Mammo v Australian Venue Security (AVS) Pty Limited
[2009] NSWWCCPD 18
•25 February 2009
| WORKERS COMPENSATION COMMISSION | ||||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | ||||||
| CITATION: | Mammo v Australian Venue Security (AVS) Pty Limited [2009] NSWWCCPD 18 | |||||
| APPELLANT: | Albirt Mammo | |||||
| RESPONDENT: | Australian Venue Security (AVS) Pty Limited | |||||
| INSURER: | GIO General Limited | |||||
| FILE NUMBER: | A2-4423/08 | |||||
| DATE OF ARBITRATOR’S DECISION: | 27 August 2008 | |||||
| DATE OF APPEAL DECISION: | 25 February 2009 | |||||
| SUBJECT MATTER OF DECISION: | Incapacity; Section 40 Workers Compensation Act 1987; concurrent employment | |||||
| PRESIDENTIAL MEMBER: | Acting Deputy President Kevin O’Grady | |||||
| HEARING: | 12 February 2009 | |||||
| REPRESENTATION: | Appellant: | Eugene Lepore & Associates | ||||
| Respondent: | Sparke Helmore | |||||
| ORDERS MADE ON APPEAL: | 1. | Time to appeal is extended to 2 October 2008. | ||||
| 2. | Paragraphs 1 and 2 of the Arbitrator’s Decision dated 27 August 2008 are revoked and the following orders are made: 1. Award in favour of the Applicant pursuant to section 33 of the 1987 Act in the sum of $1,080 per week from 31 May 2006 to 7 July 2006 (Respondent to have credit for any payment made in respect of that period) and in the sum of $608.70 per week from 31 August 2007 to 28 September 2007 in respect of total incapacity. 2. Award in favour of the Respondent in respect of the claim for weekly benefits claimed in respect of all other periods. | |||||
| 3. | Paragraphs 3 and 4 of the Arbitrator’s Decision dated 27 August 2008 are confirmed. | |||||
| 4. | The Respondent is to pay the Appellant’s costs of this appeal. | |||||
BACKGROUND TO THE APPEAL
On 2 October 2008 Albirt Mammo (‘the Appellant’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 27 August 2008.
The Respondent to the Appeal is Australian Venue Security (AVS) Pty Limited (‘the Respondent’).
The Appellant is 35 years old and has a dependent wife and two dependent children. He was born in Iraq and came to this country in March 1995. He had completed his schooling in Iraq. Upon arrival in this country he pursued tertiary education at the University of NSW completing a degree course in civil engineering in December of 2000.
The Appellant commenced work in the security industry in 1996. It appears that the Appellant was able to pursue that occupation whilst an undergraduate at the University and that he continued to work as a Security Guard following his graduation and commencement of work as an Engineer. That work was performed concurrently with his professional employment as an Engineer. The Appellant pursued such concurrent employment into the year 2003 when, on 7 June of that year, he received injury in the course of his employment with the Respondent when assaulted by a patron of the Twin Willows Hotel at Bass Hill where he was engaged as a Security Guard. It is alleged that as a result of the assault he sustained injury to his left arm, neck and left leg.
It is alleged by the Appellant that, despite his injuries, the Respondent refused to permit him to take time off work. It was the Appellant’s case that he was compelled to perform his normal duties which he continued up until April 2004. The Appellant has, since April of 2004, resumed work in the security industry and detail of such work history is addressed below.
The Appellant, on 31 May 2006, underwent arthroscopic acromioplasty and excision of the left AC joint at the hands of Dr Y. Kai Lee. It appears that a claim for compensation benefits was made at or about that time and the Respondent’s Insurer accepted liability in respect of medical expenses and it appears that weekly benefits were voluntarily paid to the Appellant between 31 May 2006 and 15 May 2007.
On 31 August 2007 the Appellant underwent partial resection of the posterior horn of the lateral meniscus (left knee) at the hands of Dr Kahill. It appears that a further claim for compensation benefits was made on behalf of the Appellant by his Solicitors on a date prior to that surgery. The Notice of Claim forwarded to the Respondent’s Insurer included claims for weekly benefits, medical expenses and lump sums pursuant to sections 66 and 67 of the Workers Compensation Act 1987 (‘the 1987 Act’). Discussions concerning settlement of the Appellant’s claim took place over a period of months and delay was occasioned by reason of the surgical procedure which occurred in August 2007. A dispute arose between the parties as to the Appellant’s entitlement to benefits claimed and an Application to Resolve a Dispute was filed on behalf of the Appellant in the Commission on 11 June 2008. That Application came before an Arbitrator for conciliation/arbitration on 1 August 2008 and a Certificate of Determination issued on 27 August 2008.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 27 August 2008 records the Arbitrator’s orders as
follows:
“The Commission determines:
1. The Respondent is to pay the Applicant weekly benefits for the periods 31.5.06 to 7.7.06 and 31.8.07 to 28.9.07 at the rate of $1079.77 per week.
2. There should be an award for the Respondent in relation to the claim for weekly benefits in relation to all other periods claimed.
3. The Respondent to pay the Applicant medical expenses pursuant to s.60 on production of accounts and/or receipts
4. The matter should [sic] is referred to the Registrar for assessment by an AMS as to Whole Person impairment arising from the injuries received on 7.3.03.”
A Statement of Reasons for Decision (‘Reasons’) accompanied the Certificate of Determination.
ISSUES IN DISPUTE
The issues in dispute in the appeal are:
(i)Whether the Arbitrator erred with respect to her conclusions concerning the existence and extent of any incapacity suffered by the Appellant.
(ii)Whether the Arbitrator erred in her determination as to the Appellant’s entitlement to weekly compensation.
HEARING
Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) enables conduct of an appeal such as the present by the Commission without holding any conference or formal hearing. Such procedure is adopted in the vast majority of matters which have come before the Commission for determination on appeal. Both the Appellant and the Respondent have indicated in documentation filed with the Registry that they consent to the matter being determined without the conduct of any conference or formal hearing.
Notwithstanding the parties’ willingness to proceed without the need for a hearing I was not satisfied that sufficient information had been supplied to the Commission in connection with the proceedings. There is before the Commission a transcript of proceedings conducted before the Arbitrator on 1 August 2008 (‘transcript’). That transcript was produced following a sound recording of those proceedings. An examination of the transcript reveals numerous gaps and omissions and it is plain that the transcript does not represent a complete record of the proceedings conducted before the Arbitrator on that day.
The Arbitrator, at [5] of Reasons under the heading ‘Oral Evidence’ noted that the Appellant had:
“… provided a summary of his earnings taken from his tax returns. This was agreed by the Respondent to be an accurate summary of the Returns which had been filed …”
That summary was, it seems, contained in a document which was referred to by the Arbitrator as an “aide memoir” (transcript page 7 line 10). That document was not before the Commission and its absence is unexplained.
The documentary evidence before the Arbitrator included numerous taxation returns filed on behalf of the Appellant. A number of those Returns included detail of the manner in which the Appellant was remunerated by the Respondent for the work he performed. Those Returns, which are addressed more fully below, contain material indicating that the Appellant had treated his earnings generated by his security work as business income and included in the Returns were substantial deductions being business expenses. The transcript did not contain any record of submissions by either party relating to the relevance or otherwise of the manner in which the Appellant’s income had been treated in his Returns for taxation purposes.
Having regard to the state of the transcript, the absence of the document described as an aide memoir and the apparent absence of submissions concerning the detail of the Appellant’s taxation returns I concluded that the appropriate course to adopt was that of a formal hearing. That hearing was fixed for 12 February 2009 at Sydney. A direction appointing that hearing was issued by the Commission on 7 January 2009. That direction included an invitation to the parties to make submissions in respect of the state of the transcript and the future conduct of the appeal. The parties’ attention was drawn to the matters above mentioned and they were invited to reach agreement as to the nature of submissions made before the Arbitrator with respect to the evidence concerning the Appellant’s earnings. The parties were also invited to put submissions concerning the relevance, if any, of the manner of treatment of the Appellant’s income derived from security work as revealed in the taxation records to the determination of “probable earnings” and the exercise of the Commission’s discretion under section 40(1) of the 1987 Act.
At the hearing the Respondent provided supplementary written submissions and each of the parties supplemented earlier written submissions by way of oral argument. A document, said to be a copy of the aide memoir referred to in [13] above was placed before the Commission. That document, which is marked with the letter “A”, contains an agreed breakdown of the Appellant’s income derived from various sources between the financial years ending June 2003 and June 2007 inclusive. That document also contains detail with respect to income received by the Appellant in the year ending June 2008 however the monetary figure there appearing is not the subject of agreement. A transcript of the hearing (“hearing transcript”) is available on the Commission file.
Having regard to all the circumstances it is my view that, notwithstanding the state of the transcript and the other matters summarised above, a just determination of the dispute between the parties can be attained. Having the advantage of supplementary submissions made at the hearing I conclude there is no impediment to proceeding with this appeal. In reaching this conclusion I have had regard to the observations of Bryson JA (with whom Handley JA and Bell J agreed) in Aluminium Louvres and Ceilings Pty Limited v Xue Qin Zheng [2006] NSWCA 34 (‘Zheng’) (at [32]).
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 amount of compensation at issue on the appeal is such that the subject matter of the appeal meets the threshold requirements of section 352(2) of the 1998 Act which must be met before a grant of leave to appeal may be made by the Commission.
Section 352(4) of the 1998 Act provides that:
“(4) An appeal can only be made within 28 days after the making of the decision appealed against.”
As noted above the Appellant’s application to bring this appeal was filed on 2 October 2008 and is thereby 8 days out of time. That lateness is acknowledged by the Appellant and an extension of time is sought. It is asserted on behalf of the Appellant that the application seeking to appeal was initially lodged on 22 September 2008, a date which was within time as prescribed by the relevant section. It is stated on behalf of the Appellant that notification was received on 25 September 2008 that the documents lodged on behalf of the Appellant had been rejected by the Registrar. It is stated that the matters referred to in the rejection notice were “attended to immediately and rectified” and further that the omissions “were through no fault of the Applicant [sic]”. It is submitted that denial of an extension of time would “amount to a substantial injustice and a demonstrable error”.
The Respondent has made no submission concerning the Appellant’s application seeking an extension of time in which to bring the appeal. No suggestion of prejudice has been made nor can such be implied from the 8 day delay in filing the Appellant’s application.
The question of entitlement to an extension of time in which to apply for leave to appeal is addressed by the Workers Compensation Commission Rules 2006 (‘Rules’). Rule 16.2 sub-clauses (11) and (12) provide as follows:
“(11) The Commission constituted by a Presidential member may, if a party satisfies the Presidential member, in exceptional circumstances, that to lose the right to seek leave to appeal would work demonstrable and substantial injustice, by order extend the time for making an appeal.
(12) A party who seeks an extension of time as referred to in subrule (11) must:
(a) as soon as practicable give notice to the other parties of the intention to seek the extension, and
(b) lodge and serve with the application for leave to appeal an application for the extension of time, including full details of the arguments to be put in favour of granting the extension.”
Having regard to all the circumstances, in particular the absence of any suggestion of prejudice and the very short period of delay in filing the subject Application, I am of the view that, in exercise of the Commission’s discretion under Rule 1.6 sub-clause (2), the Appellant is to be granted dispensation with respect to compliance with the requirements of the Rules.
I am satisfied in the present exceptional circumstances, outlined above, that to lose the right to seek leave to appeal would work demonstrable and substantial injustice. Accordingly I order, pursuant to rule 16.2 sub-clause (11) that time for making the appeal be extended to 2 October 2008.
The requirements of section 352(2) having been satisfied and having regard to the above mentioned order with respect to extension of time I order that leave be granted to the Appellant to appeal to the Commission.
EVIDENCE AND SUBMISSIONS
The Arbitrator, at paragraphs [4] and [5] of Reasons summarises the evidence that had been adduced at the hearing conducted on 1 August 2008. The documentary material summarised at [4] of Reasons comprise those documents relied upon by the Appellant which were annexed to his Application to Resolve a Dispute (‘ARD’) as well as those documents which were attached to two Applications filed on his behalf to admit late documents. Also included in that summary were those documents attached to the Respondent’s Reply to the Appellant’s ARD as well as those documents which were attached to an Application lodged on behalf of the Respondent to admit late documents.
A Statement dated 28 April 2008 made by the Appellant was attached to the ARD. That Statement summarised the Appellant’s background and vocations and it was asserted at paragraph 8:
“8. I started with Australian Venue Security in July 2002 and I averaged 30 hours per week and earnt $21.00 plus GST per hour as a Security Officer; …”
The Appellant further states that he continued that work concurrently with his occupation as an Engineer up until 7 June 2003 on which date he was assaulted in the course of his employment with the Respondent. It is further stated that his request to take time off was refused and that he “had to work normal work”. The Appellant further states that following the injury he continued to work until about April 2004 at which time he ceased his security work because he could “no longer cope”. The Appellant asserts that since April 2004 he has not worked as a Security Guard. The Statement records that the Appellant underwent surgery to his left shoulder on 31 May 2006 and that on 31 August 2007 he underwent surgery to his left knee. It is stated that the Respondent’s Insurer paid the costs of such treatment. The Appellant proceeds to state that he received no weekly payments of compensation between April 2004 and 31 May 2006 and it is further stated that weekly payments at the rate of $562.75 per week were made by the Insurer between 31 May 2006 and 15 May 2007. It is stated that no further weekly compensation had been received by the Appellant but that the Respondent’s Insurer continues to meet payment of medical expenses. It is asserted in that Statement that the Appellant is unable to do “any more security work or any other job in addition to my current employment due to my injuries”.
Also attached to the ARD was a copy of the Appellant’s Workers Compensation Claim Form dated 13 June 2003. The injury described in that form was particularised as affecting “the left hand (sic) shoulder”.
The Appellant’s Tax Returns in respect of the years ending June 2004 and June 2005 were also attached to the ARD. Detail of the contents of those Returns is addressed below. There was also attached a number of Assessment Notices received by the Appellant from the Australian Taxation Office and other correspondence relating to his income.
Attached to the ARD were a number of items of correspondence relating to the Appellant’s claim which have no direct relevance to the matters raised on this appeal.
The Appellant in his ARD relied upon the contents of the reports of Dr James Powell dated 15 March 2007 and Dr Frank George Machart dated 19 March 2008. Those Practitioners had examined the Appellant on behalf of the Respondent’s Insurer. It was recorded by Dr Powell that x-rays of the Appellant’s left shoulder demonstrated “an undisplaced fracture of the greater tuberosity”. Dr Powell examined not only the Appellant’s left shoulder but his neck and left knee. It was Dr Powell’s view that, as a result of the subject injury, the Appellant suffered a 6% whole person impairment (‘WPI’) by reason of the left shoulder injury and 5% WPI in respect of injury to his cervical spine. It was Dr Powell’s view that the Appellant had sustained no WPI by reason of the injury to his left knee. Dr Powell expressed the view that the total WPI was 11%.
Dr Machart in his examination of the Appellant addressed only the question of assessment in relation to the alleged left knee injury. Dr Machart’s diagnosis was that the Appellant had suffered a lateral meniscal tear and it was noted that that injury had been treated “by a partial meniscectomy”. It was Dr Machart’s view that there was “no additional pathology in the left knee”. Dr Machart expressed the view that by reason of the knee injury the Appellant had suffered a 1% WPI.
Attached to the Appellant’s ARD was a report from Dr Y. Kai Lee, Orthopaedic Surgeon, dated 24 November 2006. That report records Dr Lee’s treatment of the Appellant’s left shoulder injury. His diagnosis was “fracture of the greater tubercle of the left shoulder with rotator cuff injury”. Dr Lee made reference in his report to various radiological studies including an MRI scan which “confirmed tendonopathy and partial tear of the supraspinatus tendon of his left shoulder”. That Practitioner noted that:
“… the AC joint was also arthritic. There was impingement of the rotator cuff.”
It was Dr Lee’s opinion that the Appellant had suffered a 6% WPI by reason of the left shoulder injury. Dr Lee further expressed the view that, by reason of the injury to the Appellant’s neck, he had suffered an 8% WPI. Dr Lee concluded that the Appellant’s “knees are quite alright and have 0% impairment”. Dr Lee expressed the following views concerning the Appellant’s capacity to work:
“Mr Mammo has recovered quite well after the operation. He also had neck and knee injury at the time when he was attacked but this has more or less recovered and there is only mild discomfort. His shoulder is still stiff on abduction. His job was a security officer and I believe while it is possible for him to maintain order, if it involves physical contact, he may find it difficult. If he is not doing this job as a security officer, I would suggest that he should avoid jobs which require working with arms elevated.”
A report of Dr AJ Sanki, General Surgeon, dated 27 January 2008 was attached to the Appellant’s ARD. It is recorded in that report that Dr Sanki’s treatment of the Appellant commenced in May of 2007. That report contains detail of Dr Sanki’s findings on examination of the Appellant on various occasions up until the date of the last reported consultation being 9 January 2008. Dr Sanki records the treatment of the Appellant’s left knee injury by Dr Kahill. That treatment included a partial resection of the posterior horn of the lateral meniscus carried out by Dr Kahill on 31 August 2007. Dr Sanki’s WPI assessments were 6% WPI with respect to the left shoulder injury, 8% WPI with respect to the injury to the cervical spine, 3% WPI by reason of muscular wasting at the left calf and 2% WPI with respect to muscular wasting at the left thigh. The aggregate WPI was therefore 19% in Dr Sanki’s view.
At the hearing the Arbitrator admitted into evidence that material which was attached to two Applications to Admit Late Documents filed on behalf of the Appellant. Those documents included copies of Taxation Returns filed on behalf of the Appellant for the years ending June 2003, June 2006 and June 2007. A copy of a document dated 16 July 2008 signed by the Appellant’s Accountant, Mr Hourani was also admitted into evidence.
At the hearing before the Arbitrator the Respondent relied upon those documents attached to its Reply. Reference is made hereunder to relevant portions of that evidence.
Documents attached to an Application to Admit Late Documents filed on behalf of the Respondent on 31 July 2008 were admitted into evidence by the Arbitrator at the hearing. Those documents included copies of correspondence from the Appellant’s Solicitor to the Respondent’s Insurer dated 16 February 2007, together with an enclosure being what was described as “copies of earnings from 30 September 2002 to 28 August 2004”. The detail of this evidence is addressed below.
As noted above at [13] the Arbitrator had before her what was described as a summary of the Appellant’s earnings. Whilst the document referred to by the Arbitrator is not before the Commission a replacement was furnished by the parties at the hearing of this appeal and that document, marked with the letter “A”, records agreed financial particulars relating to the Appellant’s earnings during the financial years ending June 2003 to June 2007 inclusive. As above noted that document contains particulars relating to the year ending June 2008 however there is no agreement between the parties as to the accuracy of those figures.
It should be noted that the Commission’s file contains correspondence received by it from the Appellant dated 9 October 2008 which contains a copy of his Taxation Return in respect of the year ending June 2008. The parties representatives had no knowledge of the existence of that correspondence and its enclosure when the subject was raised at the hearing of this appeal. It was acknowledged by the Appellant that the correspondence had been forwarded with the request that it be brought to the notice of the Arbitrator. No application was made on behalf of the Appellant to seek to adduce late evidence being the correspondence and enclosure. In the circumstances the correspondence and the Taxation Return do not constitute evidence and I have disregarded the contents of same in my adjudication of this appeal.
Submissions
As noted above at [12] the transcript of submissions put by each party before the Arbitrator contains a number of gaps and obvious omissions occasioned by a fault in the recording process. Notwithstanding that fact it is clear that Counsel on behalf of the Appellant relied upon the opinion of Dr Sanki as expressed in his report of 27 January 2008 in support of an argument that the Appellant was unfit to perform the work of a Security Guard. It is also clear from the material contained in the transcript that it was common ground between the parties that the Appellant had been paid weekly compensation in the sum of $562.75 between May of 2006 and May of 2007. It is also clear that the Appellant made a claim in respect of weekly payments as set out in the ARD, subject to the concession as to the payments earlier noted. The state of the transcript is such that it is unclear as to the precise quantification of the Appellant’s alleged entitlement to weekly payments.
In support of this appeal, General Submissions have been included in the documentation accompanying the Appellant’s Application. The thrust of those submissions is that, notwithstanding the Arbitrator’s finding that the Appellant had suffered “serious” injuries, she had erred in failing to take into account the medical evidence when addressing the question of incapacity and, further, that error was made in failing to apply relevant principle to determine quantification of entitlement to weekly benefits pursuant to section 40 of the 1987 Act (reference was made to the decision of the NSW Court of Appeal in Mitchell v Central West Health Service (1997) 14 NSWCCR 526) (‘Mitchell’). It was further argued in those submissions that:
“As the Applicant has not been able to return to the workforce as a security officer, he is entitled to the full statutory rate.”
It is submitted that, by reason of the errors identified in the submissions, the Appellant’s application should be remitted back to the Arbitrator or another Arbitrator for determination of the Appellant’s entitlement to weekly benefits pursuant to section 40 of the 1987 Act.
At the hearing of this appeal conducted on 12 February 2009 it was submitted by Counsel on behalf of the Appellant that notwithstanding his performance of security work post injury the Appellant “still carried an incapacity”. It was argued, in particular, that the Appellant had suffered a loss of his earning power following the conduct of surgery.
The Appellant submitted at that hearing that the fact that the Appellant, for taxation purposes, treated his income derived from security work as business income and made deductions in respect of business expenses was “probably not relevant” to the determination of probable earnings but for injury nor to exercise of discretion pursuant to section 40(1) of the 1987 Act.
It is to be noted that submissions made by Counsel for the Appellant at the hearing of this appeal included an acknowledgement that the Appellant does not allege that he has any incapacity for his concurrent employment, namely engineering work, resulting from the subject injury (hearing transcript page 12 lines 19 – 24).
At the hearing before the Arbitrator, Counsel appearing on behalf of the Respondent made reference to the available evidence concerning pre-injury earnings and submitted that the average of those earnings was $1,080 per week. At the hearing on this appeal, Counsel made it clear that that figure had been agreed between the parties as representing the average weekly earnings pre-injury having regard to the aggregate of his earnings from both engineering and security work (hearing transcript page 10 lines 5 – 14).
The general thrust of the Respondent’s submissions made before the Arbitrator and clarified by Counsel at the hearing conducted on this appeal was that the Appellant had demonstrated a capacity to earn post injury which was greater than that demonstrated pre-injury. It was argued upon the basis of the agreed figures which appear in the document described as an aide memoir and marked with the letter “A” that the Appellant had, over a considerable period, demonstrated an ability to earn in security work substantially more than was demonstrated prior to receipt of his injury. Counsel in submissions sought to emphasise that, whilst the agreed figures concerning the Appellant’s earnings post injury demonstrate a reduction of income derived from engineering work, there was no evidence before the Commission explaining why there was such reduction.
It is convenient, to enable a clearer understanding of the Respondent’s arguments, to set out hereunder a reproduction of the aide memoir which was marked “A” at the hearing on this appeal.
“A” Tax Returns
2002/2003 Engineering works Security works comments $17,345 $1,064 $12,078 $4,671 work for AVS $20,430 work for AVS $560 $29,423 $26,725 total = $56,148 2003/2004 Engineering works Security works $53,071 $28,373 work for AVS $53,071 $28,373 total = $82,074 2004/2005 Engineering works Security works comments $52,195 $16,731 no security works $68,926 total = $68,926 2005/2006 Engineering works Security works GIO payments comments $9,644 $3,057 $1,092 work for the cinema $31,234 work for the cinema $9,644 $34,291 $1,092 total = $45,027 2006/2007 Engineering works Security works GIO payments $798 $25,070 $6,140 $18,950 $25,888 $25,070 total = $50,958 2007/2008 Engineering works Security works GIO payments $26,000 Not agreed $26,000 total = $26,000
The Respondent sought to rely upon the figures which appear in the document reproduced above to found an argument that the Appellant has, over time, demonstrated an earning capacity post injury which exceeds his pre-injury earnings. It was submitted that acceptance by the Commission of that analysis of the figures would lead to a determination that the Appellant had no entitlement to an award for weekly benefits.
It should be noted that during the course of the hearing on this appeal the question as to the relevance or otherwise of the deduction of business expenses from the Appellant’s earnings in the security industry as evidenced in the Tax Returns was raised. In particular the question as to the relevance of those figures to the question of determination of probable earnings but for injury as well as the question of relevance to the exercise of discretion under section 40(1) was raised. The Respondent advanced no argument that the business deductions were in any way relevant to those questions which require to be addressed when determining entitlement, if any, pursuant to section 40 of the 1987 Act.
The Respondent in submissions which accompanied the Notice of Opposition to this appeal filed on 13 October 2008 draws attention to the evidence contained in correspondence from Nicolas Karam, the Appellant’s Accountant dated 16 September 2006 and 28 May 2007 as well as correspondence dated 16 July 2008 from M & N Partners being the accounting business conducted by Mr Karam. It is stated in each of those items of correspondence that the Appellant derived a gross weekly income of $1,600 from work as an Engineering Sub-Contractor. Reference is also made in that correspondence to expenses claimed as deductions by the Appellant for the purpose of determining his taxable income from such source. It is argued that the figure of $1,600 demonstrated ability to earn derived solely from engineering works and it is argued that such demonstrated ability to earn exceeds the Appellant’s probable earnings in terms of section 40(2)(a) of the 1987 Act. Upon this basis it is put that the Appellant has no entitlement to weekly compensation as claimed.
The Respondent further submits that, whilst weekly benefits have been paid by the Respondent’s Insurer, those payments had been made upon the basis of incorrect information. It appears that this submission is founded upon the contents of the Claim Form dated 13 June 2003 in evidence before the Arbitrator. That document expressly states that the Appellant did not have employment concurrent with that as Security Officer with the Respondent. It is also asserted in that submission that payments were made by the Insurer upon the basis of medical certificates which stated the Appellant to be totally unfit for work at a time when he continued to work as an Engineer.
At the hearing on this appeal Counsel for the Respondent handed up a document headed “Summary of Respondent’s Submissions in proceedings before the Arbitrator”. That document reiterated matters which have been summarised above and it was noted that agreement had been reached between the parties that the sum of $1,080 represented the Appellant’s average weekly earnings “from all sources” prior to injury. It was argued that during the 2 years immediately following the injury the Appellant was “able to earn at least that much and about that much just from engineering”. The point was made in those submissions that, whilst the Appellant did no security work in the financial year 2004/2005 he “returned to that work subsequently and in fact has abandoned employment as an Engineer”. It was argued that there was no evidence that the Appellant “was incapacitated from [sic] engineering work”. It was argued that the Appellant’s earnings as at the date of arbitration “were not reflective of his true capacity to earn”. It was put in submissions that the “documents supplied by the Accountant were inconsistent with the Taxation Returns submitted on the (Applicant’s) behalf and therefore carried no weight”. It was also put that the reduction of the Appellant’s earnings in 2006, 2007 and any reduction in 2008 “were not reflective of or supported by evidence of a limited ability to earn but were a matter of choice, the Applicant having shown he had a greater capacity to earn as an Engineer”.
DISCUSSION AND FINDINGS
This appeal is brought pursuant to the provisions of section 352 of the 1998 Act. Subsection (5) of that section provides:
“(5) An appeal under this section is to be by way of review of the decision appealed against.”
The nature of the “review” stated in the aforementioned subsection was considered by the NSW Court of Appeal in Aluminium Louvres & Ceiling Pty Limited v Zheng [2006] NSWCA 34; 4 DDCR 358 (‘Zheng’) where the Court was there considering an appeal from a Deputy President of this Commission who had heard an appeal from an Arbitrator which involved arguments concerning suggested denial of procedural fairness. In his leading judgment Bryson JA (with whom Handley JA and Bell J agreed) said at [38]:
“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. ….”
The concept of “review” as it appears in the aforementioned subsection was again considered by the NSW Court of Appeal in State Transit Authority of NSW v Fritzi Chemler [2007] NSWCA 249 where, it was observed by Spigelman CJ (with whom Basten JA and Bryson AJA agreed) at [30]:
“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 fact of injury and the diagnosis of the Appellant’s resultant disability was not the subject of dispute at the hearing. The Arbitrator at [15] of Reasons noted:
“15.There is no dispute as to the injuries received by Mr Mammo in June 2003 – an undisplaced fracture of the greater tuberosity in the left shoulder with a partial tear of the supraspinatus tendon, soft tissue injury to the cervical spine and injury – meniscal tear – to the left knee – nor the nature of the surgery he received. In August 2007 an arthroscopy with partial trimming of the meniscus in the left knee was carried out and in May 2006 Dr K Y Lee performed a left subacromial decompression and excision of the bursa and acromioclavicular joint. …”
The Appellant on this appeal has challenged the manner in which the Arbitrator has determined the question of partial incapacity and also challenges the Arbitrator’s approach to the manner in which the Appellant’s entitlement to weekly compensation was determined. With respect to the Appellant’s claim for weekly compensation the Arbitrator (at Reasons [2]) correctly noted:
“The issues in relation to weekly benefits are:
·Was the applicant partially incapacitated for work during the relevant period?
1.In respect of any period of partial incapacity for work:
(a) what is the weekly amount which the Applicant would probably have been earning but for the injury had he continued to be employed in the same or comparable employment? (the 1987 Act ss40(2)(a), 42, 43)
(b) what is the average weekly amount the Applicant is earning or would be able to earn in some suitable employment from time to time after the injury? (the 1987 Act ss 40(2)(b), 40(3), 42, 43, 43A(definition))
(c) What is the appropriate level of weekly benefit to which Mr Mammo is entitled?”
It may be seen that the Arbitrator has raised for determination the fundamental question as to whether the Appellant had established that he was “partially incapacitated for work during the relevant period”. The Arbitrator proceeded to make reference to the decision of the High Court of Australia in Arnott’s Snack Products v Yacob (1985) 155 CLR 171 (‘Yacob’). The Arbitrator proceeded (at [8] and [9] of Reasons) to make reference to the provisions of section 40(3) and section 43A of the 1987 Act and the decision of the Court of Appeal in Mitchell.
The Arbitrator, immediately following consideration of the authorities and provisions noted above, proceeded to conclude:
“What is the Extent of Mr Mammo Incapacity?
9.The decision in Arnott’s (supra) makes it clear that the concept of incapacity is the reduction in earning power as a result of an injury – not simply a reduction in physical capacity. The appropriate sum to be awarded in weekly benefits will be the result of the calculation set out in Mitchell (supra) and that is also in a practical sense the measure of the incapacity.”
The Arbitrator proceeded to examine the evidence as to the Appellant’s earnings over the relevant period and the medical evidence (Reasons [10] to [22]). The Arbitrator’s consideration of the evidence and her conclusions of fact led her to state (at Reasons [23]):
“23.There is, therefore, on the basis of the evidence no “incapacity” in the Arnott’s sense of a reduction in earning capacity. The result of performing the Mitchell calculation in Mr Mammo’s case would be that there is no shortfall between probable and actual post injury earnings and no demonstrable reduction in earning power related to his injuries, save for two periods following surgery, one of which is conceded by the Respondent, for which I find total incapacity. He should be compensated for these periods based on his pre injury earnings of $1079.77 per week.”
It is the Appellant’s submission that the Arbitrator has erred in her approach to the determination of the question of incapacity. In my opinion the Arbitrator has erred in her approach to the question of the existence or otherwise of incapacity in that she has, in the course of her reasoning, failed to distinguish between the concept of incapacity for work and the question concerning entitlement to weekly compensation. In concluding that there was “… no ‘incapacity’ in the Arnott’s sense of a reduction in earning capacity” the Arbitrator has, I respectfully consider, failed to address the true statement of principle found in the Judgment of the majority in Yacob. The extract of that Judgment which appears at [7] of Reasons omits the balance of the paragraph appearing at 178:
“… This flows, not from the concept of partial incapacity for work, but from the nature of the express limitation which the subsection places on the amount of compensation payable. On the other hand, the words “partial incapacity for work” in sub-s.(2) must be given their natural and established meaning, there being no limitation or other restricting context which confines the employer’s obligation to offer suitable employment to an injured employee who is suffering actual economic loss.”
The following statement by the late Professor Mills in his text Workers Compensation in New South Wales (Butterworths 2nd edition 1979), at page 286, whilst published before Yacob, remains sound in principle:
"...The receipt of wages may, under sub-s 11(1), destroy for the time being the right to compensation,but it does not mean there that there is no incapacity. The receipt of wages will almost certainly prove that the worker is not totally incapacitated;if there is some degree of incapacity, then his case falls to be determined under sub-s 11(1); and his post-injury earnings will provide one of the limits within which the Commission's discretion may be exercised and will also be a relevant factor to be considered in the exercise of that discretion...".
The distinction between a finding of partial incapacity and a finding as to entitlement to compensation is of particular importance in the context of determining liability of an employer in respect of deemed total incapacity as provided in section 11(2) of the Workers Compensation Act 1926 (‘the 1926 Act’) and section 38 of the 1987 Act. The High Court was concerned with a determination of entitlement under the former section 11(2) in the matter of Yacob. In the present matter resolution of the dispute between the parties requires determination of the fundamental question as to whether the evidence establishes that the Appellant has suffered physical incapacity for actually doing work in the labour market in which he works or may reasonably be expected to work. If such incapacity is found it is then necessary to examine the evidence to determine whether there is any entitlement to compensation having regard to the evidence adduced as to the Appellant’s probable earnings but for injury and ability to earn in terms of section 40 of the 1987 Act (see discussion Williams v Metropolitan Coal Co Ltd (1948) 76 CLR 431 per Dixion J at 449). That enquiry, as the Arbitrator has correctly indicated in her Reasons, requires adherence to the method of determination as enunciated in Mitchell.
In the circumstances of the present case, I consider it appropriate to review the evidence both as to the question of incapacity and as to the Appellant’s entitlement to weekly benefits.
Incapacity
There is little evidence addressing the question of incapacity during the period in respect of which a claim for weekly benefits is made. The report of Dr Lee dated 24 November 2006 contained a notation that the Appellant had last been reviewed by that Practitioner on 23 November 2006. It was Dr Lee’s opinion that following the surgical procedure to the Appellant’s left shoulder he had “reached a plateau of recovery”. Dr Lee noted that whilst there had been improvement the Appellant was still unable to abduct or flex the arm fully. Dr Lee, as noted above at [34], proceeds to state:
“His job was a security officer and I believe while it is possible for him to maintain order, if it involves physical contact, he may find it difficult. If he is not doing this job as a security officer, I would suggest that he should avoid jobs which require working with arms elevated.”
There was in evidence a WorkCover Medical Certificate issued by Dr Yousif dated 4 May 2007 which was referred to by the Arbitrator at [18] of Reasons. That Certificate contained a notation that the Worker was unfit for pre-injury duties “as security” from 7 May 2007 to 10 June 2007 but that he was fit for suitable duties from 7 May 2007 to 10 June 2007. It appears that the Arbitrator’s summary of the contents of that certificate is, to an extent, inaccurate.
The report of Dr Sanki dated 27 January 2008 includes that Practitioner’s opinion concerning capacity for work where it was stated:
“I find that the patient is unfit to do Security type of work at the moment because of his left knee injury as he cannot stand for a long period of time nor can he run.”
As noted at [28] above the Appellant asserts in his Statement dated 28 April 2008 that he was unable to perform security work after April 2004 by reason of his injuries.
Dr Powell in his report of 15 March 2007 accepts that the Appellant has suffered a WPI by reason of the injuries to his left shoulder, neck and left knee. There is nothing in that report that addresses the question of capacity for work as a Security Guard or otherwise.
The report of Dr Machart dated 19 March 2008 concluded that there was 1% WPI resulting from the knee injury sustained by the Appellant. There is nothing contained in that report which addresses the question of the Appellant’s capacity for work.
It is of significance that the financial records of the Appellant reveal that, notwithstanding the injury and its undoubted consequences as diagnosed by the various Practitioners, he was able to continue, at the insistence of his employer, with his normal duties up until April of 2004. It is from that date that the claim is made in respect of weekly payments. The only evidence relevant to the question of capacity for work as at that date is the assertion of the Appellant himself as to his inability to continue work. Evaluation of the Appellant’s evidence on that point must be made having regard to the established fact that he, in the financial year ending June 2006, worked in the security industry and was paid $34,291.
Notwithstanding the paucity of evidence before the Commission concerning the question of incapacity I conclude that by reason of the injury and resultant disability the Appellant suffered incapacity for his pre-injury work as a Security Guard up to at least 9 January 2008 being the date of the last recorded examination by Dr. Sanki. It is apparent that the Respondent concedes a period of total incapacity following the shoulder sugery as noted at [19] of the Arbitrator’s Reasons from 31 May 2006 to 7 July 2006.
I respectfully agree with the Arbitrator’s conclusion expressed at [21] of Reasons that there was “probably some period of total incapacity following the knee surgery on 31 August 2007.” The Arbitrator’s conclusion that that total incapacity would have persisted for a period of 4 weeks is a matter with which I agree.
Having regard to the nature of the injuries, the resultant disabilities and the restrictions as noted by the various Medical Practitioners in the reports which are before the Commission I conclude that the Appellant has since April of 2004, excluding the periods mentioned in [73] and [74] above suffered partial incapacity up to at least 9 January 2008. That incapacity is only in respect of the most strenuous duties required of a Security Officer including exercise of strength in restoring order and policing any violent conduct in the course of work.
Entitlement to Weekly Benefits
I respectfully agree with the Arbitrator that the Appellant is entitled to weekly compensation benefits in respect of the periods of total incapacity noted above. The quantum of entitlement during those periods is addressed below.
Any entitlement the Appellant may have to weekly payments during periods of partial incapacity which I have found requires reference to the principles relevant to quantification of entitlement as outlined in the decision of Mitchell. Step 1 as outlined in Mitchell requires a determination of the weekly amount the Worker would probably have been earning if uninjured (section 40(2)(a)). The parties agree that the aggregate of his earnings pre-injury from both engineering and security work was (rounded up) $1,080 per week. There is no evidence concerning probable earnings beyond the date of injury in security work or otherwise and accordingly I conclude that the Appellant’s probable earnings from 1 April 2004 to date is $1,080 per week.
Step 2 as described in Mitchell requires a determination of the average weekly amount 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)). The document marked “A” and described as an aide memoir demonstrates that the Appellant has continued to earn to, at least June 2007, various amounts from both engineering and security work. The only evidence before the Commission as to the Appellant’s actual earnings beyond 1 July 2007 is to be found in the letter from M & N Partners signed by Mr Hourani dated 16 July 2008 referred to in [36] above. Given my findings of total incapacity and the fact that the Respondent’s Insurer has paid the Appellant’s entitlement between 31 May 2006 and 15 May 2007 it is necessary to determine the Appellant’s actual earnings and/or ability to earn during the following periods:
§1 April 2004 to 30 May 2006 (period 1)
§16 May 2007 to 30 August 2007 (period 2)
§29 September 2007 to date (period 3).
With respect to period 1, I note that the document marked “A” reveals earnings for the financial year ending June 2005 as being $68,926. The totality of that income came from engineering works. The average weekly amount the Appellant was able to earn during that financial year (rounded up) was $1,325. That sum exceeds the probable earnings as found in [77] above.
During the financial year ending June 2006 the evidence establishes that the Appellant was able to earn $45,027 of which sum $34,291 was earnt in performance of security work. The average weekly amount the Appellant earnt between 1 July 2005 and 30 May 2006 was (rounded up) $866.Whether this figure represents the Appellant’s ability to earn in terms of section 40 is addressed below.
With respect to period 2, I note that there has been no agreement between the parties as to actual earnings of the Appellant from 1 July 2007 to date. There is however in evidence correspondence from the Appellant’s Accountant which states that the Appellant’s weekly income as an Engineering Sub-Contractor was $1,600 and that he had expenses totalling “between $700 and $800”. I further note that as at July 2008 the evidence of the Appellant’s Accountant establishes that again his weekly income from engineering work was $1,600 with expenses totalling between $700 and $800. Upon the basis of that evidence I conclude that the Appellant’s gross earnings between 16 May 2007 and 30 August 2007 before deduction of business expenses was $1,600 per week. For the reasons stated below I conclude that the Appellant’s ability to earn during this period was $1600 per week.
With respect to period 3 I conclude, again upon the basis of the evidence of the Appellant’s Accountant in particular the letter dated 16 July 2008 which is before the Commission, that his gross earnings during that time to date has been $1,600 per week. Again for the reasons stated below I conclude that the Appellant’s ability to earn during this period was $1600 per week.
Step 3 as outlined in Mitchell requires a determination of the arithmetic difference between the figures determined in Steps 1 and 2. I set out that difference in the table hereunder.
Period Difference
1/4/04 – 30/6/05 Nil
1/7/05 – 31/5/06 $214.00
16/5/07 – 30/8/07 Nil
29/9/07 to date Nil
It may be seen that I have concluded that there is no difference between the Appellant’s probable earnings and actual earnings or ability to earn from 16 May 2007 to date during relevant periods. It is the case that, for taxation purposes, the Appellant has sought to set off substantial business expenses against the gross income of $1,600 per week. I have had regard to the principles as stated by the High Court of Australia in Cage Developments Pty Limited v Schubert 91983) 151 CLR 584 (‘Cage’) and I conclude that the true value of the labour performed by the Appellant in the course of his engineering works at relevant times is the sum of $1,600 per week.
For these reasons I conclude that the Appellant would not be entitled to an award of weekly compensation during those periods enumerated above where the difference in earnings or ability to earn has been expressed as “nil”.
It may be seen that the Appellant has a prima facie entitlement to weekly compensation during the period of 1 July 2005 to 31 May 2006. However, it is argued on behalf of the Respondent that a proper analysis of the earnings figures for this period demonstrates a high figure earnt from Security work and an unexplained low figure generated by Engineering work. This raises the question as to whether the demonstrated earnings represent the Appellant’s true ability to earn in terms of section 40.
The document marked “A” indicates that during the financial year ending 30 June 2006 the Appellant’s income from engineering works totalled $9,644 whilst his earnings from security work totalled $34,291. There is no evidence before the Commission as to why in that year there was a substantial reduction in earnings generated by the Appellant from work in the engineering field. The amount earnt performing security work was during that year the highest annual sum recorded in document “A”. As above noted the Appellant makes no allegation of any incapacity to perform engineering work by reason of the subject injury and, in all the circumstances, I conclude that those actual earnings do not properly demonstrate the Appellent’s ability to earn. It is reasonable to conclude that, as during other periods, the Appellant had a capacity to earn a greater amount as an Engineer during that period than as noted in document “A”. My conclusion is that the Appellant’s true ability to earn from both sources during the period in question was $60000, that is $1250. per week. That sum exceeds the Appellant’s probable earnings as found. There is thus no entitlement to a weekly award during this period.
With respect to the Appellant’s entitlement to weekly payments during the period of total incapacity between 31 May 2006 and 7 July 2006 I respectfully agree that the appropriate weekly rate is (rounded up) $1,080.
With respect to the Appellant’s entitlement during total incapacity as found between 31 August 2007 and 28 September 2007 the Appellant is entitled to the maximum statutory rate payable to a Worker with a dependent wife and two dependent children.
It may be seen that I have concluded that the Arbitrator has erred in certain respects when determining the question as to the existence or otherwise of incapacity and its extent as well as the manner in which any entitlement to compensation should be quantified. For the reasons which I have attempted to outline above I am of the view that her decision expressed in Orders 1 and 2 require revocation. The question then arises as to whether there should be a substitution of that Order with a new decision on this appeal or alternatively whether the matter should be remitted for determination in accordance with the matters determined on this appeal. The Court of Appeal in Chubb Security Australia Pty Limited v Trevarro [2004] NSWCA 344 (‘Trevarro’) has expressed the view that should an appeal be upheld, it is preferable, if possible, that the Presidential Member finally determine the matter (per Santow JA at [28] and [29]).
Having regard to all the circumstances I consider it appropriate to revoke Orders 1 and 2 stated in the Certificate of Determination and a new decision be made in their place on this appeal.
For the reasons set forth above I find that the Appellant was totally incapacitated as a result of the subject injury between 31 May 2006 to 7 July 2006 and between 31 August 2007 and 28 September 2007.
DECISION
Time to appeal is extended to 2 October 2008.
Paragraphs 1 and 2 of the Arbitrator’s Decision dated 27 August 2008 are revoked and the following orders are made:
1. Award in favour of the Applicant pursuant to section 33 of the 1987 Act in the sum of $1,080 per week from 31 May 2006 to 7 July 2006 (Respondent to have credit for any payment made in respect of that period) and in the sum of $608.70 per week from 31 August 2007 to 28 September 2007 in respect of total incapacity.
2. Award in favour of the Respondent in respect of the claim for weekly benefits claimed in respect of all other periods.
Paragraphs 3 and 4 of the Arbitrator’s Decision dated 27 August 2008 are confirmed.
COSTS
The Respondent is to pay the Appellant’s costs of this appeal.
KEVIN O’GRADY
Acting Deputy President
25 February 2009
I, TUYET WALLIS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF KEVIN O’GRADY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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