”, and seeking “an order the Appellant make some form of payment”. By letter dated 13 September 2006, responding to the correspondence of 7 July 2006, the President of the Commission advised the parties the appeal would be expedited.

THE DECISION UNDER REVIEW

The ‘Certificate of Determination’, dated 7 July 2006 records the Arbitrator’s orders as follows:
“1.     The Respondent is liable to make weekly benefits compensation to the Applicant as follows:
(i)At the rate of $1449.50 per week from 18 November 2005 to 31 March 2006 pursuant to section 36.
(ii)At the rate of $1479.40 per week from 1 April 2006 to 19 May 2006 to date and continuing pursuant to section 37.
(iii)At the rate of $505.10 per week (worker plus dependant wife and child) from 20 May 2006 to date and continuing pursuant to section 37.
2.     The Respondent is liable to pay the Applicant’s reasonable and necessary medical and treatment expenses pursuant to section 60.
3.     The Respondent is liable to pay the Applicant’s costs as agreed or as assessed.”

In setting out the orders in the Certificate of Determination, I have corrected the numbering of the paragraphs. Clearly the words “to date and continuing” appear in error at sub-paragraph 1(ii). In addition, it appears the award made in paragraph 1(ii) should have been pursuant to section 36 of the 1987 Act, rather than section 37, it being at the ‘current weekly wage rate’ during the first twenty-six weeks of incapacity. Nothing turns on this.

The arbitrator, in detailed Reasons, set out the medical and lay evidence before her, both documentary and oral. This included setting out at some length the substance of the various witness’ statements relied upon by the appellant. Her Findings and Reasons are at paragraphs [33] to [47] of her Reasons.

It is convenient at this point to set out section 14 of the 1987 Act:
“14.   (1)   Compensation is payable in respect of any injury resulting in the death or   serious and permanent disablement of a worker, notwithstanding that the worker was, at the time when the injury was received:
(a)acting in contravention of any statutory or other regulation applicable to the worker’s employment, or of any orders given by or on behalf of the employer, or
(b)  acting without instructions from the worker’s employer,
if the act was done by the worker for the purposes of and in connection with the employer’s trade or business.
(2)   If it is proved that an injury to a worker is solely attributable to the serious and wilful misconduct of the worker, compensation is not payable in respect of that injury, unless the injury results in death or serious and permanent disablement.
(3)   Compensation is not payable in respect of any injury to or death of a worker caused by an intentional self-inflicted injury.”
At paragraphs [34] to [36] the arbitrator analysed evidence relating to the respondent’s consumption of alcohol, preferred the evidence of other lay witnesses to that of the respondent, regarding the circumstances of such consumption, and concluded the respondent “engaged in serious and wilful misconduct by consuming alcohol on the night shift”.

The arbitrator then, at paragraphs [37] to [38], considered whether the respondent’s injury was “solely attributable to the serious and wilful misconduct”, and concluded that it was. This involved a consideration of certain credit issues, in the course of which the arbitrator expressed “the view that the Applicant’s evidence is questionable and I am of the view that he is not a reliable witness”.

At paragraphs [39] to [43] the arbitrator dealt with the issue of whether the injury had resulted in ‘serious and permanent disablement’ within the meaning of section 14(2) of the 1987 Act. She formed the view it had, and accordingly found the appellant was liable to pay compensation to the respondent, notwithstanding her findings on the other matters arising under section 14(2).

The balance of the arbitrator’s Reasons deal with matters of assessment not the subject of challenge in this appeal.

ISSUES IN DISPUTE

The submissions of the appellant on appeal raise three issues:
(i) whether the respondent’s employment was a ‘substantial contributing factor’ such that section 9A of the 1987 Act was satisfied;
(ii) whether it was properly open to the arbitrator to find, as she did, that the respondent sustained an injury capable of fulfilling the test of ‘serious and permanent disablement’ in section 14(2), and
(iii) whether the arbitrator gave adequate reasons for her decision. In particular, it is said the arbitrator’s reasons were silent on the topic of section 9A, notwithstanding it being raised as an issue in the appellant’s Reply.
The respondent takes issue with each of these issues:

(i) As regards the section 9A point, the respondent submits the issue, although pleaded in the appellant’s Reply, was not relied upon by the appellant in its submissions at the arbitration hearing, and was accordingly abandoned, and cannot be relied upon in the appeal. Alternatively, the respondent submits the evidence was sufficient to satisfy the test in section 9A.
(ii) The respondent, in response to the issue raised regarding ‘serious and permanent disablement’, submits the medical evidence overall, from a combination of Dr Conrad and Westmead Hospital, was sufficient to justify the finding made.
(iii) The respondent submits the arbitrator’s reasons were adequate in how they dealt with the issues raised pursuant to section 14(2) of the 1987 Act, and that all other issues pleaded by the appellant, including section 9A, had been abandoned, by the way in which the appellant conducted its case before the arbitrator.

On 28 September 2006 I issued a Direction to the parties in the following terms:

“The parties are invited to make written submissions on the following matters:

In the event it was to be decided on appeal that the evidence before the arbitrator was not capable of fulfilling the test of ‘serious and permanent disablement’ in section 14(2) of the Workers Compensation Act 1987:
(i) what significance, if any, should be attached to the absence of any expert evidence dealing with the alcohol consumed by the respondent, and its probable effect on the respondent? Without limiting the foregoing, the attention of the parties is drawn to the judgment of Neilson J in Clyde v State of New South Wales (Technical & Further Education Commission) (1995) 12 NSWCCR 541.
(ii) was the evidence before the arbitrator sufficient to justify her finding that the injury to the respondent was solely attributable to his serious and wilful misconduct (at [36] of her Reasons)?”

Both parties made further written submissions, which are before me, in response to this Direction.

ON THE PAPERS REVIEW

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.”
The appellant submits the appeal should not be determined on the papers, the respondent submits it should. I have the documentary evidence relied upon by the parties before the arbitrator, transcript of the evidence and submissions, the written submissions filed on the appeal, and the supplementary submissions filed in response to my Direction. Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by the respondent that the appeal can proceed to be determined on the basis of the 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

Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.

The quantum of the arbitrator’s award is in excess of the sum of $5,000.00 prescribed in section 352(2)(a) of the 1998 Act. The whole of the award is in issue, and clearly section 352(2)(b) is satisfied.

The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.

In the circumstances, leave to appeal is granted.

DISCUSSION AND FINDINGS

Section 9A

The first of the grounds raised by the appellant is that the respondent’s injury occurred in circumstances such that his employment was not a substantial contributing factor, and section 9A of the 1987 Act is not satisfied. The appellant refers to evidence from one of the respondent’s co-workers, Dulibor Stancev, that the respondent “was discharged from the work site at 2.30am”, and the respondent’s statement says the accident occurred at 3am. It is therefore submitted the respondent was in his own time when the injury occurred. The appellant makes reference to Mercer v ANZ Banking Group Limited (2000) 48 NSWLR 740 (‘Mercer’), and McMahon v Lagana & Anor [2004] NSWCA 164. By implication, it is submitted the respondent was not carrying out positive employment duties at the time of injury, and section 9A is not satisfied.

The Reply filed by the appellant in the arbitral proceedings pleaded a multitude of issues not raised by it during the running of the arbitration hearing. These included matters such as whether an ‘injury’ had occurred within the meaning of the legislation, whether incapacity resulted from the injury, whether there had been a failure by the appellant to comply with its obligations under section 38 of the 1987 Act, and the level of probable earnings if not for injury. The Reply also asserted the respondent’s conduct was such it had taken him out of the course of his employment, and that he was guilty of ‘serious and wilful misconduct’ such that section 14 precluded him from recovering compensation. The argument that the respondent was, due to his conduct, not in the course of his employment at the time he suffered injury, is not relied upon in the appeal, but the argument based upon section 9A is.

The cross-examination of the respondent at the arbitration hearing went to the issue of whether he had been drinking alcohol on the night of his fall, and whether poor lighting and the lack of a safety harness were potentially contributing causes to the fall. The respondent conceded he had been drinking beer on the night, and conceded he was aware he was not supposed to drink alcohol in the circumstances. These all were matters relevant to the issue between the parties pursuant to section 14(2) of the 1987 Act. The submissions of the appellant before the arbitrator went to the issue of whether the appellant could make out a defence to the claim, based upon section 14(2). This was made clear at the opening of the appellant’s submissions (at T29.50), and the submissions thereafter are directed to that issue. Although section 9A was pleaded, it was not raised during the running of the arbitration hearing. It was not submitted upon.

In the High Court, in Metwally (No 2) v University of Wollongong (1985) 60 ALR 68 at 71, it was said:

“It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.”

This principle has been applied in Presidential decisions in the Commission. In Department of Corrective Services v Evans [2005] NSWWCCPD 58 Fleming DP said:

“Secondly it would be unfair to allow a party to raise an issue on appeal, which was not argued before the Arbitrator. This is the legal principle applicable to proceedings in a court and, for essentially the same reasons, it is applicable in proceedings in the Commission. Review by a Presidential Member is not an opportunity for a party to re-litigate their case or to raise fresh arguments on appeal that were not raised at first instance (see Commissioner of Corrective Services v Aldridge (No. 2) [2002] NSWADTAP 6, where this principle was applied in a ‘tribunal’ appeal proceeding).

These decisions were applied by Harrington ADP in K-Mart Australia Limited v Duggan [2006] NSWWCCPD 137 to restrict a party, on appeal, to issues it had agitated at first instance before the arbitrator.

Applying these decisions to the current case, in my view it would be unfair to allow the appellant, on appeal, to pursue its argument based upon section 9A of the 1987 Act, when that issue was not argued before the arbitrator. Accordingly, I reject the appellant’s argument based upon section 9A.

Failure to give adequate reasons

As I understand the appellant’s submissions on the ‘reasons’ point, the appellant argues the arbitrator failed to address the issue of section 9A in her reasons. After referring to certain authorities on section 9A, the appellant submits:

“In the present case the Arbitrator has abrogated the requirement to address the issue. She failed to consider the relevant criteria of employment as required by section 9A(2).”

In Supair Pty Ltd v Sweeney (2000) 20 NSWCCR 514, it was argued by an employer in the Court of Appeal that the trial judge had failed to consider certain of the matters required by section 9A(2). Meagher JA said:

“…s 9A(2)(d) does not require a judge to deal with that particular paragraph in every case. In my view, he does not have to deal with it unless there is evidence before him suggesting that the paragraph is material. In other words, there is evidence before him suggesting that the accident would have befallen the worker in any event. There was no such evidence in the present case…” (at 11])

In the same case, Mason P said:

“Without stating any absolute proposition, it ought to be incumbent upon a litigant in the Compensation Court who wants to run a serious issue relating to non-compliance with s 9A(2) to flag that in submissions. It should not be left to uncertain inferences if there is a serious issue being raised. Rather, the point should be raised in evidence and flagged in submissions, then it is almost certain that it will be addressed by the trial judge and we will not be left having to infer one way or the other whether there has been a failure to advert to the relevant principle.” (at [22])

In the current case, the evidence did not, of itself, necessarily suggest section 9A was a serious issue between the parties. It was not an issue raised by the appellant in submissions before the arbitrator. I cannot see any error by the arbitrator, in failing to give reasons dealing with an issue not raised before her in the running of the case.

I do not understand the appellant’s argument about the adequacy of the arbitrator’s reasons to go beyond an argument that she should have dealt with section 9A. If I am wrong in this, I should briefly state that, in my view, the reasons given by the arbitrator, in dealing with the issue pursuant to section 14(2), easily satisfy what was required of her, both at common law and pursuant to her statutory duty (Mayne Health Group v Sarah Sandford [2002] NSWWCCPD 6, Snow Confectionary Pty Ltd v Askin [2004] NSWWCCPD 56). Accordingly, I reject the appellant’s argument the arbitrator failed to give adequate reasons.

Section 14(2) – serious and permanent disablement

The third ground of appeal raised is that the injury sustained by the respondent was not “capable of fulfilling the test of ‘serious and permanent disablement’”. The appellant makes reference to the Decision of the NSW Court of Appeal in Broken Hill Pty Co Ltd v Kuhna (1992) 8 NSWCCR 401 (‘Kuhna’).

In Peters Ice Cream Limited v Feeney [1970] 3 NSWR 125 at 127 Jacobs JA, dealing with the words ‘serious and permanent disablement’, said:

“It would therefore not be correct to insist upon the finding that all capacity for employment has gone except for a mere chance of obtaining special employment of an unusual kind.
The condition required under the section now being considered will be satisfied provided there is evidence that the disability was both serious and permanent. In the context it is correct, I think, to apply those words to employment situations, and it seems to me that that is what the medical evidence did in this case.”

This passage was quoted in Kuhna. It was held in Kuhna that it was sufficient, to satisfy the test of ‘serious and permanent disablement’, if a worker’s disablement is permanent, and such that it precludes him from undertaking his pre-injury employment. Mahoney JA said:

“Mr Timbs QC, who appeared for Broken Hill Pty Co Ltd, sought at length to establish that, within section 14(1) of the Workers Compensation Act 1987, “serious and permanent disablement” connotes disablement for work generally and not merely for the work or the kind of work done by the worker at the time of injury. I do not accept that that is the meaning of the phrase. No doubt the word “disablement” primarily refers to disablement in respect of capacity to perform work. But provided the disablement or interference with capacity is “serious”, the provision may be satisfied notwithstanding that other work may be undertaken and even undertaken more remuneratively.”

This passage of Kuhna is applied, in construing the same phrase (although in the different context of the ‘claim’ provisions of the legislation), by Burke J in Gregson v L & MR Dimasi Pty Ltd (2000) NSWCCR 520. Burke J put the test in these terms:
“In this matter the question becomes whether Mr Gregson suffers a serious and permanent disablement. Does he have a disability, is it serious, is it permanent, does it impinge adversely upon his capacity to work? If all questions were answered in the affirmative then he would satisfy that requirement. The basic question then presenting is the degree of the applicant’s incapacity and losses before a considered answer to those previous questions is available.” (at [78])
Whether an injury has resulted in ‘serious and permanent disablement’ is a question likely to require medical evidence. In some rare cases, such as traumatic amputation, this may not be so. However in the vast majority of cases, the matters to be proved, particularly the question of permanence, will require medical evidence. The medical evidence in the current case was fairly sparse.
Records from Westmead Hospital were in evidence, which included various radiological reports. The radiological reports indicate fractures of the left wrist involving the radius, a comminuted undisplaced fracture of the left clavicle, multiple rib fractures on the left, a fracture of a rib on the right, and fractures of the left transverse processes at T11, T12, L1, L2 and L3. There was also injury to the lung.
The respondent relied upon a report of Dr Conrad, a general surgeon, who had assessed him at the request of his own solicitors on 23 March 2006, about four months post-accident. At that point it was noted a plate and screws were still present in the respondent’s left lower forearm, and he was not working. The ‘present symptoms’ of which Dr Conrad obtained a history were relatively extensive, and included pain and restricted movement in the left chest, shoulder and arm, together with back and right leg pain. Dr Conrad expressed the view the respondent needed much more extensive treatment than he had been afforded thus far. He suggested the need for further investigations, and described him as “totally unfit for any form of physical work”. He said the internal fixation devices in the left wrist would require removal within a year, and described the prognosis as “uncertain”. In a supplementary report dated 27 March 2006, dealing with the question of permanent impairment, Dr Conrad said it was not possible for him to say the respondent had reached maximum medical improvement, and thus whole person impairment could not be calculated at that stage.
The appellant relied upon a report of Dr Machart, an orthopaedic surgeon, dated 17 May 2006, emanating from an examination on 15 May 2006. Dr Machart noted the fractures of both the left clavicle and left radius had been subject of open reduction and internal fixation. He considered the respondent was demonstrating “non-organic illness behaviour”. He recommended some further investigations, being an MRI of the lumbar spine and up to date x-rays of the left wrist and clavicle. However he then went on to conclude:
“Fitness for Work
I have not been able to establish a physical condition that would prevent him from returning to work as a gyprocker.
Treatment
I do not recommend any specific treatment because I have not been able to establish ongoing serious physical ailment in relation to injury 6-months ago.”
Thus the medical evidence consisted of material from the hospital to which the respondent was admitted on the date of accident, confirming multiple fractures (and other injuries), and treatment. There was a report in the respondent’s case saying the respondent was unfit for work at the date of assessment, prognosis was uncertain, maximum improvement had not yet occurred, and it was too early to assess permanent impairment. There was a report in the appellant’s case saying the respondent was fit for his pre-accident work, and no ongoing serious physical ailment could be established. In my view, this evidence did not permit the conclusion that ‘serious and permanent disablement’ had resulted from the respondent’s injury, consistent with the meaning of that phrase, applying the authorities discussed at [37] to [39] above. There was not medical evidence to support the conclusion, and it was not a conclusion which could be reached simply on the basis of the lay evidence. Thus, I conclude the finding made by the arbitrator, regarding the existence of ‘serious and permanent disablement’, demonstrates error.
Having reached this conclusion, it is necessary that I review the arbitrator’s decision on the issue raised, regarding the application of section 14(2). In doing so, I am mindful of the finding as to credit made by the arbitrator. She was in a position of advantage in assessing the respondent’s credit, and it is necessary that I respect the finding she has made. In Malco Engineering Pty Ltd v Ferreira (1994) 10 NSWCCR 117 the NSW Court of Appeal dealt with the appropriate approach to be taken to a worker’s evidence, where his credit had been significantly damaged, and he had been found to have told deliberate lies in an attempt to obtain compensation:
“In my opinion the perjury by the worker required the trial Judge to carefully assess the rest of his evidence in order to determine its honesty and reliability. Some of his evidence may have been acceptable because it was confirmed by other independent or objective evidence. However where the worker’s evidence was not independently supported it clearly had to be assessed with great care to determine whether it could properly be accepted as proof of any matter that was in issue in the proceedings.” (per Handley JA at 118D)

Section 14(2) – serious and wilful misconduct

To deal firstly with matters which are uncontroversial, the respondent was born on 29 August 1965, is now forty-one years of age, and is married with a dependant wife and son. Since coming to Australia in 1997, his work history has been that of a labourer/gyprock fixer. There is no dispute he was a ‘worker’. There is no serious issue regarding the occurrence of the fall which injured the respondent. The real issue between the parties is the extent of the alcohol consumption by the respondent prior to his fall, whether such consumption amounted to ‘serious and wilful misconduct’ within the meaning of section 14(2), and if so, whether the respondent’s injury was solely attributable to such misconduct.
The evidence regarding the respondent’s alcohol consumption prior to the fall, from various sources, is as follows:
(i)The respondent gave a statement (described as dated 15 December 2005, but unsigned), which was annexed to both his Application, and to the appellant’s Reply. He said he had one stubby of beer with his lunch, around 2pm, prior to starting work at 5pm on 17 November 2005. He said he consumed “maybe four or five stubbies of beer during the night before the accident”. He said he consumed these on the building site. He claimed he was drinking that night in company with other employees (at [22]). This aspect of his evidence was not accepted by the arbitrator (at [34] of her Reasons). He said he knew it was against the rules to consume alcohol during working hours. He said, at the time of the accident, at about 3am on 18 November 2005, he was not intoxicated or drunk, and felt fine. His version of events on this topic did not change significantly during cross-examination, save that he then put his consumption on the night in question as three to four stubbies of beer (T14.15).
There are two further short handwritten ‘statements’ of the respondent, attached to the appellant’s Reply. The first is dated 18 November 2005, and is unsigned. It says:
“I was working behind the parapet when I was confronted by flying bottles hurled by youths, in anger I climbed over parapet to address the youths when I slipped and fell to the ground.”
The second is dated 22 November 2005 and states:
“On Saturday morning between 3am – 4am on 17/11/05, I was working at Goulburn Centro on the roof behind a wall (parapet) when I was confronted by youths who were verbally abusing me & throwing bottles at my direction, in anger, I climbed over the wall to confront the youths, when I slipped and fell to the pavement.”
The respondent gave some evidence about the short statement which was signed (that of 22 November 2005). He accepted his signature was on the document, although said he did not write the document. The evidence regarding how the document came to be executed makes little sense. The respondent said, however, the document was read to him with the assistance of an interpreter on the morning of the arbitration hearing. He disagreed with that part of it that said he climbed the wall in anger, saying rather that he was working there, and was on the wall. The wall he was standing on at the time he fell, he described as being twenty centimetres wide (T5 to 6).
The following passage occurred (at T13) when the respondent was cross-examined about the reasons for his fall:
“Q.     And the story about no lighting or the failure to wear a harness is something that you have now decided to point to to give the impression that that was the cause of your accident, but, in fact, neither of those things had anything to do with your accident.
A.       It was impossible to fall from that place.
Q.     Well it was possible because you were drunk and you lost your footing because you were drunk?
A.     I fell from a wall that was high – eight to nine metres – so if there wasn’t a need for a safety harness, how could I fell (sic) from that wall.
Q.       Incidentally, this wall that you were walking on at the time you said was 20 centimetres wide?
A.       It was – yes, it was one wall and then it was another wall on that wall.
Q.     Yeah. But you were standing on a wall that was 20 centimetres wide?
A.     Yes.”
(ii)The notes from Westmead Hospital on 18 November 2005 at “1530” (3.30pm) record “Smells of Etoh – but I am not sure if he is intoxicated”, and “Still smells of Etoh + + +”.
(iii)The notes from Westmead Hospital include a document headed “All result sections Date range 18/11/05 to 23/11/05”, which against the entry “Ethanol”, appears to indicate a result of “0.17%” for a test carried out at “0957” on “18/11/05”. This may relate to a blood alcohol analysis; certainly the statement of Mr Zuanic (referred to below) indicates he was told such a test had been carried out (at paragraph [11]). However the expert evidence is silent regarding the significance of this entry (if it is a blood alcohol analysis), and it would be inappropriate for me to seek to speculate on the significance of this entry, in the absence of appropriate expert evidence (Clyde v State of NSW (Technical & Further Education Commission) (1995) 12 NSWCCR 541) (‘Clyde’).
(iv)Rod Zuanic, a supervisor with the appellant on the site, in his statement of 29 December 2005, says he arrived at the site at 5.30pm on 17 November 2005, and the respondent (with the rest of the night shift) was already present. He could recall being quite close to the respondent at that time, and could not smell alcohol on his breath. He said he visited the respondent in Westmead Hospital at about 10.30am on 18 November 2005, and the respondent “… smelt of alcohol”. He said he asked the respondent whether he had consumed any alcohol before the incident and the respondent “said no”.
There is a shorter statement of Mr Zuanic dated 18 November 2005, also attached to the appellant’s Reply. Like the statement of 29 December 2005, that of 19 November 2005 described Mr Zuanic as leaving the site well before the time of the respondent’s fall. He described visiting the respondent at Westmead Hospital “to learn more of the incident”, and speaking with the respondent while he was in a “semi conscious state”. He said the respondent denied at that time having consumed alcohol during working hours, although conversations with other family members suggested otherwise.
(v)Dulibor Stancev, a gyprocker employed by the appellant, worked on the same shift as the respondent, on the night of injury. His statement is dated 9 January 2006. He says he started work at 5pm and worked throughout the shift with the respondent. However he also says “When Besim (the respondent) turned up he smelt strongly of alcohol and it was obvious he had been drinking. This was around 11.30pm or thereabouts. He wanted to work with us and Dragan was not happy but he insisted that he help. I cannot say how badly affected he was by the alcohol he always looks the same whether he is drunk or sober.” The statement at [9] says the respondent was “obviously drinking on the other side of the parapet wall”. This would appear to be a conclusion formed by this witness, based upon what he was told by someone else (see his statement at [7]), rather than his personal observation. He describes the respondent being told “around 2.30” that he wasn’t needed anymore, and the respondent then saying he would “get off the roof from the carpark”. He described hearing youths “swearing and yelling abuse at us”, and hearing the respondent fall, although he did not see the fall. He did not see a bottle thrown prior to the respondent’s fall.
Mr Stancev’s statement describes the respondent’s state of sobriety shortly after the fall in these terms:
“During the period we were speaking to Besim after the accident both at the Motel and in the car it was obvious that he was still affected by alcohol but he did not appear to be severely affected. He certainly seemed to know what he was doing and he was aware of what was happening.” (at [17]).
(vi)There is a statement from Dragan Krstic dated 9 January 2006. He says he and Mr Stancev were working in a place different to the respondent on the relevant night, until 11.30pm. At 11.30pm he says the respondent “turned up outside”. He gives this description of the respondent’s state of sobriety at that time:
“…he smelt very strongly of alcohol. He did not seem badly intoxicated at that stage but he did seem affected. I do not know where he had been or who he had been with or what he had been drinking or where.” (at [4]).
Mr Krstic says after the respondent’s fall he “found a number of empty stubby bottles of beer up on the roof behind the parapet wall. There were at least five empty bottles there and maybe more.” (at [9]).
Mr Krstic says youths started yelling at them at “around about 2.30am”. He said the respondent was going to get off the roof at the carpark, he heard the respondent yelling at the youths, he did not see him fall. Mr Krstic describes the respondent disappearing from the scene for “a long time, maybe two hours”, then reappearing and asking to be driven home to Sydney. Mr Krstic describes he and Mr Stancev travelling from Goulburn to Sydney, with the respondent. Regarding the respondent’s sobriety, Mr Krstic says “Up to that point in time he seemed to be in complete control of all of his senses.” (at [21]). He also says:
“Both at the time of the incident and beforehand he did smell strongly of alcohol and seemed to be affected by alcohol, but I would not say that he was severely affected.” (at [27]).
There was a second statement of Mr Krstic dated 28 November 2005, annexed to the appellant’s Reply. That statement said Mr Krstic “saw Bessim (the respondent) fall”. It does not say what caused him to fall. It does say the fall followed youths “swearing and making rude gestures at us”, resulting in the respondent “swearing back at them”. It also described the security guard at the site, shortly after the fall saying the youths had thrown a bottle at the respondent. It described the youths denying this. It described a policeman saying Bessim “reeked of alcohol”. It recounted Messrs Krstic and Stancev driving the respondent back to Sydney after the fall, saying “He looked ok to me, walking and sitting fine”.
Mr Krstic was called to give oral evidence in the appellant’s case. Such evidence did not much add to his statement. He was asked “Did you see Mr Basic fall?” to which he responded “Yes” (T20.20). This seems to some extent inconsistent with the passage of his statement at [14], where he says “I did not see him when he first fell”. However that part of his statement does go on to describe the respondent, when he fell, striking a supporting beam and then falling to the pavement. Precisely what Mr Krstic actually saw was not further explored in his evidence. He was given a copy of his statement which was read to him, and he said it was correct (T21.35).
(vii)There was also a statement from Drasko Basta dated 10 January 2006. Mr Basta denied drinking with the respondent on the night in question, was unaware of the respondent consuming alcohol, and had no first hand knowledge of exactly what happened in the fall. Mr Basta gave oral evidence in the appellant’s case. It did not expand on the above, as regards the respondent’s consumption of alcohol or sobriety on the night of the fall.
(viii)The appellant relied also upon a statement of Boris Subotic dated 10 January 2006. He denied drinking with the respondent on the night, and said he had no first hand knowledge of the fall. He also stated the respondent telephoned him a “couple of days prior” to him making his statement, and says the respondent said “they” had found out he was drinking at the time of the accident, and asked him to say he (Mr Subotic) had been drinking with the respondent, and to say the respondent did not have too many beers. He said the respondent requested that he ask Drasko to say the same thing.
(ix)There was also a statement from Goran Zuanic dated 29 December 2005. He was employed by the appellant as construction manager on the site. He “attended the site once or twice per week”. He did not indicate he was on the site at any time on the night in question, he said he received a phone call from his brother Rod at 7.30am on 18 November 2005, to say the respondent had been involved in an accident and gone to Sydney. His statement then contains a significant amount of material which, it is clear, consisted of his understanding of what happened based upon what he was told by others. It also described a telephone conversation with a man who identified himself as the respondent’s cousin Emir. Mr Goran Zuanic said there was a supervisor on site until 11pm, and thereafter the leading hand in charge was Dragan.
There is a further statement of Mr Goran Zuanic dated 18 November 2005. It adds little, recounting versions of events given to him by others. It does quote a conversation with Drago (I infer Dragan Krstic) in which Goran Zuanic asked how the respondent fell, and “Drago” said “He was drunk and angry with the youths across the road”.
(x)Goran’s father, Peter Zuanic, also provided a statement, dated 29 December 2005, utilised by the appellant. He worked as a supervisor on the site. He had driven the respondent to work, on the afternoon of 17 November 2005, at about 5pm. At that time, he said, the respondent did not smell of alcohol, and seemed sober (at [5]). He knew of no previous instances where the respondent had consumed alcohol during or prior to a shift (at [12]). Peter last saw the respondent at 8.30pm, at which stage “there was no alcohol on his breath that I can recall and he seemed OK” (at [16]). Mr Peter Zuanic left the site at 11pm. He said he was then telephoned “probably after 1am to say that there had been an accident” (at [17]).
Mr Peter Zuanic said he re-attended the site, “the respondent had disappeared and everyone was trying to find him”, and he “turned up” after the police had left (at [21]). He described the respondent’s state of sobriety at that time:
“At that stage although he smelt like alcohol, he did not appear to be badly affected by it.” (at [22]).
(xi)Lastly, there was a statement of Roberto Migliorino dated 29 December 2005. He was the managing director of the appellant. He described the contractual arrangements between the appellant and Multiplex, the head contractor on the site, and also the basis on which workers such as the respondent were engaged. He said Multiplex had a policy that alcohol, and its consumption, were forbidden on work sites, and during work hours (at [8]). He said he had “no real first hand knowledge of it (the accident) but there have been several stories told” (at [9]).
Mr Migliorino described visiting the respondent on 28 November 2005, accompanied by Rod Zuanic. The respondent’s wife and son were present. A person, Emir, described as the respondent’s friend, was utilised as an amateur interpreter. Mr Migliorino asked the respondent if he was intoxicated. Emir said there had been evidence of alcohol in the respondent’s blood stream, and Westmead Hospital had a record of this. The respondent “said very little and it was difficult to find out exactly what happened at the time of the incident” (at [13]).
(xii)Documentation relating to the attendance of police at the scene of the fall was attached to the appellant’s Reply. It indicated the police attended at about 3.40am. The place from which the respondent fell is described as being approximately four metres high. The respondent was not, at that time, present at the scene. Co-workers of the respondent are described as stating a bottle had been thrown at the respondent prior to him falling, although the police narrative details say “police were not convinced that it had been thrown there by persons from across the street. This belief was due to there being another beer bottle of the same brand and completely intact, less than two meters from the broken glass.”

In assessing this evidence, the arbitrator rejected the evidence of the respondent that he had been drinking in company with other workers, prior to his fall, and rejected his evidence the beer consumed had been purchased by Dulibor Stancev. She found he had been “drinking in an area where he was carrying out his work out of view of his co-workers”. She noted the respondent’s admission he was aware drinking while working and on site was forbidden. She found the respondent was aware of the potential risk of injury drinking alcohol on the job, given that he was working with building tools in a roof area several metres above the ground (see paragraph [34] of the Reasons).
The arbitrator then referred to the decision of O’Meally J in Searle v Macadamia Processing Co Pty Ltd (1999) 18 NSWCCR 106 (‘Searle’). She then expressed the conclusion:
“36. Having considered all of the evidence before me, I am satisfied that by drinking five stubbies of alcohol (an amount admitted to by the Applicant and confirmed by the evidence of Mr Krstic who found a six pack with five empty beer stubbies) on the job between 5.30pm and 2.00am amounted to serious and wilful misconduct because the Applicant knew that drinking alcohol was forbidden but proceeded to do so anyway. I am satisfied that the Applicant acted deliberately in complete disregard of the safety issues and the risk of injury of which he was aware. I am satisfied that he proceeded to consume the alcohol without regard to that risk. Accordingly, I am satisfied that the Applicant engaged in serious and wilful misconduct by consuming alcohol on the night shift of 17 November 2003/18 November 2003 (sic).”
The arbitrator then moved, at paragraph [37] of her Reasons, to consider the question of whether the injury was solely attributable to the serious and wilful misconduct she had found. The arbitrator rejected a submission on the respondent’s behalf, that lighting was poor, as there was no complaint about lighting from the other workers, and the workers had been able to carry out their duties in the available light. She rejected a submission a safety harness should have been provided, accepting the evidence of Messrs Krstic and Stancev that the respondent’s duties had not been carried out near an open void area, until the respondent went to leave the roof from the car park. She rejected the respondent’s evidence that a bottle had been thrown, saying “It is not supported by any other evidence before me.” She also refers to the belief expressed in the police documentation that a bottle had not been thrown, and to “evidence of the witnesses that the Applicant and his wife tried to coopt them to confirm that a bottle was thrown”.
The arbitrator concluded on this point, at paragraph [38] of her Reasons:
“Accordingly, I am satisfied that the fall and the subsequent injuries occurred because the Applicant had been drinking and his judgement was impaired such that he moved to an open void area to respond to some youths without regard to the danger and without donning a safety harness and consequently lost his balance and fell. Accordingly, I am satisfied that the Applicant’s injuries sustained in the fall were solely attributable to his serious and wilful misconduct.”
I invited the parties to make further submissions, as set out at [16] above, so that I would have such submissions before me in the event I formed the view, which I ultimately have done, that the evidence of ‘serious and permanent disablement’ was insufficient to support the finding which was made.
I shall not set out the appellant’s further submissions in full. The appellant submits the unchallenged statement of Mr Krstic established the respondent presented to the work site at 11.30pm in “an already toxified state”, and then consumed a further five stubbies between 11.30pm and 3am. It is stated a “Blood Alcohol reading does not appear to have been conducted”. It is submitted the respondent, by absenting himself for a period from the site, and then wishing to attend Westmead (rather than Goulburn) Hospital, “Prevented the Appellant from obtaining expert evidence as to the level of intoxication by way of a blood alcohol reading”. The appellant seeks to distinguish the matter from Clyde, on the basis Clyde involved a motor vehicle accident in which the worker was not at fault, whereas no other party was at fault in the current matter. It is submitted the arbitrator found the lighting was adequate, and a safety harness was not required, such that it was open to the arbitrator to find the injury occurred when the respondent lost his balance due to his consumption of alcohol. It is further submitted intoxication during employment is sufficient to support the finding of serious and wilful misconduct, and the evidence was sufficient to support a finding of intoxication. It is submitted the finding at paragraph [37] of the arbitrator’s Reasons, was based upon “logically probative and unchallenged evidence of the Appellant’s witnesses”. It is submitted in the alternative that, if there was not sufficient evidence to justify the finding of intoxication, the act of consuming alcohol on the worksite, knowing this was not permitted, amounted to serious and wilful misconduct.
The respondent, in his further submissions, refers to authority that a finding of wilful misconduct involves a consideration of the worker’s state of mind. It is noted the employer carries the onus under section 14, of establishing ‘serious and wilful misconduct’. It is submitted the appellant should have adduced evidence such as a toxicology report dealing with the probable level of alcohol in the respondent’s system, and whether this would have affected his balance. It is submitted the appellant did not adduce evidence to establish the alcohol consumed by the respondent contributed to his injuries. It is submitted a finding the respondent lost his balance and fell due to the alcohol he consumed was not open on the evidence. It is submitted the appellant could not discharge its onus of proving the injury was solely attributable to the serious and wilful misconduct.
The operation of section 14(2) of the 1987 Act was considered by O’Meally J in Searle, a case referred to by the arbitrator in her Reasons. In dealing with the meaning of the phrase ‘serious and wilful misconduct’, His Honour said:
“Serious and wilful misconduct is conduct beyond negligence, even beyond culpable or gross negligence. In order to establish serious and wilful misconduct, it must be demonstrated that the person performing an act or suffering an omission knows it will cause risk of injury, or acts in disregard of consideration whether it will cause injury. The word “wilful” connotes that the applicant must have acted deliberately. As it seems to me, in order to establish serious and wilful misconduct, a person accused of it must be shown to have knowledge of the risk of injury and, in the light of that knowledge, proceeded without regard to the risk.” (at [24])
Murray v Moppett [1957] 31 WCR (NSW) 109 (‘Murray’) involved an appeal by an employer against an award of compensation to a drover, who suffered serious burns (leading to amputation) to his feet while lying next to a campfire, insensible due to drinking. Street CJ said:
“It is not in dispute that at the time when he suffered these injuries the applicant was in fact in a locality and at a spot where his employment would have required him to be. If he had not consumed any alcoholic intoxicant and having returned to the camp in the evening in the normal course of events and, while sleeping at the camp, through some misadventure had been burned by the camp fire, as for instance, if a spark had blown on to his blanket or a log had rolled off the fire and set his sleeping kit alight and he had been thereby injured, I think it is inescapable that he would have been entitled to recover compensation for injuries thereby sustained. Such injuries would have arisen in the course of his employment and would have arisen also out of his employment, which by its very nature necessitated that he should sleep in camp from night to night as the cattle travelled.
The complicating factor in the present case is the applicant's own conduct in reducing himself to this condition of stupefaction or torpor so deep that he remained insensible till the following morning and had no feeling whatever when he suffered these serious injuries by burning. A self-inducted condition of inebriety of this nature, created while the applicant was in the course of carrying out the duties of his employment, is to my mind clearly serious and wilful misconduct on his part in relation to his employment. Intoxication during employment has been specifically held to amount to serious and wilful misconduct (Byrne v. Bruce, 37 BWCC 26) and no more gross case of self-induced intoxication than the present one could be imagined. It is not in dispute that the injuries were serious and the consequent disablement suffered by the application was also serious and permanent.”
Murray was referred to by the arbitrator, and is clear authority that intoxication during employment can amount to ‘serious and wilful misconduct’. It has been said, obiter, that this will not necessarily be the case. In Powell v Intercapital Brokers (1998) 16 NSWCCR 259 Armitage J said the behaviour of a worker consuming significant quantities of alcohol at a social function, where senior management did the same, and the worker’s state of insobriety was no more than everyone else’s, would not have amounted to ‘serious and wilful misconduct’. That is not, however, relevant to the current matter. The arbitrator, based upon a credit finding, has found the respondent did not consume alcohol in a social setting in the company of other employees, such that the consumption was effectively condoned by his workmates or superiors.
Clyde was a matter where a truck driver, involved in an accident, was found to have a blood alcohol level of 0.146. Neilson J referred to the judgment of Meagher JA (with which Handley JA agreed) in Zlojutro v GIO (NSW), Court of Appeal, No 40569/89, 11 August 1995, Unreported (‘Zlojutro’), where it was said:
“It later transpired, after the accident, that he had a blood reading of 0.125. Nobody was called to testify as to the significance of this. We can make no inference or deduction. For all I know many people drive motor vehicles perfectly safely with such a blood reading.
His Honour deliberately refrained from making a finding that the driver was affected by alcohol. If this be correct, and it would seem to me to be correct, no finding was available that Mr Zlojutro knew the driver was affected by alcohol. Yet, paradoxically, his Honour found that the plaintiff was ‘conscious that there were risks’ (unspecified) ‘involved’ in accepting a lift with Mr Miladinovic, and assessed him guilty of contributory negligence to the extent of 50 per cent. From what I have said, this is clearly insupportable.”
The view reached by Neilson J in Clyde, based upon the above passage from Zlojutro, was that it would be impossible for him to conclude a worker was intoxicated on the basis of the blood alcohol reading, in the absence of some appropriate expert evidence, to establish the significance of the reading (at page 553).
When the lay case presented by the appellant in the current matter is analysed, there is not a great deal of evidence to support the assertion the respondent was intoxicated. The respondent himself concedes the consumption of five stubbies of beer between 5pm (when his shift commenced) and about 3am (the approximate time of the fall). He does not concede feeling intoxicated.
The statement of Peter Zuanic says he drove the respondent to work at 5pm, and the respondent did not smell of alcohol and seemed sober. The statement of Rod Zuanic, the supervisor, says the respondent did not smell of alcohol at 5.30pm, when he was quite close to him. This is inconsistent with any suggestion the respondent was in some way under the influence of alcohol when his shift commenced at 5pm. Peter Zuanic said he did not notice the smell of alcohol on the respondent’s breath when he last saw him at 8.30pm.
Dulibor Stancev, who worked with the respondent subsequent to 11.30pm on the night in question, said at 11.30pm the respondent smelled strongly of alcohol, but he could not say how badly he was affected, as he always looked the same, whether drunk or sober. At the motel after the fall he described the respondent as “still affected by alcohol but he did not appear to be severely affected”. Dragan Krstic described finding five empty bottles behind the parapet wall, maybe more. Consistent with Mr Stancev’s statement, he described the respondent’s condition at the time of accident and after as “affected by alcohol but I would not say that he was severely affected”.
Much of the other material relied upon by the appellant is heresay or speculative. The above are the witnesses who give direct evidence of the respondent’s condition. Thus the lay evidence, overall, establishes the respondent turned up at work sober at 5pm. It establishes that at 5.30pm he did not smell of alcohol according to Rod Zuanic, and at 8.30pm he did not smell of alcohol according to Peter Zuanic. It establishes some consumption had occurred prior to 11.30pm, as he smelt strongly of alcohol by that time, according to Messrs Stancev and Krstic. By that stage Mr Stancev says it was obvious the respondent had been drinking, although does not nominate any particular aspect of the respondent’s presentation leading to this conclusion, beyond the smell on his breath. Mr Stancev says he could not say how badly the respondent was affected by alcohol at that time. At 11.30pm Mr Krstic describes the respondent as smelling very strongly of alcohol, and says he seemed affected by alcohol, but was not badly intoxicated.
Messrs Stancev and Krstic describe working with the respondent between 11.30pm and about 2.30am. Messrs Stancev and Krstic were affixing sheeting to a parapet wall. They were in a scissor lift for the purpose. While they worked from the scissor lift, the respondent was on the other side of the parapet wall, holding the sheets in position as they were affixed (Mr Krstic at [7]). Whilst the statements do not suggest the duties being carried out by the respondent over this period were of any great complexity, nor do they suggest any particular problem was experienced in working with him.
At the time of the fall the respondent smelt strongly of alcohol, according to Mr Krstic’s statement. Messrs Stancev and Krstic both describe the respondent, around the time of the fall, as being affected by alcohol, but not severely affected.
The statement of Mr Stancev describes the respondent as able to get up by himself after the fall, and says the respondent suggested a bottle had been thrown at him, at that stage. It says the respondent then disappeared (paragraph [14]). Mr Krstic also describes the respondent disappearing shortly after the fall, for a period. Mr Krstic says the respondent turned up about two hours later (paragraph [19]). Peter Zuanic says when the respondent turned up again, he smelt like alcohol but did not appear to be badly affected by it (paragraph [22]). The respondent’s statement says he has no recall after the fall, until Westmead Hospital (paragraph [32]). Mr Stancev describes the respondent’s condition at the motel after the fall as affected, but not severely affected, by alcohol (paragraph [17]). Messrs Krstic and Stancev drove the respondent to Sydney after the fall. Mr Krstic describes him then as being “in complete control of all of his senses” (paragraph [21]). The shorter statement of Rod Zuanic, dated 18 November 2005, describes visiting the respondent in Westmead Hospital, I infer on the morning of 18 November 2005, and finding him in a semi-conscious state. Of course, the respondent’s condition after the fall could have been, to a greater or lesser extent, a result of the fall, rather than intoxication. Thus the best guide to the state of the respondent’s sobriety is likely to be found in the observations of others, prior to the fall.
There is also the material from Westmead Hospital. The nursing notes describe the respondent as smelling significantly of alcohol, well into the afternoon of 18 November 2005. There is also the “Ethanol” reading. Consistent with the judgment of Meagher JA in Zlojutro (as applied in Clyde), it would be unsafe for me to speculate on the significance of this reading, or the period over which the respondent was observed to smell of alcohol, in the absence of suitable expert evidence, to explain its significance.
The appellant carries the onus of establishing ‘serious and wilful misconduct’. In my view, the evidence overall does not permit a finding that the respondent was intoxicated. It establishes the respondent was sober when he started work at 5pm, and consumed five stubbies of beer, probably between 8.30pm and about 2.30pm or 3pm. It would not be possible to conclude, in the absence of expert evidence, the consumption of five stubbies of beer over a period of about six hours would lead to intoxication. As was pointed out by Neilson J in Clyde, there are many factual considerations which could be relevant. These include a person’s size, drinking experience, genetic background and liver function.
The observations of the respondent by others, prior to the fall, similarly would not permit the conclusion the respondent was intoxicated. At most, such evidence indicates the respondent smelt of alcohol, and appeared affected by alcohol, but not severely. Precisely how the respondent appeared affected by alcohol is largely unexplained. There is no evidence of staggering, slurring words, or other behaviour commonly associated with inebriation. It appears he was able to carry out (probably undemanding) duties with Messrs Stancev and Krstic between about 11.30pm and about 2.30am. Accordingly, I reject the submission of the appellant, contained in its Additional Submissions, that the evidence was sufficient to support a finding of intoxication.
This leaves the alternative submission made by the appellant, that the act of drinking alcohol, of itself, during work hours and contrary to site rules, amounted to ‘substantial and wilful misconduct’. This is consistent with the basis on which Neilson J found ‘substantial and wilful misconduct’ in Clyde, after deciding intoxication could not be established in the circumstances. The evidence accepted by the arbitrator, and the admissions made by the respondent, clearly establish the respondent consumed five stubbies of beer at the site, knowing this to be something he was not supposed to do (T10.35). This activity does, in my view, amount to ‘serious and wilful misconduct’. In Taylor v Commissioner for Railways [1970] 44 WCR (NSW) 73 McGrath J said:
“It seems to me that in the present case the Commissioner does carry the onus of establishing what in a criminal court would be regarded as ‘mens rea’. In other words he has to establish that the mind went with the act.” (at 76)
This passage was applied by Truss J in Gardoll v RJ Fletchers International Pty Ltd (1999) 19 NSWCCR 30. This mental element is present in the current case, given the respondent’s consumption of alcohol on site and during working hours, knowing this to be contrary to site rules, and something he was not allowed to do.

Was the injury solely attributable to the misconduct found?

This however does not end the matter. For section 14(2) to afford a defence to the appellant, it must also prove the injury was ‘solely attributable’ to this misconduct. The misconduct was drinking alcohol, not being intoxicated, which in my view was something the appellant could not establish on the available evidence.
The arbitrator found ‘serious and wilful misconduct’ on the respondent’s part, in that he drank five stubbies, knowing this to be forbidden, and aware of the potential risk of drinking on the building site. In considering whether the injury was solely attributable to this misconduct, the arbitrator rejected the respondent’s evidence of a bottle being thrown, saying this was “not supported by any other evidence before” her. She referred to the Police Incident Report saying “the Police did not believe a bottle was thrown”. She rejected the submission the lighting at the site was inadequate, on the basis “there was no complaint about the lighting from any of the other workers and the workers including the Applicant were able to carry out their work without the need for more lighting”. She found there had been no need for a safety harness at the place where the respondent was working assisting Messrs Stancev and Krstic (at [37] of the Reasons).

Having rejected these various possible competing causes for the fall, the arbitrator then found:
“I am satisfied that the Applicant responded to the youths who were verbally abusing the workers on the site and that he went over to the open void area to respond to them without regard to the danger and the need for a safety harness in all probability because of his own intoxicated state. I am satisfied that he lost his balance and fell.” (at [37])
And:
“I am satisfied that the fall and subsequent injuries occurred because the Applicant had been drinking and his judgement was impaired such that he moved to an open void area to respond to some youths without regard to the danger and without donning a safety harness and consequently lost his balance and fell. Accordingly I am satisfied that the Applicant’s injuries sustained in the fall were solely attributable to his serious and wilful misconduct.” (at [38])
In considering the extent to which this fact finding was open on the evidence, I must, of course, bear in mind the credit finding made by the arbitrator. There was a contest between the respondent and other lay witnesses, about the state of the lighting, and clearly it was open to the arbitrator to prefer the other lay evidence on this point, as she did.
As regards the bottle throwing, there was some evidence other than the respondent’s, although it is not great. The statement of Mr Krstic dated 28 November 2005 indicates that shortly after the fall “The security guard then said that the youths had thrown a bottle at Besim”. It says the youths denied this. The Police documentation says “Coworkers (sic) of the victim also stated that a bottle had been thrown at the victim prior to him falling. Though none of the workers had seen it thrown or it hitting the victim, they had ‘rounded up’ the persons they believed had done it.” It goes on “Police were not convinced that it (the broken bottle) had been thrown there by persons from across the street. This belief was due to there being another beer bottle of the same brand and completely intact, less than two meters from the broken glass.” This did amount to some other evidence, apart from the respondent’s, concerning the throwing of a bottle. It was relatively vague, and based upon heresay. Overall, in my view it was reasonably open to the arbitrator to make the finding she did regarding whether a bottle was thrown.
There is more difficulty with the arbitrator’s finding the respondent, responding to abuse from the youths, moved to an open void area to respond, without regard to the danger, and without donning a safety harness, as his judgement was impaired by drinking. This finding is crucial to the arbitrator’s conclusion the injury was solely attributable to the ‘serious and wilful misconduct’ she had found.
Drasko Basta gave evidence in the appellant’s case and was cross-examined. In a passage of cross-examination at T26.10 to 26.50, Mr Basta said in his time working for the appellant, he had never worn a safety harness, and had never seen any other employee wearing a safety harness. There was at least an available inference that the wearing of safety harnesses was not regularly enforced by the appellant. If this be so, it is an alternative explanation for why the respondent was in the place where he fell, without a harness, as opposed to it being the result of his drinking.
Whether a finding of intoxication was available, on the evidence, is discussed above at some length. I have formed the view that it was not. Indeed the finding the arbitrator made of ‘serious and wilful misconduct’ was based upon the activity of drinking on the site, as opposed to intoxication. The appellant carries the onus of establishing a defence under section 14(2). This includes proving the injury was solely attributable to the misconduct. To reach the conclusion the arbitrator has on this point, it would be necessary to be satisfied the respondent’s drinking on site resulted in impairment of the senses or judgement, sufficient to result in him placing himself in a position of peril, and falling. In my view, the appellant could not discharge its onus in this regard, in the absence of some evidence of a level of intoxication sufficient to bring this about. For the same reasons the evidence was insufficient to justify a finding of intoxication, it is insufficient to justify this conclusion. There is no evidence the respondent acted in the way he did as a result of the quantity of beer the appellant established he had consumed, over many hours. There is no expert evidence the alcohol consumed by the respondent would have led him to act as he did, or would have significantly impaired his judgement. The lay evidence does not lead to that conclusion. It goes no further than to establish the respondent was “affected” by alcohol, in a largely unspecified way, but not severely affected. In my view, the finding the respondent’s injury was solely attributable to the ‘serious and wilful misconduct’, which was found to exist, was not reasonably open on the evidence.
Thus I have found error both in the arbitrator’s conclusion the respondent’s injury was solely attributable to ‘serious and wilful misconduct’, and in her conclusion the evidence was sufficient to establish ‘serious and permanent disablement’. I have formed the view the appropriate course is to remit the matter to another arbitrator for determination, rather than to redetermine it myself. The arbitrator had the advantage of seeing both the respondent and two lay witnesses give evidence. She expressed a view regarding the credit of the respondent. In my view it is preferable for another arbitrator to consider the overall application of section 14(2) to the matter, with the benefit of hearing such evidence as the parties may call, rather than for me to redetermine it without the benefit of hearing such evidence.

DECISION

The decision of the arbitrator dated 7 July 2006 is revoked and the matter is remitted to another arbitrator for determination afresh.

The costs of the original arbitration hearing to follow the final costs order when the matter is redetermined.

COSTS

I make no order as to costs of the appeal.

Michael Snell
Acting Deputy President
6 November 2006

I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF MICHAEL SNELL, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE