Jenkins v Franklins Limited
[2006] NSWWCCPD 252
•29 September 2006
WORKERS COMPENSATION COMMISSION
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Jenkins v Franklins Limited [2006] NSWWCCPD 252
APPELLANT Lorraine Stella Jenkins
RESPONDENT: Franklins Limited
INSURER:Allianz Australia Workers Compensation (NSW) Limited
FILE NUMBER: WCC18010-04
DATE OF ARBITRATOR’S DECISION: 10 March 2005
DATE OF APPEAL DECISION: 29 September 2006
SUBJECT MATTER OF DECISION: Partial incapacity; Exercise of discretion under section 40(1) of the Workers Compensation Act 1987.
PRESIDENTIAL MEMBER: Acting Deputy President Bill Roche
HEARING:On the Papers
REPRESENTATION: Appellant: Thomson Bentley & Partners
Respondent: Sparke Helmore
ORDERS MADE ON APPEAL: Paragraph one of the Arbitrator’s decision of 10 March 2005 is revoked and the following order made:
“That the Respondent pay the Applicant the sum of $271.70 per week from 10 November 2004 to date and continuing under section 40 of the Workers Compensation Act 1987. Such payments to continue in accordance with the provisions of the Act.”
Paragraph two of the Arbitrator’s decision dated 10 March 2005 is confirmed.
The Respondent Employer is to pay the Appellant Worker’s costs of the appeal.
BACKGROUND
On 8 April 2005 Mrs Lorraine Stella Jenkins (‘Mrs Jenkins’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision dated 10 March 2005. The Respondent to the appeal is Franklins Limited (‘Franklins’). Mrs Jenkins submits on appeal that the Arbitrator erred in the exercise of his discretion in reducing the award of weekly compensation payable to Mrs Jenkins pursuant to section 40 of the Workers Compensation Act 1987.
Mrs Jenkins is a 59 year old shop assistant who worked for Franklins for approximately 21years. During her employment she sustained injury to her right arm whilst ticketing on 2 September 1996 and injury to her left elbow and right wrist whilst ticketing and packing on 23 January 1998, resulting in bilateral epicondylitis. Mrs Jenkins was unable to return to her pre injury ticketing duties and was transferred to full time packing duties. After the injury in 1998, and in accordance with restrictions specified in a WorkCover certificate, she continued to work full time in lighter duties. She was moved to the dock and also worked in the store packing smaller items weighing less than 10 kilograms. She continued in this full time position until 29 May 2002 when the store’s new owners terminated her employment on the basis that they could no longer provide suitable duties. She was paid voluntary weekly compensation at the maximum rate until 10 November 2004 when payments ceased on the basis of a section 40 assessment prepared by Inergise Australia Pty Ltd (‘Inergise’) on behalf of Franklins which suggested that she was capable of earning at least $535.48 per week and therefore had no entitlement to compensation. On 15 November 2004 Mrs Jenkins obtained part time work with another company as a merchandiser, working about 20 hours per week and earning substantially less than she had been earning at Franklins.
On 4 November 2004 Mrs Jenkins’ lodged an Application to Resolve a Dispute (‘the Application’) with the Commission seeking weekly compensation for partial incapacity from 10 November 2004 to date and continuing at a rate of $330.00 per week.
Annexed to the Application was a section 66A Agreement dated 9 March 2004 detailing the settlement in favour of Mrs Jenkins for lump sum compensation pursuant to sections 66 of the 1987 Act in respect of 5% permanent loss of efficient use of the right arm at or above the elbow, 5% permanent loss of efficient use of the right leg at or above the knee, 4% permanent loss of efficient use of “the right leg at or below (sic) the knee” and $5,450.00 pursuant to section 67 for pain and suffering. Presumably this settlement also compensated her for an injury to her right ankle when she twisted it stepping off a ladder in 1997 and injury to her left knee stepping off a ladder on 6 March 2002. Neither of these injuries are part of the current dispute.
When the parties were unable to settle the claim for weekly compensation payments, the matter proceeded to an Arbitration hearing on 3 March 2005. At that hearing both parties were represented, Mrs Jenkins gave oral evidence and was cross examined. The Arbitrator issued a Certificate of Determination and written ‘Statement of Reasons for Decision’ (‘Reasons’) dated 10 March 2005 in which he found in favour of Mrs Jenkins under section 40 of the 1987 Act, but at a rate that was substantially lower than the difference between her current earnings in suitable employment and her pre injury earnings with Franklins.
DECISION UNDER REVIEW
The Certificate of Determination records the orders as follows:
“1.That the Respondent pay the Applicant weekly compensation at the rate of $125.00 from the 10th November 2004 to date and continuing under Section 40 of the Workers Compensation Act [1987]. Such payments to continue in accordance with the provisions of the Act.
2.The Respondent to pay the Applicant’s costs as agreed or assessed.”
ON THE PAPERS REVIEW
Mrs Jenkins’ solicitors made a submission seeking to reserve their position on whether the appeal could proceed to be determined ‘on the papers’, until after receipt of Franklins’ Notice of Opposition. Correspondence from the solicitors for Franklins confirms that both the Notice of Opposition and the Respondent’s submissions were served on Mrs Jenkins’s solicitors on or about 18 April and 26 April 2005 respectively. No further submissions have been filed on Mrs Jenkins’ behalf.
In accordance with section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’), and having regard to Practice Directions Numbers 1 and 6, and the documents that are before me, including the transcript of the arbitral hearing on 3 March 2005, the evidence and submissions that were before the Arbitrator and the submissions by the parties filed in the appeal, 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 by facsimile transmission on the 6 April 2005, which was within 28 days of the Arbitrator’s decision and in compliance with section 352(4) of the 1998 Act.
The threshold requirements of section 352(2) of the 1998 Act have also been met, with the amount of compensation at issue being both in excess of $5,000.00 and greater than 20% of the amount awarded.
Leave to appeal is granted.
ISSUES IN DISPUTE
The issues in dispute in the appeal are:
(a) did the Arbitrator err in law in the application of the five steps as set out by the Court of Appeal in Mitchell v Central West Health Services (1997) 14 NSWCCR 526 (‘Mitchell ’) in his calculation of the award pursuant to section 40 of the 1987 Act, and in particular did the Arbitrator fail to properly exercise his discretion pursuant to section 40(1) of the 1987 Act (‘section 40 calculation and discretion’), and
(b) was Mrs Jenkins denied procedural fairness as a result of the Arbitrator falling into error in not inviting and hearing submissions on the exercise of his discretion under section 40(1) of the 1987 Act? (‘procedural fairness issue’);
Section 40 Calculation and Discretion
The Evidence
Mrs Jenkins was born on 16 November 1946. She left school at the age of 15 having completed only two years of high school and without obtaining her Intermediate Certificate. Her first job was as a process worker/factory hand at an umbrella factory where she remained for eight years. She then worked for two or three years at Watson’s Bakery serving customers and cleaning.
In 1972 she started work as a driver and delivery person with TMD Auto Spares Pty Ltd (‘TDM’) at Bankstown where she remained for two years. Her son Jamie was born on 20 April 1974 and she remained out of the workforce until 1977 when she started work with Franklins at Banskstown Square where she worked full time as a packer in the chilling section. She resigned after one year to return to work with TDM where she worked part time.
In 1981 Mrs Jenkins returned to work with Franklins as a casual and was made permanent in 1983. Her duties included packing, ordering, ticketing and back dock duties. Mrs Jenkins sustained a number of injuries whilst working with Franklins. Her main injuries were to her right and left elbows sustained in 1996 and 1998. As a result of her injuries she was given lighter duties which she continued to perform until her employment was terminated in 2002.
She remained with Franklins until November 2001 when IGA Supermarkets (‘IGA’) “assumed control of the company” (Mrs Jenkins’ statement 21 February 2005, paragraph 15). IGA terminated her employment on 29 May 2002. The circumstances leading up to the cessation of her employment are not controversial but are important and are set out in her statement and in a medical report from Dr McGroder, a doctor qualified by Allianz Australia Workers Compensation (NSW) Limited (‘Allianz’). In his report of 23 July 2002, Dr McGroder stated:
“Mrs Jenkins continued working until she was terminated on the 29.5.02. The basis of this was that my report had suggested that she would never return to full pre injury duties at IGA South Terrace. It appears that management had deemed that selected duties were not available on an ongoing basis.”
Dr McGroder’s reference to “my report” is a reference to his first examination and report on Mrs Jenkins dated 27 March 2002. That report has not been served.
Mrs Jenkins’ unchallenged evidence about the circumstances of the cessation of her employment are set out at paragraph 17 of her statement of 21 February 2005 which reads:
“On 29 May 2002 I was sent home by the then manager whose first name was David who said: ‘The Company cannot give you duties in accordance with your medical certificate. There is no more work for you’.”
After the termination of her employment Mrs Jenkins underwent vocational and functional assessments. It was determined that “the most suitable work Mrs Jenkins could be doing was what she had been doing previously at IGA” (Dr McGroder 23 July 2002, page two). In his conclusion Dr McGroder stated that Mrs Jenkins was not fit for:
· ticketing work which required repetitive forceful use of the forearms;
· cashier work where some loads would have to be scanned, packed and bags of cash would need to be handled;
· work requiring lifting over 10 kg;
· work that involves forceful twisting of the forearms, or
· anything that requires static load on the forearms.
Mrs Jenkins obtained work for a few days at Big W at Chullora in January 2003 but ceased because she did not believe she could sustain the demands of that job.
In November 2004 she started work with Brands on Show Pty Ltd as a part time merchandiser. As at 3 March 2005 she was working about 20 paid hours per week and also did extra unpaid work for the job of about six hours per week (transcript, page 11 line one). This job is far from idea for Mrs Jenkins as she has trouble lifting boxes which can sometimes be rather heavy (transcript, page six lines 54 to 58 and page seven line 34). In addition, assembling displays also makes her arms sore (transcript, page seven line seven).
In cross examination she agreed that she had looked for full time work at a nursing home but had been unsuccessful in her application (transcript, page eight line 52). She agreed that if her current employer offered her more work she would be prepared to try it (transcript, page seven line 17), but “not much more than 20” hours because “walking around and holding the notes folder and having to carry some of the things I have trouble with”. The evidence establishes that Mrs Jenkins does all the work her employer has available for her. It was not put to her that she was avoiding work or deliberately working under her capacity.
Franklins relies on a section 40 assessment report prepared by Inergise on 26 August 2004. That report was prepared by Sue Smith, occupational therapist, and Angela Vrankic, consultant psychologist. At page five it was noted that Mrs Jenkins was not fit for her pre injury duties. After considering her work history and skills a number of employment options were identified. They included retail sales, food sales assistant, console operator and metre reader. The report also noted that Mrs Jenkins’ physical restrictions prevent her from working in areas that involve handling goods above 7.5 kg’s bilaterally and 6.25 kg’s unilaterally at waist level on an occasional basis. She is unable to tolerate tasks that require repetitive fine hand movements, static hand gripping and forceful gross hand gripping. This limits the number of suitable options as Mrs Jenkins cannot tolerate work tasks that involve prolonged and or repetitive use of a cash register or computer. Further, it was felt that Mrs Jenkins’ age was a significant barrier to employment.
Given the contents of the report from Inergise, it is to Mrs Jenkins’ credit that she has obtained employment.
It was agreed her earnings but for injury were $511.70 per week and that her actual earnings were $240.00 per week.
Submissions and Findings:
Mrs Jenkins’ solicitors submit that whilst the Arbitrator was correct in finding that she was partially incapacitated for work, and that her probable weekly earnings but for the injury were $511.70 and that her current earnings average $240.00 per week, he erred in not awarding her the full difference between those two amounts, that is, the sum of $271.70 per week.
It is argued that the Arbitrator’s Reasons record that both parties agreed and submitted that “there was no basis upon which the discretion would be enlivened.” It is further submitted that if the reasoning of the Arbitrator is correct, every injured worker who was ever supplied with selected duties for whatever period of time would be liable to have the section 40(1) discretion exercised against him/her.
It is submit that the Arbitrator erred in the application of the five steps to calculate the section 40 award, as outlined by the Court of Appeal in Mitchell, by erroneously considering Mrs Jenkins’ ability to earn in both step two and step four.
On behalf of Franklins it is submitted that in the exercise of his discretion the Arbitrator should have taken into consideration that Mrs Jenkins applied for full time jobs, presumably on the basis she considered herself fit to perform full time work and that there was no medical evidence to suggest Mrs Jenkins could not work full time in suitable duties. Therefore, the Arbitrator should have applied his discretion and reduced her entitlement to nil. It is argued that the facts of the present case are similar to those in Snow Confectionary Pty Ltd v Askin [2004] NSWWCCPD 56 (‘Askin’).
Franklins also submits that the store where Mrs Jenkins worked was purchased by IGA Supermarkets (‘IGA’) on 11 November 2001 and that her employment was terminated by the new owners in May 2002. Therefore, so it is argued, her pre injury employer and the job on which her comparable earnings were based, no longer exist. That is a misguided and misleading submission. First, there is no evidence that Mrs Jenkins’ pre injury job was not available with IGA, only that suitable duties were no longer available to her beyond May 2002. Second, the evidence established that Mrs Jenkins continued to work for IGA in a restricted capacity until her employment was terminated. There is no evidence that any of Franklins’ shop assistants were dismissed in or about November 2001. There is no evidence that Mrs Jenkins’ employment with IGA would have been terminated if she had been fully fit. Therefore, the point that Franklins ‘ceased to exist’ is irrelevant.
The Arbitrator considered the parties’ submissions and set out the five steps required to be undertaken on the authority of Mitchell (Reasons, paragraph 30). Those steps are set out at 529 of Mitchell and are:
“...the Court is required:
1. To determine the weekly amount the worker would probably have been earning if uninjured (section 40(2)(a))...
2. To determine ‘the average weekly amount that the worker is earning or would be able to earn in some suitable employment from time to time after the injury’ (section 40(2)(b)). Section 40(3) provides that the determination of this amount is subject to the following:‘(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker;
(b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A.’...
3. To subtract the figure derived from 2. from the figure derived from 1. (section 40(2)).
4. To decide whether and to what extent the reduction calculated as above bears ‘such relation to the amount of that reduction as may appear proper in the circumstances of the case (section 40(1))...
5. To make an award in the amount arrived at in Step 4.”
He then carefully analysed the evidence relevant to step two. This analysis included a detailed consideration of the evidence from both sides touching on Mrs Jenkins’ ability to work given her injuries and undoubted incapacity. The Arbitrator concluded this analysis at paragraphs [48] and [49] where he said:
“In balancing the evidence presented I give greater weight to the Applicant because of the efforts she has made over the last seven years to return to work. She did work for a significant period with the Respondent on full time hours until terminated. She has since sought appropriate work including applying for a number of part-time and one fulltime position. She has worked for the last thirteen weeks in a not very well paid job with working conditions that are hardly ideal for anyone let alone someone with problems lifting more than 10kg’s. This work includes significant unpaid work which the applicant appears to be doing diligently. She spoke of the work she currently had to do at home which gave me the impression that she was feeling guilty that she had not completed all that she had to do. No evidence has been presented either medical or otherwise that would cast any doubt on the Applicants diligence and conscientious approach to her work. This diligence would, in my view, have carried over to her search for suitable employment. I therefore accept the evidence of the Applicants actual experience in seeking work over that of the Respondents Section 40 Assessment report.
For these reasons I find that the amount that the applicant is earning is the appropriate amount pursuant to Section 40 2 (b). This amount is $240.00 per week.”
The above analysis was correct. Arbitrator then correctly applied step three to arrive at the figure of $271.70 per week.
The Arbitrator then incorrectly states that “both parties made submissions that there were no grounds for me exercising my discretion”. In fact it was submitted on behalf of Franklins that there was “no cap on” the kinds of situations where the section 40 discretion may be used (transcript, page 17 line 15). Counsel for Mrs Jenkins submitted that there were no reasons for exercising the discretion against his client in the circumstances of the present case (transcript, page 14 line one to line 35).
In the exercise of his discretion the Arbitrator found at paragraph [52] of his Reasons that:
“…notwithstanding that the Applicant has had difficulty in obtaining work, she can do most of her pre injury duties. She admits that she could do more hours or at least would certainly try if they were available. The Applicants counsel admits in oral submissions that the Applicant is not suggesting that she cannot do more hours than she is currently working. More importantly she managed full-time hours with the Respondent for a significant period prior to the termination of her employment with them and would still be able to work that amount of time per week had her employment continued.”
The Arbitrator then referred to and purported to apply Bruce v Grocon Ltd (1995) 11 NSWCCR 247 (‘Bruce’). The Arbitrator quoted the following passage from Bruce:
“The job to which the probable earnings attach no longer exists and, if it did, the applicant would probably still be doing it, and, secondly, the applicant retains to a large extent the ability to do most of that job” [at page 255].
He then found that Mrs Jenkins would “fit within this description notwithstanding her disabilities were significantly less than those of Mr Bruce” (Reasons, paragraph 53). He then reduced the difference arrived at in step three ($271.70) “to reflect the ability of the Applicant to earn at least $386.70 of her former wage of $511.70”. The Arbitrator then made an award for the difference, namely, $125 per week.
There are significant differences between the facts in Bruce and those in the present case. First, after his injury Mr Bruce was certified fit to return to his pre injury duties and he did so (Bruce at 251E). Second, he continued those duties until he, along with other workers, was retrenched. At the time of his retrenchment he was having difficulty with certain tasks at work, but not to any great extent, because his left leg was not as strong as before (Bruce at 254B). Third, Mr Bruce’s retrenchment was for reasons unrelated to his injury. Mrs Jenkins was never certified fit for her pre injury duties but was given appropriate WorkCover certificates restricting her duties. Those restrictions were accepted as being appropriate by Allianz’s own doctor, Dr McGroder. As I have noted above [31] there is no evidence that Mrs Jenkins’ pre injury job ceased to exist. The evidence suggests that IGA took over the Franklins store where she worked. I infer that, but for her injury and resulting disability, Mrs Jenkins would have continued to work for IGA on the same or a similar wage. Mrs Jenkins was dismissed because of Dr McGroder’s opinion that she would never return to her pre injury duties (see paragraph [17] above).
Therefore, none of the factual bases which influenced Judge Neilson to exercise his discretion in Bruce are present in Mrs Jenkins’ matter. The Arbitrator was in error in relying on Bruce in these circumstances.
Having considered Mrs Jenkins’ ability to earn in step two the Arbitrator was in error to find a different figure for her ability to earn in step four. The exercise of the section 40 discretion does not call for a reassessment of step two. What is required at the discretion stage is a consideration of all the facts so that the award bears “such relation to the amount of that reduction as may appear proper in the circumstances of the case” (section 40(1)).
The exercise of the discretion in section 11 of the Workers Compensation Act 1926 (which is in substantially the same terms as section 40 of the 1987 Act) was considered by the Court of Appeal in Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50 (‘Nicholson’) where McHugh JA (as he then was) said at 55A that:
“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”.
In Nicholson it was held that the fact that the worker was forced to retire due to his age could not defeat his claim, but was a factor to be “considered in determining whether it is proper to award the whole or a part of the difference between the hypothetical earnings under the first step and the actual or potential earnings of the worker under the second step” (Nicholson at 55D).
Other examples of where the discretion has been used to reduce the mathematical difference between step one and step two are:
· where the worker had been retired for two years before the injury which occurred during a short period of work which was a one-off job (Pratt v Claydon (1996) 14 NSWCCR 86;
· where the worker is imprisoned during a period of partial incapacity (Stranlund v Mid Coast Meat Co Pty Ltd (1999) 19 NSWCCR 91), and
· where the worker is pregnant (Wrigley Co Pty Ltd v Holland (2002) NSWCCR 463.
The exercise of the discretion does not permit the figure arrived at in step two to be recalculated as the Arbitrator has done in the present case. He found that Mrs Jenkins’ ability to earn under section 40(2)(b) was $240.00 per week. Having made that finding, it was not then open to find in step four that her ability to earn was $386.70.
On the evidence presented, I believe the figure of $240.00 was a correct assessment of Mrs Jenkins’ ability to earn under section 40(2)(b). On the authority of Aitken v Goodyear Tyre & Rubber Co (Australia) Ltd (1945) 46 SR (NSW) 20 (‘Aitken’) a worker’s actual earnings are prima facie evidence of his or her ability to earn unless it is established that those earnings are not a proper test. In Aitken it was held (at 22) that actual earnings may not be the proper measure if the worker is deliberately taking lower paid work than could reasonably be expected, is idling or malingering. None of those matters have been established against Mrs Jenkins.
Franklins submits that Askin is relevant in that the Deputy President in that case reduced the worker’s potential entitlement in the exercise of her discretion. However, the worker in that case was not employed. In addition, the worker submitted on appeal that in the exercise of discretion the Commission “might consider she retains the residual earning capacity of $100 to $150 a week” (Askin at [34]). The Deputy President accepted that submission and reduced the potential award by $150.00 per week. In my view that reduction should have been made in step two of the analysis, but in the light of the submission made on behalf of the worker it is not surprising it was done in step four. No such concession is made in the matter before me. Therefore, I do not believe that Askin provides Franklins with any assistance.
I do not accept the submission that the Arbitrator should have reduced Mrs Jenkins’ entitlement to nil. That submission is contrary to the evidence and contrary to authority. The fact that Mrs Jenkins has unsuccessfully applied for full time positions does not establish her ability to earn in the labour market reasonably accessible to her. The exercise the Commission is concerned with is an assessment of capacity for work, “having regard to the realities of the labour market in which [she] is to be engaged” (Lawarra Nominees Pty Ltd v Wilson (1996) 25 NSWCCR 206 per Justice Mahony at 213). It is not sufficient to merely look at the Mrs Jenkins’ theoretical work capacity. Regard must be had to the realities of the labour market. That is what the Arbitrator did in his step two assessment. There were no persuasive reasons advanced either on appeal or before the Arbitrator to justify a reduction in the sum of $271.70 per week. That figure is the ‘proper’ figure in all the circumstances of this matter.
Procedural Fairness Issue
In light of the findings I have made above it is not necessary to express a view on this ground of appeal.
CONCLUSION:
I therefore conclude that the Arbitrator was in error when he reduced Mrs Jenkins’ entitlement to compensation in the use of his discretion under step four. There were no grounds to reduce the difference arrived at in step two and that is the amount Mrs Jenkins is entitled to receive as her award under section 40.
DECISION
Paragraph one of the Arbitrator decision of 10 March 2005 is revoked and the following order made:
“That the Respondent pay the Applicant the sum of $271.70 per week from 10 November 2004 to date and continuing under section 40 of the Workers Compensation Act 1987. Such payments to continue in accordance with the provisions of the Act.”
Paragraph 2 of the Arbitrator’s decision dated 10 March 2005 is confirmed.
COSTS
Franklins is to pay Mrs Jenkins’ costs of the appeal.
Bill Roche
Acting Deputy President
29 September 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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