Heckendorf Family Trading Pty Ltd v Linnett
[2007] NSWWCCPD 110
•7 May 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Heckendorf Family Trading Pty Ltd v Linnett [2007] NSWWCCPD 110
APPELLANT: Heckendorf Family Trading Pty Ltd
RESPONDENT: Kym Linnett
INSURER:CGU Workers Compensation (NSW) Limited
FILE NUMBER: WCC13402-06
DATE OF ARBITRATOR’S DECISION: 11 December 2006
DATE OF APPEAL DECISION: 7 May 2007
SUBJECT MATTER OF DECISION: Sections 38 and 38A of the Workers Compensation Act 1987
PRESIDENTIAL MEMBER: Deputy President Bill Roche
HEARING:On the papers
REPRESENTATION: Appellant: Sparke Helmore
Respondent: Firths
ORDERS MADE ON APPEAL: Paragraph one of the Arbitrator’s determination dated 11 December 2006 is revoked and the following order made:
“The matter is remitted to a different Arbitrator for re-determination of the Applicant, Kym Linnett’s, entitlement to weekly compensation under the Workers Compensation Act 1987”.
Paragraphs two and three of the Arbitrator’s determination are confirmed.
No order as to costs of the appeal.
BACKGROUND TO THE APPEAL
On 8 January 2007 Heckendorf Family Trading Pty Ltd (‘the Appellant Employer/Heckendorf’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 11 December 2006.
The Respondent to the Appeal is Kym Linnett (‘the Respondent Worker/Mr Linnett’).
Mr Linnett was born on 28 November 1958 and is currently 48 years old. He left school at the age of 15 and started work as a shearer when he was 19 and continued in that work until he was injured in 2005. In or about 2005 Mr Linnett normally worked for Mr Day, shearing contractor. However, on 24 February 2005 Heckendorf employed Mr Linnett as a shearer on its property near Narromine in western NSW. On that day he was trying to control a sheep when another sheep knocked him sideways causing injury to his neck and right knee. The incident was reported to his employer and he attempted to continue working on lighter duties but was unable to do so.
His claim for compensation was accepted and he was paid voluntary compensation. On the basis of a medical certificate dated 15 July 2005 from Mr Linnett’s general practitioner, Dr Wright, stating that Mr Linnett would be fit for pre-injury duties from 30 July 2005, compensation payments ceased on 29 July 2005.
An Application to Resolve a Dispute (‘the Application’) was registered with the Commission on 24 August 2006 seeking weekly compensation from 30 July 2005 to date and continuing together with a general order for the payment of hospital and medical expenses and a declaration that “the MRI provided by our client’s treating doctors are reasonable and necessary” (Application paragraph 4.2). The Application claims that Mr Linnett has four children dependent on him for support: Daniel born on 2 December 1991, Bianca born on 30 December 1993, Dylan born on 28 May 1996 and Angela born on 8 February 1999.
By its Reply filed on 14 September 2006 the Appellant Employer disputed injury, incapacity, the connection between any incapacity and the alleged injury and whether Mr Linnett’s hospital and medical expenses were reasonably necessary as a result of the injury.
The claim was listed for conciliation and arbitration before a Commission Arbitrator on 22 November 2006. On that day the Arbitrator stated that the parties agreed that the main dispute was in relation to Mr Linnett’s capacity to earn (T1.29). However, submissions by counsel for the Appellant Employer at page nine of the transcript indicate that injury and causation remained in issue. In respect of the claim for hospital and medical expenses, it was noted by the Arbitrator that only a “general order upon production of accounts or receipts” was sought (T1.27). The matter could not be resolved and proceeded to arbitration hearing.
In a reserved decision the Arbitrator found in favour of Mr Linnett on all issues and made an award in his favour at the maximum applicable rate of compensation for various periods under either section 38 or 40 of the Workers Compensation Act 1987 (‘the 1987 Act’).
Heckendorf seeks leave to appeal the Arbitrator’s 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’).
There is no issue that the monetary thresholds in section 352(2) are satisfied.
Time
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Leave to appeal is granted.
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 11 December 2006, records the Arbitrator’s orders as follows:
“1.That the Respondent pay the Applicant weekly benefits compensation under the Workers Compensation Act 1987 as follows:
a.$778.24 per week from 30 July 2005 to 25 August 2005 under section 38;
b.$662.10 per week from 26 August 2005 to 30 September 2005 under section 38;
c.$675.60 from 1 October 2005 to 30 March 2006 under sections 38 and 40;
d.$689.50 from 1 April 2006 to 30 September 2006 under section 40;
e.$702.30 from 1 October 2006 to date under section 40 and continuing in accordance with the Act.
2.That the Respondent pay the Applicant’s section 60 [sic] of the Workers Compensation Act 1987 medical and related expenses to date, upon production of account [sic] or receipts.
3.That the Respondent pay the Applicant’s costs as agreed or to be assessed.”
ISSUES IN DISPUTE
The issues in dispute in the appeal are whether the Arbitrator erred in:
(a)recording the agreement between the parties in respect of the current weekly wage rate and probable earnings but for injury to be $778.24 per week instead of $760.00 per week (‘wages’);
(b)finding Mr Linnett to be totally unfit for work until 30 August 2005 (‘finding of total incapacity’);
(c)the application of sections 38 and 38A of the 1987 Act (‘section 38 and 38A’), and
(d)the application of section 40 of the 1987 Act (‘section 40’).
SUBMISSIONS AND FINDINGS
Wages
The Appellant Employer submits that probable earnings but for injury (section 40(2)(a)) were agreed between the parties to be $760 per week. Reference is made to ‘the transcript’ at page 15.5. The transcript referred to was prepared by the Appellant Employer’s solicitor. The Commission’s transcript of the proceedings was forwarded to the parties on 29 January 2007. Unless otherwise stated, all references in this decision to the transcript are references to the Commission’s transcript. It records that the parties agreed the “current pre-injury earning rate is $778.24” (T2.30). At page 17 line 54 the following submission was made by counsel for the Appellant Employer:
“He’s probably got a capacity to $550 to $600 as against the $700 – and – something that we’ve agreed, the $760 – odd.”
There is no difference in substance between the Commission’s transcript and the Appellant Employer’s transcript. The relevant entry at page 15.5 of the Appellant Employer’s transcript reads:
“…he’s probably got a capacity to find $550 - $600 as against the $700 and something we’ve agreed. The $760 odd.”
There is no other reference in the transcript to the agreed figure for probable earnings. The evidence falls well short of sustaining the submission now made that it was agreed that the correct figure for probable earnings was $760.00 per week. In the absence of clear evidence that the agreement noted at page two line thirty of the transcript was later varied by consent, the Arbitrator was not in error in accepting and acting on the figure of $778.24.
Finding of Total Incapacity
The Arbitrator found that Mr Linnett was totally unfit from 24 February to 30 August 2005 (Statement of Reasons for Decision (‘Reasons’), paragraph 50 bullet point three), though his reference to section 38 in the same paragraph (and in the award) was an error.
The challenge to this finding is that it is inconsistent with the Arbitrator’s finding at paragraph 44 that Mr Linnett had a “partial incapacity being deemed total for the first 26 weeks to 25 August 2005”.
Mr Linnett submits that the Arbitrator dealt with the nature of the incapacity in August 2005 at paragraph 42 of his Reasons where he stated that there was a “tension in the intervening period from 30 July 2005 to 31 August 2005 during which time Dr Wallace [sic] has not seen fit to clarify the change in his view over the Applicant’s capacity for pre-injury duties despite requests to do so by the Insurer”. The reference to Dr Wallace is incorrect and should be Dr Wright.
At paragraph 43 of his Reasons the Arbitrator stated that in the light of other medical evidence that any return to work should be gradual and supported by rehabilitation, he was prepared to give “the benefit of doubt to the Applicant”. Noting a “degree of ambivalence in Dr Wallace’s [sic, Dr Wright] view” the Arbitrator decided to place less weight on his certificates.
The evidence dealing with incapacity in this period is found in Dr Wright’s medical certificate dated 15 July 2005 stating that Mr Linnett would be fit for work on 30 July 2005. His next certificate, dated 31 August 2005, declared Mr Linnett to be fit for full time suitable duties from 31 August to 31 December 2005 with restrictions on lifting (up to 10kg), walking (up to 50 metres) and standing (up to 15 minutes).
At paragraph five of his statement dated 14 August 2006 Mr Linnett said that at the time he received Dr Wright’s certificate of 15 July 2005 he believed he was fit for some work but he did not believe he was fully fit for work. This evidence alone was sufficient to prevent a finding of total incapacity up to 30 August 2005.
Dr Porges, consultant surgeon, qualified by CGU Workers Compensation (NSW) Limited (‘CGU’) examined Mr Linnett on 15 June 2005. Dr Porges diagnosed Mr Linnett to have sustained a soft tissue ligamentous contusion of the cervical spine and an aggravation of pre-existing mild osteoarthritis in the right knee as a result of the incident at work on 24 February 2005. He felt that Mr Linnett would be able to return to shearing but would be wise to do so in a graduated fashion, initially half time for the first two weeks (report, 15 June 2005 page four).
The evidence did not support a finding of total incapacity up to 30 August 2005. However, given the reference to the award being under section 38 for the periods up to 30 September 2005 it is far from clear that the Arbitrator intended to find total incapacity for the period up to 30 August 2005.
Sections 38 and 38A
Compensation is not payable under section 38 unless the worker is “seeking suitable employment”, as determined in accordance with section 38A. The Appellant Employer’s submission is that in finding in favour of Mr Linnett under section 38 the Arbitrator failed to take into account the provisions of section 38A.
Section 38A provides:
“38A Determination of whether worker seeking suitable employment
(1) Application. This section provides for the determination of whether a worker is seeking suitable employment for the purposes of section 38 and section 52A (Discontinuation of weekly payments after 2 years).
(2) General requirements. The worker is not to be regarded as seeking suitable employment unless:
(a) the worker is ready, willing and able to accept an offer of suitable employment from the employer, and
(b) the worker has supplied the employer (or the insurer who is liable to indemnify the employer) with a medical certificate with respect to the worker’s partial incapacity for work, being a medical certificate that is in or to the effect of a form approved by the Authority, or that is in any other form and contains information that is reasonably sufficient in the circumstances to assist in determining what is suitable employment for the worker, and
(c) the worker has requested the employer (or such an insurer) to provide suitable employment or it is apparent from the circumstances that the worker is ready, willing and able to accept an offer of suitable employment from the employer, and
(d) the worker is taking reasonable steps to obtain suitable employment from some other person.
Taking reasonable steps to obtain suitable employment includes seeking or receiving rehabilitation training that is reasonably necessary to improve the worker’s employment prospects.
(3) Notice of requirement relating to obtaining suitable employment from other person. The requirement under subsection (2) (d) does not apply unless the worker has been notified of the requirement in accordance with this subsection.
Such a notice:(a) must be given in writing by the insurer or self-insurer concerned, and
(b) must state that the worker is required to take reasonable steps to obtain suitable employment from some other person in order to remain entitled to compensation under section 38, and
(c) may set out particular reasonable steps that can be taken by the worker in order to satisfy that general requirement, and
(d) is subject to, and must comply with, any regulations and (subject to the regulations) any claims procedures notified by the Authority to insurers and self-insurers, and
(e) does not constitute an admission of liability by an employer or insurer under this Act or independently of this Act.
The requirement under subsection (2) (d) does not apply, and a notice is not to be given under this subsection, while action is being taken by or on behalf of the employer to arrange or explore the possibility of suitable employment with the employer.
(4) Notice not applicable when proceedings pending etc. If proceedings relating to the payment of compensation under section 38 or to the discontinuation of weekly payments under section 52A are before the Commission or the insurer or self-insurer has denied liability to pay any such compensation:(a) a notice is not to be given under subsection (3), and the requirement under subsection (2) (d) applies without any such notice being given, and
(b) particular steps to satisfy that requirement that are set out in a notice previously given do not restrict the determination of the matter by the Commission.
(5) Workers treated as not seeking suitable employment. A worker is not to be regarded as seeking suitable employment if the worker has unreasonably refused an offer from any person of suitable employment or necessary rehabilitation training. A worker is also not to be regarded as seeking suitable employment if the worker:
(a) unreasonably refuses to have an assessment made of the worker’s employment prospects, or
(b) unreasonably refuses to co-operate in procedures connected with the provision or arrangement of suitable employment or rehabilitation training under the employer’s return-to-work program.
(6) Court orders. An order of the Commission relating to the weekly payment of compensation:
(a) may be subject to conditions relating to the worker taking reasonable steps to obtain suitable employment during any weekly payments under section 38, and
(b) may include directions relating to the adjustment of the amount of weekly payments under section 38 for any future period of payments under section 40 when the worker obtains employment or when the period for payments under section 38 comes to an end.
(7) Definitions. In this section:
employer of a worker who is partially incapacitated for work means the employer liable to pay compensation to the worker in respect of the incapacity or, if there are 2 or more such employers, the employer so liable who last employed the worker.
refusal of an offer or to do a thing includes a failure to accept the offer or to do the thing.
rehabilitation training means training of a vocationally useful kind, and includes vocational re-education, work-trials, occupational rehabilitation services or treatment provided by way of rehabilitation.
suitable employment means suitable employment within the meaning of section 43A.”
The Arbitrator correctly noted that there was no evidence that CGU issued a notice to Mr Linnett under section 38A(3). However, the requirement that such a notice be served does not apply if “the insurer…has denied liability to pay such compensation”. In the present matter Mr Linnett’s solicitor wrote to CGU on 13 September 2005 in the following terms:
“We advise that we have received instructions to act for Mr Kym Linnett in relation to injuries sustained during the course of his employment.
We note that our client has been advised by his employer, that despite receiving a certificate to the effect that he is fit for suitable duties, no such suitable duties are available. As you are aware our client was employed as a shearer and his medical certificate certifies him unfit to perform crutch or sheering [sic] work.
In that regard we enclose for you our client’s medical certificate dated 31 August 2005 which has certified him fit for suitable duties from 31 August 2005 to 31 December 2005.
On that basis we are instructed to make a claim pursuant to Section 38 of the Workers Compensation Act.
We would be pleased if you could confirm as a matter of urgency that payments will be made noting that our client has been without income, on our instructions since 30 July 2005.
We would be pleased to hear from you as a matter of urgency.”
In response CGU wrote to Mr Linnett’s solicitor on 14 September 2005 as follows:
“We are in receipt of your fax dated 13/9/05 and wish to advise that we will not be commencing wage payments to Mr Linnett as Mr Linnett was given a Medical Certificate stating he is fit for pre-injury duties from the 30/7/05.
As Mr Linnett has not worked since 24/2/05 it is hard to see how he can regress since the medical certificate was issued. It is not part of the Injury Management Process to continue a claim of [sic] the bases that the worker is unable to gain employment.
If you have any questions please call me on 02 6767 2369.”
The legislation does not require the denial in section 38(4) to be in any particular form. In my view the letter from CGU was a clear ‘denial of liability to pay’ section 38 compensation. Therefore, the notice in section 38(3) did not have to be given and the requirement under section 38(2)(d) did apply. To the extent that the Arbitrator relied on the absence of a section 38(3) notice to excuse Mr Linnett’s failure to ‘take reasonable steps to obtain suitable employment’, he was in error.
More importantly, the Arbitrator failed to consider and determine if Mr Linnett had requested suitable duties directly from his employer or through CGU. There is no evidence that he did either. In his statement dated 14 August 2006 Mr Linnett said at paragraph five:
“Following the injury I received weekly payments of compensation up until 30 July 2005. Despite receiving a certificate that I was fit to work at that time my employer indicated that he would not allow me to return to work unless I was ‘at full steam’. At that time whilst I believe I was fit for some work I did not believe that I was fully fit for work.”
There is no evidence of when or where Mr Linnett sought suitable employment or to whom, on behalf of the employer, he spoke. In a letter dated 25 September 2006, Mr Heckendorf, the Appellant Employer’s manager, states, “the term ‘at full steam’ never took place”.
The letter by Mr Linnett’s solicitor to CGU on 13 September 2005 does not seek suitable employment, but makes a claim for compensation under section 38. Therefore, there is no evidence that Mr Linnett sought suitable employment from the Appellant Employer as required by section 38A(2) in order to be entitled to compensation under section 38.
The evidence establishes that Mr Linnett had sought work from Mr Day, the shearing contractor for whom he regularly worked. However, Mr Day was not Mr Linnett’s employer for the purposes of section 38A(7) and that application for work, whether it was light duties or not, is irrelevant to Mr Linnett’s entitlement to compensation under section 38 against Heckendorf.
At paragraph 40 of his Reasons the Arbitrator stated that Mr Linnett’s “former employer was not prepared to have him back on his team because he ‘feared another injury could ruin his reputation in the district’”. These comments were allegedly made by Mr Day and are of no relevance in establishing if Mr Linnett sought suitable employment from Heckendorf.
At the arbitration hearing Mr Linnett’s counsel did not argue that his client was entitled to an award under section 38. His submission was that Mr Linnett was partially unfit but entitled to a full award (T8.22). The reference at page 18 line 21 of the transcript to the employer having an obligation to provide suitable employment fell well short of a submission in support of a claim under section 38. Similarly, counsel for the Appellant Employer did not address on section 38. On appeal, the Respondent Worker has made no submissions in support of this part of the award.
At paragraph 44 the Arbitrator found:
“In light of all the available evidence, I am satisfied on the balance of probabilities that the Applicant continued to be incapacitated for work as a result of his injuries and that he was not suitably employed during any period of that partial incapacity for work. Entitlements under section 38 therefore are available to the Applicant for weekly benefits,…”
However, the Arbitrator did not make any finding as to whether Mr Linnett sought suitable employment from either his employer or CGU and has erred in law in making an award under section 38. In these circumstances the award in favour of Mr Linnett under section 38 must be revoked.
Section 40
The Appellant Employer argues that the Arbitrator failed to apply the five steps set out in Mitchell v Central West Area Health Service (1997) 14 NSWCCR 527 (‘Mitchell’) in determining Mr Linnett’s entitlement under section 40 of the 1987 Act. It is alleged that the Arbitrator failed to make a determination of Mr Linnett’s ability to earn (section 40(2)(b)) and failed to have regard to sections 40(3) and 43A.
At paragraph 50 of his Reasons (bullet point six) the Arbitrator found Mr Linnett’s ability to earn after his injury to be nil. This finding is inconsistent with the finding that from 31 August 2005 Mr Linnett was only partially incapacitated (Reasons, paragraph 50 bullet point three) and with the Arbitrator’s acceptance of the opinion of Dr Wallace. These inconsistent findings cannot stand. If Mr Linnett’s ability to earn is nil, then he is entitled to an award for total incapacity under section 36 or 37, as appropriate.
The Appellant Employer also argues that the Arbitrator was in error in that the only labour market available to Mr Linnett was that in Trangie, where he lived. It is submitted that the larger town of Narromine (35 kilometres from Trangie) should have been considered along with Dubbo (75 kilometres from Trangie). Whether it was reasonable for Mr Linnett to be able to travel as far as Dubbo to seek employment was not adequately explored in the evidence. In view of the conclusions I have reached on the other grounds of appeal it is not necessary for me to make a finding on this issue or on whether the Arbitrator erred in failing to exercise his discretion under section 40. However, I should note that the fact that Mr Linnett lives in a caravan does not mean that he is required to relocate that caravan to Dubbo. He is entitled to live where he chooses.
In respect of the exercise the discretion under section 40 I note that the Appellant Employer has failed to refer to any of the leading authorities on this issue, such as Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50 or Australian Iron & Steel Pty Ltd v Elliott (1967) 67 SR (NSW) 87. Most of the 11 points raised at pages six and seven of the Appellant Employer’s submissions are completely irrelevant to the exercise of the discretion under section 40 but may well be relevant to the calculation of Mr Linnett’s ability to earn under section 40(2)(b). For example, Mr Linnett’s failure to look for work and his alleged nominal efforts at the fitness program are not matters relevant to the discretion (see Mitchell). As the matter must be re-determined, it is not appropriate that I make any further comment or finding on these issues.
OTHER MATTERS
On page one of the Appellant Employer’s submissions there appears the heading “Errors in the Arbitrator’s Determination”. The submissions then state “the Appellant herein as a preliminary to the grounds of Appeal sets out errors to be found in the Arbitrator’s written Reasons”. The submissions then list 11 alleged errors in the Arbitrator’s decision. None of these errors is alleged to support, as I understand it, a ground of appeal and it is unclear what purpose is served by listing them. Apart from the allegation that comparable earnings were agreed at $760.00 and not $778.24, none of the other points raised is relevant to any of the substantive grounds of appeal. Presenting an appeal in this way is unhelpful and does not aid in the efficient conduct of the review.
CONCLUSION
In view of the errors identified above the Arbitrator’s award for weekly compensation must be revoked. I note that the Arbitrator’s other findings and determinations have not been challenged on appeal and remain undisturbed. I am not in a position to re-determine the matter because I anticipate the parties will wish to make further submissions in light of the reasons given in this decision. The matter will therefore be remitted to a different Arbitrator for that purpose.
DECISION
Paragraph one of the Arbitrator’s determination dated 11 December 2006 is revoked and the following order made:
“The matter is remitted to a different Arbitrator for re-determination of the Applicant, Kym Linnett’s, entitlement under the Workers Compensation Act 1987”.
Paragraphs two and three of the Arbitrator’s determination are confirmed.
COSTS
The Respondent Worker seeks a “certification of its [sic] costs (even if unsuccessful) on the basis that the Application for Appeal against an Arbitrator’s decision to a Presidential Member was instigated by Application on behalf of the Insurer see Table 4, Item 1, Column 3 [of the Workers Compensation Regulation 2003 (‘the Regulation’)]”. This entry provides that in an appeal filed on behalf of an insurer the “upper limit of $2,200” applies in respect of costs for the “claimant”. If the appeal is resolved by decision of a Presidential member the costs recovered are “to be as ordered or certified by the Presidential member” (emphasis added) (see Table 4 of Schedule 6 of the Regulation).
I assume that the Respondent Worker seeks an order or certification of costs in his favour even though he has been unsuccessful. Other than the bald request for that certification, no submissions have been made in support of the application.
The terms of the Regulation and section 341 of the 1998 Act make it clear that the Commission has a wide discretion to determine “by whom, to whom and to what extent costs are to be paid” (section 341(2)). The circumstances in which an unsuccessful party may be entitled to recover his or her cost of an arbitral appeal were discussed in Mayne Group Limited v Mikhail [2007] NSWWCCPD 249R. None of the circumstances discussed in that case are applicable in the present matter. I decline to order the successful Appellant Employer to pay the unsuccessful Respondent Worker’s costs of the appeal or to provide any certification to that effect.
The appropriate costs order is: “no order as to costs of the appeal” and that is the order I make.
Bill Roche
Deputy President
7 May 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.
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