Gray v Johnston's Transport Industries Pty Limited
[2008] NSWWCCPD 104
•24 September 2008
| WORKERS COMPENSATION COMMISSION | |||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||||
| CITATION: | Gray v Johnston’s Transport Industries Pty Limited and anor [2008] NSWWCCPD 104 | ||||
| APPELLANT: | Scott Gray | ||||
| FIRST RESPONDENT: | Johnston’s Transport Industries Pty Limited | ||||
| SECOND RESPONDENT: | North & Western Services Pty Limited | ||||
| FIRST RESPONDENT’S INSURER | Employers Mutual NSW Limited | ||||
| SECOND RESPONDENT’S INSURER | Employers Mutual NSW Limited | ||||
| FILE NUMBER | WCC479-08 | ||||
| DATE OF ARBITRATOR’S DECISION: | 15 April 2008 | ||||
| DATE OF APPEAL DECISION: | 24 September 2008 | ||||
| SUBJECT MATTER OF DECISION: | Partial incapacity; section 40 of the Workers Compensation Act 1987; adequacy of reasons; weight of evidence. | ||||
| PRESIDENTIAL MEMBER: | President, Judge Keating | ||||
| HEARING: | On the papers | ||||
| REPRESENTATION: | Appellant: | Firths | |||
| Respondent: | Edwards Michael Lawyers | ||||
| ORDERS MADE ON APPEAL: | Paragraph (2) of the Arbitrator’s decision dated 15 April 2008 is revoked. The matter is remitted to a different Arbitrator to determine afresh the claim for weekly compensation benefits. The Respondents are to pay the Appellant’s costs of the appeal. | ||||
BACKGROUND TO THE APPEAL
On 12 May 2008, Mr Scott Gray (‘the Appellant/Worker’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 15 April 2008.
The Respondents to the Appeal are Johnston’s Transport Industries Pty Limited (‘Johnston’s Transport / First Respondent’) and North & Western Services Pty Limited (deregistered) (‘North & Western Services / Second Respondent’). Both Respondents were insured at all relevant times by Employers Mutual Pty Limited (‘EMI’) and both are represented by the one solicitor under the lead insurer provisions.
Mr Gray is a 42-year-old truck driver who sustained a labral tear in his right shoulder when attempting to lift a 120kg load at work on 26 July 1994 whilst in the employ of the First Respondent. He subsequently underwent surgical repair on 15 December 1994, and further shoulder stabilisation surgery on 18 January 1995. In 1996 Mr Gray obtained employment with the Second Respondent as a bus driver and on 27 September 1997 he slipped and fell onto his right arm and suffered a further injury to his right shoulder. After this injury, Mr Gray underwent further surgery in the form an arthroscopic acromioplasty on 22 January 1998.
The Worker also has a well-documented history of marijuana use and also reports dependence on prescribed analgesic medication.
Mr Gray has not worked since shortly before he underwent the last shoulder surgery in January 1998 and has been in receipt of weekly compensation payments since that time, although the insurer has periodically sought to reduce those payments. This has given rise to a number of proceedings in the Compensation Court and the Commission.
The Worker brought proceedings against Johnston’s Transport in the Compensation Court in matter number 19068 of 1995. Those proceedings resolved with an award entered in favour of the Worker in respect of 20% permanent loss of efficient use of the right arm at or above the elbow ($20,864.00) and $10,875.00 for pain and suffering under section 67. There was an award “in favour of the respondent in respect of the applicant’s claim for lump sum compensation in relation to permanent impairment of the neck.”
On 4 April 2002 the Worker underwent arthroscopic surgery to his left knee in respect of a non-work related football injury sustained as a child. Five days after the surgery his right shoulder gave way whilst he was walking with crutches and he fell, injuring his left knee again and requiring further arthroscopic surgery to repair additional damage.
Further proceedings in the Compensation Court in matter number 7529 of 2002 against both Johnston’s Transport and North Western Services, resolved on 6 August 2003 by way of terms of settlement with an award for the Worker in respect of an additional 3% loss of efficient use of the right arm at or above the elbow and 5% loss of efficient use of the left leg at or above the knee and an additional $1,000.00 for pain and suffering. There was an award for the Respondents in respect of the claim for permanent loss of efficient use of the left arm at or above the elbow.
The Worker and both Respondents also executed ‘Heads of Agreement’ on 6 August 2003, noting that the Second Respondent agreed to make voluntary payments of weekly compensation to the Worker under section 40 at the rate of $550.00 per week from 9 January 2002.
Proceedings were commenced in the Commission in 2004, in matter number 18008-04 between Mr Gray and North Western Services. On 18 January 2005, a Certificate of Determination was issued which included a notation that the parties had reached agreement that North Western Services was to pay the Worker $550.00 per week from 18 March 2004, with credit given to the Respondent for payment made at the rate of $383.00 per week since that time. The Respondent also agreed to pay medical expenses under section 60 for the worker to attend a drug rehabilitation programme, and, depending on the outcome of the drug rehabilitation programme, the Respondent would consider meeting the cost of job retraining activity.
It would appear that after these last proceedings Mr Gray remained in receipt of weekly compensation payments under section 40 at the rate of $550.00 per week until 4 October 2006, when these payments were reduced to $45.88 per week after the insurer obtained a section 40 assessment and reassessed Mr Gray’s probable earnings at $923.50 per week and his ability to earn at $877.62 per week.
After the reduction in his payments, Mr Gray filed the current ‘Application for Determination’ (No. 479-08) in the Commission on 24 January 2008. Against the First Respondent, he claimed injury on 26 July 1994 to his right shoulder, neck and left leg and against the Second Respondent he claimed injury on 27 September 1997 to his right shoulder, neck and left leg. The Worker claimed four dependant children and sought an award of $702.30 per week from 4 October 2006 to 31 March 2007 and thereafter at a rate of $715.90 per week, together with an unspecified claim for medical expenses. He also claimed additional lump sum compensation under sections 66 and 67 in respect of a further 2.5% loss of use of the right arm at or above the elbow and a further 6.5% loss of use of the left leg at or above the knee and 10% permanent impairment of the neck.
The parties were unable to resolve the dispute and the matter proceeded to an arbitration hearing on 31 March 2008. Both parties made oral submissions. At the conclusion of the hearing the Arbitrator reserved her decision and in a Certificate of Determination and accompanying statement of reasons issued on 15 April 2005 found the worker to be entitled to an award of weekly compensation in the sum of $487.97 per week.
It is from this decision that the Worker now seeks leave to appeal.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 15 April 2008 records the Arbitrator’s orders as follows:
“The Commission determines:
1. The application for lump sum compensation is remitted to the Registrar for referral to an Approved Medical Specialist for assessment of the degree of permanent impairment of the Applicant’s neck, left leg at or above the knee and right arm at or above the elbow, resulting from injury on 26 July 1994 and 27 September 1997.
2. The Respondents to pay the Applicant weekly compensation in the sum of $487.97 from 4 October 2006 to date and continuing, with a credit for any payments made to date.
3. The Respondents to pay the Applicant’s cost as agreed or assessed. Pursuant to Schedule 6, Part B, Table 4, Item 7 of the Workers Compensation Regulation 2003, I certify that this matter warrants an uplift in costs of 20% for both parties.”
In relation to the claim for weekly compensation benefits from 4 October 2006 to date and continuing, the Arbitrator accepted that the Worker was seeking compensation on the basis of partial incapacity pursuant to section 40 of the 1987 Act. She noted that the insurer had reduced his weekly payments to $45.00 per week commencing on 4 October 2007 and that Mr Gray was seeking to have the compensation payments increased to the maximum statutory rate for a worker with four dependant children.
The Arbitrator found, taking into account all the relevant factors including his long-term unemployment, his disability and reduced function of his right shoulder, his lack of formal qualifications, his limited work history and his long-term drug use, that he was virtually unemployable and he had a nil earning ability in suitable employment. She found probable earnings but for injury to be $1,187.97.
The Arbitrator also found that the marijuana use and addiction was not causally related to his work injuries and was a supervening event that impacted on his earning ability and that she exercised her discretion and found that, by excluding the effects of the drug addiction, the Worker had an ability to work 20 hours per week and earn $35.00 per hour or a total of $700.00 per week. The Arbitrator therefore made an award in favour of Mr Gray for $487.97 per week.
ISSUES IN DISPUTE
The issues in dispute in the appeal are that:
(a) there was no evidence, or insufficient evidence, to support the finding the Worker has an ability to earn of $35.00 per hour, and
(b) the Arbitrator failed to provide reasons as to how the figure of $35.00 was derived.
SECTION 162 APPLICATION
North & Western Services Pty Limited, being a corporation, has ceased to exist.
In proceedings between the same parties, matter number 7529-02, a declaration was made under Section 162 of the Workers Compensation Act 1987 (‘1987 Act’), dated 6 August 2003, in the following terms:
“(8) Declaration that the 2nd Respondent has entered into a contract of insurance with Employers Mutual Indemnity (Workers Compensation) Ltd, in respect of employers liability under the Act to the Worker and that employer has ceased to exist.”
INCOMPLETE TRANSCRIPT
An arbitration hearing took place at the Commission on 31 March 2008.
Regrettably there was a malfunction with the recording equipment and, although the Arbitrator took steps to record the proceedings, the transcription indicates that the recording started sometime after the proceedings commenced and the initial part of the proceedings were not recorded and were unable to be transcribed. The recording commences part way through submissions by counsel for the Respondents.
There have been a number of cases where appeals have been brought in circumstances where for a variety of reasons there has been an incomplete recording of the proceedings from which the appeal is brought.
In Wyong Shire Council v Paterson [2004] NSWWCCPD 45 (‘Paterson’) Deputy President Fleming (as she then was) considered the absence of a transcript in the context of an appeal from the decision of an arbitrator in circumstances that are similar to the instant case. In that matter the oral evidence given by the worker at the arbitration could not be transcribed. The Deputy President relied on statements that had been filed by the worker. She noted at paragraph [16]:
“Taking into account the particular grounds of appeal, the Arbitrator’s written reasons and the documentary evidence that is before me I am satisfied that I can proceed to review the Arbitrator’s decision.”
An appeal to the Court of Appeal was unanimously dismissed with Giles JA holding at [44] that the absence of a transcript is not a passport to a fresh arbitration.
In Aluminium Louvres & Ceilings Pty Ltd v Xue Qin Zheng [2006] NSWCA 34 (‘Zheng’) there was no transcript or sound recording available of the evidence given before the Arbitrator. The Presidential member dealing with the appeal overcame the absence of the transcript by relying upon a summary of the relevant evidence from a solicitor for one of the parties. The Court of Appeal noted that the solicitor’s narration of the relevant facts was not disputed by the opposing party and in all the circumstances it was determined there was no error on the part of the Presidential member in proceeding to deal with the appeal relying, inter alia, on the solicitor’s narration of the relevant evidence.
In Zheng Bryon JA (with whom Handley JA and Bell J agreed) in dealing with the absence of transcript stated:
“This is a serious shortcoming, because it greatly impedes the right of appeal and the due exercise of powers of the Presidential member under s.352; and also impedes the conduct of a further appeal under s.353. According to circumstances, the absence of a sound recording could fairly readily lead a Presidential member to a decision to require a rehearing; although that result would not be automatic.”
In Ashley v Ashmore Constructions Pty Ltd [2006] NSWWCCPD 225 (‘Ashley’) Acting Deputy President Candy dealt with a case similar to this appeal regarding the absence of transcript of portions of the evidence. In that matter the missing transcript concerned the evidence of the worker and a lay witness. Statements from both of the witnesses were attached to the Application to Resolve a Dispute. Acting Deputy President Candy drew the distinction between cases where portions of the evidence are not transcribed from those where the reasons for decision are not transcribed. He noted that the absence of a transcript is not necessarily fatal to the process of review. He noted the Arbitrator gave careful reasons in her determination of the matters in dispute. She had before her a statement of the worker taken several years before the hearing. The Acting Deputy President expressed doubt as to whether the evidence of the worker given during the arbitration hearing in March 2005, almost four years after the event in question, would have greatly assisted the Arbitrator in determining disputed matters of fact. He considered the statement of the worker some months after the event and the contemporaneous medical evidence to give a greater indication of where the truth lay. He held that the absence of the transcript did not prevent him from dealing with the matter on appeal and proceeded to determine it.
In Safi v Australian Concert & Entertainment Security [2007] NSWWCCPD 128 (‘Safi’) Deputy President Byron dealing with an absence of transcript formed the view that in the absence of the evidence upon which the Arbitrator’s decision was made he was unable to undertake a proper review in order to determine whether or not the Arbitrator had erred as alleged. He noted at [29]:
“The absence of a transcript can be a serious impediment to the process of ‘review’ that is required on appeal. In Fraternity Bowling & Recreation Club Ltd v Sartor [2004] NSWWCCPD 47 (‘Sartor’) not only was there no transcript of the oral evidence but there was no transcript of the Arbitrator’s ex tempore decision. The Arbitrator’s decision was revoked and the matter remitted to a new Arbitrator for re-hearing. The Commission noted at paragraph 15:
‘The absence of a transcript of the arbitration may be fatal to the conduct of a fair review on appeal where no written reasons have been provided. The task of the Presidential Member is to ‘review’ the Arbitrator’s decision, wherever it is possible to do so, either ‘on the papers’ or after an oral hearing. Where an Arbitrator has erred in making the decision, it may not be possible for a Presidential Member to proceed to substitute a new decision ... if the evidence on appeal is inadequate. This has frequently occurred because the evidence was not properly filed or given in accordance with the Rules or because it was not properly recorded in the arbitral proceedings. In these circumstances, to grant leave for fresh evidence to be given on appeal can lead to the review becoming a complete second hearing of the dispute ... this is not the intention of the statutory scheme. The particular circumstances of each case will influence the course of the review.’”
On 14 August 2008, I issued a Direction to the parties in reference to the incomplete transcript of the arbitration hearing conducted on 31 March 2008. Both parties were invited to make written submissions in relation to the conduct of the appeal in the absence of a complete transcript of the arbitration.
The parties filed written submissions in response to the Direction, agreeing that whilst the transcript was incomplete, all of the evidence in the proceedings was documentary evidence, no oral evidence was given and the absence of a complete transcript of the submissions did not inhibit the appeal proceeding.
Whilst it must be accepted that the absence of a complete transcript is a serious shortcoming because it greatly impedes the right of appeal and could fairly readily lead a Presidential member to a decision to require a rehearing, that is not an automatic result (see Zheng).
The absence of a transcript of the Arbitrator’s reasons or ex tempore decision may well be fatal to the conduct of a fair review on appeal (see Sartor and Safi).
However, cases where there are transcribed reasons for decision or a written statement of reasons for decision, but portions of the evidence or submissions are not transcribed, are in my view, a different category and their absence may not necessarily be fatal to the conduct of a fair review on appeal (see Ashley and Paterson).
In this matter, in addition to the transcript, I have the benefit of the Arbitrator’s written statement of reasons.
In light of the parties’ agreements noted at [32] above, that the incomplete transcript does not inhibit the appeal from proceeding, and taking into account the Arbitrator’s statement of reasons for decision, the legal principles to be applied, the documentary evidence relied on by both parties and the submissions on appeal, I am of the view that I have sufficient information to fairly review the Arbitrator’s decision on appeal under section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). I am comfortably satisfied that in light of the above matters, my conducting the appeal in the absence of part of the transcript is not procedurally unfair to either party.
ON THE PAPERS REVIEW
Section 354(6) of the 1998 Act e 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.
LEAVE
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.
The appeal was lodged on 12 May 2008, within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
The thresholds in section 352(2)(a) and (b) of the 1987 Act are also met.
Leave to appeal is granted.
FRESH EVIDENCE
Neither party seeks to rely on fresh and/or additional evidence on appeal.
REVIEW
The nature of a review was considered by the Court of Appeal in Zheng where Bryson JA said at [38]:
“A review is a different process to an appeal and the matters which may be considered and the manner in which they may be considered are somewhat wider. See Boston Clothing Co Pty Ltd v. Margaronis (1992) 27 NSWLR 580 at 584 (Kirby P). An attack, on review or otherwise, on an Arbitrator's discretionary decision in controlling procedure may be based on the test stated in House v. R (1936) 55 CLR 499 at 504 - 505; but that is not the only basis on which the Presidential member may act. The powers of a Presidential member on review are somewhat wider and extend to power to reopen consideration of a matter of which an Arbitrator has disposed; the manner in which the powers of the Presidential member are to be exercised is itself the subject of discretion of the Presidential member.”
This passage was recently quoted with approval by McColl JA in South Western Sydney Area Health Service v Edmonds (2007) 4 DDCR 421; [2007] NSWCA 16 at [134]. To describe the relative weight and relevance of the expert evidence as “a discretionary decision which could only be disturbed on House v The King principles” was described by McColl JA as “an over-generalisation” (at [133]). Thus, on review, a Presidential member is not bound by an Arbitrator’s discretionary decision, but can reach his or her own conclusion.
The nature of a review was further considered by the Court of Appeal in State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249; (2007) 5 DDCR 287 (‘Chemler’) where Spigelman CJ said at [28] and [30]:
“28. The concept of a review on the merits is wider than the concept of an appeal in a judicial context. There is a well established line of authority on the use of the terminology of ‘review’ instead of ‘appeal’ with respect to the workers compensation system in this State which establishes the breadth of a review on the merits.
30. A Presidential member exercising a power to review a decision must decide whether the original decision is wrong or, as it is often put in the context of administrative appeals on merits, must decide what is the true and correct view. If s/he does so decide then s/he should substitute his or her own views, unless it is an appropriate case to remit. The power to remit is not constrained in the manner for which the Appellant contends.”
In a recent decision of Tan v National Australia Bank Limited [2008] NSWCA 198 Basten JA noted that at [12]:
“The fact that the term “appeal” may refer to a hearing de novo, the fact that the appeal is described as one “by way of review”, together with the largely unlimited discretion conferred on the Deputy President as to the manner in which the appeal will be conducted and the broad powers, including the power to make a “new decision” in place of that subject to appeal, all tend to confirm that the Deputy President may conduct a fresh hearing and is not constrained to intervene only if satisfied that the decision of the Arbitrator was effected by identifiable error.”
I propose to apply these principles to the matter before me.
SUBMISSIONS ON APPEAL
The Appellant’s Submissions:
The Appellant Submits:
a. There was no evidence, or insufficient evidence, tendered by either the Worker or the Respondents that supported the Arbitrator’s finding that the Worker could earn $700.00 per week, working 20 hours at $35.00 per hour.
b. Whilst the Work Assessment Centre report (‘ARC’) dated 15 June 2006, concluded that Mr Gray could work as a delivery driver and motorbus driver and earn up to $25.00 per hour, the Arbitrator however (at [55] – [56] of her reasons) did not accept that Mr Gray could perform this work.
c. Given the Arbitrator’s findings in relation to the Appellant’s literacy skills, education and training, work experience, and the opinion of Dr Kearney, the Appellants’ general practitioner, that Mr Gray was fit for 20 hours per week, lifting up to 2kg, with walking and travelling tolerances of one hour and sitting and standing tolerances of up to two hours, the Arbitrator was required to assess what positions he could be employed in with these restrictions and the income he could earn in them working 20 hours per week.
d. Given the Arbitrator’s findings, the hourly rate that the Worker is able to earn based on his education, skills, work experience, literacy and physical limitations is no more than $12.00 to $15.00 per hour.
e. The Arbitrator failed to provide reasons as to how she determined that the Worker was able to earn $35.00 per hour and the duties and occupations in which he could earn this hourly rate.
f. The Arbitrator’s finding that the Worker lacked motivation was inconsistent with the evidence that he had made five applications for work per fortnight.
g. The relief sought by the Appellant is that the Arbitrator’s finding of an ability to earn $35.00 per hour be set aside and a new finding of ability to earn between $12.00 to $15.00 per week be substituted.
The Respondents’ Submissions:
The Respondents submit in reply that there was evidence to support the Arbitrator’s findings and her reasons were adequate:
a. The Worker in the ‘Application to Resolve a Dispute’, nominated his probable earnings, but for injury at $1,187.97 per week or $31.26 per hour as a driver/bus driver.
b. The Worker provided evidence of the Transport Industries (State) Award, which noted that the casual hourly rate was 12% higher than the fulltime rate.
c. The Arbitrator’s finding that the worker was able to work 20 hours and earn $35.00 per hour was based on the application of the 12% casual rate to the $31.26 hourly rate.
d. The Respondents’ submissions before the Arbitrator were that in fulltime employment the Worker was capable of earning $25.00 per hour.
e. The Arbitrator’s finding that the Worker could earn $35.00 per hour was within her power taking into account that the reduced hours as a bus driver would entitle the Worker to the casual rate.
f. The Arbitrator’s decision was based on available evidence and should not be changed (see North Broker Hill Ltd v Tumes (1999) NSWCA 309).
g. The Arbitrator’s reasons were adequate. She set out the legal test to be applied (Mitchell) and gave reasons in relation to each step and how the award of compensation was calculated.
h. The Arbitrator exercised her undisputed discretion in finding that, but for the Worker’s abuse of marijuana, he would be able to earn $700.00 per week in suitable employment and deducting this figure from $1,187.97 gave $487.97 per week and she correctly awarded this amount as it was less than the statutory rate for a worker with four dependant children.
DISCUSSION AND FINDINGS
The grounds of appeal are limited to the Arbitrator’s finding that the Worker has an ability to earn $35.00 per hour for 20 hours per week. The Appellant submits that there was no evidence upon which this finding could be made and the Arbitrator failed to provide reasons as to how the figure was calculated or in which type of work or duties the Worker could earn $35.00 per hour.
Commission Arbitrators are under a statutory duty to given reasons for their decisions (section 294(2) of the 1998 Act; Part 15 Rule 15.6 of the Workers Compensation Commission Rules 2006 (‘the Rules’)). To succeed in having the decision set aside on this ground it must be demonstrated not only that the reasons are inadequate, but that their inadequacy discloses that the Arbitrator has failed to exercise his or her statutory duty to fairly and lawfully determine the application (YG & GG v Minister for Community Services [2002] NSWCA 247; Absolon v NSW TAFE [1999] NSWCA 311; ADCO Constructions Pty Ltd v Ferguson [2003] NSWWCCPD 21).
The Court of Appeal in Mitchell confirmed that the decision-maker must disclose the essential steps on the decision-making process leading to the figure that is assessed to represent what the Worker would be able to earn in suitable employment. In that case, the Court of Appeal held at 531:
“The making of a finding unsupported by evidence would involve as error of law: see Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-6. Error of law would also be involved if the reasoning disclosed in the judgment did not enable the reader to understand the essential steps in the decision-making process: see Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247.”
In Mitchell, the Court of Appeal held that care needs to be taken in dealing with fitness for a variety of work (in Mitchell ‘clerical and managerial type duties’) broadly expressed. The Court held at 533B:
“Some particularity was therefore required in identifying the particular types of clerical and managerial type duties that the worker was found (though incapacitated) to be able to perform.”
The Arbitrator, in assessing the Worker’s incapacity, initially found that the Worker had a nil capacity to earn in suitable employment at [54]-[55]:
“54.Findings and conclusions Mr Gray has now been unemployed for over ten years. That coupled with his physical restrictions, narrow employment experience, lack of formal qualifications and long term drug use lead me to conclude like many of the experts, that at this stage he is virtually unemployable.
55.In my view having regard to all relevant factors his ability to earn in suitable employment at this stage is nil.”
However, having made this finding, she did not enter an award for the Worker based on total incapacity but instead found at [60]-[62]:
“60.In this case it is apparent that there is a supervening event that impacts on Mr Gray’s ability to earn, namely his addiction. While possible that it might be linked to the injury on the evidence before me I could not be satisfied that it was. It seems that a constellation of factors have caused what his treating doctor now believes to be a very serious problem.
61.In my view the discretion available under s 40 ought be exercised to in effect exclude the effect of the addiction from the calculation of Mr Gray’s assessment to earn. Applying the restrictions recommended by his treating doctor I conclude that Mr Gray would be capable of earning around $35 per hour i.e. $700 per week. In reaching that conclusion I have had regard to the uncontroverted evidence that he has made at least five applications for employment per fortnight for an extended period. I have also had regard to the detailed statement he prepared in 2006 which sets out the reason he disagrees with the ARC assessment. That statement reveals that his opinion of his functional capacity is poorer than that held by his treating doctor, who as the evidence makes clear has been supportive of his patient and does not question the veracity of his report of symptoms. In my opinion that statement confirms the view of a number of experts who believe that Mr Gray consciously or otherwise lacks the motivation to return to work and the commitment or ability to undertake reasonable steps to achieve that goal.
62.For these reasons I have decided to reduce the difference between Mr Gray’s probable injured and uninjured earning to $487. 97.”
In determining the Worker’s probable earnings but for the injury, the Arbitrator accepted the Appellant’s submissions and relied on Mr Gray’s average weekly earnings with the Second Respondent as a bus driver and applied an annual adjustment of 3% to that figure to reach the figure of $1,187.96 per week by July 2007. This approach has not been challenged on appeal.
The weekly amount of $1,187.96 is the award rate for bus drivers. The award rate for bus drivers was nominated in the ARC ‘Section 40 Assessment - Award and Labour Market Rates Analyses’ report, dated 20 June 2006, at $671.24 per week. The part-time hourly rate was listed as $17.67 and the casual hourly rate at $20.32 and as such there is no basis for adding a 12% casual loading, even if 12% is the correct uplift for casual bus drivers.
On appeal, the Respondents submit that the Arbitrator’s finding of an ability to earn in suitable employment of $35.00 per hour was based on calculating an hourly rate from the probable earnings figure of $1,187.97 per week ($31.26 per hour) and applying a 12% increase for casual rate to reach the figure of $35.00 per hour. The 12% increase being derived from the difference between the permanent and casual rates under Transport Industries (State) Award.
The Respondents’ submissions on appeal in relation to the basis for the Arbitrator’s determination of the Worker’s ability to earn of $35.00 per hour are misconceived. The figure of $1,187.96 is an extrapolation based on the Worker’s earnings whilst employed by the Second Respondent, in order to establish his probable earnings, but for injury, and had he remained in the employ of the Second Respondent or some comparable employment until the year 2007. There is no evidence that $1,187.96 is representative of the Worker’s ability to earn in suitable duties with the restrictions nominated by his treating doctor.
There is nothing in the Arbitrator’s statement of reasons to give any indication that she applied the reasoning or evidence outlined in the Respondents’ submissions in her calculation of $35.00 per hour and in any event, as outlined above, for her to have done so would have constituted an error. I therefore reject this submission.
I am not satisfied that the Arbitrator’s reasons in determining the Worker’s ability to work 20 hours per week and earn $35.00 per hour disclose her reasoning process such as to enable the reader to understand the essential steps in that process. Therefore, the appeal is successful and the decision of the Arbitrator in respect of the claim for weekly compensation benefits cannot stand and is revoked.
In determining the Worker’s ability to work 20 hours earning $35.00 per hour, the Arbitrator failed to identify the type of work that she considered the Worker could perform. Whilst she referred to the Worker’s evidence that over an extended period of time he has applied for at least five jobs per fortnight she did not explain what relationship this activity has to his capacity to engage in suitable work. It is not apparent from the Arbitrator’s reasoning that she either accepted this as evidence of the Worker’s belief that he was fit for the jobs for which he had applied, or, in the alternative, that his persistent and unsuccessful applications demonstrated that suitable duties within his medically certified limitations were not readily available in the labour market accessible to him. I am therefore not satisfied that the Arbitrator has discharged her duty to realistically assess Mr Gray’s ability to earn.
Further, in an assessment under section 40 consideration must be given to the Court of Appeal’s decision in Ric Developments t/as Lane Cove Poolmart v Muir [2008] NSWCA 155, where it was held the assessment of a worker’s ability to obtain and retain work must be realistic, not a theoretical possibility. At [48] Campbell JA held:
“The error that the Deputy President saw in the Arbitrator’s reasoning was that the Arbitrator had not paid attention to the practical realities of the Worker, in his injured condition, actually being able to get and keep a job. The VCC reports did not address the Worker’s practical prospects in the labour market. Rather, they assessed his physical and mental capacities, and matched them to the tasks required to be performed in various jobs. That the Worker had the physical and mental capacity to carry out the tasks involved in some particular job is not sufficient to establish that there was a realistic prospect that anyone would actually give him such a job, or that he would be able to keep it. A further enquiry was needed concerning those matters, and it was that further enquiry that, in the Deputy President’s view, the Arbitrator had failed to carry out.”
OTHER MATTERS
First, the Arbitrator stated at [39]:
“The consensus of medical opinion is that he has on-going problems with the knee which are largely not work related”
As previously noted, the Worker has received compensation under section 66 for 5% permanent impairment of the leg at or above the knee as a result of the injury to his left knee sustained when he fell whilst walking with crutches. This permanent disability in his left knee is a factor that the Worker is entitled to have taken into account in assessing his capacity for work. That has not been done.
Second, the Arbitrator found Mr Gray's ability to earn (step 2 in Mitchell) to be nil. She then purported to exercise her discretion (step 4 of Mitchell) to find an ability to earn of $700.00 per week. This approach was incorrect and inconsistent with the accepted authority. Normally, if a worker's ability to earn is nil he or she will be entitled to an award for total incapacity. However, the Arbitrator’s subsequent findings suggest that she was not satisfied that Mr Gray was in fact totally incapacitated. The assessment of a worker's ability to earn must be made at step 2. The difference between steps 1 and 2 can then, if appropriate, be adjusted to give an award that is “proper in the circumstances of the case”.
Third, if on redetermination the Arbitrator assesses the Worker to be entitled to compensation under section 40, he or she will have to consider whether the discretion under section 40(1) needs to be exercised.
In that event, the evidence as to the Worker’s drug use may need to be carefully considered and the extent to which the drug dependency has or has not resulted from the work injury will need to be determined.
If it is found that the increased drug usage has resulted from the injury, the situation is analogous to one considered by his Honour Judge Neilson in Rootsey v Tiger Nominees Pty Ltd [2002] NSWCC 48 (3 July 2002) in which his Honour was satisfied on the evidence that there was a direct causal link between a worker’s increased alcohol consumption and the motor vehicle accident. His Honour therefore held that the alcohol consumption did not disentitle the worker from receiving weekly compensation. If Mr Gray’s current drug dependency has resulted from his work injuries, then it is difficult to see on what basis it could be argued that the dependency is a supervening unrelated illness or condition that would justify the exercise of discretion in section 40.
As was observed in Mitchell (at 534F) “The discretion is a broad one”. In Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50 (‘Nicholson’), McHugh JA (as his Honour then was) held, at [54]:
“The third step [the fourth step in Mitchell] in the process 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.”
The courts have considered the exercise of the discretion in a number of cases and have applied it in situations including where the worker has retired or suffered some supervening illness or injury (Nicholson at 55, and Australia Iron & Steel Pty Ltd v Elliott (1966) 67 SR (NSW) 87); where the worker was imprisoned during a period of partial incapacity (Stranlund v Mid Coast Meat Co Pty Ltd (1999) 19 NSWCCR 91); where after the injury, the worker was dismissed because of a criminal conviction (Morgan v Commissioner for Railways [1972] WCR 33); where, before the injury, the worker chose to work for only limited periods each year (Moy); where the worker was pregnant (Wrigley Co Pty Ltd v Holland (2002) NSWCCR 463), and where a worker sustained injury while working two jobs and the court had regard to the practical impossibility of continuing two full-time jobs over any lengthy period (Erisir v Kellogg (Australia) Pty Ltd (1987) 3 NSWCCR 92).
The issues highlighted above in [66] – [73] were not the subject of submissions on appeal but are clearly relevant in a re-determination of the award of weekly compensation benefits.
Whilst, having revoked the Arbitrator’s decision and upheld the appeal, it is desirable, where appropriate, that a Presidential Member finally determine the matter (see Chubb Security Australia Pty Ltd v Trevarrow (2004) NSWCA 344), this is not an appropriate matter for me to re-determine given the issues referred to above. The matter must be remitted to a different Arbitrator to determine afresh the claim for weekly compensation benefits.
Paragraphs (1) and (3) of the Arbitrator’s decision dated 15 April 2008 were not subject to appeal and I do not disturb those orders.
DECISION
Paragraph (2) of the Arbitrator’s decision dated 15 April 2008 is revoked.
The matter is remitted to a different Arbitrator to determine afresh the claim for weekly compensation benefits.
COSTS
The Respondents are to pay the Appellant’s costs of the appeal.
His Hon. Judge Keating
President24 September 2008
I, MARIE JOHNS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF HIS HON. JUDGE KEATING, PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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