Galal v Department of Lands
[2006] NSWWCCPD 279
•24 October 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Galal v Department of Lands [2006] NSWWCCPD 279
APPELLANT: Effat Galal
RESPONDENT: Department of Lands
INSURER:NSW Treasury Managed Fund
FILE NUMBER: WCC 7478-05
DATE OF ARBITRATOR’S DECISION: 21 October 2005
DATE OF APPEAL DECISION: 24 October 2006
SUBJECT MATTER OF DECISION: Section 40 of the Workers Compensation Act 1987; weight of evidence.
PRESIDENTIAL MEMBER: Acting Deputy President Tydd
HEARING:On the papers
REPRESENTATION: Appellant: Milicevic Solicitors
Respondent: Moray & Agnew Solicitors
ORDERS MADE ON APPEAL: 1. Paragraph one of the Arbitrator’s decision dated 21 October 2005 is revoked and the following order made in its place:
“That the Respondent pay the Applicant the sum of:
(i) $78.00 per week from 21 October 2004 to 9 February 2005,
(ii) $106.77 per week from 10 February 2005 to 18 May 2005,
(iii) $106.78 per week from 19 May 2005 to 13 July 2005 and
(iv) $136.68 per week from 14 July 2005 to date and continuing in accordance with section 40 of the Workers Compensation Act 1987.”2. Paragraphs two and three of the Arbitrator’s decision of 21 October 2005 are confirmed.
3. The Respondent is to pay the Appellant’s cost of the Appeal.
BACKGROUND TO THE APPEAL
Employment and Injuries
Effat Galal (‘Mr Galal’) is a 60 year old man who was employed to undertake administrative duties related to the management of maps and plans by what is now known as the Department of Lands (‘the Department’). On 3 June 2004, after sixteen years of employment with the Department, Mr Galal applied for voluntary redundancy which was approved and on 24 September 2004 he ceased employment. Mr Galal has not been employed since.
Mr Galal sustained two injuries during his employment with the Department. On 1 February 2001 he was moving heavy presses and injured his lower back, and on 17 July 2003 he lost control of a trolley he was using to transport maps. In attempting to regain control of the trolley he experienced acute pain in his right shoulder. Following this injury Mr Galal required time off work and upon return to duties he commenced a graduated return to work program. Until commencing Job Search Leave on 5 July 2004 Mr Galal was undertaking permanently modified duties with the Department which accorded with the certificates provided by his treating doctor.
On 20 October 2004, the New South Wales Treasury Managed Fund (‘the Insurer) issued correspondence to Mr Galal stating that it would cease paying Mr Galal the weekly compensation payments it made following his redundancy on the basis that he had taken voluntary redundancy and, on the Insurer’s medical evidence he was fit for the duties he undertook prior to ceasing employment. Payments ceased on or about 22 October 2004.
The Application to Resolve a Dispute
On 19 May 2005, Mr Galal lodged an ‘Application to Resolve a Dispute’ (WCC7478-05) with the Workers Compensation Commission (‘the Commission’) naming the Department as the Respondent. The application was amended at the teleconference, to seek weekly compensation from 27 October 2004 to date and continuing in the sum of $755.00 per week and a general order for medical and related expenses pursuant to section 60 of the Workers Compensation Act 1987 (‘the 1987 Act’). Mr Galal claimed that he suffered post-traumatic mechanical derangement of the lumbar spine; injuries to his right and left leg, and a partial thickness tear of his right subscapularis tendon with subacromial bursitis and impingement of his right shoulder as a result of the two frank injuries set out above and also as a result of the nature and conditions of his employment with the Department from 1 February 2001 to 2 July 2004.
On 3 June 2005, the Department lodged a Reply to the ‘Application to Resolve a Dispute’ in which it confirmed its settlement on 25 May 2004, of Mr Galal’s prior claim brought pursuant to section 66 and 67 of the 1987 Act. The claim was for 18% permanent impairment of his back and a 2.5% loss of use of efficient use of both legs at or above the knee and an undisclosed amount pursuant to section 67. The terms of settlement were not disclosed. However the Department disputed Mr Galal’s entitlement to weekly benefits compensation on the basis that he had a demonstrated capacity to earn greater than or equal to his pre-injury earnings at the time he received voluntary redundancy and therefore his entitlement pursuant to section 40 should be nil. Further the Department disputed Mr Galal’s claim for medical and related expenses as not reasonable and necessary in light of the alleged injury.
Conciliation and Arbitration Proceedings
On 2 August 2005, a teleconference was conducted by a Commission Arbitrator (‘the Arbitrator’) who made Procedural Directions to: amended the application as set out above; permit the filing of late documents by both parties and issue ‘Directions for Production’. The matter was set down for conciliation/arbitration on 10 October 2005 and as the dispute was not resolved it proceeded to arbitration on that day. The Arbitrator issued a ‘Certificate of Determination’ and a ‘Statement of Reasons’ dated 21 October 2005.
Lodgement of the Appeal
On 17 November 2005 Mr Galal sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Commission against the decision dated 21 October 2005.
The Department filed its ‘Notice of Opposition to Appeal Against Decision of Arbitrator’ on 8 December 2005.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 21 October 2005 records the Arbitrator’s orders as follows:
“1. That the Respondent pay the Applicant weekly compensation at the rate of $15.00 from 27 October 2004 to date and continuing under section 40 of the Workers Compensation Act 1987, such weekly payments to continue in accordance with the provisions of the Act.
2. That the Respondent pay the Applicant’s section 60 of the Workers Compensation Act 1987 expenses on production of accounts or receipts.
3. That the Respondent pay the Applicant’s costs as agreed or assessed.”
ISSUES IN DISPUTE
The issues in dispute on appeal are:
·Whether the Arbitrator erred in exercising his discretion pursuant to section 40(1) of the 1987 Act.
·Whether the Arbitrator’s finding that Mr Galal’s acceptance of redundancy was not because of his injuries or because he was “being forced” out was against the weight of evidence.
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.”
Mr Galal submits that the appeal “involves the exercise of the Arbitrator’s discretion pursuant to Section 40(1) WCA and as such requests the opportunity to make further oral submissions.” The Department submits that unless the Commission “is minded to dismiss the Appeal, the Respondent would wish to be heard in light of the substantial issues involved.” Further submissions in support of the request for a formal hearing are not provided by the Department.
In determining whether a conference or formal hearing is required I have regard to the parties’ submissions. However the only argument in support of this request is Mr Galal’s submission that, as the matter involves the exercise of the Arbitrator’s discretion pursuant to section 40(1) of the 1987 Act the Commission should provide an opportunity to make further oral submissions. Both parties are legally represented and have filed lengthy submissions on appeal which refer to the relevant authorities concerning the exercise of discretion pursuant to section 40(1). These submissions have been served. Neither party has made an application to make further written submissions. In my view, the parties are, or ought to be aware of the substantive issues in dispute between them, the issues in contention on appeal and the risks in relation to an adverse finding inherent in the issues raised on appeal. Having considered the submissions, the Arbitrator’s reasons and all of the evidence before the Arbitrator, I am satisfied that I have sufficient information within the meaning of section 354 of the 1998 Act and in accordance with Practice Directions 1 and 6 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 amount of compensation at issue on the appeal is determined by reference to the amount of any monetary award made by the Arbitrator (Grimson v Integral Energy [2003] NSWWCCPD 29). The dispute before the Arbitrator was a claim of compensation of $755.00 per week and continuing. I am satisfied that the amount of compensation at issue on appeal is at least $5,000.00. The Arbitrator awarded the sum of $15.00 per week and Mr Galal disputes the entire award. Therefore I am also satisfied that the amount of compensation at issue is at least 20% of the amount awarded in the decision appealed against. I am satisfied that the requirements of Section 352(2) of the 1998 Act have been met.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Leave to appeal is granted.
EVIDENCE AND SUBMISSIONS
Mr Galal’s submissions
Mr Galal submits that the Arbitrator erred in the exercise of his discretion pursuant to section 40(1) of the 1987 Act by taking into account self-induced diminution of earning capacity to reduce the mathematical difference between what he found to be Mr Galal’s probable earnings pursuant to section 40(2)(a) and his ability to earn pursuant to section 40(2)(b) to arrive at an award of $15.00 per week. It is submitted that the Arbitrator’s exercise of discretion in this regard is contrary to the authority provided by Mitchell v Central West Health Service (1997) 14 NSWCCR 527 (‘Mitchell’). It is submitted that factors to be taken into account by the decision maker in exercising the discretion in accordance with section 40(1) are those which demonstrate “supervening incapacity, unrelated to the worker’s injury, causing him to be unable to under take work” such as pregnancy and motherhood (Hirst v Illawarra Area Health Service (2000) 21NSWCCR 82 (‘Hirst’)) and imprisonment.
Additionally, it is submitted that the Arbitrator erred in applying Kesen v Luke Singer Pty Ltd (1989) 18 NSWLR 566 (‘Kesen’) in exercising his discretion as the facts of the present case are clearly distinguishable from those in Kesen. In Kesen the worker had resided in Turkey for a period of three years during which time he cared for his sick father and in doing so that worker was not available to undertake work in the general labour market available to him. In the present case Mr Galal was not unavailable to undertake work.
Mr Galal also submits that the Arbitrator’s finding that his acceptance of a redundancy was not because of his injuries or because he was being “forced out” was against the weight of evidence. In summary, it is submitted that the Arbitrator erred in:
·requiring confirmation of Mr Galal’s evidence, given in the form of statements;
·failing to accept that Mr Galal’s unchallenged evidence regarding the reasons for his acceptance of a redundancy in circumstances where oral evidence is “generally not called to confirm statements already in evidence”, and
·finding that “there was no apparent pressure on the Applicant to retire” which was contrary to Mr Galal’s unchallenged evidence.
The Department’s submissions
The Department submits that the appeal process “is not a vehicle by which an aggrieved party can seek to again agitate the primary issues before the Arbitrator” and the decision at first instance should not be lightly interfered with (Mayne Health Group T/as Nepean Private Hospital v Sandford [2002] NSWWCCPD 6 and Ross v Zurich Worker’s Compensation Insurance [2002] NSWWCCPD 7).
The Department also submits that contrary to Mr Galal’s submissions the Arbitrator did not seek to draw parallels between the facts in Kesen and the present case. Rather the Arbitrator referred to Kesen in acknowledging that, in the case of an established incapacity it is necessary to award some compensation rather than make no award at all as occurred in Kesen at first instance. In applying Kesen the Arbitrator made a nominal award in favour of Mr Galal. The Department also relies upon Kesen in support of the proposition that the Arbitrator may invoke the discretion pursuant to section 40(1) of the 1987 Act to reduce the deficit between probable earnings but for the injury and the amount the partially incapacitated worker is able to earn after injury in circumstances where the worker “declines to work or who by some means puts it out of his power to do so”. The case of Zinc Corporation Limited v Robbins [1999] NSWCA 194 (‘Zinc Corporation’) is also relied upon in support of the proposition that voluntary redundancy is relevant to the exercise of the discretion.
The Department further submits that the Arbitrator correctly applied the steps set out in Mitchell. However, it is submitted that the facts in the present case are distinguishable from those considered by the Court of Appeal in Mitchell. In Mitchell the Court was required to consider a situation where the worker had made no attempt to seek suitable work and the Court recognised that “failure to look for work is relevant to the question of what a person is capable of earning.” It is submitted that, in the present case Mr Galal voluntarily took himself “out of suitable employment which otherwise was and would have continued to be available to him.” Further, the broad discretion referred to in Mitchell should be preserved.
In respect of Mr Galal’s submissions that the Arbitrator’s findings were against the weight of evidence the Department submits that:
·the Department tendered a substantial body of evidence to refute and contradict matters contained in Mr Galal’s statement and the contemporaneous documentary evidence provided by the Department such as correspondence from Ms Michelle King which was preferred by the Arbitrator;
·the Arbitrator carefully and accurately analysed the facts and made findings which were open to him, and
·there was no attempt made by Mr Galal to deal with the live issue of the background and circumstances of his redundancy when the facility for oral evidence was afforded and therefore the Arbitrator was required to reconcile the differences in the evidence. The overwhelming evidence supported the Arbitrator’s finding that the redundancy was not occasioned by reason of Mr Galal’s injuries.
The Department submits that in determining the application the Arbitrator:
· had regard to Mr Galal’s oral evidence and referred to “the strong body of evidence and objective facts” which suggested that contrary to Mr Galal’s evidence he was not being “pushed out” of the workplace;
· considered Mr Galal’s ability to cope with the work he was performing and did not accept that Mr Galal was having difficulties undertaking the work required of him, and,
· refuted the suggestion that Mr Galal’s employment was not secure.
Mr Galal’s evidence
Evidence of Mr Galal’s partial incapacity prior to his acceptance of voluntary redundancy was contained in medical certificates issued by Dr Guirgis dating from 2 February 2004 to 30 June 2004. Dr Guirgis certified Mr Galal fit for full time permanently modified duties with restrictions on lifting no more than 10 kilograms and “no pushing on trolleys”. A further medical certificate issued by Dr Guirgis and dated 28 June 2004 added restrictions limiting Mr Galal’s sitting, travelling, walking and standing to periods of one hour. Dr Guirgis did not certify that Mr Galal had reached maximum medical improvement.
Mr Galal relied upon three reports and a number of medical certificates issued by Dr Guirgis in support of a finding that, following his acceptance of voluntary redundancy he became totally incapacitated for work.
In summary Dr Guirgis’ report dated 30 December 2004 concluded that:
·Mr Galal was last seen on 6 December 2004 at which time he complained of “episodic severe pain and stiffness in the lower back” and “attacks of radiation down the left lower limb”. These attacks “lasted for a few hours to days on each occasion”;
·the signs and diagnosis remain consistent with the on-going effects of “post-traumatic mechanical derangement of the lumbar spine” and this condition was related to the nature of Mr Galal’s duties;
·the injury suffered by Mr Galal at work on 17 July 2003 resulted in “on-going post-traumatic symptoms in the right shoulder joint caused by contusion of the articular surfaces and spraining of the supporting capsular and ligamentous structures. There was ultrasound scan evidence of partial thickness tear of the subscapularis tendon” and “subacromial bursitis and impingement & blocking at 90 degrees of abduction.”;
·conservative treatment should continue and surgical treatment is “not indicated at the present stage but should be considered if the clinical condition deteriorated.”, and
·Mr Galal “remains unfit to be involved in any activities that require applying stresses to the back, right shoulder and neck.”
In his report dated 31 December 2004, Dr Guirgis concluded that Mr Galal:
·had presented on 28 September 2004 complaining of an acute exacerbation of his symptoms in his lower back; an “acute left lumbosciatic syndrome.”, and “exacerbation of his right shoulder symptoms despite receiving the intra-articular double dose steroid injection in that shoulder under fluoroscopic control on 28-8-2004”;
·was totally unfit for work and “This was particularly the case with the repeated acute episodes which would render the patient unable to maintain any job and unable to keep a regular time table of attendance.”, and
·had not experience “much change in his condition than what was present” on 28 September 2004 to when he was last seen by Dr Guirgis on 6 December 2004.
In his report dated 7 September 2005 Dr Guirgis referred to Mr Galal’s presentations on 28 September 2004 and 6 December 2004 and again Dr Guirgis commented that there was “no [sic] much change in his condition” between the two presentations. In referring to Mr Galal’s presentation on 28 September 2004 Dr Guirgis stated that “It was my opinion then that he became totally unfit for work.” Dr Guirgis opined that:
“after that he presented with persistent symptoms in the lower back and right shoulder and developed symptoms and signs of chronic pain/anxiety/depression. This rendered him to be unable to resume his suitable duties since then.”
The medical certificate issued by Dr Guirgis September 2004 (no date provided) specified that Mr Galal was unfit for work from 28 September 2004 to 28 November 2004 as a result of an “Acute exacerbation of his symptoms”. On 6 December 2004 Dr Guirgis issued a further certificate specifying that Mr Galal was unfit for work from 6 December 2004 to 6 February 2005 as a result of his right shoulder injury and back injury “with active lumbar sciatica”. Further certificates were issued by Dr Guirgis certifying Mr Galal unfit for work until 6 August 2005, with the last certificate dated 30 May 2005 indicating that Mr Galal’s diagnosis was “failure to cope” with “chronic pain syndrome” following his back and right shoulder injury.
A report dated 31 January 2005 issued by Mrs Jill Gage, of Seven Hills Physiotherapy & Rehabilitation Centre was also relied upon by Mr Galal. In summary the report noted that Mr Galal had returned for treatment “a week ago” complaining of severe lumbar back pain and advised that he was “spending most of the time resting in bed.” Mrs Gage stated that she “was trying to get him to do more” and provided him with a TNS machine which he reported had a significant pain relieving effect.
The Department’s evidence
The Department relied upon a Rehabilitation Closure Report (‘the Closure Report’) prepared by Rehabilitation Services Pty Limited; the report of Dr B Stephenson, Orthopaedic Surgeon, and a Section 40 Assessment (‘the section 40 assessment’) prepared by Dr R Mitchell, Occupational Physician and Mr David Brown, Occupational Psychologist, in support of a finding that Mr Galal had a demonstrated capacity to earn his pre-injury earnings.
The Closure Report, dated 2 March 2004 concluded that:
“Mr Galal is performing alternative duties as a plan room officer at Department of Lands NSW without reported difficulties. He presents as happy with his recovery and motivated to remain at work.
Mr Larry Brandt of Department of Lands NSW has expressed no ongoing concerns in relation to Mr Galal’s performance or ability to manage work.
No further time loss or treatment is anticipated in relation to Mr Galal’s right shoulder injury sustained on 17.07.03.”
The report of Dr Stephenson, was dated 3 August 2004, that is one month after Mr Galal took job search leave from his employment. The report can be summarised as follows:
·Mr Galal suffered a back injury in 2001 which resulted in lumbar strain and radiology confirms lumbar degenerative changes and some cervical degenerative changes;
·Mr Galal also suffered a work related strain at the right shoulder causing findings of impingement related to tendonitis in July 2003;
·Mr Galal “appears fit for normal pre-injury hours of work and for general office work” avoiding heavy lifting activities or heavy repetitive overhead use of his right upper limb;
·“therefore he is fit for more selected duties, which probably should continue in the future on the current findings and the history”;
·Mr Galal may require occasional short courses of physiotherapy, either for his back or shoulder “on specialist medical advice, depending upon his clinical presentation”, and
·Mr Galal has a 5% permanent impairment of the back as a result of his work injury and following a deduction for pre-existing injury. He was assessed as having a 3% Whole Person Impairment as a result of his right shoulder injury at work.
The section 40 assessment, dated 22 July 2005 concluded that Mr Galal suffered from wide spread degenerative changes in his cervical, lumbar spine and both shoulders which are long standing. However he is fit to resume duties which include those he undertook prior to his injury and at a minimum he could perform the duties he undertook prior to his voluntary redundancy. Mr Galal is fit for “suitable duties with lifting up to 10 kg and requiring a posture change every hour, and he was to avoid pushing and pulling on heavy objects.” There were no particular restrictions on the number of hours worked and the appropriate jobs recommended for Mr Galal were that of General Clerk; Sales Assistant, and Taxi Diver.
The Department also relied upon a Progress Report dated 16 December 2003, from Ms Michelle King, Occupational Therapist. Ms King’s report detailed Mr Galal’s response to psychological therapy which she summarised as “difficult” as a result of Mr Galal’s belief that he is a very sick man due to the presence of pain. The report noted that the Department had confirmed at a meeting conducted on 5 December 2003 that an alternate position would be provided to accommodate Mr Galal’s permanent restrictions. However notwithstanding this confirmation contact with Mr Galal’s psychologist revealed that he was under the impression that “he was being ‘pushed out of the workplace’”. The report concluded that Dr Guirgis had confirmed in a facsimile of 8 December 2003 that Mr Galal was fit for pre-injury duties yet the WorkCover medical certificate of that date did not conform to Dr Guirgis’ written advice. Ms King concluded that “It is felt that Mr Galal is stating what he thinks the health professionals involved in his rehabilitation want to hear, this was additionally a concern reported by the treating physiotherapist.”
Mr Galal’s statements dated 10 November 2004 and 30 May 2005 described the injuries he sustained and his post injury duties. Mr Galal indicated that he experienced “great difficulties” in completing his duties in the workplace as a result of on-going pain and his difficulties were noticed by the Department who arranged a meeting to discuss this issue. Mr Galal stated that the meeting took place on 19 December 2003 and that at that meeting he was “indirectly asked by the officials to retire.” In his later statement Mr Galal set out the effect of his pain on activities of daily living and his development of depression.
The Department relied upon correspondence from Ms Michelle King to Mr Galal, dated 16 December 2003 in support of its submission that Mr Galal’s “position” with the Department was “not in jeopardy”. In the correspondence Ms King confirmed that the issue of Mr Galal’s employment was discussed at the meeting conducted on 16 December 2003 because Mr Galal had raised the issue of retirement previously with Mr Brandt. During that meeting Mr Brandt confirmed that Mr Galal had “questioned him about retirement” and as stated in the meeting by Mr Brandt “a position would be found for [Mr Galal] so that [he] could manage work until you are ready to retire therefore it is uncertain as to why you think that you are being ‘forced out of work’”. The reference to a prior conversation between Mr Brandt and Mr Galal contained in Mr King’s report was the only evidence relied upon by the Department in support of a finding that following his acceptance of a voluntary redundancy Mr Galal was intending to retire. Mr Galal did not provide evidence to address this issue which was not advanced by the Department.
ARBITRATOR’S DECISION
(i) The Arbitrator’s ‘Statement of Reasons’ in relation to Section 40 of the 1987 Act
At paragraph 44 of his decision the Arbitrator set out his “concerns regarding causation” and noted that Dr Guirgis had not addressed this issue in respect of the deterioration of Mr Galal’s condition after he ceased work. The Arbitrator stated that the opportunity existed for Mr Galal’s representative to address this issue in respect of what occurred after he ceased work and what symptoms Mr Galal experienced at that time. The Arbitrator noted that Mr Galal provided a brief response that he was “very, very sick” and, as a result he did not attempt a computer course whilst on Job Search Leave.
The Arbitrator concluded at paragraph 45 that the failure to explore this “critical issue” raised concerns regarding the weight to be placed on Mr Galal’s claims regarding his recurrent symptoms. The Arbitrator stated that this failure, coupled with the concerns and opinions expressed by Ms King and Dr Mitchell that Mr Galal’s responses were not consistent, and in the absence of “objective findings particularised by Dr Guirgis” led him to conclude that he had difficulty in “accepting the opinion of Dr Guirgis over that of Dr Stephenson or Dr Mitchell as to [Mr Galal’s] capacity to work. Accordingly the Arbitrator determined that Mr Galal “had failed to discharge his burden of proof to establish that his incapacity is total, as opposed to partial.”
Having determined that Mr Galal was partially incapacitated for work the Arbitrator applied section 40 of the 1987 Act. The parties agreed that Mr Galal’s earnings but for the injury are:
from 21 October 2004 $719.22;
from 10 February 2005 $747.99;
from 19 May 2005 $748.00, and
from 14 July 2005 $777.90
In determining the amount that Mr Galal would be able to earn in ‘suitable employment’ the Arbitrator considered submissions from the parties. The Department submitted that Mr Galal is capable of working normal hours and based upon his past experience an appropriate job would be that of an elementary clerical worker which would be readily available to him in Sydney. Mr Galal submitted that he would experience a number of difficulties in the general labour market including that: he had been employed by the Department since 1988 with little experience of the general labour market and would require retraining; the results of the section 40 assessment demonstrate that he was a person who has problems with vocational decision making and/or work adjustment; he has poor spelling; at that time he was 59 years of age, and he has a significant permanent impairment which places significant restrictions on his capacity to work including his inability to sit for 8 hours a day. Mr Galal submitted that he could only earn an amount limited to approximately $250.00 per week in ‘suitable employment’.
The Arbitrator’s reasons demonstrate that he assessed the submissions at paragraph 54 as follows:
“54.1 A problem with the Applicant’s submissions on his difficulties in the general labour market is that there is no objective evidence because the Applicant has not sought employment since he went on job search leave nor undertaken training.
54.2 I accept that the Applicant would be capable of working in an elementary clerical position, but I do not accept that such a position could be one similar to that he was performing before accepting voluntary redundancy. The position with the Respondent was one that had been modified to accommodate the restrictions arising from the Applicant’s injuries. It is not a position available in the general labour market and is unlikely to be available to a new employee engaged by the Respondent.
54.3 I am not convinced that, given his impairments and age, the Applicant is likely to obtain a full time clerical job. I consider the S40 Report has paid insufficient regard to the Applicant’s impairments and age has not addressed the practical issue of whether, even in the current labour market, an employer would engage the Applicant in a full time job should he reveal his work capacity limitations.”
Following his consideration of these submissions the Arbitrator concluded at that Mr Galal should be able to find a part time job for half of the working week and based on the Clerical & Administrative Employees (State) Award, the Arbitrator determined that the average weekly amount Mr Galal would be able to earn in ‘suitable employment’ working 20 hours per week was $275.60 from 12 July 2005. At Step 3 the Arbitrator calculated the difference between Mr Galal’s earnings but for the injury of $777.90 and his ability to earn in suitable employment of $275.60 to be $502.30 from 14 July 2005. The Arbitrator then exercised his discretion at Step 4 to reduce the difference arrived at in Step 3 from $502.30 to $15.00 per week. Accordingly the Arbitrator’s award for Mr Galal at Step 5 was for $15.00 per week from 27 October 2004 to date and continuing pursuant to section 40 of the 1987 Act.
(ii) The Arbitrator’s ‘Statement of Reasons’ in relation to the exercise of discretion and Mr Galal’s claim that he accepted a voluntary redundancy because of his injuries and/or because he was being “forced out”
In exercising his discretion at Step 4 the Arbitrator considered the submissions of the Department that Mr Galal had voluntarily elected to take redundancy and but for that could have continued until retirement working in his permanently modified duties and earning comparable wages. The Arbitrator also considered Mr Galal’s contention that he was under pressure from his fellow workers and managers as he was “unable to work beyond the extent of the injuries” and his resultant conclusion that he was being “pushed out”.
The Arbitrator rejected Mr Galal’s assertion that he took the redundancy package because he was being “pushed out”. At paragraph 60 the Arbitrator found that there was no evidence that Mr Galal was unable to cope with his permanently modified duties as certified by Dr Guirgis and accepted that the Closure Report was evidence that Mr Galal was coping with the duties. The Arbitrator noted that Mr Galal made his own enquiries regarding the redundancy package in writing without any mention of difficulties in coping one month prior to having further time off work as a result of his injury. The Arbitrator referred to Ms King’s Rehabilitation Progress Report and correspondence of 16 December 2003 and concluded that these documents demonstrated that it was Mr Galal who expressed interest in the redundancy.
The Arbitrator found at paragraph 61 that the balance of evidence did not satisfy him that Mr Galal was “forced out”; rather the evidence indicated that Mr Galal voluntarily sought a redundancy under a scheme that was open to other employees.
The Arbitrator concluded at paragraph 62 that:
“In applying for and accepting the redundancy package, as well as the Job Search Leave and funding under the Job Assist Scheme, I consider that the Applicant knew or ought to have known that he would face difficulties in the general labour market, as identified in paragraph 53 above, that he was unlikely to replicate the weekly earnings he was receiving from the Respondent and that his impairments were likely to reduce the capacity to obtain a full time position.”
The Arbitrator then stated that consonant with Kesen and section 33 of the 1987 Act Mr Galal was entitled to some weekly payment during his incapacity and in the “above circumstances” reduced the amounts calculated at Step 3 to “the nominal amount of $15.00 a week”.
In my view the “above circumstances” referred to by the Arbitrator must refer to the preceding paragraphs of the Arbitrator’s decision contained under the heading “Does the reduction in the Applicant’s weekly earnings appear proper in the circumstances?” The circumstances outlined by the Arbitrator specifically refer to Mr Galal’s application for, and acceptance of a redundancy package in circumstances where he “knew, or ought to have known, that he would face difficulties in the general labour market”.
DISCUSSION AND FINDINGS
Were the Arbitrator’s findings that Mr Galal’s acceptance of redundancy was not because of his injuries or because he was “being forced” out against the weight of evidence?
The Arbitrator found that in the period of some eight months after his return to work following injury on 17 July 2003 to the time of his redundancy Mr Galal lost 2 working days in February 2004, one day in April to attend a consultation and three days in late May 2004. The Arbitrator noted that there was “no evidence that the Applicant was unable to cope with his permanently modified duties as certified by Dr Guirgis.” The Arbitrator also relied upon the Closure Report and referred to the evidence that Mr L Brandt had not expressed ongoing concerns in relation to Mr Galal’s performance. The Arbitrator concluded that Ms King’s letter to Mr Galal dated 16 December 2003 “rebutted” his belief that he was being pushed out. Further the Arbitrator referred to the fact that the Department’s managers had created permanently modified duties for him in support of his finding that there was no apparent pressure on Mr Galal to retire. The Arbitrator balanced this evidence against the only evidence that Mr Galal was being “pushed out” contained in his statement dated 10 November 2004 set out at paragraph 38 and concluded that the balance of evidence does not support a finding that Mr Galal accepted a voluntary redundancy because of his injuries or because he was being forced out. The Department did not provide evidence or submissions other than that set out at paragraph 39 in support of the argument that Mr Galal intended to retire following his acceptance of voluntary redundancy and accordingly the Arbitrator did not make a finding in relation to this issue.
Whilst I have regard to the time taken off work by Mr Galal, I also note that Dr Guirgis continued to certify him fit for his permanently modified duties on a full time basis until he had ceased employment with the Department. I accept the Arbitrator’s finding that the balance of evidence does not support a finding that Mr Galal accepted a voluntary redundancy because of his injuries. I also accept the Arbitrator’s finding that it was Mr Galal who made enquiries regarding the redundancy and that the weight of evidence did not support Mr Galal’s contention that he was being “pushed out” as detailed in his statement dated 10 November 2004. Additionally in the absence of further evidence or specific submissions I also find that the Arbitrator was not required to consider the issue of Mr Galal’s intention to retire following his acceptance of voluntary redundancy. Accordingly, I am not persuaded that the Arbitrator acted upon a wrong legal principle, allowed irrelevant considerations to influence the decision, made a material mistake as to the facts or failed to take into account relevant and material considerations sufficient to warrant a finding of an error of law in relation to this ground of appeal (House v The King (1936) 55 CLR 499 at 504-505; Norbis v Norbis (1986) 161 CLR 513 at 520, Re National Roads and Motorists Association Ltd [2003] FCAFC 206 at [21] to [21]) .
Did the Arbitrator err in exercising his discretion pursuant to section 40(1) of the 1987 Act?
The exercise of the discretion provided by section 40(1) of the 1987 Act has been considered in a number of decisions (Mitchell; Zinc Corporation; Novello v Zinc Corporation Ltd 1998 NSWLR 25 (‘Novello’); Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50 (‘Nicholson’); Pratt v Claydon (1996) 14 NSWCCR 86; Stranlund v Mid Coast Meat Co Pty Ltd (1999) 19 NSWCCR 91; Farrell v Metromix Pty Ltd [2001] NSWCA 166 (‘Farrell’)). Whilst the effect of a voluntary redundancy has been a factor the Commission considered relevant to the exercise of discretion (Priest v Southern Cross University [2005] NSWWCCPD 11 (‘Priest’), Luland v MPA Energy Services Pty Limited [2006] NSWWCCPD 74) it has also been rejected by the Commission as a factor to be considered in exercising the discretion (Dive v Sutherland Shire Council and Linfox Australia Pty Ltd [2006] NSWCCPD 104 (‘Dive’)).
In my view, it is necessary to approach the issue with reference to the preceding steps in the process set out in Mitchell and in so doing the errors inherent in “duplication” of the factors considered in the process (‘Farrell’); and “endeavouring to define [the] outer limits” of the discretion may be avoided (‘Mitchell’).
The parties agreed on Mr Galal’s pre-injury earnings at Step 1. In applying Step 2 to determine the amount Mr Galal is able to earn in ‘suitable employment’ the Arbitrator determined that the worker’s actual earnings were not the proper test as the position Mr Galal had occupied with the Department was one that had been modified to accommodate his restrictions arising from his injuries and was not a position available in the general labour market. In my view the Arbitrator’s determination to apply the test of ‘able to earn’ as opposed to ‘is earning’ accords with the authority provided in Novello and JCLudowici and Son Ltd v Cutri (1992) 26 NSWLR 580 (at 593).
The Arbitrator’s reasons demonstrate that he then took into account the factors set out at section 40(3)(a) and section 43A of the 1987 Act in determining Mr Galal’s ability to earn ‘in the general labour market reasonably accessible’ to him and having regard to ‘suitable employment’. The Arbitrator referred to Mr Galal’s:
· failure to seek employment since he went on Job Search Leave (prior to his actual redundancy) nor undertake training;
· age;
· impairments, and
· education, skills, and work experience.
In my view, in citing these factors the Arbitrator demonstrated that he had “regard to the realities of the labour market in which [Mr Galal] is to be engaged” (Lawarra Nominees Pty Ltd v Wilson (1996) 25 NSWCCR 206) and his “motivation to re-enter the work force” (Dive) and these are matters properly considered at Step 2.
Following his calculation at Step 3 the Arbitrator was required to consider the exercise of discretion in the circumstances of a worker taking a voluntary redundancy. I note that Mr Galal’s legal representative submitted at hearing, that the Arbitrator should consider this issue Step 4 (transcript page 29). However on appeal Mr Galal’s representatives submit that the Arbitrator was in error in doing so, relying on Mitchell. The Department relies upon Zinc Corporation as authority that a voluntary redundancy is relevant to the exercise of the discretion.
In Zinc Corporation the Court of Appeal was required to consider the circumstances of a miner who was, prior to his injuries working as a dump truck driver and following two injuries the worker continued to work as a dump truck driver. The worker later accepted a voluntary redundancy in order to commence a hauling business of his own which subsequently failed. The appeal raised two issues. Firstly the classification to be applied in accordance with section 40(2)(a) of the 1987 Act and secondly the loss of weekly earnings sustained by the worker as a result of his taking a voluntary redundancy and the requirement to take this factor into account when exercising the discretion pursuant to section 40(1). In dismissing the appeal the Court found that Curtis CCJ had correctly applied section 40(2) (a) of the 1987 Act in determining that the worker was employed as a ‘miner’ as the section did not deal with the worker’s tasks or duties. In relation to the exercise of discretion in circumstances of the worker having accepted a voluntary redundancy the Court held that “A matter such as redundancy is relevant to the exercise of that discretion [paragraph 21].” In this regard the Court referred to an unreported decision of the Court of Appeal in O’Laughlin v The Zinc Cororation and Novello. The Court concluded that the trail judge did not err in the exercise of his discretion rather he considered the fact of the worker’s voluntary redundancy and “discarded it as a factor affecting the final computation [and] ... it is worth noting that in [Novello], this Court whilst having considered the effect of the voluntary redundancy on the worker, rejected it as a factor which would cause the Court to reduce the amount of compensation [paragraph 22]”. In my view, Zinc Corporation does not advance the Department’s submissions as a result of the unique circumstances present in that case, the fact that the discretion was not exercised to reduce the award on the basis of the worker’s acceptance of a redundancy and the Court’s reliance upon Novello. Therefore to properly consider the Department’s submissions it is necessary to consider the authority laid down in Novello.
In Novello the Court of Appeal considered the case of Morgan v Commissioner for Railways [1972] WCR (NSW) 33 (‘Morgan’) applied by O’Meally J at first instance, which established that where a worker by folly, irresponsibility or misconduct deliberately throws away the employment he enjoyed after injury or acts in a way that causes his dismissal then the salary he was earning prior to his act of folly, irresponsibility or misconduct may be determined to be the amount he ‘is able to earn in suitable employment’. Kirby A-CJ (as he then was) sought to confine the authority of Morgan to circumstances of “judicial shock” and held at page 32 that the residual discretion contained at section 11(1) of the Workers Compensation Act 1926 (expressed in similar terms as section 40(1) of the 1987 Act) “rather than artificial constructions of the phrase ‘is able to earn’” are more appropriate to deal with cases of a worker who has thrown up a job or by folly, irresponsibility or misconduct been dismissed from that employment. The Court referred to the authority provided in Steggles Pty Ltd v Aguirre (1988) 12 NSWLR 693 (‘Steggles’) and found that, in circumstances where no question of folly or misconduct arose, O’Meally J had erred in not determining “what the worker was able to earn simply by his own ability as a worker and not taking into account amounts he might be paid for other reasons”.
Accordingly, in my view the authority provided in Novello has a specific application. The case is confined to matters in which it is established that the worker ceased employment by his or her own act of folly, irresponsibility or misconduct and in those cases Kirby A-CJ considered that the exercise of discretion pursuant to section 40(1) of the 1987 Act was “[m]ore than ample [to] adjust the amount of compensation [awarded] [page 32]”.
In the present case the Department did not contend that Mr Galal acted irresponsibly or foolishly nor did the issue of misconduct arise. Rather the Department asserted that Mr Galal had a “clear, personal decision to make [page 24 line 40, transcript].” I note, in passing that the action of a 59 year old worker who required workplace modifications seeking to avail himself of an opportunity for voluntary redundancy which was being offered to other workers generally may not of itself constitute a foolish or irresponsible act. Accordingly the Department’s submissions in this regard have no application to the present case. I also note that sections 40(2A) and 40(2B) of the 1987 Act were not raised before the Arbitrator nor on appeal and in my view these provisions do not have application to a voluntary redundancy (Metal Manufactures Limited v Gagovski [2006] NSWWCCPD 267).
Having properly considered the realities of the labour market reasonably accessible to Mr Galal and his motivation to re-enter the workforce at Step 2 the Arbitrator then exercised his discretion to reduce the difference calculated to $15.00 per week. In exercising his discretion the Arbitrator concluded that Mr Galal sought and obtained a voluntary redundancy in circumstances where he knew or ought to have known “that he would face difficulties in the general labour market” and that he was “unlikely to replicate the weekly earnings he was receiving” and “that his impairments were likely to reduce the capacity to obtain a full time position (emphasis added) [paragraph 63].”.
In Mitchell the Court of Appeal considered the matters to be taken into account at Step 4 and rejected Egan A-CCJ’s (as he then was) assessment of the factors to be applied in exercising the discretion. At first instance Egan A-CCJ accepted that the “applicant has made no attempts to seek that sort of work and it seems, to me, by and large, that (a) he is sitting back waiting on a result of these proceedings or (b) waiting on the unlikely prospect that the CES will hand him a job on a platter.” The Court held that:
“....self-induced diminution of earning capacity lies squarely within the exercise required to be carried out at what we have identified as the second stage. The matters to which Egan A-CCJ referred to go directly to the ‘worker’s ability to earn in the general labour market reasonably accessible to the worker’ and are therefore required (by section 40(3) (a) to be taken into account in the section 40(2) (b) exercise. In consequence, there can be no justification for taking them into account in the additional discretionary phase [534].”
This line of authority has been followed by the Commission in similar factual circumstances to those presented in this case. In Dive Acting Deputy President O’Grady held that:
“I am of the view that the Appellant’s effective withdrawal from the labour market, a fact which may not be surprising having regard to his serious back disability and his good fortune in winning the Soccer Pools, and his relocation to Queensland are not factors to be taken into account when considering exercise of the section 40(1) of the 1987 Act discretion. I note in passing that I do not consider the receipt of the financial windfall as a result of his Pools win nor the income generated from that capital amount are factors relevant to the exercise of such discretion [paragraph 80]”.
The facts of the present case are clearly analogous to those of Mitchell and Dive in that the evidence before the Arbitrator supported a conclusion that Mr Galal had not sought employment following his voluntary redundancy or “financial windfall” and in accordance with these authorities those factors are not matters to be taken into account at Step 4. I see no reason to depart from this line of authority. Accordingly I find that the Arbitrator erred in taking into account “self induced earning capacity” at Step 4 of the process set out in Mitchell.
However, if I am wrong in finding that the Arbitrator erred in taking into account self- induced diminution in earning capacity at Step 4 I also find that the Arbitrator was in error in “doubling-up” or duplicating the factors considered in determining Step 2 and then applying those same factors to exercise his discretion contained at Step 4. At both Step 2 and Step 4 the Arbitrator referred to the difficulties Mr Galal would face in the general labour market as a result of his impairments and his inability to obtain a full time position in support of his calculations and the reduction applied. Accordingly the Arbitrator’s decision was infected by error in duplicating factors already taken into account to arrive at the award (Mitchell; Dive and Farrell).
Redetermination of the Application
Having found error sufficient to revoke the decision I will now proceed to redetermine the application.
The parties agreed on the weekly amounts Mr Galal would have been earning from 21 October 2004 and on appeal the Arbitrator’s finding of partial incapacity was not disputed. However Mr Galal seeks orders that the Department should pay the weekly compensation “pursuant to section 40” of the 1987 Act at the “statutory rate” for a worker with dependants. In the absence of further submissions I am unable to determine the basis for this claim as I have no evidence or submissions before me which would cause me to consider factors other than what the worker would have earned in the employment undertaken when injured (New South Wales Harness Racing Club Ltd v Forrest (1995) 12 NSWCCR 217) or to invoke the statutory rate at section 40 of the 1987 Act.
In my view, the medical evidence supports a finding that Mr Galal was partially incapacitated and in this regard I rely on the reports of Dr Stephenson and Dr Mitchell who applied some restrictions in relation to the avoidance of heavy lifting, pulling and pushing, the requirement for regular posture change and avoidance of repetitive overhead use of the right upper limb. Neither Dr Stephenson nor Dr Mitchell applied a restriction on Mr Galal’s hours of work. These restrictions are not inconsistent with those contained in Dr Guirgis’ report of 30 December 2004 in which he noted that Mr Galal remains “unfit to be involved in any activities that require applying stress to the back, right shoulder and neck.” Again, I note here that Dr Guirgis did not restrict Mr Galal’s hours of work in this report. However contrary to the restrictions stipulated in that report Dr Guirgis issued a medical certificate on 6 December 2004 certifying Mr Galal totally unfit for work until 6 February 2005. In his report dated 31 December 2004, Dr Guirgis again stated that Mr Galal was “totally unfit for work”. That report indicates that Mr Galal was last seen by Dr Guirgis on 6 December 2004 and there had been “no [sic] much change in his condition than what was present on 28-9-04”. I am unable to reconcile the opinions expressed by Dr Guirgis in his certificated and report of 31 December 2004 with that contained in his report issued one day prior particularly in circumstances where Dr Guirgis had not re-examined Mr Galal. Further Dr Guirgis stated in his report dated 30 December 2004 that surgical treatment should be considered if Mr Galal’s condition declined. Having found Mr Galal fit for modified duties on that day and then one day later reporting that he was totally unfit for work and this total incapacity has continued it must be concluded that Dr Guirgis noted a significant deterioration in Mr Galal’s condition. However Dr Guirgis has failed to provide any further recommendations in relation to treatment to address the deterioration he described. Accordingly I prefer the evidence of Drs Stephenson and Mitchell and who provided similar restrictions notwithstanding that their reports straddle a period of some 11 months. I note in this regard that Dr Guirgis’ latest certificate provides a diagnosis of “failure to cope” with “chronic pain syndrome” and this diagnosis had not been applied in his two prior reports. For the reasons set out above I apply the authority of Makita (Australia) Pty Ltd v Sprowles (2001) NSWCA 305 in preferring the reports of Drs Stephenson and Mitchell to that of Dr Guirgis.
Having found that Mr Galal was partially incapacitated I apply section 40 of the 1987 Act and in determining the amount of ‘pre-injury earnings’ I accept the figures agreed by the parties in proceedings before the Arbitrator as I have no evidence that these amounts are now in dispute. Accordingly I find that in accordance with Step 1 of the process set out in Mitchell that Mr Galal’s earnings but for the injury are:
$719.22 from 21 October 2004 to 9 February 2005,
$747.99 from 10 February 2005 to18 May 2005,
$748.00 from 19 May 2005 to 13 July 2005, and
$777.90 from 14 July 2005 and continuing.
In applying Step 2 I am satisfied that the test ‘would be able to earn’ as opposed to ‘is earning’ is the appropriate as set out at paragraph 56. In accepting the medical evidence of Drs Stephenson and Williams. I also accept that Mr Galal is able to work on a full time basis. In my assessment there is no medical evidence to restrict Mr Galal’s hours of work other than that contained in Dr Guirgis’ reports which, in my view are inconsistent for the reasons set out at paragraph 71. Further, I note that the diagnosis now applied by Dr Guirgis of “failure to cope” “anxiety/depression” requires a level of specialist knowledge not possessed by Dr Guirgis. Accordingly I am unable to accept Dr Guirgis evidence as to Mr Galal’s current incapacity.
Following my consideration of Mr Galal’s incapacity which requires frequent postural change, lifting and bending restrictions; his place of residence, Seven Hills; his skills; work experience in the public sector undertaking a variety of administrative tasks, and age I accept that Mr Galal should be able to obtain employment in the general labour market but in a limited number of fields. I reject the position of taxi driver contained in the section 40 report. However I accept that Mr Galal could obtain employment as a base grade clerk undertaking administrative duties such as that set out in the section 40 report of photocopying, sorting mail, answering telephone and other general enquiries, sorting, filing and classifying documents. I am also satisfied that these duties would accommodate his work restrictions. I also have regard to Mr Galal’s prior experience and prior classification within the public sector. Therefore I am satisfied that the appropriate classification is that of clerical officer or administrative officer, for which Mr Galal would be paid $641.22 per week for a 35 hour week at the mid range level.
Accordingly at Step 3 I find the difference between the sums calculated at Step 1 and 2 to be:
$78.00; from 21 October 2004 to 9 February 2005,
$106.77 from 10 February 2005 to18 May 2005,
$106.78 from 19 May 2005 to 13 July 2005, and
$136.68 from 14 July 2005 and continuing.
I have considered the exercise of discretion at Step 4 in determining the appeal and I am not persuaded that “supervening illnesses or injuries” manifest in this case to further reduce the mathematical calculation arrived at in Step 3 (‘Nicholson’). I see no other reasons to apply my discretion and I find the amounts set out at paragraph 75 to be the ‘proper’ figure in all the circumstances of this matter.
Conclusion
I therefore conclude that the Arbitrator was in error in applying “self-induced diminution of earning capacity” to reduce the mathematical difference between Mr Galal’s pre-injury earnings and what he would be ‘able to earn’ in suitable employment at Step 4 of the process set out in Mitchell.
DECISION
Paragraph one of the Arbitrator’s decision dated 21 October 2005 is revoked and the following order made in its place:
“That the Respondent pay the Applicant the sum of:
(i) $78.00 per week from 21 October 2004 to 9 February 2005,
(ii) $106.77 per week from 10 February 2005 to 18 May 2005,
(iii) $106.78 per week from 19 May 2005 to 13 July 2005, and
(iv) $136.68 per week from 14 July 2005 to date and continuing in accordance with section 40 of the Workers Compensation Act 1987.”
Paragraphs two and three of the Arbitrator’s decision of 21 October 2005 are confirmed.
COSTS
The Appeal having been successful I order the Respondent to pay the Appellant’s costs.
Elizabeth Tydd
Acting Deputy President
24 October 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ELIZABETH TYDD, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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