Director General, Department of Education and Training v Pembroke

[2006] NSWWCCPD 182

WORKERS COMPENSATION COMMISSION

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

CITATION:Director General, Department of Education and Training v Pembroke [2006] NSWWCCPD 182

APPELLANT:  Director General, Department of Education and Training

RESPONDENT:  Elaine Dorothy Pembroke

INSURER:NSW Treasury Managed Fund

FILE NUMBER:  WCC 8912-05

DATE OF ARBITRATOR’S DECISION:          15 September 2005

DATE OF APPEAL DECISION:  10 August 2006

SUBJECT MATTER OF DECISION: Whether action taken was “in respect of ... discipline”; reasonableness of the action; section 11A of the Workers Compensation Act 1987

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant: Sparke Helmore Lawyers

Respondent: MacMahon Associates Lawyers

ORDERS MADE ON APPEAL:  The decision of the Arbitrator, dated 15 September 2005, is revoked and the matter is remitted to the Arbitrator to determine the reasonableness of the Appellant’s actions in accordance with these reasons.

There is no order as to the costs of this appeal.

BACKGROUND TO THE APPEAL

1. On 5 October 2005, the Director General of the Department of Education and Training (‘the Department’) sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 15 September 2005. The Respondent to the appeal is Elaine Pembroke. The insurer is the NSW Treasury Managed Fund (‘TMF’).

1. Ms Pembroke was born on 27 July 1944 and is aged 62. Ms Pembroke has worked as a teacher since 1964. From 1996, she was employed by the Department as a maths and science teacher at Wyong High School. Following an incident 6 February 2003 with a disruptive female student whom Ms Pembroke reported to the Deputy Principal, the student made a complaint against Ms Pembroke that was passed to the Child Protection Investigation Directorate (‘CPID’). About six weeks after the incident, Ms Pembroke received a letter from the CPID detailing the complaint. She claims that from the time of receiving the letter on 19 March 2003, she has experienced anxiety and has been unable to work.  She has not worked since 19 March 2003 as a result. On 2 April 2003, Ms Pembroke completed a claim for workers compensation. Liability was initially accepted. However, by letter dated 27 September 2004, TMF notified Ms Pembroke of its intention to cease payment of medical benefits from 10 October 2004 and of weekly compensation from 11 November 2004.

1. On 9 June 2005, the Commission registered Ms Pembroke’s ‘Application to Resolve a Dispute’. On 30 June 2005, the Department filed its ‘Reply’. On 18 August 2005, the Arbitrator conducted a teleconference with the parties and, on 14 September 2005, conciliation having proved unsuccessful, he conducted an arbitration hearing. The Arbitrator gave his decisions orally at the conclusion of the hearing.

THE DECISION UNDER REVIEW

1. The Certificate of Determination, dated 15 September 2005, records the Arbitrator’s orders as follows:

“1. There is an award for the Applicant in respect of the Applicant’s claim for weekly compensation pursuant to s 40 of the Workers Compensation Act 1987, for the period from 11/11/2004 to date and continuing, at the statutory rate for a single worker with no dependants.
2. There is an award for the Applicant, in relation to the Applicant’s claim for medical costs incurred to date, pursuant to s 60 of the Workers Compensation Act 1987.
3. I determine that this matter, which went directly to arbitration, was a complex matter as provided for by Regulation 129 of the Workers Compensation (General) Amendment (Costs) Regulation 2001.
4. The Respondent is to pay the Applicant’s costs as agreed or assessed.”

1. In his oral statement of reasons for his decision, the Arbitrator found that Ms Pembroke suffered from a psychological injury as a result of the investigation of the complaint made against her. Relying on the decision of Walker J of the Compensation Court of NSW in Hunt v Department of Education and Training (2003) 24 NSWCCR 642, the Arbitrator decided that section 11A of the Workers Compensation Act 1987 (‘the 1987 Act’) did not apply. He rejected the Department’s submission that the investigation was a reasonable action with respect to the discipline of the worker on the basis that discipline only occurs after there has been a finding of fault. There was no such finding in Ms Pembroke’s case and no disciplinary proceedings: “there was no reasonable basis for any discipline which would invoke it [section 11A]” (transcript page 66).

ISSUE IN DISPUTE

1. The issue in dispute in the appeal is whether the Arbitrator should have applied section 11A of the 1987 Act in making his determination. The Department submits that it was not liable to pay compensation because the worker’s injury arose from the reasonable actions of the employer with respect to discipline. The parties’ submissions on this issue are discussed below.

ON THE PAPERS REVIEW

1. Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) states:

“(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.”

1. Having regard to Practice Directions Numbers 1 and 6, the documents before me, and the submissions by the parties that the matter can be decided ‘on the papers’, 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

1. 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 appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. With regard to section 352(2), I note the award made by the Arbitrator involves weekly compensation at the statutory rate for a single worker with no dependents from 11 November 2004 to date and continuing. Thus, the amount at issue exceeds $5,000 and is more than 20% of the amount awarded in the decision appealed against. I therefore grant leave to appeal.

FRESH EVIDENCE

1. Fresh evidence on appeal is governed by section 352(6) of the 1998 Act, which provides as follows:

“(6)     Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”

1. Both parties stated they did not intend to rely on new evidence. However, the Department contends that submissions made by Ms Pembroke’s solicitors on the appeal in relation to the reasonableness of the Department’s conduct towards Ms Pembroke amount to an attempt to introduce new evidence. Whilst it appears from the transcript of the arbitration hearing (at page 55) that the main focus of the submissions made by Ms Pembroke’s solicitors on section 11A may have been different from those now made by them on the appeal, there was evidence before the Arbitrator and Ms Pembroke’s solicitors made submissions on the reasonableness of the Department’s investigation of the complaint. I therefore reject the Department’s submission. I am not persuaded that Ms Pembroke’s solicitors are seeking to introduce new evidence.

SUBMISSIONS

1. The Department submits that the Arbitrator erred in his interpretation of section 11A and that, as a result, his decision is incorrect.

1. Section 11A(1) of the 1987 Act states:

“No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by the reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.”

1. The Department submits that it is “not liable to pay compensation as the worker’s injury arose from the reasonable actions of the employer with respect to discipline”. The Department contended before the Arbitrator “that it was clear from the medical evidence that the worker’s condition arose from her notification of the investigation which was to take place”. The Department submits that the words in section 11A(1) “action ... with respect to ... discipline” require “a broad interpretation of discipline which includes all stages of the disciplinary process including notification of an investigation”. The Arbitrator erred by interpreting the relevant action in section 11A(1) as meaning “something that occurs after there has been a finding of fault” (transcript page 65). The Department submits that Neilson J’s reasoning in Yeo v Western Sydney Area Health Service t/as Cumberland Hospital [1999] NSWCC 1, at paragraph 48, should be applied:

“The words in s11A(1)(b) which refer to a number of categories should include all that is reasonably necessary or incidental to each of the activities referred to in it.”

1. Ms Pembroke’s solicitors submit that she suffered a psychological injury on receiving the CPID letter dated 14 March 2003 advising her that allegations of misconduct made against her were to be investigated by the CPID. She had not previously been advised of the allegations. Ms Pembroke’s solicitors submit that, in the circumstances, the Department’s action in presenting her “with a letter advising her that she was to be investigated in relation to the conduct alleged without first discussing the allegations with her” was unreasonable. Ms Pembroke’s solicitors cite the judgment of Foster AJA in Commissioner of Police v Minahan [2003] NSWCA 239 (‘Minahan’), at paragraphs 27 to 28, where His Honour referred with approval to what Campbell CCJ said at first instance:

“27. He considered the import of the words "reasonable action" in s 11A and had regard to certain judgments given in the Compensation Court in relation to the section. He specifically adopted what was said by Geraghty J in Irwin v Director-General of School Education (unreported, 18 June 1998) namely:

‘The question of reasonableness is one of fact, weighing all the relevant factors. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of "reasonableness" is objective, and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.’

28. He also referred to what was said by Truss J in Ivanisevic v Laudet Pty Limited (unreported, 24 November 1998):

‘In my view when considering the concept of reasonable action the Court is required to have regard not only to the end result but to the manner in which it was effected.’”

DISCUSSION

1. The role of the Presidential Member on appeal is to review the Arbitrator’s decision as a whole. The review is not a rehearing. In this case, the Department must demonstrate that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172; The King Island Company Limited v Deery [2005] NSW WCC PD 1) in order to enliven the Presidential Member’s power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act.

The Arbitration Hearing

1. The Arbitrator found that Ms Pembroke did suffer from a psychological injury as a result of the receipt of the CPID letter on 19 March 2003, and no issue has been taken with whether Ms Pembroke’s psychological injury was “wholly or predominantly caused” (section 11A(1)) by the Department’s conduct. As stated above, the issue in dispute is whether section 11A of the 1987 Act is applicable in Ms Pembroke’s case. During the course of the arbitration hearing, there was a lengthy discussion between Counsel for the Department and the Arbitrator on the nature of the inquiry conducted by the CPID, on Departmental Policy on the handling of complaints, and on Walker J’s judgment in Hunt v Department of Education and Training (2003) 24 NSWCCR 642 (‘Hunt’). It was established that Ms Pembroke was notified of the complaint against her by a letter from the CPID dated 14 March 2003, received by her on 19 March 2003. Further, by letter dated 8 May 2003, the CPID informed her that “it has been determined that there is insufficient evidence to establish that the alleged conduct has occurred”, and that the CPID would take no further action in relation to the matter.

1. The Arbitrator questioned why it had taken 55 days to conduct this inquiry when the Principal of the school could have dealt with the matter within an afternoon by calling the child in, with the teacher present, and then questioning both parties (transcript page 40). Counsel for the Department referred the Arbitrator to the relevant Departmental Policy “Responding to Suggestions, Complaints and Allegations”, effective 23 April 2001. This document refers to the procedures to be followed when particular situations arise. The legislative framework is stated to include the Children and Young Persons (Care and Protection) Act 1998, and the coverage includes complaints or allegations that “places a child or young person at risk of harm” (page 3). In assessing the seriousness of the complaint or allegation, the following is stated:

“3. If the complaint or allegation involves suspected improper conduct related to child abuse by a staff member (including contractors and volunteers) against a child or young person, then refer the matter to the Child Protection Investigation Unit.”

1. Counsel for the Department submitted that in the circumstances, where a complaint had been made alleging that Ms Pembroke made an abusive comment to a young person who was being disruptive in class, and had allegedly pushed a student and grabbed and twisted her arm, there had to be an investigation. Counsel referred the Arbitrator to the High Court decision in Sullivan v Moody [2001] HCA 59, at paragraph 62, in support of the proposition

   that where a statutory scheme requires an investigation, no duty of care is owed to the person about whom a complaint is made or who is the subject of the inquiry, even if the complaint is totally wrong or baseless (transcript page 45). The Arbitrator accepted that the investigation conducted “was most likely appropriate” according to the Departmental Policy where there is an allegation of harm to a child or young person, but he questioned the relevance of this to the issue of discipline raised by section 11A in Ms Pembroke’s case (transcript page 46 to 47):

“We’re dealing with an investigation of conduct before there’s a finding [of improper conduct] and before there’s discipline ... I think until you make a finding that the person has been appropriately – their behaviour has been inappropriate, then there can’t be discipline that invokes 11A.”

1. Counsel for the Department then referred the Arbitrator to the decision in Hunt, and especially to paragraphs 139 to 140 of Walker J’s judgment:

“139. In Kushwaha v Queanbeyan City Council (2002) 23 NSWCCR 339, Neilson J held at 362 [152] that the word “discipline” should be given its full meaning including “learning or instruction imparted to the learner and the maintenance of that learning by training, by exercise or repetition” as opposed to the narrow meaning of “chastisement” used in popular speech.

140. In Buxton v Bi-Lo Pty Ltd (1998) 16 NSWCCR 234, in the context of considering the meaning of the proper construction of “reasonable action” in s 11A, I took the view that, because the actions specified in s 11A(1) related to the contract of employment, the meaning that should be imparted to them was their ordinary meaning in industrial law. There I referred to the decision of the Federal Court in Commission for Safety and Rehabilitation of Commonwealth Employees v Chenhall (1992) 109 ALR 361 where Cooper J defined “disciplinary action” to mean reasonable action carefully taken against an employee in the nature of or to promote discipline. I also noted the decision in Re Rizkallah v Australian Postal Corporation (1991) 23 ALD 517 which found a warning about unsatisfactory conduct in the performance of work was disciplinary action. I took the view that the meaning that should be attributed to the word “discipline” in s 11A was the primary meaning attributed to it in the Macquarie Dictionary namely “training to act in accordance with rules”. The only difference I have with Neilson J’s definition is the industrial requirement that there be rules, be they written or inferred, that have been infringed before formal instruction is undertaken.”

1. The Arbitrator disagreed with Counsel for the Department’s submission that section 11A applies to the investigatory process. The Arbitrator responded (transcript page 49):

“[D]iscipline is something that happens where there’s been a breach of the rules written or inferred, not where there’s been an investigation as to whether there’s been a breach of the rules.”

1. Ms Pembroke’s solicitor submitted that section 11A was not applicable because (transcript page 55):

“[T]he injury arose out of the allegations rather than any threat of discipline. We rely on that decision of Walker J in Hunt. We’d say that there was no rule that was broken. There was an investigation by the employer, and discipline, section 11A in relation to discipline is just not applicable.

At no time was Mrs Pembroke advised that her work performance was unsatisfactory or was she told that she had to improve her performance or any offer of training or assistance. In any event, we say that it was the investigation process and not the – in relation to discipline. And, in any event, we do say that the department’s procedures were unreasonable and they have subsequently been changed.”

1. The Arbitrator found that section 11A did not apply in Ms Pembroke’s case because (transcript pages 65 to 66):

“[I]n my view, discipline is something which occurs after there has been a finding of fault, whether that fault be in relation to a written policy, as there was in this case, or to some inferred conduct which a teacher should appropriately undertake when conducting themselves in managing their class and dealing with their students.

However, there was no finding of fault ... I therefore find on the basis of the material provided to me in the case of Hunt v Department of Education and Training, a decision of Justice Walker of the Compensation Court, as it was or then existed, that there was no discipline within the meaning of section 11A, being, as he quoted The Macquarie Dictionary, training to act in accordance with rules, there was no finding of fault, and there was no formal or informal disciplinary proceedings to which section 11A could apply.”

Section 11A: was the action “with respect to ... discipline”?

1. The first question in Ms Pembroke’s case, therefore, is whether the action taken by the Department in relation to the allegations of misconduct made against Ms Pembroke was “with respect to ... discipline”. The word ‘discipline’ is not defined in the NSW workers compensation legislation, but its meaning has been considered by the courts and the Commission in a number of decisions. Those decisions make clear that the word ‘discipline’, in the context of its use in conjunction with the words “with respect to”, is to be given a broad interpretation (Tan v National Australia Bank Ltd [2006] NSWWCCPD 115, at paragraphs 127 to 128). Discipline includes the process followed in pursuing disciplinary action, and is not limited to the disciplinary act itself (Yeo v Western Sydney Area Health Service t/as Cumberland Hospital [1999] NSWCC 1, at paragraph 42; Manley Pacific International Hotel v Doyle [1999] NSWCA 465, paragraphs 26 to 27; Department of Education and Training v Sinclair [2005] NSWCA 465 at paragraph 58; Pethyon v Ottoy Pty Ltd t/as Noble Toyota [2006] NSWWCCPD 121, at paragraph 41).

1. In my view, the Arbitrator made an error of law in his interpretation of the relevant words in section 11A. The key to their interpretation is the words “with respect to”. These words should be understood in their ordinary, literal sense and, in my view, the process involved in investigating improper conduct that might lead to disciplinary proceedings should be taken to be included within the ambit of the phrase “with respect to ... discipline”. This is notwithstanding that there has been no finding of fault or improper conduct on the part of the person whose conduct is the subject of the investigation. The Arbitrator appears to have mistakenly focused on the word “discipline” without reference to the words “with respect to”. In my view, he misinterpreted Walker J’s comments in Hunt: my reading of that part of His Honour’s judgment, quoted in paragraph 20 above, does not suggest that a finding of fault or improper conduct is a pre-requisite to describing action as being with respect to discipline.

Section 11A: was the action reasonable?

1. Having determined that the answer to the first question is that the Department’s action was “with respect to ... discipline”, then the second question which must be considered is whether that action was “reasonable”. This is a question of fact involving an objective test, that of the reasonableness of the conduct: Minahan at paragraph 27. In determining whether the conduct was reasonable, all relevant factors must be taken into consideration including the rights of both employee and employer (Aristocrat Technologies Australia Pty Ltd v Rashov [2005] NSWWCCPD 66, at paragraph 82). If the employer can establish that its conduct was reasonable, then the employee cannot recover compensation.

1. As mentioned above, Counsel for the Department referred the Arbitrator to the Departmental Policy on the handling of complaints that was attached to its ‘Reply’. The Policy provides a procedure for handling complaints and allegations. Specific emphasis is given to the protection of children and young persons. The Policy states that when assessing seriousness, where a complaint or allegation (page 16, paragraph 3):

“involves suspected improper conduct related to child abuse by a staff member (including contractors and volunteers) against a child or young person, then refer the matter to the Child Protection Investigation Unit.”

I note there was reference at the Arbitration hearing to the Departmental Policy now having been changed (transcript page 55) although no evidence appears to have been provided as to this.

1. The complaint against Ms Pembroke was made on 6 February 2003. She was notified of the complaint by letter dated 14 March 2003, received on 19 March 2003. She was notified of the outcome by letter dated 8 May 2003, received on 14 May 2003. The first letter, which was handed to Ms Pembroke personally by her School Principal, outlines the complaint made against Ms Pembroke. It also emphasises that the role of the CPID is to conduct “fair and thorough investigations” and that no finding had been made about whether the alleged conduct occurred. The names and contact details of a number of staff who could provide support to Ms Pembroke were provided, together with the telephone number of the NSW Teachers Federation.

1. In her statement dated 30 May 2005, Ms Pembroke said that, “the minute I received the letter from the CPID I felt anxiety” (paragraph 37). She recounted how her son was the subject of a CPID investigation about five years previously and how, although he was ultimately cleared, this was “not without severe damage to his professional reputation and his confidence” (paragraph 41). Ms Pembroke also said the female student who was principally involved in the incident on 6 February 2003 was suspended from school for four days because of the incident (paragraph 34).

1. The second CPID, letter dated 8 May 2005, was also handed to Ms Pembroke by her Principal. It states:

“Following careful consideration of all the available information, it has been determined that there is insufficient evidence to establish that the alleged conduct occurred. The CPID will take no further action in relation to the matter.”

The letter also refers to persons from whom Ms Pembroke can obtain support.

1. Ms Pembroke’s solicitors submit that the Department’s action in presenting her with the letter dated 14 March 2005 was unreasonable and that the allegations should have been discussed with her first, instead of her first finding out about the allegations when handed the letter.

1. In a response to Ms Pembroke’s solicitors’ written submissions on the appeal, the Department pointed out that the Arbitrator found the Departmental Policy to have “legislative force” and that the policy was mandatory for the employer to follow (transcript page 65). I note, however, that there is no apparent indication of any specific legislative framework for the Policy in the material provided to the Commission.

1. In my view, there is insufficient evidence before the Commission for me to determine whether the Department’s action was unreasonable. It appears from the transcript that the hearing may have been sidetracked by the discussion between the Arbitrator and Counsel for the Department over the application of section 11A. The appropriate course, therefore, is for me to remit the matter to the Arbitrator to determine the issue of whether the Department’s action was reasonable.

DECISION

1. The decision of the Arbitrator, dated 15 September 2005, is revoked and the matter is remitted to the Arbitrator to determine the reasonableness of the Appellant’s actions in accordance with these reasons.

COSTS

1. There is no order as to the costs of this appeal.

Robin Handley

Acting Deputy President  

10 August 2006

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

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