Formosa v Express Transport & Packaging Pty Ltd
[2009] NSWWCCPD 21
•27 February 2009
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE
COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Formosa v Express Transport & Packaging Pty Ltd [2009] NSWWCCPD 21
APPELLANT: Daniel Formosa
RESPONDENT: Express Transport & Packaging Pty Ltd
INSURER:Employers Mutual Indemnity (Workers Compensation) Ltd
FILE NUMBER: A1-006955/08
DATE OF ARBITRATOR’S DECISION: 20 November 2008
DATE OF APPEAL DECISION: 27 February 2009
SUBJECT MATTER OF DECISION: Change of circumstances; section 40 of the Workers Compensation Act 1987; partial incapacity for work.
PRESIDENTIAL MEMBER: Acting Deputy President Robin Handley
HEARING:Determined on the papers
REPRESENTATION: Appellant: C & M Lawyers
Respondent: Workplace Law
ORDERS MADE ON APPEAL: The decision of the Arbitrator dated 20 November 2008 is revoked and the matter is remitted to another arbitrator for determination afresh in accordance with these reasons.
The Respondent, Express Transport & Packaging Pty Ltd, is to pay the costs of the Appellant, Mr Formosa in this appeal.
BACKGROUND
On 3 December 2008, Daniel Formosa sought leave in the Workers Compensation Commission to bring an appeal against the decision of an arbitrator dated 20 November 2008. The Respondent to the appeal is Express Transport & Packaging Pty Ltd (‘Express Transport’). The Respondent’s workers compensation insurer is Employers Mutual Indemnity (Workers Compensation) Ltd (‘EMI’).
Mr Formosa is aged 31 and without dependents. After leaving school at the age of 13, he worked in the chicken industry performing unskilled manual work. In 1995, he commenced employment with Red Lea Chickens, now Express Transport, and worked there until 5 December 2005, when he injured his back lifting tubs of chickens. On 3 October 2007, a Commission arbitrator determined that Mr Formosa was totally incapacitated for work and made an award of weekly compensation.
On 4 September 2008, the Commission registered an ‘Application to Resolve a Dispute’ filed by EMI on behalf of Express Transport seeking a review of weekly payments to Mr Formosa because of a claimed change of circumstances, pursuant to section 55 of the Workers Compensation Act 1987 (‘the 1987 Act’). EMI claimed that Mr Formosa was partially incapacitated and no longer totally incapacitated for work.
On 26 September 2008, Mr Formosa’s solicitors filed a ‘Reply’, contending that his condition remains the same. He claims to suffer persistent lumbar pain radiating into his right lower limb, aggravated by performing repetitive tasks, including walking for more than 20 minutes.
On 9 October 2008, the Arbitrator conducted a teleconference with the parties. On 6 November 2008, conciliation having proved unsuccessful, the Arbitrator conducted an arbitration hearing, at the conclusion of which he reserved his decision. A Statement of Reasons (‘Reasons’) for his decision were issued on 20 November 2008 with the Certificate of Determination.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 20 November 2008, records the Arbitrator’s orders as follows:
“1. That there has been a change in circumstances since the award on 3 October 2007 within the meaning of s 55 of the 1987 Act.
2. That the Applicant pay the Respondent weekly compensation at the statutory rate for a single worker from 1 June 2008 to the day preceding the date of this determination under s 40 of the Workers Compensation Act 1987.
3. That the Applicant pay the Respondent weekly compensation at the rate of $171.30 from the date of this determination under s 40 of the Workers Compensation Act 1987, such weekly payments to continue in accordance with the provisions of the Act.
4. That the Applicant pay the Respondent’s costs as agreed or assessed.”
In the Reasons for his decision, the Arbitrator discussed the evidence provided by the parties in relation to EMI’s claim that there had been a change of circumstances. The Arbitrator found that Mr Formosa’s fitness had improved, which he said (paragraph 15):
“seems to be attributable to the gym toughening programs undertaken since January 2008. This has led to both Dr Bodel and Dr Morsingh considering that Mr Formosa is fit for suitable duties, albeit with restrictions. Even Mr Formosa’s new nominated treating doctor, Dr Badami has certified on 3 September 2008 that he is fit for suitable duties, albeit for only 1 hour/day, 5 days a week with a 5 kg lifting limit.”
Relying on this evidence, the Arbitrator was satisfied that there had been a change of circumstances, namely that Mr Formosa’s physical condition had improved such that he was no longer totally incapacitated for work and could undertake suitable duties. With regard to Mr Formosa’s capacity for work, the Arbitrator relied on the opinion of Dr James Bodel, Orthopaedic Surgeon, dated 11 June 2008, who said that Mr Formosa “should be capable of a wide range of full time work activities although probably not his pre-injury activities”, subject to a lifting restriction of 15 kgs, initially for a period of four hours a day, five days a week. Dr Bodel said: “With continued work hardening and appropriately permanently modified duties he may be able to upgrade to full time permanently modified within a three to four month period”.
The Arbitrator said (paragraph 21):
“As Mr Formosa has received further gym strengthening sessions and rehabilitation assistance in accordance with Dr Bodel’s recommendations, I agree that Mr Formosa’s capacity to work should have progressed to full time work over time. However, given Dr Bodel’s equivocal opinion of 3 to 4 months for progression to 38 hours a week, I will adopt a longer period of 5.5 months commencing with the day of this determination.”
With regard to suitable employment, the Arbitrator said:
“25.I accept that, for an illiterate manual worker with a back injury, job opportunities are likely to be limited. However, there were sufficient process work roles in the metropolitan area advertised in June 2008 (as identified in the Recovre report) for Mr Formosa to have had an opportunity to secure a position that accommodated his limitations. There is also the issue as to whether any such opportunity is likely to be identified without the assistance of a rehabilitation specialist. The training and assistance Mr Formosa received will have better equipped him in job seeking and, while he would be in a better position had he continued with such assistance, in my opinion, he cannot now complain of difficulties in job seeking arising from his decision not to avail himself further of these services. In any case, I note he secured his previous two jobs, despite his illiteracy, by simply turning up at the work site, and this approach is still open to him.
26.I therefore consider that, on the balance of probabilities, Mr Formosa will be able to secure suitable employment as a process worker within the meaning of ss 40(3) and 43A provided there is no requirement for the taking of inventories or checking orders. The Recovre report identifies the hourly rate of a process worker for casual work as $16.61 and full time $548.70. Accordingly, the average weekly amount Mr Formosa would be able to earn in that suitable employment after injury would initially be $332.00 ($16.61 x 20 hours/week) and, upon commencement of full time work, $548.70.”
The Arbitrator then applied the five steps prescribed by the NSW Court of Appeal in Mitchell v Central West Health Service (1997) 14 NSWCCR 528 (‘Mitchell’) in determining Mr Formosa’s entitlement to weekly compensation under s 40 of the 1987 Act, noting that the parties had agreed that Mr Formosa’s pre-injury earnings were $720.00 per week. With regard to step 4, the Arbitrator said that “[t]here appear to be no circumstances by which I would consider it proper to reduce the above amount of reduction in weekly earnings” (paragraph 31).
ISSUES IN DISPUTE
The issues in dispute before the Arbitrator were whether (1) there had been a change in circumstances, (2) if so, whether Mr Formosa was either wholly or partially incapacitated for work, (3) what weekly compensation was payable, and (4) whether EMI was entitled to any refund because of a change of circumstances.
Mr Formosa appeal
sis limited to the ground that the Arbitrator erred in law in his determination with regard to the operation of section 40 of the 1987 Act.
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.”
Having regard to Practice Directions Numbers 1 and 6, the documents before me, and the submission by the parties that the appeal can be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
Neither party sought to adduce fresh evidence.
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 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), the requirement that the Commission is not to grant leave to appeal unless the amount of compensation at issue in the appeal is at least $5,000 and at least 20% of the amount awarded in the decision appealed against, Mr Formosa’s solicitors contend that s 352(2) is satisfied as a result of the reduction in the weekly compensation paid to Mr Formosa consequent upon the Arbitrator’s award. EMI disputes this stating that two arbitrators have determined Mr Formosa’s entitlements after fully contested hearings. In my view, the amount of compensation at issue in the appeal, being the difference between Mr Formosa’s entitlements in respect of total and partial incapacity for work, exceeds $5,000 and is at least 20% of the amount awarded in the decision appealed against. Accordingly, I am satisfied that the section 352 threshold has been met, and I grant leave to appeal.
MR FORMOSA’S SUBMISSIONS
Mr Formosa’s solicitors concede that on the basis of the evidence available, it was open to the Arbitrator to conclude that Mr Formosa is no longer totally incapacitated for work and has some partial capacity for employment. However, they dispute “the means by which the Arbitrator arrived at his assessment of the weekly compensation award”. First, Mr Formosa’s solicitors contend that the Arbitrator misinterpreted the comment made by Bryan Teodoruk of Body Blitz Personal Training Studio in an undated report apparently of July 2008, noting “big improvements” in Mr Formosa’s body strength but stating that Mr Formosa “is only just starting to reach the strength levels of the norm of the population”. At paragraph 23((e), the Arbitrator said, “Mr Teodoruk, the trainer said that after 73 sessions, Mr Formosa had reached the strength levels of the norm of the population.”
Second, Mr Formosa’s solicitors contend the Arbitrator made an error in determining that if Mr Formosa had availed himself of the further gym strengthening sessions and rehabilitation assistance recommended by Dr Bodel, he should have been able to find himself work as at the date of the Arbitrator’s decision. Mr Formosa’s solicitors contend that EMI made no submission to the Arbitrator that if Mr Formosa had made it known to EMI that he was prepared to undergo a multi-faceted rehabilitation program, he would have been retrained or rehabilitated to the extent that he was capable of full-time employment as at the date of the hearing. Such a submission would have been untenable and “plainly inconsistent with the application of s 40 of the 1987 Act”. Indeed, the Arbitrator denied Mr Formosa natural justice in not affording him the opportunity to address this. Mr Formosa’s solicitors submit the Arbitrator failed to have regard to the reality of the worker’s situation - that:
23 ... “he is effectively illiterate, he has only ever worked in chicken processing and he has been assessed as having a 11% WPI assessed by the AMS Dr Gliksman restricting his ability to pursue manual employment. He is in reality unlikely to obtain remunerative work until he has been rehabilitated, work hardened and re-skilled as recommended by the Doctor whose opinion the Arbitrator preferred, Dr Bodel.
24.The Arbitrator having rejected that submission effectively sought to punish the worker for his perceived lack of co-operation with the insurer with respect to rehabilitation efforts.
25.The Arbitrator found that had the worker so availed himself he would have been working full time by the time of the arbitration.
26.This is not a relevant consideration in establishing a factual basis for determining a workers ability to earn in some suitable employment.”
Mr Formosa’s solicitors contend that the Arbitrator “found without any evidentiary basis that the worker would be able to work a full 38 hour week as at the date of the arbitration”.
EMI’S SUBMISSIONS
EMI submits that it was open to the Arbitrator to draw an inference from the fact of Mr Formosa not having provided a statement and not having given oral evidence that his evidence would not have assisted his case: Jones v Dunkeld (1959) HCA 8. In these circumstances, the Arbitrator was entitled to find that there had been a change of circumstances in accordance with EMI’s submissions. Similarly, EMI submits that in the light of Dr Bodel’s evidence as to Mr Formosa’s increasing capacity to engage in alternative work, it was open to the Arbitrator to infer from the absence of any evidence from Mr Formosa, that his evidence would not have assisted him in this regard. Moreover, Dr Bodel examined Mr Formosa on 11 June 2008. The gym program continued until 28 July 2008.
EMI notes that the Arbitrator considered four pieces of evidence in concluding that there had been a change in circumstances: (1) the gym strengthening training; (2) the opinion of Dr R Morsingh, Mr Formosa’s then treating doctor, dated 15 May 2008, that Mr Formosa was no longer totally unfit for work, and Dr Morsingh’s WorkCover medical Certificate dated 24 June 2008 stating that Mr Formosa was fit for suitable duties; (3) the capacity for work findings of Paul Gan, physiotherapist, contained in the Recovre report dated 6 June 2008; and (4) the opinion of Dr Bodel expressed in his report dated 11 June 2008.
EMI also submits that the absence of any up to date report from Dr Max Ellis, Surgeon, was of “considerable significance” given that the original finding of total incapacity was based on his opinion.
EMI contends that it was open to the Arbitrator to find that Mr Formosa had cancelled further job seeking sessions. In terms of Mr Formosa’s capacity to engage in suitable work, in the absence of evidence from Mr Formosa, the Arbitrator relied on the Recovre report as to the availability of suitable process work, and allowed a period of five and a half months during which Mr Formosa would have progressed to the stage where he was able to engage in suitable employment for a full working week. In finding partial capacity only, the Arbitrator had proper regard to the reality of Mr Formosa’s situation, to his capacity for particular work, to the availability of such work and the likely income to be derived from it. At no time did the Arbitrator base his decision upon an assumption that if Mr Formosa had made it known to EMI that he was prepared to undergo a multi-faceted rehabilitation program, he would have been retrained or rehabilitated to the extent that he was capable of full-time employment as at the date of the hearing. There was no denial of natural justice. A reading of the transcript of the arbitration hearing reveals that Mr Formosa’s counsel had every opportunity to make submissions in relation to the clearly defined issues in the case.
DISCUSSION AND FINDINGS
Pursuant to s 352(5) of the 1998 Act, the role of a Presidential Member on appeal is to conduct a review of the decision appealed against. As Mr Formosa’s counsel pointed out in the arbitration hearing (transcript p 18), Mr Formosa gave evidence and was cross-examined in the course of the first arbitration hearing 12 months earlier (on 3 October 2007). In the second proceedings brought by EMI, there was no onus on Mr Formosa – it was for EMI to establish there had been a change of circumstances under s 55 of the 1987 Act. This states relevantly:
“55(1)Any weekly payment of compensation may, because of a change of circumstances, be reviewed by the Commission at the request of the employer or the worker or of the Authority.
(2) On any such review:
(a) the weekly payment may be ended, reduced or increased (but subject to the provisions of this Division relating to the amount of the weekly payment), and
(b) the amount of the weekly payment (if any) shall, in default of agreement, be determined by the Commission.”
I note that in their submissions in the appeal, Mr Formosa’s solicitors concede that, on the basis of the evidence available, it was open to the Arbitrator to conclude that Mr Formosa was no longer totally incapacitated for work – that he is now partially incapacitated for work. As stated above, Mr Formosa’s solicitors submit that the Arbitrator made an error of law in his application of section 40 of the 1987 Act. However, as EMI notes, his solicitors also appear to rely on errors of fact in seeking to have the Arbitrator’s decision set aside.
The five step process prescribed by the NSW Court of Appeal in Mitchell, at pages 529 to 530, for determining an award under section 40 is as follows:
“1.To determine the weekly amount the worker would probably have been earning if uninjured (section 40(2)(a))
2.To determine the average weekly amount that the worker is earning or would be able to earn in some suitable employment from time to time after the injury (section 40(2)(b)). Section 40(3) provides that the determination of this amount is subject to the following:
‘(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker;
(b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A.’3.To subtract the figure derived from 2. from the figure derived from 1. (section 40(2))
4.To decide whether and to what extent the reduction calculated as above, bears such relation to the amount of that reduction as may appear proper in the circumstances of the case (section 40(1)) ...
5. To make an award in the amount arrived at in Step 4.”
In relation to Mr Formosa’s solicitors’ first contention, that the Arbitrator misinterpreted Mr Teodoruk’s evidence, I note that at paragraph 17 of his Reasons, the Arbitrator quoted Mr Teodoruk correctly:
“Given that at the end of the gym strengthening sessions Mr Formosa was assessed ‘as only just starting to reach the strength levels of the norm of the population’, a graduated return to work is more realistic after almost 3 years not working.”
The Arbitrator’s comment at paragraph 23(e) was specifically in relation to the factors to which regard should be had in determining what should be considered ‘suitable employment’ for Mr Formosa, pursuant to section 43A(1) of the 1987 Act, for the purposes of Mitchell step 2. In my view, there was no error of fact: merely, a brief reference to Mr Teodoruk’s opinion in the context of whether there was an injury management plan for Mr Formosa, one of the factors to which regard should be had under section 43A(1).
In relation to Mr Formosa telephoning Recovre following the second job seeking session on 14 August 2008, when he advised that “he had had ‘an argument’ with EMI and asked to cancel his next job seeking appointment” and said that he had been given legal advice that he did not have to attend (Recovre, Closure Report, dated 15 August 2008, p 2), it appears that EMI may have informed Mr Formosa that it was no longer prepared to pay for the gym sessions (transcript pp 20 and 22, and see file notes attached to EMI’s letter to Workplace Law dated 1 September 2008). In my view, Mr Formosa’s conduct in relation to rehabilitation and job seeking assistance was a matter the Arbitrator could have taken into account at step 4 of the Mitchell process in deciding whether and to what extent the reduction in the worker’s ability to earn in suitable employment after the injury calculated at step three was the proper award to make in the circumstances of the case: see Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50 at 55 (McHugh JA)).
At step 2, the Arbitrator was required to make a finding of fact as to the weekly amount Mr Formosa would be earning (Mr Formosa was not then working) in some suitable employment from time to time after the injury. This determination had to be based on Mr Formosa’s ability to earn in the general labour market reasonably accessible to him and having regard to suitable employment.
The Arbitrator referred to the evidence of Mr Formosa’s new treating doctor, Dr S Badami (WorkCover medical certificate dated 3 September 2008), who certified that Mr Formosa was fit for suitable duties for one hour a day on 5 days a week avoiding lifting, pushing or pulling more than 5 kgs. The Arbitrator placed “little weight on this certification” because there were no supporting reasons for Dr Badami’s opinion (paragraph 17). The Arbitrator noted the opinion expressed by Paul Gan, Physiotherapist, of Recovre (report dated 6 June 2008), who considered that Mr Formosa was fit for light to medium work for 38 hours a week subject to restrictions on lifting, carrying and bending. However, the Arbitrator preferred the opinion of Dr Bodel (report dated 11 June 2008), who considered that Mr Formosa “should be capable of a wide range of full time work activities although probably not his pre-injury activities”. Dr Bodel said: “I would encourage the further gymnasium-based programme to strengthen the back and abdominal area and reduce his weight”. Dr Bodel advised:
“The restriction on this gentleman’s return to the workforce at the moment would in my view be a four hour a day [sic], five days a week with a 15 kg lifting limit. With continued work hardening and appropriately permanently modified duties he may be able to upgrade to full time permanently modified within a three to four month period.”
The Arbitrator noted that the gym program had continued until 28 July 2008. The Recovre Closure report dated 15 August 2008 noted that on 14 August 2008, Mr Formosa provided a WorkCover medical certificate from Dr Morsingh certifying him to be fit for only one hour per day, five days per week, due to increased pain symptoms.
At paragraph 21 of his Reasons, the Arbitrator relied on Dr Bodel’s opinion that as at the date of examination, Mr Formosa had a capacity of 20 hours a week. As Mr Formosa had received further gym strengthening sessions and rehabilitation assistance in accordance with Dr Bodel’s recommendations, the Arbitrator agreed that over time, this capacity would have progressed to full-time work, albeit with restrictions. The Arbitrator said, “given Dr Bodel’s equivocal opinion of 3 to 4 months for progression to 38 hours a week, I will adopt a longer period of 5.5 months from the day of this determination”.
At this point, the Arbitrator proceeded to consider the issue of suitable employment and had regard to the factors set out in section 43A of the 1987 Act. The Arbitrator also referred to the decision in Lawarra Nominees Pty Ltd v Wilson (1996) 25 NSWCCR 206, where at 213, Mahoney J said:
“The legislation is not concerned merely in the abstract with work or work capacities as such. It is concerned with the capacity to do work of a particular kind or kinds and in a context which will produce income.”
The Arbitrator said, at paragraph 25:
“I accept that, for an illiterate unskilled manual worker with a back injury, job opportunities are likely to be limited. However, there were sufficient process work roles in the metropolitan area advertised in June 2008 (as identified in the Recovre report) for Mr Formosa to have had an opportunity to secure a position that accommodated his limitations. There is also the issue as to whether any such opportunity is likely to be identified without the assistance of a rehabilitation specialist. The training and assistance Mr Formosa received will have better equipped him in job seeking and, whilst he would be in a better position had he continued with such assistance, in my opinion, he cannot now complain of difficulties in job seeking arising from his decision not to avail himself further of these services. In any case, I note he secured his two previous jobs, despite his illiteracy, by simply turning up at the work site, and this approach is still open to him.”
The Arbitrator therefore determined that Mr Formosa would initially be able to work for 20 hours a week from 1 June 2008, and then full-time from the date of the determination (20 November 2008). The Arbitrator appears to have accepted that Mr Formosa’s ability to work would be subject to restrictions, at least in terms of lifting, and that he would not be able to return to his pre-injury duties.
In my view, the Arbitrator’s finding that Mr Formosa would be in a better position had he continued with job training and rehabilitation assistance is speculative. At the time of Dr Bodel’s examination, Mr Formosa was not fit for full-time work and later medical certificates from Dr Morsingh (referred to in the Recovre Closure report dated 15 August 2008) and Dr Badami (3 September 2008) certified that Mr Formosa was only fit for work for one hour per day on five days a week. I am not satisfied that there was sufficient evidence before the Arbitrator to enable him to find that Mr Formosa was capable of full-time work as at the date of the determination and, in doing so, in my view, the Arbitrator made an error of fact. Any lack of co-operation by Mr Formosa in terms of training and rehabilitation was not a matter the Arbitrator should have taken into account in determining Mr Formosa’s ability to earn in suitable employment (at step 2 of Mitchell) and to the extent that he did so, this was an error of law. Rather, any lack of co-operation by Mr Formosa was a matter the Arbitrator could have considered in exercising his discretion at step 4 of the Mitchell process.
Having conducted a review on the merits (per Spigelman CJ in State Transit Authority v Fritzi Chemler [2007] NSWCA 249: (2007) 5 DDCR 287 at [28]), I am of the view, for the reasons given in this decision, that the Arbitrator erred in his application of section 40 of the 1987 Act and that the decision must be revoked and remitted to another Arbitrator for determination afresh.
DECISION
The decision of the Arbitrator dated 20 November 2008 is revoked and the matter is remitted to another arbitrator for determination afresh in accordance with these reasons.
COSTS
The Respondent, Express Transport & Packaging Pty Ltd, is to pay the costs of the Appellant, Mr Formosa in this appeal.
Robin Handley
Acting Deputy President
27 February 2009
I MARIE JOHNS 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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