Mesiti v South West Realty Pty Ltd - [2010] NSWWCCPD 122

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:		Mesiti v South West Realty Pty Ltd [2010] NSWWCCPD 122
APPELLANT:		Angelo Roy Mesiti
RESPONDENT:		South West Realty Pty Ltd
INSURER:		Employers Mutual (NSW) Ltd
FILE NUMBER:		WCC A1-004026/10
ARBITRATOR:	Mr B McManamey
DATE OF ARBITRATOR’S DECISION:		18 August 2010
DATE OF APPEAL DECISION:		18 November 2010
SUBJECT MATTER OF DECISION:		Fresh evidence on appeal; s 352(6) of the Workplace Injury Management and Workers Compensation Act 1998; failure to demonstrate economic incapacity; s 40 of the Workers Compensation Act 1987
PRESIDENTIAL MEMBER:		President Judge Keating
HEARING:		On the papers
REPRESENTATION:		Appellant:	Galluzzo Lawyers
Respondent:	Edwards Michael Lawyers
ORDERS MADE ON APPEAL:		1. The Arbitrator’s findings, orders and directions made in the Certificate of Determination dated 18 August 2010 are confirmed, subject to the addition of the following order: “Each party is to pay his or its own costs of the arbitration.” 2. Each party is to pay his or its own costs of the appeal.

BACKGROUND TO THE APPEAL

At the time of having sustained the injuries the subject of this appeal, the appellant worker, Mr Mesiti, was a self-employed working director of South West Realty Pty Ltd. The company operated a real estate agency known as L J Hooker Hoxton Park.
Mr Mesiti alleges he was injured on three occasions. The first injury occurred on 2 August 2007, when the vehicle he was driving went off the side of the road and collided with a telegraph pole. He suffered a fractured sternum and injuries to his knees, shoulders, neck, back and left hip.
The second injury occurred on 18 April 2008, when he slipped at his business premises and suffered injuries to his right shoulder, back and right knee.
On 26 June 2009, during the course of a property inspection, he tripped and fell, injuring his left shin, left knee, right knee and right shoulder.
After the motor vehicle accident on 2 August 2007, Mr Mesiti had difficulty performing his normal duties and reduced his working hours. In particular, he stopped working on Saturday afternoons and Sundays.
After the injuries in April 2008 and June 2009, he progressively reduced his working hours and ultimately sold his business, with settlement occurring on 6 May 2010. Immediately prior to the sale, he had reduced his hours to five hours per day, five days per week. It was a condition of the sale that Mr Mesiti was to continue work in the agency for three months after the sale, for which he was not to be separately remunerated.
At the end of the three-month transition period, it was agreed between Mr Mesiti and the new proprietors of the agency that he would work for them as real estate agent on a commission basis. He had not received any remuneration as a commission agent at the time of the arbitration.
Employers Mutual (NSW) Ltd (Employers Mutual) accepted liability for Mr Mesiti’s claim and made voluntary payments of weekly compensation between 13 June 2008 and 10 June 2009.
On 25 March 2010, Employers Mutual issued a notice under s 54 of the Workers Compensation Act 1987 (the 1987 Act). It denied liability for weekly payments from 6 May 2010 on the basis that the effects of the injuries sustained in the three subject accidents had resolved.
On 19 May 2010, Mr Mesiti lodged an Application to Resolve a Dispute (the Application) in the Commission. Relying on the injuries referred to at [2]–[4] above, he claimed weekly compensation from 6 May 2010 to date and continuing, medical expenses in the sum of $1,827.40, and lump sum payments, including a claim for pain and suffering under s 67 in the sum of $53,256.25. The lump sum payments related to impairments to the lumbar spine, both arms and both legs.
On 8 June 2010, the respondent lodged a Reply to the Application to Resolve a Dispute. It denied liability for the weekly payments, medical expenses and the lump sum claims on the basis disclosed in the s 54 notice.
The Commission listed the matter for conciliation and arbitration on 28 July 2010. Mr Mesiti gave brief unsworn oral evidence and the parties made lengthy submissions. In a reserved decision dated 18 August 2010, the Arbitrator accepted that, as a result of his injuries, which were not in dispute, Mr Mesiti continued to suffer from the effects of the injuries to his neck, back, shoulders and right knee. However, he was not satisfied that Mr Mesiti had established he was suffering any ongoing economic incapacity.
Consistent with the Arbitrator’s findings, the Commission issued a Certificate of Determination on 18 August 2010 in the following terms:
“The Commission determines:
1.     Award for the respondent in respect of the claim for weekly payments to date.
2.     Respondent to pay s 60 expenses.
3.     Claim for permanent impairment benefits remitted to the Registrar for referral to an AMS.”
In an appeal filed on 13 September 2010, Mr Mesiti seeks leave to appeal the Arbitrator’s determination.

ON THE PAPERS REVIEW

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.”
Having regard to Practice Directions Nos 1 and 6, the documents that are before me, and the submissions by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.

LEAVE

Monetary threshold

Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of s 352 of the 1998 Act.
The monetary thresholds in s 352(2) of the 1998 Act are satisfied.

Time

The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with s 352(4) of the 1998 Act.
I grant leave to appeal.

FRESH EVIDENCE

The appellant seeks leave to rely on the following fresh evidence:
(a)     A letter and statement of account drawn by Galluzzo Andriano Solicitors dated 6 May 2010;
(b)     An individual tax return, unsigned and undated, prepared by Prudential Partners, accountants;
(c)     Trust tax return: South West Realty Unit Trust, undated and unsigned, prepared by Prudential Partners, accountants;
(d)     Trust tax return: The ARM Trust, undated and unsigned, prepared by Prudential Partners, accountants.
The submissions in support of the admission of the fresh evidence are brief, and are reproduced as follows:
“OUTLINE OF THE EVIDENCE AND WHY IT WAS NOT GIVEN IN PROCEEDINGS BEFORE THE ARBITRATOR
(a)     The new evidence contains evidence of the sale price of $131,000.00 as a capital sum. It was not given in proceedings before the Arbitrator as it does not show evidence of wages or earnings, it is a capital sum.
(b)     (c) and (d) This evidence comprises of the tax records for the financial year ended 30 June 2010. It was not in existence at the date of the Arbitration.
SUBMISSIONS AS TO WHY THE NEW EVIDENCE SHOULD BE ADMITTED
(a)     This new evidence is in response to the Arbitrator’s comments in paragraph 25 of the Statement of Reasons and is therefore just to admit.
(b)     (c) and (d) This evidence was not in existence and therefore could not have reasonably been obtained prior to the Arbitration.”
The respondent opposes the admission of the fresh evidence. It submits that the evidence sought to be relied upon was capable of being in existence prior to the arbitration and no explanation is offered as to why the documents in question were not obtained before the conclusion of the hearing.
The respondent submits that the worker could have elected to discontinue the proceedings and commence fresh proceedings when all the evidence was available. The respondent further submits that the failure to call all relevant evidence at the hearing does not entitle a party to re-litigate the issues on appeal. Consistent with the Commission’s procedures, all documents in support of the claim should have been filed with the Application to Resolve a Dispute.
‘Fresh evidence’ on appeal is governed by s 352(6) of the 1998 Act, which provides as follows:
“(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.”
Practice Direction No 6 sets out the process for seeking leave of the Commission to give ‘new evidence’ on appeal. It provides as follows:
“FRESH EVIDENCE AND/OR ADDITIONAL EVIDENCE
Each application to introduce fresh evidence or additional evidence on appeal will be considered on its own facts and circumstances and in the context of the Commission’s obligation to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (see s 354 of the 1998 Act).
In the exercise of its discretion to admit fresh evidence or further evidence on appeal the Commission will have regard to, and the parties should make submissions on, whether:
·it can be demonstrated that the evidence could not with reasonable diligence have been obtained by the party and tendered in proceedings before the Arbitrator;
·the evidence is credible;
·there is a high degree of probability that there would have been a different decision if the evidence had been admitted at the arbitration, and/or
·it is just to admit the evidence in all the circumstances of the individual case.
Parties should be aware that a review under s 352 of the 1998 Act is not a rehearing or hearing de novo. The original arbitration should not be treated as a preliminary hearing and all relevant evidence should be called at that time.”
Practice Direction No 6 also provides that, if fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against is relied upon, parties must include:
·a schedule of the fresh or additional evidence;
·a copy of the fresh or additional evidence;
·a brief outline of the fresh or additional evidence and the reasons why it was not given in proceedings before the Arbitrator, and
·submissions on why the fresh or additional evidence should be admitted, or rejected as the case may be.
Where a party seeks leave to rely on fresh or additional evidence in relation to the decision appealed against, that party must serve a copy of the fresh or additional evidence on the other parties to the dispute when serving the Application or Notice of Opposition.
The Court of Appeal considered the introduction of fresh evidence or additional evidence on appeal in Haider v J P Morgan Holdings Aust t/as J P Morgan Operations Australia Ltd [2007] NSWCA 158; 4 DDCR 634, where Basten JA referred to Akins v National Australia Bank (1994) 34 NSWLR 155 (Akins) and other authorities. In Akins, Clarke JA (Sheller JA and Powell JA agreeing) stated at [160] that three conditions need to be met before ‘fresh evidence’ can be admitted. These are:
“(1)   It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial;
(2)     The evidence must be such that there must be a high degree of probability that there would be a different verdict;
(3)     The evidence must be credible.”
However, in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116, Heydon JA stated at [15]:
“Even if the three tests stated in the Akins case are applicable and are not satisfied, a question remains: is it just to admit the further evidence in the case?”
It may reasonably be inferred that the 2010 individual and trust tax returns now sought to be admitted were prepared on the instructions of Mr Mesiti sometime between the Arbitrator’s decision on 18 August 2010 and the lodgement of the appeal on 14 September 2010. The appellant specifically states that the new evidence is in direct response to the Arbitrator’s comments in [25] of the Statement of Reasons (Reasons). That is, I believe, an erroneous reference to [26], which is in the following terms:
“I have not been provided with any evidence of the Applicant’s actual earnings apart from his 2009 tax return. That tax return disclosed a taxable income of $33,512 which equates to $644.46 per week. The income is a distribution from a trust. I have not been provided with the trust return to show how that income was made up. The income disclosed by the tax return broadly equates to the award rate at the relevant time. With regard to the period of the claim the Applicant says that he is working reduced hours but does not say whether that has resulted in any reduction in earning. The Applicant says that he is not paid for his current work in the agency however it is clear that it is part of the terms from the sale of the business. To that extent the sale price would include some component which represents the value of the work which the Applicant is continuing to carry out. I have not been provided with any of the details of the sale and in particular I have not been provided with the sale price. Because of that lack of evidence I am unable to be satisfied that at the current time the Applicant is, in fact, suffering any loss of earning. Whilst I accept that the Applicant has a continuing medical incapacity I am not satisfied, on the current evidence, that the Applicant is suffering from any ongoing economic incapacity such as to entitle him to an award of weekly compensation.”
It is apparent that the Arbitrator’s conclusions at [26] are based on a lack of evidence as to the worker’s ability to earn as a commission real estate agent. I accept that there is often a period following the end of the financial year before taxation returns can be prepared. However, Mr Mesiti has not submitted that there was any reason why the returns could not have been prepared and tendered in the proceedings before the Arbitrator. The reasons for not doing so are unexplained.
The tax returns are only relevant to the determination of Mr Mesiti’s probable earnings whilst working as a self-employed real estate agent. However, his probable earnings are not in dispute. It is agreed that, had he not been injured, Mr Mesiti would have been earning $694.34 per week.
Mr Mesiti claims that he has some residual capacity to work as an employed real estate agent being remunerated by commissions on the sales. It was a lack of evidence concerning Mr Mesiti’s ability to earn under s 40(2)(b) as a commission agent which led the Arbitrator to conclude that he had insufficient evidence to determine whether Mr Mesiti suffered any economic incapacity, notwithstanding his established injuries. Allowing the tax returns to be admitted on appeal would not overcome that deficiency because they relate only to Mr Mesiti’s previous earnings as a self-employed working director.
Although it was not the subject of evidence, it may be inferred that Mr Mesiti had not commenced to work as a commission agent by the time of the arbitration. This may be inferred from the fact that settlement occurred on 6 May 2010 and Mr Mesiti was not due to complete his contractual obligation to assist in the transition until 6 August 2010. The arbitration took place on 28 July 2010. During the three-month transition period, he was not to be separately remunerated in addition to the proceeds of the sale.
Mr Mesiti made no attempt to provide any evidence of his anticipated earnings as a commission agent. In the course of the evidence, Mr Mesiti said he expects to derive income as a commission agent, but the quantum of that income will depend upon the volume of sales and the commissions paid to him. The rate of the commission varies and is higher for the sale of properties of clients he introduces to the agency than other sales. The volume of sales he expected to participate in did not rise above mere speculation.
The remaining documents sought to be admitted include a letter to South West Realty dated 6 May 2010 attaching a statement of account with respect to the sale of South West Realty to Hoxton Park Realty. The relevance of the correspondence and the account is said to concern the retention of an amount of $7,307, “being the retention moneys in respect of special condition 9 of the contract”. The contract is not in evidence and no explanation has been given as to the import of special condition 9. The attached account is a statement of account in relation to the disbursement of the proceeds of sale and demonstrates that the retention moneys have been held in the solicitor’s trust account. It is submitted at [22] above that this reflects a capital payment. If this is so, it would also be irrelevant to the determination of Mr Mesiti’s ability to earn, as Mr Masiti’s submission acknowledges at [22].
The basis for seeking the admission of these documents as fresh evidence on appeal is an attempt to overcome findings made by the Arbitrator at [26] of the Reasons concerning a lack of evidence to determine whether Mr Mesiti suffers an economic incapacity.
As was observed by Roche DP in Matar v Zeineddine [2008] NSWWCCPD 51 (at [21]), “it cannot be overemphasised that arbitrations are not a trial run where parties can see how things turn out and then attempt to introduce on appeal evidence that was readily available at the time of the arbitration”.
Dealing with the considerations concerning the admission of fresh evidence on appeal, I noted in Irvin v LA Logistics Pty Ltd [2010] NSWWCCPD 40 at [48]:
“The Commission must balance two competing requirements: the public interest that litigation should not continue indefinitely against the need to ensure that justice is done in all the circumstances of the case. In balancing these matters, the Commission must also keep in mind its statutory duty to act ‘according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms’ (s 354(3) of the 1998 Act), PCR Plastic Fittings Pty Ltd v De Brito (No 3) [2008] NSWWCCPD 82.”
I am not satisfied on the evidence before me that Mr Mesiti has demonstrated that the relevant documents could not have been obtained with reasonable diligence for use at the trial. Nor am I satisfied that, given the lack of relevance of the documents to the issues in dispute, they would have had any bearing on the outcome of the hearing. Certainly, I could not be satisfied that there was any degree of probability that there would be a different result if those documents were to be admitted. For these reasons I do not consider it just to allow the admission of fresh evidence on appeal and, accordingly, I refuse the application.

REMAINING APPEAL GROUNDS

In the absence of the fresh evidence, Mr Mesiti’s only remaining appeal ground is that the Arbitrator erred in his application of the five-step assessment process referred to in Mitchell v Central West Health Service (1997) 14 NSWCCR 527 (Mitchell). In particular, Mr Mesiti submitted, “he does not appear to have assayed into the application of the Mitchell assessment or state whether the Arbitrator had considered the Mitchell assessment”. I reject that submission. It is clear from the decision as a whole that the Arbitrator was directing his attention to the second step of the Mitchell five-step process by attempting to quantify the weekly amount that Mr Mesiti would be capable of earning in suitable employment. For the reasons given by the Arbitrator, he was unable to complete that step, which makes the application of the remaining steps in Mitchell impossible.

The fact that Mr Mesiti sustained the injuries complained of in the course of his employment is not at issue. The Arbitrator’s finding that he continues to suffer from the effects of those injuries has not been challenged on appeal, and that finding stands.
The unchallenged evidence is that Mr Mesiti intends to continue working as a real estate agent. He will no longer be self-employed as a principal in a real estate agency owned and operated solely by him, but he will continue to work in the same agency on a different basis – that is, as a commission agent. For the reasons stated at [32]–[35], Mr Mesiti has failed to establish that his employment as a commission agent will derive a greater or less sum than his agreed probable earnings of $694.34.
In Submissions in Reply, the appellant relies on Aitkin v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20 (Aitkin). Mr Mesiti submits that, from 7 May 2010, his earnings have been nil and therefore the Arbitrator was required to determine his “ability to earn” in accordance with the alternative approaches discussed in Cage Developments Pty Ltd v Schubert [1983] HCA 37 (Cage Developments).
Mr Mesiti submitted that he was able to work 10–25 hours per week and that his ability to earn would be assessed at $350 per week. The appellant has not provided any reasoned argument as to why the sum of $350 per week should be selected to reflect his ability to earn. Cage Developments does not assist the appellant’s case. That case concerned the approaches to the calculation of post-injury earnings under s 40(2)(b) when the worker is engaged in his or her own business. In this case, the worker has disposed of his business and his future earnings will not be derived from income from his own business, but from commissions paid to him by the incoming proprietors of his former business.
This case is somewhat unique; it cannot be considered in the same context as cases where the ability to earn can be assessed at large, as for example in the case of an unemployed labourer. Mr Mesiti’s case is that he intends to derive his future earnings from working in a particular manner, that is, as a commission agent in his former business. It is the lack of evidence concerning his ability to earn in those particular circumstances that resulted in the Arbitrator’s conclusion that he had failed to prove an economic incapacity.
It follows that the appeal must fail and the Arbitrator’s determination should be confirmed, subject to one variation in relation to costs. The Arbitrator made no orders in relation to the costs of the arbitration. Given the outcome of those proceedings, the appropriate order is that each party pay his or its own costs of the proceedings, and the Arbitrator’s determination shall be varied to add an order in those terms.

CONCLUSION

Mr Mesiti has failed to satisfy the test for the admission of fresh evidence on appeal. I agree with the Arbitrator’s conclusions that, by reason of lack of evidence, Mr Mesiti has failed to demonstrate that he suffers from any ongoing economic incapacity such as to entitle him to an award of weekly compensation.

DECISION

The Arbitrator’s findings, orders and directions made in the Certificate of Determination dated 18 August 2010 are confirmed, subject to the addition of the following order:
“Each party is to pay his or its own costs of the arbitration.”

COSTS

Each party is to pay his or its own costs of the appeal.

Judge Keating

President
18 November 2010

I, MELANIE CURTIN, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF JUDGE KEATING, PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE