Marafioti v Sarkem Limited
[2006] NSWWCCPD 236
•19 September 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Marafioti v Sarkem Limited [2006] NSWWCCPD 236
APPELLANT: Ross Marafioti
RESPONDENT: Sarkem Limited
INSURER:QBE Workers Compensation (NSW) Limited
FILE NUMBER: WCC21058-04
DATE OF ARBITRATOR’S DECISION: 14 September 2005
DATE OF APPEAL DECISION: 19 September 2006
SUBJECT MATTER OF DECISION: Review of Weekly Payments; Section 55(2A) of the Workers Compensation Act 1987; exercise of discretion; ‘dependency’.
PRESIDENTIAL MEMBER: Dr Gabriel Fleming, Deputy President
HEARING:On the Papers
REPRESENTATION: Appellant: Carroll & O’Dea Lawyers
Respondent: McCulloch & Buggy Solicitors
ORDERS MADE ON APPEAL: 1.Leave to appeal is granted.
2.The decision of the Arbitrator, dated 14 September 2005, is revoked and matter is referred to a different Arbitrator to be determined afresh.
3. No order as to the costs of the Appeal
BACKGROUND TO THE APPEAL
On 11 October Mr Ross Marafioti sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission against a decision, dated 14 September 2005.
The Respondent to the Appeal is Sarkem Limited (‘the Respondent Employer’).
QBE Workers Compensation (NSW) Limited (‘the Insurer’) is the relevant workers compensation insurer. It appeared on behalf of Sarkem in the Commission proceedings.
Mr Marafioti suffered a number of injuries to his back, left leg and right thumb, when working for Sarkem as a ‘chemical plant operator’ from 1992 to 1993.
On 23 December 2005 the Insurer lodged an ‘Application to Resolve a Dispute’ in the Commission seeking a variation of the Compensation Court order of 14 March 1995 in so far as it related to the ongoing award of weekly compensation to Mr Marafioti. The Insurer claimed that there had been a ‘change of circumstances’ that should give rise to a review of the award (pursuant to section 55 of the Workers Compensation Act 1987 (‘the 1987 Act’)). The ‘change of circumstances’ is said to have arisen since His Honour, Judge Bishop of the Compensation Court of NSW awarded Mr Marafioti compensation for his injuries, on 14 March 1995, including weekly benefits compensation. He has been in receipt of weekly benefits compensation at the statutory rate for a married man with a dependent spouse and two dependent children since 1 October 1994.
The dispute went before a Commission Arbitrator who made a determination on 14 September 2005. At issue was not only Mr Marafioti’s future entitlement to weekly benefits compensation, but whether or not he had been overpaid an entitlement on the basis of the claimed dependency of his wife.
In this appeal Mr Marafioti challenges the Arbitrator’s decision, on the basis that his entitlement should not be reduced in relation to the dependency of his spouse and that Mr Marafioti continues to be entitled to weekly benefits compensation. The Insurer has also appealed against the Arbitrator’s decision. Both appeals obviously have the same facts, however they raise separate grounds of appeal and legal issues. Both matters involve a degree of legal complexity. The Insurer’s appeal is considered separately in Sarkem Limited v Marafioti v [2006] NSWWCCPD 235. Where evidence and submissions may be cross-referenced to avoid duplication that is indicated in the reasons. This statement of reasons therefore concerns the challenge to the Arbitrator’s decision made by Mr Marafioti.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’ dated 14 September 2005, records the Arbitrator’s orders as follows:
“The determination of the Commission in this matter is as follows:
1.The weekly compensation of the Respondent, Mr Marafioti, is reduced by the removal of any entitlement to compensation in respect of a dependent spouse, with effect from 1 July 1996.
2.The Respondent [Mr Marafioti] is to refund to the Insurer all amounts received in respect of the dependent spouse benefit from 1 July 1996, less amounts received in respect of his spouse when she was not working for a two-month period during 1998 and not working for a three-month period during 2001.
3.The parties’ legal representative are to confer directly with one another within seven days of the date of this decision to confirm the amount to be repaid under (2) above, and the terms on which it is to be repaid. Any disagreement in this regard may be referred back to the Commission for determination.
4.The Applicant is to pay the Respondent’s costs as agreed or assessed.”
Mr Marafioti seeks to have Order 2 above, set aside. The Insurer submits that the Arbitrator should have terminated Mr Marafioti’s entitlement to weekly benefits compensation and awarded further refund of amount’s paid since July 1998.
ISSUES IN DISPUTE
Mr Marafioti has made written submission on the appeal. The submissions concern the application of section 55(2) of the of the Workers Compensation Act 1987 (‘the 1987 Act’). Section 55 provides as follows:
“(1) Any weekly payment of compensation may, because of a change of circumstances, be reviewed by the Commission at the request of the employer or the worker or the Authority.
(2) On any such review –
a. the weekly payment may be ended, reduced or increased (but subject to the provisions of this Division relating to the amount of the weekly payment); and
b. the amount of the weekly payment (if any) shall, in default of agreement, be determined by the Commission.
(2A)If on any such review a weekly payment of compensation is ended or reduced with effect from a day that is earlier than the date of the Commission’s order on the review, the Commission may order the worker to refund the amount of any payments made to the worker to which the worker is not entitled as a result of the order on the review.
(3)On any such review, the amount of any weekly payment in respect of an injury may be increased to such an amount as would have been awarded if the worker had , at the time of the injury, been earning the wage or salary which the worker would probably have been earning, at the date of the review, if the worker had remained uninjured and continued to be employed in the same or some comparable employment.”
In summary, the issues Mr Marafioti argues are in dispute in the appeal are as follows:
·That the Arbitrator failed to appreciate the discretionary nature of the power to order a refund of weekly payments, in section 55(2A) of the 1987 Act (‘Misinterpretation of Discretionary Power’).
·Alternatively, that the Arbitrator failed to properly exercise the discretion under section 55(2A) of the 1987 Act (‘Improper Exercise of Discretionary Power’).
·The Arbitrator failed to “give any reasons whatsoever for the exercise of the discretion pursuant to section 55(2A)” of the 1987 Act (‘Inadequate Reasons’).
The Insurer filed a Notice of Opposition to the Appeal. It submits, “the Arbitrator properly exercised his discretion and gave adequate reasons in respect of same”.
ON THE PAPERS REVIEW
Section 354(6) of 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.”
I have before me all of the evidence and submissions that were before the Arbitrator and written submissions on appeal. There is no fresh evidence in the appeal. I note that there were four surveillance videotapes submitted in evidence to the Arbitrator. The Arbitrator’s decision refers to the surveillance videos as “inconclusive” and I therefore assume they were viewed. I note however that the videotapes are not listed in the “Information for the Record” which appears at the end of the Arbitrator’s decision. For reasons that should become obvious from this decision I have not found it necessary to view the videotapes. The matter is to be reheard afresh and the Arbitrator who has that task must decide the relevance and value of those tapes.
I have considered the parties submissions on this issue and 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 which provides:
“352 Appeal against decision of Commission constituted by Arbitrator
(1)A party to a dispute in connection with a claim for compensation may, with leave of the Commission constituted by a Presidential member, appeal to the Commission as so constituted against a decision in respect of the dispute by the Commission constituted by an Arbitrator.
(2)The Commission is not to grant leave to appeal unless the amount of compensation at issue on the appeal is both:
(a)at least $5,000 (or such other amount as may be prescribed by the regulations), and
(b) at least 20% of the amount awarded in the decision appealed against.
(3)If the Commission refuses to grant leave to appeal, the Commission must state reasons for the refusal in writing to the parties.
(4)An appeal can only be made within 28 days after the making of the decision appealed against.
(5)An appeal under this section is to be by way of review of the decision appealed against.
(6)Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.
(7)On appeal, the decision may be confirmed or may be revoked and a new decision made in its place. Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission.
(8)In this section, decision includes an award, interim award, order, determination, ruling and direction.”
The appeal was lodged on 12 October 2005, which is within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Mr Marafioti submits that the amount of the weekly payments in dispute is in excess of $30,000.00. Notwithstanding the Arbitrator’s order did not specify an exact monetary amount (Mawson v Fletchers International Exports Pty Ltd [2002] NSWWCCPD 5), the amount of compensation at issue in the appeal is greater than $5000 (Fletchers International Exports Pty Ltd v Regan [2004] NSWWCCPD 7).
Leave to appeal is granted.
CONSIDERATION OF THE ISSUES
Misinterpretation of Discretionary Power
It is clear that the power to order a refund of an amount of weekly payments, pursuant to section 55(2A) of the 1987 Act is discretionary. There is no argument between the parties on this point (Rhodes Smash Repairs Pty Ltd v Karvasilias (1999) 19 NSWCCR 97).
The Arbitrator considered the issue of the entitlement to weekly benefits based on the dependency of Mrs Marafioti at [58] to [62] of the Statement of Reasons (‘reasons’). He set out a relevant extract of Bishop J’s determination of 14 March 1995. He set out the evidence of Mrs Marafioti’s earnings for the financial year ending June 1997 and found that there was a ‘change of circumstances’ in relation to Mrs Marafioti’s earnings. He found that Mr Marafioti did not disclose the change of circumstances in relation to his wife’s dependency until 20 November 2004. His conclusion is set out at [61] as follows:
“61.In the full circumstances of this case, I believe it appropriate to find that since 1 July 1996 Mrs Marafioti has not been totally or mainly dependent on Mr Marafioti within the meaning of section 37(4).”
The Arbitrator then finds:
“62.Taking into account once again the full circumstances of this case I believe it appropriate to direct Mr Marafioti to refund the money to which he has not been entitled. Assuming the correctness of the schedule provided by the Applicant as an annexure to its submissions, the amount to be refunded is $35,806.50 less the amounts received in respect of Mrs Marafioti’s dependency when she was not working for a two-month period during 1998 (when she had throat cancer) and not working for a three-month period during 2001 (while caring for her husband).”
Mr Marafioti submits the Arbitrator “proceeded to make an order for refund of weekly payment . . . without giving any indication that he had considered any matters relevant to the discretion which he doubtless had to exercise”. He argues this amounted to a failure to appreciate the discretionary nature of the power in section 55(2A) of the 1987 Act.
While it is difficult to conceive of the Arbitrator being unaware that section 55(2A) conferred a discretion on him, I believe Mr Marafioti’s submission on this point has some merit. There is little in the Arbitrator’s reasons to indicate that he exercised the discretion. His reasons disclose a conclusion that Mrs Marafioti was not dependent for the period of the payments and then an order for refund. Ultimately however, I consider that the Arbitrator’s reference to “I believe it appropriate” gives at least some indication that he knew he was exercising a discretionary, and not a mandatory, power. The reasons are clearly inadequate, as discussed below. This is particularly evident in view of the fact that the parties had made lengthy submissions to the Arbitrator as to the amount of the refund in issue, ranging from approximately $30,000.00 to over $200,000.00. This is a substantial, and significant, amount of money to be repaid by Mr Marafioti who, due to compensable and other serious injuries, is unlikely to be fit for highly remunerative full-time employment and is claiming reliance upon weekly payments of workers compensation at the statutory rate.
Improper Exercise of Discretionary Power
Mr Marafioti submits, in the alternative, the Arbitrator failed to properly exercise the discretion to order a refund of the overpayment, pursuant to section 55(2A) of the 1987 Act.
The Arbitrator does not state what factors he considered relevant to the discretion. He refers only to “the full circumstances of the case”. The inadequacy of the Arbitrator’s reasons is discussed below.
The exercise of administrative discretion should be overturned only where it has not been exercised fairly and according to law. This occurs where the Arbitrator has acted upon a wrong legal principle, allowed irrelevant considerations to influence the decision, made a material mistake as to the facts, or failed to take into account relevant and material considerations (House v The King (1936) 55 CLR 499 at 504-505; Norbis v Norbis (1986) 161 CLR 513 at 520, Re: National Roads and Motorists Association Ltd [2003] FCAFC 206 at [21] to [21]). Whether or not another decision-maker, or an appellate tribunal, would simply have come to a different view is irrelevant.
Both parties have, in submissions to the Arbitrator and in submissions on appeal, outlined the factors that they submit are relevant to the exercise of the discretion to order a refund. It was incumbent upon the Arbitrator to expressly consider these matters and to accord them the weight he determined in view of their probative value. The reasons do not demonstrate that he has done so. I do not set out those factors here because, in my view, the question must be re-determined by another Arbitrator, who will take those submissions into account.
Inadequate Reasons
Mr Marafioti submits that the Arbitrator “failed to give any reasons at all” for the exercise of the discretion to order a refund of the overpayment. The Arbitrator’s reasons are set out above and I have already made some comment on them. In my view Mr Marafioti’s submissions on this issue have merit.
Mr Marafioti refers to Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 on the duty to give reasons. In that case the Court identified the rationale for the giving of reasons, namely, to enable the parties to understand the basis of the decision, the evidence upon which it was made, to ensure the accountability of the decision-maker, to enhance predictability and consistency in decision-making and to facilitate the exercise of any right of appeal against the decision.
It is not necessary for the Arbitrator to set out all of the evidence and to conclude every fact, whether material to the issues or not (Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; CSR Limited v Della Maddalena (2006) 80 ALJR 458; Williams v Boambee Bay TimeShare Resort Pty Ltd [2004] NSWCA 59).
The standard of the adequacy of reasons for a decision by a Commission Arbitrator has been discussed in many Presidential decisions. In the Insurer’s appeal against the Arbitrator’s decision (Sarkem Limited v Marafioti [2006] NSWWCCPD 235) I referred to those principles and decisions as follows:
“75.The Arbitrator had a statutory duty to provide reasons for the decision (section 294 of the 1998 Act). Rule 74 of the Workers Compensation Commission Rules provides that the Arbitrator must include in the reasons the findings on material questions of fact, the applicable law and the “reasoning process” that led to the conclusions (see also Mayne Health Group t/as Nepean Private Hospital v Sandford [2002] NSWWCCPD 6 for a discussion of the duty of an Arbitrator to give reasons). The Arbitrator is not required to give lengthy reasons provided that these relevant matters are addressed (Roncevich v Repatriation Commission [2005] HCA 40; Minister for Multicultural Affairs v Yusuf (2001) 206 CLR 323).”
The Arbitrator’s reasons on the exercise of the discretion under section 55(2A) are inadequate. The only reason, expressed in the ‘Statement of Reasons’, for making the order for the refund of moneys overpaid, is “taking into account once again the full circumstances of the case”. This does not meet the requirement of Rule 74 nor does it convey to the parties the basis upon which the refund was ordered. As discussed above, the finding that there has been an overpayment does not of itself entitle the Insurer to the automatic order of a refund of that overpayment.
The obligation to give reasons must be considered in relation to the nature of the decision and the decision-maker. Had the Arbitrator been asked to exercise his discretion in relation to a relatively small monetary overpayment then the reasoning of “taking into account the full circumstances of the case”, where those circumstances were set out elsewhere in the reasons, may have been sufficient. This is not the case here. The amount in issue was significant, not only in monetary terms, but also relative to Mr Marafioti’s circumstances and ability to repay, and to the Insurer’s commercial interests of recovery. The parties, through their legal advisers, had made lengthy submissions on this issue and the factors relevant to the exercise of the discretion to order repayment, none of which were referred to by the Arbitrator in the reasons. There is no indication of what factors the Arbitrator considered persuasive, both for and against the exercise of the discretion to order a refund of the overpayment. In the interests of fairness and justice Mr Marafioti, the Respondent and the Insurer deserved more than this.
The Arbitrator erred in failing to give adequate reasons for the decision. This failure is such that I cannot be satisfied that the Arbitrator exercised his power to determine the dispute fairly and lawfully. Mr Marafioti urges that I proceed on review to re-determine the issue of the overpayment. However, I have already found, by reason of other errors on the part of the Arbitrator, that the decision should be revoked (Sarkem Limited v Marafioti [2006] NSWWCCPD 235). If I had not done so, I would in any event have revoked the Arbitrator’s decision for the reasons stated in this determination. The determination of the application of section 55(2A) of the 1987 Act should be considered when the matter is heard afresh.
The costs of the arbitral and appeal proceedings are claimed by both parties. Having found that the decision should be revoked the basis for the Arbitrator’s costs order has been undermined. The matter must be heard afresh and it is appropriate that the costs of the entirety of the matter be determined at the conclusion of the proceedings.
DECISION
The decision of the Arbitrator 14 September 2005 is revoked and the matter is remitted to a different Arbitrator to be determined afresh.
COSTS
Both parties have appealed against the Arbitrator’s decision. In both proceedings the Appellant has been successful. The appropriate order in relation to the costs of the appeal, in both matters, is ‘No order as to the costs of the appeal’.
Dr Gabriel Fleming
Deputy President
19 September 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DR GABRIEL FLEMING, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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