Metal Manufactures Limited v Gagovski
[2006] NSWWCCPD 267
•10 October 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Metal Manufactures Limited v Gagovski [2006] NSWWCCPD 267
APPELLANT: Metal Manufactures Limited
RESPONDENT: Nikola Gagovski
INSURER:Allianz Australia Workers Compensation (NSW) Limited
FILE NUMBER: WCC11234-04
DATE OF ARBITRATOR’S DECISION: 15 February 2005
DATE OF APPEAL DECISION: 10 October 2006
SUBJECT MATTER OF DECISION: Sections 40(2)(b), 40(2A) and 40(2B) of the Workers Compensation Act 1987, and “unreasonably rejected suitable employment”
PRESIDENTIAL MEMBER: Deputy President Gary Byron
HEARING:Determined on the papers
REPRESENTATION: Appellant: Vardanega Roberts Solicitors
Respondent: Bussoletti Lawyers
ORDERS MADE ON APPEAL: The decision of the Arbitrator, dated 15 February 2005 is confirmed.
The Appellant Employer is to pay the Respondent Worker’s costs of the appeal.
BACKGROUND
Nikola Gagovski has worked for Metal Manufactures Limited since 1976. He injured his back at work on two occasions, 22 June 1998 and 6 March 2001. The 1998 injury occurred while he was using a crane to lift a 44-gallon drum. He returned to work after this injury. The 2001 injury occurred when he was unloading copper tubes from a tank. Mr Gagovski had a laminectomy on 11 May 2001. On 10 September 2001 he returned to work on a structured program of modified duties, at his pre-injury wages.
Allianz Australia Workers Compensation (NSW) Limited (‘the Insurer’) was Metal Manufactures Limited’s workers compensation insurer at the time of the injuries. It acted for and on behalf of the employer in the Commission proceedings.
Mr Gagovski made a claim for lump sum compensation for permanent impairment of his back and left leg pursuant to sections 66 and 67 of the Workers Compensation Act 1987 (‘the 1987 Act’). The Insurer disputed the claim and ultimately, it was settled and registered in the Compensation Court, on 19 April 2002. The terms of settlement were as follows:
·section 66 - $18,000 with respect to permanent impairment of the back and $24,375 with respect to permanent loss of use of the left leg at or above the knee; and
·section 67- $22,000 for pain and suffering.
On 3 March 2003, Mr Gagovski ceased working at level 4 status and commenced working as a cleaner for Metal Manufactures at level 2.
On 22 July 2004 Mr Gagovski’s ‘Application to Resolve a Dispute’ was registered in the Workers Compensation Commission. Mr Gagovski sought payments of weekly benefits compensation.
The dispute went to Arbitration on 5 November 2004. It was agreed between the parties that:
·Mr Gagovski received injuries arising out of or in the course of employment on 22 June 1998 and 6 March 2001 (section 9, 1987 Act);
·Mr Gagovski’s employment was a substantial contributing factor to his injuries (section 9A, 1987 Act);
·Mr Gagovski continues to be unfit for his pre-injury employment and is partially incapacitated as a result of his injuries (section 33, 1987 Act), and
·the weekly amount that Mr Gagovski would probably have been earning but for his injury (had he continued to be employed in the same or comparable employment) is the weekly amount payable to an employee working a full-time week (with some overtime) and paid at a level 4 rate (section 40(2)(a), 1987 Act).
The issues in dispute before the Arbitrator were:
·With respect to any period of partial incapacity for work what is the average weekly amount Mr Gagovski is earning or would be able to earn, in some suitable employment from time to time after the injury (sections 40(2)(b), 40(3) and 43A)?
·Did Mr Gagovski unreasonably reject suitable employment (sections 40(2A) and 40(2B)(b))?
An important issue before the Arbitrator was the circumstances surrounding the change in Mr Gagovski’s duties from level 4 to working as a cleaner at level 2. There was conflicting evidence before the Arbitrator. Mr Gagovski’s evidence was that his supervisor, Mr Tome Naumovski, told him that it was uncertain how long Metal Manufactures would be able to provide suitable duties and he should be seeking alternative employment. However, in a statement of evidence, Mr Naumovski indicated that Mr Gagovski approached him and told him that he was concerned that suitable duties would not be available and was therefore considering applying for work as a cleaner, but still in the employ of Metal Manufactures. Mr Naumovski’s evidence was that he reassured Mr Gagovski that suitable duties were available and that he attempted to persuade Mr Gagovski to reconsider his plan and to remain in his current modified duties.
The Arbitrator’s determination was made on 15 February 2005 in which he ordered:
“1.That the Respondent pay the Applicant weekly compensation pursuant to section 40 of the Workers Compensation Act 1987 for the period 8 September 2003 to date and continuing at a rate of the difference between the Level 4 hourly rate and the Level 2 hourly rate for the hours he has worked, including overtime, with the relevant rates of pay and number of hours worked to be agreed between the parties.
2.That the Respondent pay the Applicant’s costs as agreed or assessed.”
On 15 March 2005, Metal Manufactures lodged an ‘Appeal Against Decision of Arbitrator’. On 8 April 2005, Mr Gagovski lodged a ‘Notice of Opposition’ to the appeal.
ISSUES IN DISPUTE
On appeal, Metal Manufactures assert that the Arbitrator erred in law:
·by failing to properly consider section 40(2)(b) of the 1987 Act;
·by failing to properly apply the decision of Morgan v Commissioner for Railways [1972] WCR 33;
·by misapplying section 40(2)(b);
·by failing to take into account matters relevant to section 40(2A), and
·in the application of the concept of reasonableness in section 40(2A).
Mr Gagovski’s submissions support the Arbitrator’s determination.
ON THE PAPERS REVIEW
Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘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.”
Mr Gagovski gave oral evidence in the arbitration proceedings. However, the electronic file of the transcript of the proceedings was corrupted and therefore no transcript of the proceedings is available. Consequently, Metal Manufactures submit that an oral hearing on appeal is required for this reason and also due to:
·the demands of procedural fairness;
·the complexity of the issues raised in this matter;
·the numerous decisions which deal with this area of the law; and
·the potential implications of this matter.
Mr Gagovski also submits that an oral hearing on appeal is necessary due to the absence of the transcript.
In Aluminium Louvres & Ceilings Pty Limited v Xue Qin Zheng [2006] NSWCA 34 (‘Zheng‘) the Court of Appeal considered that the absence of a transcript is a “serious shortcoming” which “could fairly lead a Presidential member to a decision to require a rehearing although that result would not be automatic”. Given that Metal Manufactures’ grounds of appeal challenge the Arbitrator’s application of the law and do not rely substantially upon matters canvassed at the hearing, I do not consider that the absence of the transcript in this matter is such that a rehearing is automatically required (see Zheng), or that an oral hearing on appeal would be of particular assistance in the determination of the appeal. Both parties have made detailed written submissions in relation to the grounds of appeal. Having regard to the above considerations, Practice Directions Numbers 1 and 6, and the documents that are before me (including the Arbitrator’s written Statement of Reasons for Decision), I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or any formal hearing, and that this is the appropriate course in the circumstances.
LEAVE
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.
The appeal concerns a claim for weekly compensation payments from September 2003 to date and continuing which exceeds $5,000, and the total award of compensation is in issue in this appeal. The requirements of section 352(2)(a) and (b) are met.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Leave to appeal is granted.
SUBMISSIONS, DISCUSSION AND FINDINGS
Ground 1: Failure to properly consider section 40(2)(b)
This ground of appeal contains two specific challenges to the Arbitrator’s Determination. Several submissions are directed to section 40(2A) and its interaction within section 40, and a number of submissions are directed to the Arbitrator’s findings under section 40(2)(b).
First, with respect to section 40 and section 40(2A), Metal Manufactures assert that the correct approach to section 40 in this case is as follows:
“Firstly, the Arbitrator’s task was to determine whether there was a difference between the worker’s current weekly wage (CWWR) prior to injury and his CWWR after injury. It is stressed that this task is quite independent of any concept of rejection of suitable employment. (See paragraphs 3 to 5 of the respondent’s submissions)…
Secondly, the worker’s decision to transfer from a level 4 to a level 2 position was a rejection of suitable employment and as such the rejection was unreasonable (see paragraph 7 and following of the respondent’s submissions).”
Metal Manufactures asserts that in failing to consider the first of these submissions, the Arbitrator has not completed the task under the five step approach of Mitchell v Central West Area Health Service (1997) 14 NSWCCR 526 (‘Mitchell’) as applied to the Commission in Snow Confectionary v Askin [2004] NSWWCCPD 56 (‘Askin’). Further, Metal Manufactures note that it asserted at the hearing before the Arbitrator that it is not necessary to consider the reasonableness of the rejection of suitable employment because it is not relevant to the Mitchell steps, as set out in Askin.
In his Statement of Reasons for Determination, the Arbitrator noted that section 40(2) of the 1987 Act sets out a procedure for the calculation of a worker’s reduction in earnings in general circumstances, but section 40(2A) requires a different calculation where it is found that the worker has unreasonably discontinued or rejected suitable employment (paragraphs 31 to 40 of his Reasons). He decided that prior to considering the five steps in Mitchell, as outlined in Askin, it was appropriate to consider whether section 40(2A) applied. In so doing, he noted that Metal Manufactures had submitted to him that a different approach was required (see paragraph 31 of his Reasons).
To accept the submission of Metal Manufactures on this point is to accept that section 40(2A) has no application in the formula prescribed in section 40 of the 1998 Act. Sections 40(2A) and 40(2B) were not a consideration on the facts in either Mitchell or Askin, but that does not preclude a consideration of the application of these provisions in relevant and appropriate circumstances. Sections 40(2)(a) and 40(2)(b) have general application in the calculation of the reduction in earnings of a worker, but sections 40(2A) and 40(2B) specifically apply to provide a different basis for the calculation where a worker has rejected suitable employment (see generally for example the procedure followed in Freightcorp v Duncan [2000] NSWCA 309 (‘Freightcorp’)).
Sections 40(2)(a) and 40(2)(b) apply “(except as provided by this section)”. It is essentially the same kind of calculation but sections 40(2A) and 40(2B) are a variation of it, in relation to specific circumstances. Given the evidence that was before the Arbitrator, and as a matter of statutory construction, I am satisfied that the Arbitrator adopted the correct approach in considering sections 40(2A) and 40(2B) for the purposes of the Mitchell steps, as outlined in his Reasons. I find accordingly.
I note in any event, that the Arbitrator found at paragraph 40 of his Reasons that, “the calculation of the reduction in the Applicant’s earnings is to be conducted on the basis of s40(2) of the 1987 Act, as opposed to s40(2A), and following the five steps identified by Mitchell and Askin.”
This ground of appeal also contains submissions that challenge the Arbitrator’s findings with respect to the second step in the section 40 process (section 40(2)(b) of the 1987 Act). In reply, Mr Gagovski submits that the Arbitrator’s determination was made in accordance with the law and was based on logical and probative evidence.
The correct approach to section 40(2)(b) is that laid down in JCLudowici and Son Ltd v Cutri (1992) 26 NSWLR 580 (‘Ludowici’); see also Pied Piper Pre-School Association (Wallerwang) Incorporated v Woolsey [2004] NSWWCCPD 5 (‘Pied Piper’). In particular, it is appropriate to use the worker’s actual earnings unless it is established that the worker is able to earn more in suitable employment.
In the proceedings before the Arbitrator, Metal Manufactures submitted that the figure to be used for step 2 (section 40(2)(b)) should be Mr Gagovski’s level 4 income. However, the Arbitrator rejected this after considering the Court of Appeal decisions in Novello v Zinc Corporation Ltd 14 (1988) NSWLR 25 (‘Novello’), and Steggles Pty Ltd v Aguire (1988) 12 NSWLR 693 (‘Steggles’). He observed:
“However, while I am not able to conclude that the weekly amount the Applicant has been earning in those suitable duties provided by the Respondent should – on the basis of their previous provision – be taken to be the section 40(2)(b) component of the equation in the calculation of reduction in earnings, it may still leave open the question of what the Applicant is – on the basis of his ability as a worker – able to earn in suitable employment.”
The Arbitrator then noted the comments of Kirby AC-J in Ludowici to the effect that consideration of this question only arises where the worker’s actual earnings amount to an “under-estimation”. At paragraph 53, the Arbitrator stated that:
“Given that the worker has demonstrated what he is actually earning, it is for the Respondent to prove that that weekly amount does not represent what he is able to earn in some suitable employment (Pied Piper at paragraph 55, per Fleming DP).”
The Arbitrator concluded that in the absence of further evidence to demonstrate that Mr Gagovski is able to earn a higher weekly amount he could not conclude that the weekly amount he is earning is an “under-estimation” of his ability to earn. Consequently, the Arbitrator found that his current income (level 2) was the appropriate figure for step 2 under section 40(2)(b) of the 1987 Act.
Metal Manufactures submit that contrary to this conclusion, there was the requisite evidence available and there was no better evidence of the “under-estimation” of Mr Gagovski’s income than the fact that immediately before starting as a cleaner at level 2, he was working in fact, at level 4 (albeit with modified duties in terms of that level).
There is significant disagreement as to the circumstances of Mr Gagovski’s reduction in earnings while in the employ of Metal Manufactures. On the one hand, Mr Gagovski states that Mr Naumovski, his supervisor, told him that it was uncertain how long Metal Manufactures would be able to provide suitable duties and that he should be seeking other suitable employment. Mr Naumovski’s statement is quite at odds with this assertion. He denies that he gave any such advice to Mr Gagovski. He claims that when Mr Gagovski approached him, he said that he was concerned that suitable duties then being provided would not continue and that he was considering applying for a cleaner’s job in the organisation. Mr Naumovski states that he attempted to persuade Mr Gagovski to change his mind, give the matter further consideration, and remain in his current duties [at level 4 on modified duties].
Both accounts cannot be true.
Mr Gagovski’s version is set out in his written statements and was repeated orally by him in the hearing before the Arbitrator. According to the Arbitrator, Mr Gagovski maintained his version of events, notwithstanding that his evidence was tested under cross-examination. Mr Naumovski did not give oral evidence before the Arbitrator as, according to Metal Manufactures’ advice to the Arbitrator, was away at the time of the proceedings. Moreover, Metal Manufactures did not contend that, apart from the fear of losing employment, there was any other motive for Mr Gagovski “to change from the suitable duties provided [at level 4] to a position of cleaner [at level 2]. Nor is there anything in the evidence to suggest any other reason or purpose.”
The Arbitrator concluded that regardless of whose account he preferred, in the absence of any further evidence, Mr Gagovski’s fear of losing his employment was genuinely held and that this was the reason that prompted the course of action. According to the evidence before the Arbitrator, Mr Gagovski’s view was based in part, on medical advice as to his physical capabilities. On the evidence and with the benefit of having Mr Gagovski give oral evidence and undergo cross-examination, this is a reasonable conclusion for the Arbitrator to draw.
As indicated at paragraph 32 above, the Arbitrator rejected the level 4 income as the appropriate figure to use for step 2 and then went on to consider whether there was any evidence to suggest an “under-estimation” of Mr Gagovski’s income. Metal Manufactures submit that there is evidence of an ability to earn, the most obvious demonstration being “that immediately prior to his taking the cleaner’s job at level 2 pay, the worker had been doing the modified level 4 work and had been doing it for several months.”
Mr Gagovski demonstrated, according to the Arbitrator, what he was actually earning. He indicated that it was then for Metal Manufactures to prove that “the weekly amount does not represent what he is able to earn in some suitable employment (Pied Piperat paragraph 55 per Fleming DP).” He further observed that the work previously available to Mr Gagovski was no longer available (according to Mr Gagovski) and in any event, the evidence does not disclose that he was working at less than his abilities or that some other suitable employment is presently available to him in which he would earn a weekly amount higher than his current earnings.
On balance, it was open to the Arbitrator to conclude on the evidence and for the reasons given, that it had not been demonstrated that Mr Gagovski’s earnings were an under-estimation, or an inadequate reflection of his ability to earn. This is so, particularly in light of Mr Gagovski’s written and oral evidence, which according to the Arbitrator was unshaken under cross-examination. The fact that Mr Gagovski had been performing at a higher level, albeit on “modified duties”, that is to say not usual duties for that position, after his injury but before he eventually took up his cleaning job as arranged by his employer, Metal Manufactures, is not fatal to the Arbitrator’s finding that his current earnings at level 2, should be included in the Mitchell steps for the purposes of section 40(2)(b) of the 1987 Act.
Metal Manufactures have been unable to substantiate an error of law on the part of the Arbitrator, such that his decision on this issue ought to be revoked (Allesch v Maunz (2002) 203 CLR 172. See also Mayne Health Group t/as Nepean Private Hospital v Sarah Sandford [2002] NSWWCCPD 6).
This ground of appeal fails.
Ground 2: Failure to properly apply Morgan v Commissioner for Railways
This ground of appeal also challenges the Arbitrator’s determination under section 40(2)(b) of the 1987 Act. In particular, Metal Manufactures assert that the Arbitrator misapplied Morgan v Commissioner for Railways [1972] WCR (NSW) 33 (‘Morgan’) which, in its view, is a binding authority “on all fours” with this matter.
In approaching the section 40(2)(b) determination, the Arbitrator considered the submission of Metal Manufactures that for the purposes of step 2, Mr Gagovski’s income should be the level 4 rate. The Arbitrator considered the relevant authorities of Novello and Steggles, which were cited with approval in Ludowici. He noted that in both cases a similar submission was made but rejected by the Court of Appeal. The Arbitrator also considered Morgan, which was also considered by Kirby A-CJ in Novello.
In Morgan, Sugerman P construed the phrase ‘able to earn’ as including:
“a continuing ability to earn in a job which the injured worker had, and could have retained, but for his own folly, irresponsibility, or misconduct in throwing it up, or leading to his dismissal from it.”
In Novello Kirby A-CJ indicated that Morgan should be strictly confined to those cases mentioned. The Arbitrator in his determination noted this and adjudged that Mr Gagovski’s actions in this case could not be so characterised. Consequently, the Arbitrator was of the view that Mr Gagovski’s income in the performance of modified level 4 duties before commencing work as a cleaner, should not be taken as his ‘ability to earn’ for the purpose of section 40(2)(b).
Metal Manufactures submit that the gravamen of this principle is the absence of mutuality, which exists when a worker arbitrarily resigns or is dismissed because of misconduct. It submits that similarly, in this case, Mr Gagovski arbitrarily and unilaterally gave up his level 4 job.
In response, Mr Gagovski submits that applying Morgan and the concept of arbitrary conduct is not appropriate given that Metal Manufactures were complicit and actually approved Mr Gagovski’s transfer from level 4 to level 2.
Metal Manufactures also submit that the case falls within Aitkin v Goodyear Tyre Co [1945] 19 WCR (NSW) 107 (‘Aitkin’) where Jordan CJ stated at 109:
“As to the phrase ‘is earning’ it has been held that if the partially incapacitated worker is earning something his actual earnings must prima facie be taken as the basis… If, however, it is proved that his actual earnings are not a proper test, because it is for some reason unconnected with his earning power that makes them lower than they should be, the other alternative, what he is ‘able to earn’ must be adopted. This is so where it is shown that he is deliberately taking lower paid work than he could get, or is idling and on this account receiving less than he could be reasonably expected to obtain, or where his actual earnings have been compulsorily reduced by something unconnected with his injury or general earning power…”.
Metal Manufactures assert that Mr Gagovski’s case falls within the description of “deliberately taking lower paid work”. However, Mr Gagovski submits that the facts in this case are different from Aitkin, and in any event, “it is unhelpful to compare facts between decided cases.”
I note that this submission citing Aitken did not appear in Metal Manufactures’ written submissions before the Arbitrator. However, the principle in that case is essentially encompassed by the case law considered by the Arbitrator.
It is established that Mr Gagovski took on the level 2 cleaning position, because he feared that he would lose his employment. He was then undertaking modified, that is not the usual duties at level 4. Whichever of the conflicting version of events is believed, Mr Gagovski and Metal Manufactures came to an agreement and he was duly transferred to the cleaning position. As both parties agree, there is no suggestion of Mr Gagovski leaving the employ of Metal Manufactures. Indeed, it was Mr Gagovski’s desire to ensure the continuity of his employment with Metal Manufactures that gave rise to this whole situation in the first place. Metal Manufactures accommodated Mr Gagovski, who in any event, had the benefit of medical advice about his condition and what he was capable of doing on an ongoing basis. In these circumstances, the suggestion that Mr Gagovski acted arbitrarily and unilaterally is without substance. He did not resign. He did not threaten to resign. He was not guilty of misconduct. He went through a process of maintaining his employment. Metal Manufactures obviously participated in this process and accommodated Mr Gagovski. There is no suggestion that Mr Gagovski was not on at least reasonably good terms with his employer. Metal Manufactures were complicit in this whole arrangement such that it cannot be said that Mr Gagovski acted unilaterally. Clearly, there was no breach of mutuality. On these issues, the analysis and conclusions of the Arbitrator are soundly based.
In Aitken, Jordan CJ said that “actual earnings” is prima facie to be taken as “the basis” for consideration. Does Mr Gagovski qualify, or does he fail as Metal Manufactures claim, because he deliberately took lower paid work? One must turn to the facts of the case to make that assessment. I concur in the Arbitrator’s view that the evidence in this matter does not support the proposition that Mr Gagovski acted foolishly, irresponsibly or with misconduct. As the Arbitrator has said, it is arguable that he may have made a mistake. However, given that there are two different versions of events, even this cannot be established with any degree of certainty. Moreover, even at level 4, Mr Gagovski was undertaking modified duties rather than the substantive duties as prescribed for the position. In the fullness of time, Metal Manufactures worked with Mr Gagovski to enable him to continue in its employ, albeit in a lower position where he was able to carry out substantive duties, without modification. Mr Gagovski did not “deliberately” take lower paid work in the sense that it is discussed in Aitken. He remained in his employment and negotiated a change in his employment duties, that he considered he could reasonably undertake, and that was agreed with his employer, in order to preserve and protect his employment.
Metal Manufactures submit, “when the ability to earn is not easily ascertainable the tribunal must hypothesize, see Kirby, P in Cutri [Ludowici] at 593. In this matter there is simply no evidence of the worker’s ability to earn on the labour market because unlike the authorities cited this worker did not leave his job.” Moreover, His Honour also said, at the same page:
“Parliament included the reference to what the worker ‘is earning’ for a purpose. The phrase cannot be ignored. The earnings are not mere evidence of what the worker is ‘able to earn’. In fact, if the worker is ‘earning’ that will normally be the end of the inquiry. It is only if, for some reason, that amount where it exists, or existed, is suggested to be an under-estimation or a false measure of the worker’s ability to earn that the alternative inquiry will be embarked upon. Were it otherwise, the reference to what the worker ‘is earning’ could have been entirely omitted from par (b).”
Having concluded that there was insufficient evidence before him to demonstrate “under-estimation”, “false measure”, or the like, the Arbitrator was not required to embark upon the hypothetical exercise suggested by Metal Manufactures, and was entitled to take into account Mr Gagovski’s actual earnings, for the reasons stated.
I agree with Mr Gagovski that the Arbitrator’s analysis of the authorities cited, including Morgan, and his conclusions based on that analysis, as applied to the facts in this case, demonstrate no error of law. I find accordingly.
This ground of appeal fails.
Ground 3: Misapplication of section 40(2)(b)
Metal Manufactures state:
“On and after March 2003 the worker was effectively offered two suitable employments viz: the continuation of his level 4 position, and a new position as a cleaner on level 2.
In such a situation the award of compensation should be based on the highest ability to earn a worker is capable of, not merely one which will produce an award of compensation.”
In response, Mr Gagovski submits that no error is disclosed, as the issue involves a determination of fact, which was decided by the Arbitrator on logically probative evidence.
The Arbitrator’s approach to section 40(2)(b) and my consideration of it, is set out above, in relation to grounds 1 and 2 of this appeal. It seems that ground 3 has essentially been dealt with and requires no further consideration. Moreover, if in fact Mr Gagovski was “offered” two positions at different levels that of itself would not automatically be determinative of his “ability to work”.
In the circumstances, this ground of appeal fails.
Ground 4: Failure to take into account matters relevant to section 40(2A)
Section 40(2A) and 40(2B) provide as follows:
“(2A) Calculation of reduction in earnings of worker - workers rejecting suitable employment
If the worker has unreasonably rejected suitable employment, the reduction in the worker’s weekly earnings is the difference between:
(a)the current weekly wage rate for the worker’s pre-injury employment (but not exceeding $1,000), and
(b)the current weekly wage rate for some suitable employment for the worker from time to time after the injury (but not exceeding $1,000).
(2B) For the purposes of subsection (2A), a worker unreasonably rejects suitable employment if:
(a)a period of 28 days has elapsed since the worker was offered suitable employment by any person and the worker has unreasonably refused or not accepted the offer (whether or not the offer was available during the whole of that period), or
(b)the worker obtains suitable employment with any person but subsequently unreasonably discontinues that employment.”
As indicated at paragraph 23 above, the Arbitrator noted that section 40(2) sets out a procedure for the calculation of a worker’s reduction in earnings in general circumstances but section 40(2A) requires a different calculation where it is found that the worker has unreasonably discontinued or rejected suitable employment.
The Arbitrator considered the application of section 40(2A) but concluded that Mr Gagovski’s action in accepting level 2 work did not fall within the section.
On appeal Metal Manufactures submit that the Arbitrator erred in law in failing to take into account relevant matters, namely:
a)the worker made his decision to reject suitable employment taking into account advice from his union that he would receive make up pay to the difference between level 2 and level 4;
b)the worker’s fear of the loss of his job was not founded on any or any proper consultation with the employer;
c)there is no basis in the evidence for the finding that the suitable duties the worker performed prior to March 2003 at level 4 “are no longer available” - see paragraph 54 of the Determination;
d)the principle which the Arbitrator’s decision would enshrine is that an employer is powerless to prevent a worker from taking a lower paid position elsewhere for example with less onerous duties or less overtime without incurring additional workers compensation liability, and
e)the effect of the decision is to compensate injured workers for subjective unilateral choice rather than for incapacity.
The Arbitrator’s consideration of the matters raised by section 40(2A) is set out at paragraphs 31 to 40 of his Reasons. At paragraph 36, the Arbitrator specifically considers the submissions by Metal Manufactures including the consideration listed at b), above.
In response, Mr Gagovski submits that section 40(2A) is not relevant to this matter as Metal Manufactures granted Mr Gagovski a transfer. I note Mr Gagovski's submissions at paragraph 4.18 attached to his notice of opposition in this appeal, and without setting them out here, I substantially agree with him. In the alternative he asserts at 4.19 of the same document that it was open to the Arbitrator to accept his evidence that his actions were based on an honest belief. Both of these propositions are reasonable, in light of the evidence that was before the Arbitrator, including the fact that Mr Gagovski had consulted his doctor.
Dealing with the points raised in paragraph 64, above:- a) as determined above, the evidence does not support the contention that Mr Gagovski rejected suitable employment, whatever advice he obtained or from whom it came; b) the fact that Mr Gagovski was retained as an employee of Metal Manufactures (whichever version of events one might accept) demonstrates that someone in authority in the organisation had dealings with him about his employment and the duties that he was to carry out, and then implemented the arrangements agreed between them; c) whether or not the “modified duties” at level 4 were still available, Metal Manufacturers came to an agreement with Mr Gagovski as to his duties and continued to employ him on that basis; d) given the agreement reached between Mr Gagovski and Metal Manufactures, and the fact that the employment relationship continued, it is clear that the powerlessness alleged by Metal Manufactures simply did not exist on a consideration of the facts in this matter, and, e) the evidence does not support the contention that Mr Gagovski made a “subjective, unilateral choice” in relation to the change in his employment arrangements with Metal Manufactures. All of this essentially emerges from the evidence and the Arbitrator’s Reasons, and no error of law is demonstrated.
This ground of appeal is not made out and consequently, it fails.
Ground 5: Error in applying the concept of reasonableness in section 40(2A)
The Arbitrator found that Mr Gagovski had a “genuine fear” of losing his employment and this prompted him to pursue the possibility of a position as a level 2 cleaner, still in the employ of Metal Manufactures, rather than continue working at level 4 on modified duties. After making this finding the Arbitrator indicated that the question that then arises under section 40(2B)(b) is whether this course of action was unreasonable.
The Arbitrator cited James Kirby Pty Ltd t/a Kirby Contract Labour v Pennell (2000) 19 NSWCCR 339 (‘Pennell’) (which related to section 38A and section 52A of the 1987 Act) where Campbell CJ was of the view that the workers compensation legislation does not require a worker to necessarily be capable of putting his or her experience as a partially incapacitated worker behind them, and make entirely rational and informed choices in respect of suitable employment. The Arbitrator then considered Mr Gagovski’s employment history, the fact he has two dependents and the steps he took by consulting his doctor and rehabilitation provider before seeking to commence work as a cleaner. The Arbitrator concluded that whilst Mr Gagovski may have been in error in his fear, his actions were not unreasonable. This conclusion appears to be supported by the fact that he had consulted his doctor to ascertain his capabilities, before approaching Metal Manufactures with regard to his employment arrangements.
However, Metal Manufactures submit that Pennell is not a relevant authority as it dealt with an entirely different concept of an “unreasonable refusal to cooperate” which relates to section 38A(5) of the 1987 Act. Metal Manufactures submit that Freightcorp is a more relevant authority. In particular, where Davies AJA (with whom Handley JA and Beazley JA agreed) stated:
“I should note that an assessment of the reasonableness of a worker’s refusal depends upon the worker’s knowledge at the relevant time. See Falzic v Milingmbi Community Inc (1982) 150 CLR 345…”.
Metal Manufactures submit that the comparison with the current case could not be starker and there is nothing in the evidence to prove any basis in fact for Mr Gagovski’s apprehension. Metal Manufactures further assert that there was nothing in his “knowledge” which would lead him to believe that his employment was other than secure and that the Arbitrator’s determination came down to equating “reasonable” with “genuine” and in so doing he misapplied authority in approaching the question of unreasonableness.
In reply, Mr Gagovski submits that section 40(2b)(b) refers to a worker who obtains suitable employment and unreasonably discontinues that employment. They assert Mr Gagovski did not ‘discontinue’ employment and was simply transferred from one type of duty to another type of duty, which was certified by his doctor and rehabilitation provider. Mr Gagovski submits in the alternative that the finding of the Arbitrator was open on the evidence and did not constitute an error.
I do not disagree with Metal Manufactures that Freightcorp is a relevant authority. However, for the principle to apply there must first be a “refusal” on the part of the worker. Mr Gagovski did not “refuse”, therefore there is no assessment of reasonableness to be made. Mr Gagovski negotiated a change in the terms of his employment with Metal Manufactures. What emerged from the discussions was a negotiated agreement, not a refusal. In any event, I note that Mr Gagovski did have at least some degree of knowledge about his capabilities, having consulted his doctor before approaching Metal Manufactures on the matter. He also knew that he was employed on modified duties after his injury, and not on the normal duties for level 4 – presumably because he was unable to perform properly and meet all of the usual, unmodified demands of a job at that level. All of this is so, even without taking into account to any great extent, Mr Gagovski’s version of events.
With regard to Pennell the statement of Campbell CJ that the Arbitrator quoted, was a general observation that could have broader application, and is not necessarily restricted to the facts of that particular case. The Arbitrator clearly agreed with His Honour’s observation, but on its own, it was not determinative of the Arbitrator’s decision.
In Fazlic v Milingimbi Community Inc. (1982) 150 CLR 345, (‘Fazlic’) the High Court of Australia was concerned with whether Mr Fazlic’s refusal to undergo back surgery to mitigate the effects of his compensable injury was unreasonable. The Court said that any assessment of the reasonableness or otherwise of a worker’s refusal of treatment must depend upon the worker’s state of knowledge at the relevant time. This decision is not on all fours with the matter under appeal, as notwithstanding the sufficiency or otherwise of Mr Gagovski’s knowledge at the time, he simply did not “refuse” but negotiated an outcome that was satisfactory to both himself and his employer. In any event, the High Court in Fazlic also said that in addition to the state of knowledge of the worker at the time, what also must be taken into account is the totality of the circumstances in which the worker finds himself. In my view, that is precisely what the Arbitrator did.
While the Arbitrator did not reject outright Mr Naumovski’s evidence, he did not reject the evidence of Mr. Gagovski, either. Indeed, he made no specific finding as to who was to be believed and he proceeded to determine the matter regardless of who was telling the truth. Nevertheless, he obviously gave a considerable amount of weight to Mr Gagovski’s evidence, which unlike Mr Naumovski’s, was also given orally and held up under cross-examination.
The Arbitrator’s analysis of the facts and authorities with regard to “unreasonableness” is quite adequate, although there being no refusal by Mr Gagovski but rather what amounted to a negotiated agreement between him and his employer Metal Manufactures, it may not have been entirely necessary for him to go that far. In any event, I find no error of law on the part of the Arbitrator.
This ground of appeal is not made out and consequently, it fails.
DECISION
I find that the Arbitrator has made no error of law (or of fact or discretion) in this matter, as alleged by the Appellant, Metal Manufactures Limited. The appeal is not successful. The decision of the Arbitrator dated 15 February 2005 is confirmed.
COSTS
The Appellant, Metal Manufactures Limited is to pay the costs of this appeal.
OTHER
Mr Gagovski seeks an order for payment of interest by Metal Manufactures on the arrears of compensation, from the date of the orders on 15 February 2005. He submits that it was agreed at the hearing that the parties would agree upon the quantum of the award, but notwithstanding a request for wage records, these have not been forthcoming.
At paragraph 60 of his Reasons, the Arbitrator said:
“The parties stated that they would be able to agree on a precise quantification of the Applicant’s weekly payments of compensation on the basis of such an award. Given the parties’ agreement on the wording of such an award and due to the absence of full details of these overtime hours, rather than make an award of the above amounts, I propose to make this award, as agreed between the parties.”
I am not inclined to make such an order at this point. The time that has elapsed between the Arbitrator’s decision of 15 February 2005 and the date of determination of this appeal, was beyond the control of Metal Manufactures. This appeal has been caught up with a large number of appeals filed in the Commission, and has been dealt with in order of priority. Metal Manufactures cannot be blamed for the delay that has occurred, although strictly speaking, there is no apparent reason why Metal Manufactures’ solicitors should not have addressed the matter with Mr Gagovski’s solicitors in the interim. However, now that the appeal has been determined, I would reasonably expect that Metal Manufactures will honour its part of the agreement with Mr Gagovski, made in the presence of the Arbitrator, and co-operate fully and actively in the quantification of the award and in bringing this matter to a conclusion, without further delay.
Gary Byron
Deputy President
10 October 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DEPUTY PRESIDENT GARY BYRON OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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