Lintipal Pty Ltd v Jeffery (No 2)

[2008] NSWWCCPD 79

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR FOLLOWING REMITTER FROM THE COURT OF APPEAL
STATUS: Remitter: This decision is a decision on remitter from the Court of Appeal decision in Jeffery v Lintipal Pty Ltd [2008] NSWCA 138.
CITATION:			Lintipal Pty Ltd v Jeffery (No 2) [2008] NSWWCCPD 79
APPELLANT:			Lintipal Pty Ltd
RESPONDENT:			Peter Lewis Jeffery
INSURER:			Allianz Australia Workers Compensation (NSW) Ltd
FILE NUMBER:			WCC14994-06
DATE OF ARBITRATOR’S DECISION:			11 January 2007
DATE OF FIRST APPEAL DECISION:		23 May 2007
DATE OF COURT OF APPEAL DECISION:		17 June 2008
DATE OF SECOND APPEAL DECISION:			30 July 2008
SUBJECT MATTER OF DECISION:			Remittal of matter from the Court of Appeal.
PRESIDENTIAL MEMBER:			Deputy President Bill Roche
HEARING:			On the papers
REPRESENTATION:			Appellant:	Goldbergs
Respondent:	Higgins & Higgins
ORDERS MADE ON APPEAL:			The Arbitrator’s determination dated 11 January 2007 is revoked and the following order made: “1.The matter is remitted to a different Arbitrator to be re-determined in accordance with the reasons given by the Court of Appeal in its decision dated 17 June 2008. 2.  Costs of the first arbitration are to follow the event of the second arbitration.”
The Appellant Employer is to pay the Respondent Worker’s costs of the appeal in Lintipal Pty Ltd v Jeffery [2007] NSWWCCPD 118. No order as to costs in Lintipal Pty Ltd v Jeffery (No 2) [2008] NSWWCCPD 79

BACKGROUND

1. On 8 February 2007 Lintipal Pty Ltd (‘the Appellant Employer/Lintipal’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 11 January 2007.  At the time of the events giving rise to this appeal, Lintipal was known as Tempo Cleaning Services Ltd (‘Tempo’).

1. The Respondent to the Appeal is Peter Lewis Jeffery (‘the Respondent Worker/Mr Jeffery’).

1. I determined the appeal in favour of Lintipal on 23 May 2007 (Lintipal Pty Ltd v Jeffery [2007] NSWWCCPD 118) (‘Jeffery No 1’).  The facts and background to the matter are set out in that decision and the following summary is taken from paragraphs [3] to [9] inclusive of that decision:

“3.Mr Jeffery was born on 3 March 1951 and is currently 56 years old [now 57].  He completed his schooling in year eight at Katoomba High School.  After leaving school he performed various jobs including packer, kitchen hand and barperson until in about 1981 he started work for the Government Cleaning Service as a cleaner at Katoomba High School where he worked for about five years.  He then worked for the next 20 years as a cleaner at Katoomba Public School (‘Katoomba Public’).  Over this period the identity of his employer has changed but his duties and location have remained the same.  His duties required him to cleaning classrooms, toilets, dusting, vacuuming, buffing and polishing, removing and emptying rubbish bins and cleaning the playgrounds.

4.He performed his work without any adverse notice or comment until 23 September 2005 when he received a warning letter from the Appellant Employer for not signing off and leaving work eight minutes early on 22 September 2005.  On 21 September 2005 an unnamed Grievance Officer and Federation Representative wrote to the school making several complaints about Mr Jeffery’s behaviour in the course of his duties at the school. 

5.As a result of the letter of 21 September 2005, and other complaints made to the Principal, Janet McCarthey, she arranged to meet with the following senior personnel from Tempo on 24 October 2005: Marianne Berrier, Area Manager; Barry Purssell, General Manager; Feryial Kassim, Operations Manager; Rhonda Wilson, Support Officer; and Victoria Carroll, Human Resources Manager.  At that meeting the content of several letters of complaint about Mr Jeffery were discussed and Ms McCarthey directed Tempo to remove Mr Jeffery from his position as a cleaner at the school.  She also requested that Mr Jeffery not be told that she was involved in the matter.  Tempo agreed to implement that direction, as it was obliged to do under the terms of its contract with the Department of Education (see Cleaning Contract No. 0500325 paragraph 4.2, page 17).

6.On 25 October 2005 a meeting was held at Tempo’s Blacktown office with Mr Jeffery and his union representative (Amelia Sereno), Mr Purssell, Ms Carroll and Ms Berrier.  According to Ms Carroll, Mr Jeffery was informed of the allegations against him (see statement of Ms Carroll 16 February 2006, paragraph seven).  Though he denied any wrongdoing, he was informed that he was to be transferred to Katoomba High School.  On 26 October Ms Berrier attended the school with Rhonda Wilson and handed a letter to Mr Jeffery instructing him that he was to be transferred to Katoomba High and that he was to commence at that school on 2 November 2005.  The position at Katoomba High ceased to be available and Ms Berrier informed Mr Jeffery verbally that he was to be transferred to Hazelbrook Public School (‘Hazelbrook’).  A letter dated 2 November 2005 was given to Mr Jeffery confirming the fact that there had been concerns raised at Katoomba Public and his transfer to Hazelbrook.

7.Mr Jeffery worked at Hazelbrook Public on 2 and 3 November 2005 but attended his doctor on 4 November 2005 and has not returned to work since.  He completed a claim form on 5 February 2006.  His claim was not accepted and he filed an Application to Resolve a Dispute (‘the Application’) on 19 September 2006 alleging that he sustained an injury in the nature of “stress, anxiety and depression – post traumatic stress disorder” as a result of the “nature and conditions of employment and ultimate transfer on 4 November 2005”.

8.By its Reply filed on 11 October 2006 the Appellant Employer identified nine matters as being in dispute including injury, incapacity, whether Mr Jeffery’s employment was a substantial contributing factor to his injury and whether section 11A of the Workers Compensation Act 1987 (‘the 1987 Act’) was applicable.

9.The matter was listed for conciliation and arbitration before a Commission Arbitrator on 15 December 2006 when it could not be resolved and proceeded to arbitration hearing.  In a reserved decision the Arbitrator found in favour of Mr Jeffery on all issues and made an award in his favour for weekly compensation and section 60 expenses under the 1987 Act.”

1. The Respondent Worker appealed to the Court of Appeal and, in a decision delivered on 17 June 2008 (Jeffery v Lintipal Pty Ltd [2008] NSWCA 138), the Court of Appeal allowed the appeal and set aside the decision in Jeffery No 1 and remitted the matter to the Commission, constituted by a Presidential member, for further consideration according to law.

1. In light of this decision, I issued a Direction to the parties on 26 June 2008 requesting “detailed written submissions as to the future conduct of the matter”.

1. The Respondent Worker filed submissions in response to that Direction on 9 July 2008.  He submits:

“1.The Deputy President should disregard the alleged contractual obligations of the Respondent to Third parties when considering ‘reasonableness’ under section 11A Workers Compensation Act 1987.

2.The Respondent acted unreasonably for the reasons as previously expressed to [sic, by] the Applicant.”

1. The Respondent Worker has not indicated why the contractual obligations between the Appellant Employer and the Department of Education should be disregarded. 

1. The Appellant Employer filed its submissions in response on 18 July 2008.  It submits that it is not practical, at this juncture, for the Deputy President to proceed immediately to re‑determine the matter, because:

(a)the Court of Appeal indicated that the decision of the Deputy President would have been assisted by a full copy of the contract between the employer and the Department of Education;

(b)the medical evidence in the case is now two years old and there is no current material that would enable the Deputy President to be certain that the worker is still incapacitated for employment as previously claimed;

(c)there is no evidence at the present time as to Mr Jeffery’s earnings.

1. The Appellant Employer submitted that the appropriate way to deal with the matter is for leave to be granted for each party to update his or its medical evidence and update and file any additional documentation to enable all relevant evidence to be available to assist the Deputy President in coming to a determination.  It is further submitted that the matter should be listed for an oral hearing.

1. I have found these submissions unhelpful.

ON THE PAPERS

1. Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) provides:

“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”

1. Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, I am satisfied that I have sufficient information to proceed with the remittal ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances. 

Jeffery No 1

1. In the first appeal, I found that:

(a)the evidence supported a finding the Mr Jeffery sustained an injury in the course of or arising out of his employment with Tempo and that his employment was a substantial contributing factor to that injury (Jeffery No 1 at [23]);

(b)his injury was a psychological condition in the nature of depression with severe anxiety or an adjustment disorder with depressed mood (Jeffery No 1 at [23]);

(c)Mr Jeffery’s injury resulted wholly or predominantly from the action taken by Tempo with respect to his transfer and the manner in which it was communicated to him (Jeffery No 1 at [40]);

(d)the Court of Appeal considered the test of “reasonable action” in section 11A in Commissioner of Police v Minahan [2003] NSWCA 239 where Foster AJA (with Sheller JA agreeing) cited with approval the following passage from Irwin v Director-General of School Education (Matter No. 14068/97, unreported, 18 June 1998) where Judge Geraghty said:

“The question of reasonableness is one of fact, weighing all the relevant factors. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of ‘reasonableness’ is objective, and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.”

(e)the test of reasonableness is an objective one that requires all the circumstances to be examined (Jeffery No 1 at [56]), and

(f)having regard to the whole of the evidence, the Appellant Employer’s action taken with respect to the transfer was not only ‘reasonable’ but also met the more demanding test referred to by Judge Geraghty of ‘necessary’.

THE COURT OF APPEAL DECISION

1. The Court of Appeal did not overturn the first four findings set out at paragraph [13] above and I make those findings again on the remittal.  In respect of the test of reasonableness the Court delivered three separate judgments and held that I erred in:

(g)treating the direction given by the school to Mr Jeffery “effectively as determinative” (Hodgson JA at [2]);

(h)treating the question of reasonableness as being satisfied by compliance with a contractual obligation and did not make any specific finding that the views held by officers of the Appellant Employer were reasonable (Basten JA at [43] and [44], and

(i)concluding that the Appellant Employer acted reasonably because it complied with a contractual obligation to a third party (Rein J at [81]) and treated the direction as one that it was contractually obliged to follow as an overriding consideration (at [84]).

1. As to the correct test to be applied, the Court of Appeal delivered the following judgments:

(a)Hodgson JA, subject to what is set out below, agreed substantially with Basten JA and agreed substantially with Rein J, held (at [3]) the question of whether the school’s direction itself was reasonable is a factor relevant to the question of whether or not the transfer was “reasonable action taken…by or on behalf of the employer”, but it would not be essential for the Appellant Employer to prove that the direction given by the school was reasonable action taken by the school.  The issue is the reasonableness of action taken “by or on behalf of the employer”.  Even if the Commission was not affirmatively satisfied that the school’s direction was objectively reasonable action taken by the school, it still could be satisfied that the Appellant Employer’s action in transferring Mr Jeffery was reasonable action taken by or on behalf of the employer.  His Honour added (at [4]) that such a finding could conceivably be open on the basis that the Appellant Employer saw the direction as based on reasonable concerns of the school which either were adequately investigated or were such that it was unlikely they could be allayed by further investigation, and reasonably considered transfer as an option carrying little detriment to the worker while resolving a situation of concern and conflict.  It is not sufficient that the transfer “appeared” (emphasis included) reasonable to the Appellant Employer.  The assessment of reasonableness is an objective one for the Commission, but it is the reasonableness of action taken by or on behalf of the employer that is in issue, not the reasonableness of action taken by any other person;

(b)Basten JA held, (at 44]) the reasonableness of the action should properly be assessed by reference to the facts giving rise to the transfer, rather than the contractual relationship between the employer and a third party.  The contractual relationship is not irrelevant: it may mean that the conduct of the third party becomes a relevant factor in assessing the reasonableness of the transfer.  The education authorities legitimate concerns will be taken into account in considering the reasonableness of any action taken in relation to an employee (at [45]).  Where an employer takes action on the basis of concerns of the education authority, the reasonableness of the action may need to take account of two elements.  The first is whether it is contractually reasonable for the employer to accept an obligation to comply with a direction given by a responsible officer of the education authority.  There is no suggestion in the present case that the contractual arrangement was not a reasonable one.  The second is whether the direction itself is reasonable in the circumstances;

(c)Basten JA added (at [45]) “if the direction given by the school principal were unreasonable, the action of transferring the employee may itself not be reasonable. The statutory purpose is effected by having regard to the action of transfer as a whole, including, where part of the responsibility is exercised by a third party with the agreement of the employer, the reasonableness of the third party”. And, (at [50]) if the Commission is of the view that the action taken by the employer in transferring an employee is not reasonable in all the circumstances, the employer cannot rely upon section 11A because it held a genuine belief, based on reasonable grounds, that its action was reasonable. Therefore, a purposive approach to the operation of section 11A required the Commission to assess the reasonableness of the action of the school principal in directing the transfer (at [52]).

(d)Rein J held (at [82]) that in coming to a view as to whether an employer has acted reasonably in taking action against an employee, the following are matters that could properly be taken into account:

“(1) The nature of the complaints made and the material available to support them;

(2) The express contractual arrangements between the third party and the employer, and whether there was an implied term requiring any rights given to the third party to be exercised only on proper grounds;

(3) Whether there was a proper basis in fact for the third party’s direction;

(4) Whether the employer’s relevant officers believed on reasonable grounds that there was a proper basis for the third party’s direction;

(5) What steps if any, were practically available to the employer to either prevent the third party from issuing a direction or to persuade the third party to withdraw the direction; and what steps were taken;

(6) The seriousness of the action to be taken i.e. transfer as opposed to dismissal;

(7) The form of the investigation by the third party and or the employer and of the communication to the employee of complaints and of the action determined to be taken;

(8) Whether there existed other factors extraneous to the direction from the third party that lead the employer to take the impugned action, that were not reasonably taken into account;

(9) The conditions of the contract between the employer and employee.”

(e)Rein J added (at [83]) that an employer, in acting on a direction that its employee no longer work at a particular school without the need for reasons, and without any knowledge itself of the reasons, at least in the absence of an express acknowledgement by an employee as part of the employment contract that that could occur, would not be acting reasonably viz a viz the employee. On the other hand, it is not unreasonable to have regard to the views of the third party when the third party, and not the employer, has the main or only significant contact with the employee and is best placed to investigate complaints or conduct and where the third party has provided information to the employer as to its reasons for requiring transfer or other action. If the employer relies solely on the fact that the third party issued a direction, this would not establish reasonableness on the part of the employer for the purposes of section 11A, but if the employer believes on reasonable grounds that there was a proper basis for the third party’s direction, then this could be sufficient (at [85]).

1. In addition to the above findings, Basten JA made certain observations (at [59] to [65]) about the contract and its proper construction.  It is not possible for me to deal with those matters as I do not have the whole contract before me and no application has been made to tender it as additional evidence on appeal. 

1. The Court of Appeal’s decision makes it clear that the terms of the contract between the Appellant Employer and the Department of Education are relevant to the determination of the question of reasonableness under section 11A. It will therefore be necessary for the further evidence to be tendered dealing with the contract and its terms, and for submissions to be made as to its relevance. The parties may also consider it prudent, in the light of the reasons given by the Court of Appeal, to tender further evidence on the other issues considered by their Honours.

1. In these circumstances, regrettable though it is, it is necessary for the matter to be remitted to a different Arbitrator for re-determination in accordance with the reasons given by the Court of Appeal. The only liability issue to be re-determined is whether the action taken by the Appellant Employer with respect to the transfer of Mr Jeffery was reasonable within the terms of section 11A of the 1987 Act. If it becomes necessary, all issues on quantum must be re-determined.

DECISION

1. The Arbitrator’s determination dated 11 January 2007 is revoked and the following order made:

“1.The matter is remitted to a different Arbitrator to be re-determined in accordance with the reasons given by the Court of Appeal in its decision dated 17 June 2008.

2.Costs of the first arbitration are to follow the event of the second arbitration.”

COSTS

1. The Court of Appeal made no order as to the costs in Jeffery No 1.  The Appellant Employer has failed on issue of injury, but succeeded on the issue of whether Mr Jeffery’s injury was wholly or predominantly caused by the action taken with respect to his transfer.  The issue of the reasonableness of the transfer must be re-determined.  In these circumstances, I believe the appropriate order is that the Appellant Employer pay the Respondent Worker’s costs of the appeal in Jeffery No 1.  In view of the totally inadequate submissions filed in the remittal, I make no order as to costs in Jeffery No 2.

Bill Roche
Deputy President

30 July 2008

I, EMMA LETHBRIDGE-GILL, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE