Goktas v Goodyear Australia Pty Ltd
[2007] NSWWCCPD 1
•2 January 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Goktas v Goodyear Australia Pty Ltd [2007] NSWWCCPD 1
APPELLANT: Saffet Goktas
RESPONDENT: Goodyear Australia Pty Ltd
INSURER:Allianz Australia Workers Compensation (NSW) Limited
FILE NUMBER: WCC11909-03
DATE OF ARBITRATOR’S DECISION: 7 June 2006
DATE OF APPEAL DECISION: 2 January 2007
SUBJECT MATTER OF DECISION: Section 40 Workers Compensation Act 1987; calculation of probable earnings but for injury; exercise of discretion, and effect of subsequent injury.
PRESIDENTIAL MEMBER: Deputy President Bill Roche
HEARING:On the papers
REPRESENTATION: Appellant: Steve Masselos & Co
Respondent: Hicksons Lawyers
ORDERS MADE ON APPEAL: The Arbitrator’s decision dated 7 June 2006 is revoked and the following orders made:
“Award for the Appellant Worker under section 40 of the Workers Compensation Act 1987 as follows:
24 August 2000 to 31 December 2000$130.00 per week;
1 January 2001 to 31 December 2001 $137.00 per week;
1 January 2002 to 31 December 2002 $143.00 per week;
1 January 2003 to 31 December 2003 $150.00 per week;
1 January 2004 to 31 December 2004 $157.00 per week;
1 January 2005 to 31 December 2005 $164.00 per week;
1 January 2006 to 31 December 2006
$171.00 per week, and
1 January 2007 to date and continuing
$178.00 per weekThe Respondent Employer is to pay the Appellant Worker’s costs, if any, of the second Arbitration.”
No order as to costs of the appeal.
BACKGROUND TO THE APPEAL
On 4 July 2006 Saffet Goktas (‘the Appellant Worker/Mr Goktas’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 7 June 2006.
The Respondent to the Appeal is Goodyear Australia Pty Limited (‘the Respondent Employer/Goodyear’).
This matter has a long and unsatisfactory history that has led to two Arbitration hearings and two appeals to the Presidential members of the Commission. Acting Deputy President Handley determined the first appeal on 9 February 2006 (Goktas v Goodyear Australia Pty Lty [2006] NSWWCCPD 17) (‘the first appeal’). In the course of that decision Handley ADP set out the history of the matter up to that time in paragraphs [2] to [5] as follows:
“2. Mr Goktas was born on 1 March 1962 and is aged 43. He was employed by Goodyear as a millman from 9 March 1987 to 31 January 1991, when he was retrenched. On 13 August 1990, he injured his back and neck when lifting heavy skips of rubber. His then general practitioner, Dr Y Bulbulia, issued him with a certificate stating that he was unfit for work on 14 August 1990, and he notified Goodyear of the injury on 15 August 1990.
3. On 9 April 1999, Mr Goktas commenced casual employment with B V Property Holdings Pty Ltd (trading as ‘Aussie Table Hire’). On 20 August 2000, [‘the August 2000 injury’] in the course of his employment with Aussie Table Hire, a stacked box fell onto Mr Goktas’ left shoulder injuring his shoulder and neck. He claimed compensation in respect of this injury in the District Court of NSW, where, on 27 February 2003, an arbitrator made an award in his favour.
4. On 7 July 2003, Mr Goktas lodged an ‘Application to Resolve a Dispute’ with the Commission in respect of his claim against Goodyear for (1) weekly compensation from 31 January 1991 to date and continuing, (2) medical expenses, and (3) compensation for permanent impairment and pain and suffering. Goodyear’s ‘Reply’ was received on 25 August 2003. On 1 October 2003, the Arbitrator conducted a teleconference with the parties, at which it was agreed, and confirmed in the Arbitrator’s Directions, that the Application would be amended to seek compensation only in respect of Mr Goktas’ back and left leg at or above the knee. On 5 February 2004, the Arbitrator conducted a second teleconference with the parties, following which she referred Mr Goktas to an Approved Medical Specialist, Dr Ian Meakin, for assessment. On 17 May 2004, the Commission issued Dr Meakin’s Medical Assessment Certificate (‘MAC’). Dr Meakin assessed a 15% permanent impairment of Mr Goktas’ back arising from his employment with Goodyear, but a nil % permanent impairment of his left leg at or above the knee.5. On 25 June 2004, the Arbitrator conducted a third teleconference with the parties at which the MAC was discussed at some length and, on 2 September 2004, a further teleconference. Finally, on 3 November 2004, conciliation having proved unsuccessful, the Arbitrator conducted an arbitration hearing, at the conclusion of which she gave her decision and the reasons for her decision orally.”
As a result of the first Arbitration the following orders were made:
“1. Pursuant to s66 of the Workers Compensation Act 1987 and the MAC [Medical Assessment Certificate] issued by the Commission the respondent is to pay the applicant the sum of $8,707.50 in respect of 15% permanent impairment of the back.
2. There is an award for the respondent in respect of the claim for weekly payments.
3. The respondent is to pay the applicant’s reasonable s60 expenses upon production of receipts and/or accounts.
4. The respondent is to pay the applicant’s costs as agreed or assessed.”
On appeal to Handley ADP the following orders were made:
“39. Clauses 1, 3 and 4 of the decision of the Arbitrator dated 12 November 2004 are confirmed.
40. Clause 2 of the decision of the Arbitrator dated 12 November 2004 is revoked and (1) in substitution as to part, there is an award in favour of Goodyear Australia Pty Ltd in respect of Mr Goktas’ claim for weekly compensation from 31 January 1991 to 23 August 2000, and (2) as to the other part, Mr Goktas’ entitlement to weekly compensation for the period 24 August 2000 to date and continuing is remitted to the Arbitrator for determination.”
As a result of the orders made by Handley ADP a further teleconference was held by the original Arbitrator on 22 March 2006 when the parties indicated they wished the matter to be redetermined “on the basis of the material filed and the submissions made at the conciliation/arbitration on 3/11/04” (Statement of Reasons for Decision 7 June 2006 (‘Reasons 7 June 2006’) paragraph 12).
On 10 April 2006 the Arbitrator issued the following direction to the parties:
“The matter for decision before me is the applicant’s entitlement to weekly compensation on the basis of a finding of partial incapacity for the period 24/8/00 to date and continuing. This matter was remitted back to me for determination after Acting Deputy President Handley revoked my decision of an award in favour of the respondent for the period 31/1/91 to date.
A teleconference was held in respect of this re-determination on 22/3/06 and the parties said that they did not wish to make written submissions or attend a conciliation/arbitration to deal with this issue. It was therefore agreed that I would make the decision on the basis of the submissions made by the parties’ representatives at the original conciliation/arbitration on 12/11/04. However after much consideration of the issues and a thorough reading of the transcript and the material on the file I am unable to do this. There is simply insufficient evidence before me to enable a proper determination of this issue.
I therefore make the following Directions for the determination of the outstanding issue:
1.The parties are to make written submissions with supporting documentation in relation to the 5 steps as set out in Mitchell v Central West Health Service (1997) 14 NSWCCR 527.
2.The applicant is to file and serve his submissions and supporting documentation by 28/4/06
3.The respondent is to file and serve its submissions and supporting documentation by 12/5/06.
4.The applicant is to file and serve any submissions and supporting documentation in reply by 19/5/06.
5.I strongly recommend that the parties have settlement discussions.”
The solicitors for the Appellant Worker did not respond to this direction. The solicitors for the Respondent Employer wrote to the Commission on 12 May 2006 advising that they had not been served with any submissions from the Appellant Worker and requesting the Arbitrator provide a further timetable. So far as I am aware the Arbitrator set no further timetable and delivered her decision on 7 June 2006 again dismissing the claim for weekly compensation on ground that she was unable to calculate Mr Goktas’ entitlement to weekly compensation because “no comparables or award rates have been provided to me” (Reasons 7 June 2006 paragraph 39).
Mr Goktas seeks leave to appeal that decision.
LEAVE TO APPEAL
Monetary Threshold
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’).
The quantum in issue on the appeal is in excess of $5,000.00 and therefore the threshold in section 352(2)(a) of the 1998 Act is satisfied. No award of weekly compensation has been made in this case but the Arbitrator’s finding would result in the Respondent Worker receiving no weekly compensation and therefore the second limb of section 352(2) does not apply (see Mawson v Fletchers International Exports Pty Ltd [2002] NSWWCCPD 5).
Time
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
PRELIMINARY MATTERS
Section 354(6) of 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 that are before me, and the submission by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 7 June 2006, records the Arbitrator’s order as follows:
“1.The claim for weekly payments made pursuant to s40 of the Workers Compensation Act 1987 in relation to the period 24/8/00 to date and continuing is dismissed.”
ISSUES IN DISPUTE
The issues in dispute in the appeal are whether the Arbitrator erred in:
(a)declining to determine probable earnings but for injury merely because only limited evidence was available of those earnings;
(b)determining the Appellant Worker’s ability to earn under section 40(2)(b) of the 1987 Act to be $500.00 per week;
(c)failing to give reasons for assessing Mr Goktas’ ability to earn to be $500.00 per week, and
(d)her exercise of the discretion under section 40(1) of the 1987 Act.
APPELLANT WORKER’S SUBMISSIONS
The Appellant Worker submits that:
a) the steps that must be taken in making an award under section 40 are set out in Mitchell v Central Health Service (1997) 14 NSWCCR 527 (‘Mitchell’). The first step in Mitchell required the Arbitrator to determine the Appellant Worker’s ability to earn uninjured. A tribunal of fact should not shirk from its task by reason of a lack of evidence. Reliance is placed on Blasetto v Wilson (Court of Appeal, unreported, 17 May 1978) which was referred to by Hayden JA (as he then was) in State of NSW v Moss (2000) 54 NSWLR 536 who said at 559:
“In short, where earning capacity has unquestionably been reduced but its extent is difficult to assess, even though no precise evidence of relevant earning rates is tendered, it is not open to the court to abandon the task and the want of evidence does not necessarily result in non-recovery of damages.”
b) the mere fact that only limited information was available to the Arbitrator did not enable her to decline to fulfil her statutory role. Reference is made to NSW Harness Racing Club Ltd v Forrest (1995) 12 NSWCCR 217 (‘Forrest’) and J & H Timbers Pty Ltd v Nelson (1972) 126 CLR 625 (‘Nelson’);
c) given that the Commission is not a court and has an obligation to determine issues having regard to the “substantial merits” (section 354(3) of the 1998 Act) it is arguable that there are even less stringent restrictions on what it can do than are imposed on courts;
d) the absence of evidence as to earning rates does not entitle the tribunal of fact to abandon the task of determining the issue;
e) in any event there was sufficient evidence upon which the Arbitrator could make an informed estimation of the probable earnings but for injury. That evidence was in the Employer’s Report of Injury form dated 17 August 1990, which set out the award and the award rate ($345.40 per week) under which Mr Goktas was employed and “the actual rate paid to worker” ($594.19 per week). Therefore the Appellant Worker was either paid over the award rate or was being paid for overtime which he said he worked;
f) the Respondent Employer called no evidence as to whether these figures were accurate or not, did not cross examine Mr Goktas in respect of his earnings and made no submissions that his entitlement could not be assessed;
g) the Respondent Employer failed to comply with its statutory obligation to provide comparable earnings;
h) it was incumbent upon the Arbitrator to do the best she could with the material at hand;
i) the Arbitrator should have applied the figures produced by the Australian Bureau of Statistics (‘ABS’) for the average weekly earnings for full time male employees. Adopting this approach the following figures are applicable:
2000$945.00
2001$990.00
2002$1,020.00
2003No further figures were available at the time the Appellant Worker’s submissions were prepared.
j) In the alternative she should have added 3% per annum to the figure of $594.19 per week in the claim form from 1990 to 2006 to allow for inflation and upwards trends in labour costs. Taking this approach one arrives at the following figures:
2000$793.00
2001$816.00
2002$840.00
2003$865.00
2004$890.00
2005$916.00
2006$943.00
k) averaging the two approaches set out in paragraphs (i) and (j) may be the more appropriate method of assessing Mr Goktas’ probable earnings but for injury;
l) the above methods provide the only practical and cost effective approach to assessment of step one in Mitchell, namely, the Appellant Worker’s earnings in the ‘same or some comparable employment’ but for injury;
m) the award rate is of limited assistance as the Appellant Worker was paid 70% above that rate. By adding 70% to the relevant award rate one arrives at the following figures:
3 June 2000 $815.45
3 June 2001 $837.59
3 June 2002 $868.19
3 June 2003 $897.09
3 June 2004 $929.39
7 June 2005 $958.29
1 December 2006 $1,004.53
n) an industrial award represents the current weekly wage rate and does not take into account shift work and overtime;
o) the figures set out in paragraph (m) are based on the only available evidence regarding the Appellant Worker’s actual earings;
p) the Arbitrator was wrong to conclude that the Appellant Worker’s ability to earn was $500.00 per week. In so far as that figure was based on Mr Goktas’ earnings as a courier driver the Arbitrator failed to take into account that in that work he provided his own vehicle and the earnings were not earnings as a ‘worker’. In addition Mr Goktas only did that work for 30 hours per week and had to cease because of his back disability. If that finding was based on Mr Goktas’ ability to do process work, the Arbitrator failed to have due regard to the matters referred to in section 43A of the 1987 Act. Those matters included the fact that the Appellant Worker had a limited education, poor language skills and had been out of work for sixteen years;
q) the Arbitrator failed to give adequate reasons as to why she found the Appellant Worker had an ability to earn of $500.00 per week;
r) an allowance should be made for the fact that the claim spans 16 years and earnings have increased over time;
s) the Arbitrator erred in the exercise of her discretion under section 40(1) of the 1987 Act. Having made no finding of ability to earn in step one it was not possible to apply the discretion;
t) any incapacity flowing from the 2000 injury should not have been factored into the section 40 assessment. Reliance is placed on the following passage from C P Mills New South Wales Workers Compensation, second edition, 1979 (‘Mills’) where the author said at 299:
“Nor is it proper to make any deduction from the maximum figure merely because there is also incapacity resulting from another injury, from the advance of a disease not related to the employment, or even from old age, so long as the incapacity resulting from the work injury continues: Douglas v Better Brakes Pty Ltd [1971] WCR 58”
u) the Appellant Worker is entitled to the mathematical difference between his probable earnings but for injury and his ability to earn in his injured state.
RESPONDENT EMPLYER’S SUBMISSIONS
The Respondent Employer submits:
a) no weight should be placed on the Employer’s Report of Injury form as there was no evidence that its contents were correct and it was completed 10 years before the period of incapacity starts in the present claim, namely, August 2000;
b) the Arbitrator did not have wage material before her to enable her to make a fair determination of the Appellant Worker’s probable earnings but for injury. In the absence of that material the most relevant wage material would be by reference to the Rubber Plastic and Cable Making Award and the Australia Fair Pay and Conditions Standards;
c) the figures from the Australian Bureau of Statistics were not in evidence before the Arbitrator;
d) the Appellant Worker’s August 2000 injury should be taken into account when assessing his capacity in accordance with the fourth limb of Mitchell;
e) the August 2000 injury resulted in a $100.00 reduction in Mr Goktas’ capacity to earn and that should be taken into account in the fourth step in the Mitchell analysis (the discretion stage) (see Respondent Employer’s submissions 11 December 2006 paragraph 2.3);
f) the Arbitrator concluded that the Appellant Worker had not discharged the onus of proof that rested on him to establish that he suffered a loss of earnings as a result of the incident on 13 August 1990;
g) the Arbitrator was not in error in finding that the Appellant Worker had an ability to earn $500.00;
h) the Appellant Worker’s figures set out at paragraphs 19 (i) and (j) above amount to fresh evidence which was not before the Arbitrator and the Respondent Employer objects to this evidence;
i) it was open to the Arbitrator to find that Mr Goktas was capable of earning $500.00 per week as he had shown a capacity to earn $600.00 per week for 30 hours per week and it is apparent she discounted the figure to $500.00 having regard to the provisions of section 43A of the 1987 Act. There is no evidence that Mr Goktas’ poor education, poor language skills or his compensation history caused him any difficulties in carrying out his work as a courier in 2004;
j) it was not necessary for the Arbitrator to give detailed reasons in respect of the evidence she accepted or rejected when assessing the Appellant Worker’s ability to earn;
k) the Appellant Worker’s injuries in August 2000 were such that they restricted his ability to work in the open labour market;
l) as the Arbitrator could not make a determination as to probable earnings but for injury meant that the remaining steps in the Mitchell analysis were irrelevant;
m) the Arbitrator did not err in her application of Mitchell as there was no evidence of probable earnings, and
n) though the Appellant Worker has a partial incapacity, it is only minor. After discounting for the effects of the August 2000 injury and having regard to Mr Goktas’ earnings of between $500.00 and $600.00 per week as a courier, the award rates for his pre injury classification with “perhaps a small loading to take into account overtime”, an award in the Appellant Worker’s favour of up to $100.00 per week would be appropriate (see Respondent Employer’s submissions 11 December 2006, paragraph 3).
On 22 December 2006 the Respondent Employer filed further submissions. These submissions make no reference to the submissions filed on 11 December 2006 and are inconsistent with them. In these submissions the following points are made:
a) the award rate is not relevant;
b) the Appellant Worker made a clear decision not to bring any award rates into evidence and is left with the “absence of evidence that has been pointed out by the Arbitrator” (Respondent Employer’s submissions 22 December 2006, paragraph 1.5);
c) if the Commission considers the award rate is relevant no “percentage uplift” should be applied to it to take into account the possibility Mr Goktas may have received payments over and above the award level had he continued in the type of employment in which he was engaged in 1990;
d) Mr Goktas was retrenched from Goodyear in 1991. Therefore, even if Mr Goktas had been fully fit he would have had to find alternative work and the award figures should be considered the maximum figure under section 40(2)(a), and
e) the Respondent Employer’s “primary submission” is that the Appellant Worker “did not take the required steps to provide any clear evidence to properly determine ‘step 1’ of the Mitchell process, and the decision of the Arbitrator should stand” (Respondent Employer’s submissions 22 December 2006, paragraph 3.1).
REVIEW
The nature of a review and the role and function of a Presidential member on appeal has been considered in many cases in the Commission. In The King Island Company Limited v Deery [2005] NSWWCCPD 1 it was held at [19]:
“19. A Presidential Member on appeal has a specific and limited role in the review of a decision of an Arbitrator. The review is not a rehearing. The Presidential member is not dealing with the matter de novo and is not arriving at a fresh decision based on all of the evidence available at a later time (Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Builders Licensing Board v Sperway Constructions (Sydney) Pty Ltd (1976) 135 CLR 616). The powers of the Presidential Member to revoke the decision pursuant to section 352(7) of the 1998 Act and to substitute a new decision in its place, are exercisable only where it is demonstrated that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172). Alternatively, the Presidential Member may remit the matter back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions made.”
Before an Arbitrator’s decision will be revoked on review it must by demonstrated that it contains or has resulted from an error of fact, law or discretion. The error must be such that, but for it, a different decision should have been made (see Snow Confectionary Pty Ltd v Askin [2004] NSWWCCPD 79; Section 294 of the 1998 Act; YG & GG v Minister for Community Services [2002] NSWCA 247; Absolon v NSW TAFE [1999] NSWCA 311).
I intend to apply the above principles in the matter before me.
THE ARBITRATOR’S DECISION
The Arbitrator set out the history of the matter, the medical evidence and the determination by Handley ADP that Mr Goktas’ has a partial incapacity for work from 24 August 2000 to date and continuing as a result of his injury with the Respondent Employer. She also noted that Mr Goktas injured his left shoulder, neck and back in a separate work accident with a different employer on 20 August 2000 for which he recovered common law damages.
She stated that though the Appellant Worker had sought comparable wages the Respondent Employer had not provided them. Therefore, “no comparables were in evidence” (Reasons 7 June 2006, paragraph 25). She added that “no award rates were in evidence” and that Mr Goktas’ counsel submitted that such rates were not a true reflection of what Mr Goktas would have been earning as he was paid in excess of the award because he did overtime.
Whilst counsel for Mr Goktas submitted that the average weekly earnings for all full time male employees from the ABS should be taken into account the Arbitrator said that “no proper submissions about the relevance and appropriateness of an averaging of ABS figures were made” (Reasons 7 June 2006, paragraph 28).
The Arbitrator referred to the unsatisfactory state of the evidence and noted that the parties had been given three opportunities to present their case. Given that every opportunity had been given to the parties to present relevant evidence the Arbitrator felt “bound to deal with this matter on the basis of what is before me” (Reasons 7 June 2006, paragraph 38).
The Arbitrator did not consider it appropriate that she “make a guess or a projection from the figure in the Notice of Claim form which is now 16 years out of date” (Reasons 7 June 2006, paragraph 39). On the basis of the limited submissions made she did not accept the ABS figures as the appropriate way to determine the wages issue (Reasons 7 June 2006, paragraph 39). She did not consider there was any “satisfactory evidence” before her “about what the Applicant would be earning but for injury” and she stated that she “was unable to make a finding in this regard” (Reasons 7 June 2006, paragraph 39).
In light of this finding the Arbitrator was unable to complete step one of the Mitchell analysis.
The Arbitrator found that the Appellant Worker’s ability to earn in some suitable employment was $500.00 per week (step two). As a result of his accident in 2000 the Arbitrator found that Mr Goktas’ capacity to earn was reduced by $100.00 per week.
As a result of being unable to determine Mr Goktas’ probable earnings uninjured the Arbitrator was unable to make an award and dismissed the claim for weekly compensation.
DISCUSSION AND FINDINGS
Was the Arbitrator in Error?
It is certainly not appropriate that an Arbitrator guess at probable earnings. However, there was some evidence of both the award under which Mr Goktas was employed and his actual rate of pay as at 1990. It was appropriate for the Arbitrator to use that evidence as a basis for calculating probable earnings from August 2000. Due to the delay in bringing this claim the evidence available was far from satisfactory. However, as Mr Goktas was found to be entitled to lump sum compensation in respect of a 15% permanent impairment of his back and as his level of education was such that he was unlikely to ever be able to earn a living other than through physical exertion, he has a clear entitlement to weekly compensation which is capable of calculation though the means of making that calculation are less than ideal.
In these circumstances it was open to the Arbitrator to accept the figure of $594.19 as the appropriate figure for probable earnings. Whether any adjustment should be made to that figure to allow for wage movements since 1990 is open to debate. However, as a specialist tribunal the Commission is entitled to draw on its knowledge of the labour market and wages. In Akawa Australia Pty Ltd v Cassells (2003) 25 NSWCCR 385 it was noted at 392:
“The compensation Court is a specialised tribunal the judges of which are well qualified by their experience and knowledge of matters in the labour market and wages paid to make the type of assessment Burke CCJ was called on to make in this case. This has been recognized by appellate courts for many years.”
Barwick CJ in Nelson referred to similar considerations at 632-633. In my opinion the same principles apply in the Commission.
Given the available evidence and the authorities noted above the Arbitrator was in error in not making the appropriate section 40 calculations in that she failed to perform her function according to law. This error requires that the whole of Arbitrator’s determination be revoked and the Appellant Worker’s entitlement to compensation under section 40 be redetermined. I have considered whether that redetermination should be done by me or in a third Arbitration hearing. Given the history of this matter I have decided that the matter should be redetermined by me and that is the course I propose to adopt.
The Redetermination
I have been faced with the same difficulties that Handley ADP and the Arbitrator faced in attempting to determine Mr Goktas’ probable earnings but for injury. In light of this problem I issued a Direction to the parties on 4 December 2006 as follows:
1. “The Appellant Worker was employed under the Rubber, Plastic and Cable Making Award (Employer’s Report of Injury form 17 August 1990). Relying on section 354(2) of the Workplace Injury Management and Workers Compensation Act 1998 the Commission has informed itself that the applicable relevant weekly rates of pay under the Rubber Plastic and Cable Making Industry – General – Award 1998 [AP 794720 – Fed] (Classification: Manufacturing/production, Level 5) are:
(a)3 June 2000 $479.70
(b)3 June 2001 $492.70
(c)3 June 2002 $510.70
(d)3 June 2003 $527.70
(e)3 June 2004 $546.70, and
(f)7 June 2005 $563.70.
Under WorkChoices from 1 December 2006 the minimum wage for employees covered by the above award is contained in the Australian Pay and Classification scales of the Australian Fair Pay and Conditions Standards and, for the above award, classification and level, is $590.90.
2. The parties are directed to make submissions about the applicability and relevance of the above Award and wage rates to the calculation of the Appellant Worker’s probable earnings but for injury under section 40(2)(a) of the Workers Compensation Act 1987 (‘the 1987 Act’).
3. The Appellant Worker’s submissions are to be filed and served on or before Monday 18 December 2006 and the Respondent Employer’s submissions are to be filed and served on or before Monday 8 January 2007.
4. In addition, the Respondent Employer is directed to explain and clarify its submissions on the exercise of the discretion under section 40 of the 1987 Act.”
Both parties provided additional submissions in response to the above Direction and I have carefully considered those submissions in reaching my decision. The parties agree that the Rubber Plastic and Cable Making Industry Award is the award under which Mr Goktas was employed but disagree as to the appropriate method to be adopted to determine probable earnings but for injury and what, if any, deduction should be made in the exercise of the discretion under step four of Mitchell.
The Legislation
Section 40 of the 1987 Act provides:
“(1) Entitlement
The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings, but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.
(2) Calculation of reduction in earnings of worker—generalThe reduction in the worker’s weekly earnings is (except as provided by this section) the difference between:
(a) the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment (but not exceeding $1,000), and
(b) 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 (but not exceeding $1,000).
…
(3) Ability to earn in suitable employmentThe determination of the amount that an injured worker would be able to earn in some suitable employment 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.”
It should be noted that the above form of section 40(2) was inserted in the 1987 Act by the Workers Compensation Legislation (Amendment) Act 1994. The new form of section 40 applies to any period of incapacity for work occurring after 1 September 1994, the commencement date of the amendment. Therefore, it applies in the present case even though the injury occurred before the amendment.
Section 43A defines “suitable employment”. It provides:
“For the purposes of [s 40]:
suitable employment, in relation to a worker, means employment in work for which the worker is suited, having regard to the following:
(a) the nature of the worker’s incapacity and pre-injury employment,
(b) the worker’s age, education, skills and work experience,
(c) the worker’s place of residence,
(d) the details given in the medical certificate supplied by the worker,
(e) the provisions of any injury management plan for the worker,
(f) any suitable employment for which the worker has received rehabilitation training,
(g) the length of time the worker has been seeking suitable employment,
(h) any other relevant circumstances.”
The Authorities
The approach to be taken to an assessment under section 40 was discussed by the Court of Appeal in Mitchell where it was observed at 529-530:
“An award of weekly payment of compensation is not to exceed the ‘reduction in the worker’s weekly earnings’ (s 40). Section 40, like its predecessor s 11 of the Workers’ Compensation Act 1926, requires the judge making an award to follow a number of steps, although the precise number is a matter of some debate: cf JC Ludowici & Son Ltd v Cutri (1992) 26 NSWLR 580 at 582. The judicial process is discussed in Australian Wheat Board v Pantaleo [1984] 3 NSWLR 530. For present purposes, it is sufficient to observe that the Court is required:
1. To determine the weekly amount the worker would probably have been earning if uninjured (s40(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’ (s40(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) (s40(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’ (s40(1)).”
In Australian Iron & Steel Pty Ltd v Elliott (1966) 67 SR (NSW) 87 it was held that the calculation of probable earnings but for injury (step one) is a hypothetical calculation only which assumes that the worker’s pre injury employment continued. This issue was also discussed in Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50 (‘Nicholson’) where McHugh JA (as he then was) held that the compulsory retirement of the worker was irrelevant to the calculation of probable earnings in step one but was relevant to the exercise of the discretion (step four). The calculation of probable earning but for injury was also discussed by Kirby P (as he then was) in Australian Wheat Board v Pantaleo (1984) 1 NSWCCR 1 at 14 (‘Pantaleo’) where his Honour said:
“Nonetheless, for the purpose of the hypothetical calculation in the first step of the first stage required by the Act, the decision-maker is not entirely at large. He cannot speculate, without limitation, upon what might have been but for injury. True it is, he is not limited to an assumption that the worker remains with the same employer: Johnston’s case. Equally true, he is entitled to have regard to evidence as to his possible promotion within that employer’s service. But he cannot boldly assume that every cleaner will necessarily become an engine driver (or chief executive). He is limited, in indulging in the speculation as to what might, but for injury, have been the employment history of the injured worker, by the need to presume, as the statute requires, that the incapacitated person remains a worker and remains ‘in the same or some comparable employment’.” (emphasis added)
His Honour added at 15:
“Judging comparability of employment requires common sense and experience of the labour market and its variety such as the judges of the Compensation Court acquire in performing their duties. It is essentially a factual question though regard may be had to a variety of indicia of comparability in this context.”
His Honour also noted at 15D “it is particularly relevant to refer to structural change in the economy and the need to import flexibility as to the possible career paths of workers, in order to take into account the impact of such change on employment prospects”.
The Mitchell Analysis
The Appellant Worker submits that the appropriate amounts in step one of Mitchell are found in one of the three alternatives set out in paragraphs [17] (i),(j) and (m) above. These calculations require certain assumptions to be made. First, that Mr Goktas continued in the same or some comparable employment. This assumption is appropriate and is consistent with the authorities. Second, that from 1990 to date Mr Goktas’ wage would have risen consistently over time and that he would have continued to work overtime at the same level he worked up to his retrenchment in January 1991. In making this assessment, it is appropriate to consider Mr Goktas’ past employment history, his qualifications and his general work experience.
The Appellant Worker relied on two statements in support of his claim. The first dated 2 July 2003 and the second 9 October 2003. Both are hopelessly inadequate for the purpose of determining the issues raised on appeal. He also gave oral evidence before the Arbitrator on 3 November 2003. His evidence in chief merely indicated that apart from a part time job with Aussie Tables from 1999 until his injury in 2000, Mr Goktas had been engaged in no paid employment since his retrenchment. He was cross-examined about work he performed as a courier in 2004 which he said he stopped because he was too slow (transcript page 11 line 15 and page 22 line 21). No questions were asked in cross-examination about the nature and extent of any overtime Mr Goktas worked with Goodyear. In re-examination Mr Goktas said he earned between $500.00 and $600.00 as a courier (transcript page 20 line 16). I assume that this figure represents gross earnings per week but the evidence is unclear. Mr Goktas worked about 30 hours per week as a courier with his own van for several months in 2004 (transcript page 20 line 42). He also stated that in respect of his hours of work with Goodyear he “wasn’t working less than 50 hours, 55-60 hours” (transcript page 23 line 17) and that his ordinary working week was “38-40 hours”. Mr Goktas said he never refused overtime (transcript page 23 line 41). Without any documents it is difficult to assess if this evidence is completely accurate. However, the Employer’s Notice of Injury form supports a claim that Mr Goktas was paid above the award rate while he worked at Goodyear. The question for me to determine is: what he would have earned in the same or some similar employment after August 2000 had he not been injured.
Mr Goktas was born in Turkey and migrated to Australia at the age of nine in 1971. Dr Ellis records that Mr Goktas “did not go to school much” and “played truant” (report 25 April 2002). He left school at age 15 and until the age of 20 spent a great deal of time in and out of Detention Centres and from 1978 spent three years in jail. He worked at a Pizza shop for a period and then did a number of labouring jobs until he returned to Turkey in 1984 where he did 18 months of National Service. On his return to Australia he started with Goodyear as a ‘millman’ in March 1987 where he worked until the company closed and moved to Melbourne in January 1991. Dr Ellis described the work as “hot, heavy and dangerous” (report 16 April 2003). There is no evidence that Mr Goktas undertook any tertiary training.
Whilst I agree with the Appellant Worker’s submission that the award rate does not allow for overtime and is therefore not the appropriate rate for probable earnings under section 40(2)(a), I reject the argument that probable earnings should be assessed on the basis of the ABS figures for adult males. There is no evidence that Mr Goktas’ wage with Goodyear was equal to or above the figures provided by the ABS as at 1990. There is therefore no basis for allowing the ABS figures as probable earnings. In addition, those figures were never provided to the Arbitrator and no application has been made to rely on them as fresh evidence on appeal.
In respect of the second approach suggested by the Appellant Worker (the 3% annual adjustment of the figure of $594.19 in the Employer’s Report of Injury form) there is no evidence that that adjustment accurately reflects the wage movements for the employment of a millman, or some similar employment, from 1990 to date. It invites the Commission to speculate as to the rate of wage movements and it is difficult for the Commission to do that, in the absence of evidence, especially when such a long period is involved. The Appellant Worker’s submission that assessments “inevitably involve a degree of speculation and assumption” (Appellant Worker’s submissions 4 July 2006 paragraph six) is unhelpful and relies on common law cases that have limited, if any, application to the Commission. The reference to Forrest is also unhelpful as in that case the trial judge had before him relevant award rates for appropriate ‘comparable employment’.
Whilst the Commission is a specialist tribunal it must not ‘speculate without limitation’ when it comes to assessing probable earnings. No evidence was called as the movement in wage rates for millmen or labourers in NSW from 1990 to 2006. I am not prepared to allow a 3% annual increase as submitted by the Appellant Worker. However, as a specialist tribunal the Commission is aware that general wage rates have increased in that period. Doing the best I can, given the lack of evidence, but having regard to the figures set out in the Employer’s Notice of Injury form, I believe that an adjustment of 1% per annum on the figure of $594.19 from 1990 is appropriate. That adjustment gives the following figures which I find to be Mr Goktas’ probable earnings but for injury (step one in Mitchell):
2000$655.00
2001$662.00
2002$668.00
2003$675.00
2004$682.00
2005$689.00
2006$696.00
2007$703.00
The above figures have been rounded up to the nearest whole dollar.
It follows from the above that I reject the Respondent Employer submission that no weight should be placed on its Report of Injury form. The document is consistent with Mr Goktas’ evidence that he worked substantial overtime. Mr Goktas was not cross-examined about his overtime and the Respondent Employer called no evidence on this issue. In these circumstances I accept the figure of $594.19 as being the wage paid to Mr Goktas in 1990.
I also reject the Appellant Worker’s third approach to calculating probable earnings. It is purely speculative. There is no basis for assuming that Mr Goktas would have earned 70% above his award rate from 2000 to date if he had remained uninjured.
Step two in Mitchell requires the assessment of Mr Goktas’ ability to earn (section 40(2)(b)). Whilst I will not set out all of the evidence in this decision, I have read and taken into account all of the evidence in reaching my conclusions.
Dr Ellis sets out a convenient summary of Mr Goktas’ conditions at page seven of his report of 25 April 2002. They are:
1.narcolepsy which causes persistent hyper somnolence;
2.a severe injury to her neck and left shoulder due to the injury on 20 August 2000 which resulted in:
a. dislocation of the left acromioclavicular joint;
b.fracture of the left caracoid process at its base which is still ununited by bone and is tender and swollen;
c. the left shoulder has clearly diminished internal rotation.
3.posterior disc bulging and osteophyte formation at most of the cervical disc joints and there is encroachment by osteophytes on the right side of the neck particularly at C3-4 and C5-6, and
4.lumbar disc lesions at L3-4. L4-5 and L5-S1 levels.
Dr Ellis thought that a report from a rehabilitation expert would be helpful. None is in evidence. Dr Ellis thought that Mr Goktas was unfit for work requiring strenuous use of his left shoulder or strenuous use of his low back with much bending and lifting.
Dr Burke, surgeon, qualified by the Respondent Worker considered Mr Goktas to be fit for light manual tasks but unfit for work involving repeated bending, lifting of heavy weights or other activities likely to aggravate his shoulder and back (report, 15 September 2003 page nine). He thought Mr Goktas was unfit for work with his hands above chest height. Despite Mr Goktas’ muscular prowess, lifting and carrying should be limited to about 10kg.
Dr Harvey, the Appellant Worker’s general practitioner from August 2000, thought he was fit for process work if seated at a bench.
Dr Endrey-Walder, surgeon qualified by the Appellant Worker, reported on Mr Goktas’ condition on 21 May 2003. He thought that Mr Goktas was able to cope with light to moderate duty process work in which he could either sit or stand. He also made a comment similar to that noted above from Dr Burke that despite Mr Goktas’s “strong physique, a lifting restriction of 10-12kg would be in order” (report 21 May 2003 page five).
In addition to the above evidence I note the Appellant Worker’s oral evidence that he worked for a period in 2004 as a courier using his own van. Exactly how much he earned from that work has not been properly established on the evidence. The submission is made that the earnings as a courier were not earnings as a ‘worker’. I reject that submission as the earnings were earnings from Mr Goktas’ own physical exertion. He did not employ others and there was no element of profit involved. No evidence was tendered as to the overheads incurred by Mr Goktas in running his van for his courier work but ideally those expenses should be taken into account in assessing ability to earn. It is of more significance that Mr Goktas said he stopped that work because he was too slow because of his pain (transcript page 22 line 24). Whether his slowness was because of his back or his shoulder problem was not clarified in the evidence.
Having regard to all of the evidence it is my assessment that Mr Goktas’ ability to earn from August 2000 to date in some suitable employment in the labour market reasonably assessable to him is $350.00 per week in part time process work. I have not made adjustments to this figure over time but have taken $350.00 as an average over the period from August 2000 to date.
Step three of the Mitchell process requires me to deduct $350.00 from the probable earnings set out at [49] above. That step gives the following mathematical difference:
24 August 2000 to 31 December 2000 $305.00 per week
1 January 2001 to 31 December 2001 $312.00 per week
1 January 2002 to 31 December 2002 $318.00 per week
1 January 2003 to 31 December 2003 $325.00 per week
1 January 2004 to 31 December 2004 $332.00 per week
1 January 2005 to 31 December 2005 $339.00 per week
1 January 2006 to 31 December 2005 $346.00 per week
1 January 2007 to date $353.00 per week
Step four of Mitchell requires me to determine, in the exercise of my discretion, the amount of compensation as appears “proper in the circumstances of the case” (section 40(1)). In the present case there are two issues that must be considered in the exercise of my discretion: first, the fact that had Mr Goktas not been injured he would have been retrenched in any event, and, second, the fact that Mr Goktas had a subsequent injury which has impacted on his ability to earn.
Judge Armitage considered the first issue in Harding v Transfield Pty Ltd (2003) 25 NSWCCR 86. In that case the worker’s contract of employment would have expired before the hearing of his claim for compensation had he remained uninjured. His Honour held, applying Elliott and Nicholson, that the calculation of probable earnings hypothesises that the worker’s pre injury employment would have continued. It is only in the exercise of the discretion under section 40(1) that the fact that that employment did not continue becomes relevant. In that case the judge found the difference between steps 1 and 2 in Mitchell was slightly less than $400.00 per week. In the exercise of his discretion he reduced that loss to $200.00 because, among other reasons, the worker’s employment with his employer would have ceased in any event.
In the present case the evidence suggests that Mr Goktas was retrenched in 1991 (transcript page nine and report Dr Ellis 16 April 2003). On the basis of this evidence I find that had Mr Goktas not been injured his employment with Goodyear would have ceased in any event and he would have had to seek alternative employment. Whether he would have found employment with the same generous levels of overtime is problematic and is a matter I take into account in the exercise of my discretion in determining the ‘proper’ amount of compensation in all the circumstances of the case. I intend to reduce the mathematical difference between steps 1 and 2 by $75.00 per week to take account of the fact that Mr Goktas’ employment with Goodyear would not have continued even if he had been uninjured.
In respect of the second discretionary issue the Appellant Worker submits that the consequences of the August 2000 injury are irrelevant to the exercise of the discretion under section 40 and quotes the passage set out above at [17] (t) from Mills. The authority cited by Mills (Douglas v Better Brakes Pty Ltd [1971] WCR 58 (‘Douglas’)) lends support to this submission. Douglas was a decision of Ferrari J of the former Workers Compensation Commission of NSW. It concerned a case of a worker whose working days were limited in any event by reason of a degenerative spinal condition. It was held that compensation under section 11 of the Workers Compensation Act 1926 (‘the 1926 Act’) (the predecessor to section 40 of the 1987 Act) should not be reduced by reason of the degenerative condition.
Since Douglas was decided the application of the discretion has been considered by the Court of Appeal in Nicholson which has been applied and followed in Singh v TAJ (Sydney) Pty Limited [2006] NSWCA 330 (‘Singh’).
The discretion was described by McHugh JA in Nicholson, at 54-55, as follows:
“The third step in the process [the four step in Mitchell] requires the Compensation Court to look at the circumstances of the case. The weekly payment awarded must bear such relationship to the differential amount – which is the result of the exercise under the first and second steps – as under the circumstances of the case is proper. This third step therefore calls for the exercise of a judicial discretion of a kind with which courts have long been familiar.
It is at this stage that the Compensation Court can and must examine all the facts. The matters which can be examined include such matters as retirement, other supervening illnesses or injuries, the personal employment history of the worker and so on.” (emphasis added)
The above passage was quoted with approval in Singh at [31]. To the extent that Douglas is inconsistent with the principles set out in Nicholson I believe it is no longer good law and I intend to apply Nicholson. That authority makes it clear that a ‘supervening injury’ is a matter that must be examined when exercising the discretion in section 40. Having regard to the Appellant Worker’s significant symptoms as a result of the August 2000 injury I find that that injury has reduced Mr Goktas’ capacity to earn by $100.00 per week.
Therefore, in the exercise of my discretion, I reduce the figures set out in [61] above by $175.00 per week. Making that adjustment the resulting figures are:
24 August 2000 to 31 December 2000 $130.00 per week
1 January 2001 to 31 December 2001 $137.00 per week
1 January 2002 to 31 December 2002 $143.00 per week
1 January 2003 to 31 December 2003 $150.00 per week
1 January 2004 to 31 December 2004 $157.00 per week
1 January 2005 to 31 December 2005 $164.00 per week
1 January 2006 to 31 December 2006 $171.00 per week
1 January 2007 to date and continuing $178.00 per week
There will be an award in favour of the Appellant Worker under section 40 in the sums set out in paragraph [69] above.
DECISION
The Arbitrator decision dated 7 June 2006 is revoked and the following order made:
“Award for the Appellant Worker under section 40 of the Workers Compensation Act 1987 as follows:
24 August 2000 to 31 December 2000 $130.00 per week
1 January 2001 to 31 December 2001 $137.00 per week
1 January 2002 to 31 December 2002 $143.00 per week
1 January 2003 to 31 December 2003 $150.00 per week
1 January 2004 to 31 December 2004 $157.00 per week
1 January 2005 to 31 December 2005 $164.00 per week
1 January 2006 to 31 December 2006 $171.00 per week
1 January 2007 to date and continuing $178.00 per week
The Respondent Employer is to pay the Appellant Worker’s costs, if any, of the second Arbitration.”
COSTS
Had the Arbitrator been provided with proper assistance at the second Arbitration the current appeal would probably not have been necessary. In view of the fact that the Appellant Worker’s solicitors made no response to the Arbitrator’s Direction of 10 April 2006 I see no reason why they should be entitled to costs of the appeal. In these circumstances I believe the proper order is no order as to costs of the appeal.
No order as to costs of the appeal.
Bill Roche
Deputy President
2 January 2007
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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