MJ Hanna & Sons Pty Limited v Woodyard

[2007] NSWWCCPD 202

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:MJ Hanna & Sons Pty Limited v Woodyard [2007] NSWWCCPD 202

APPELLANT:  MJ Hanna & Sons Pty Limited

RESPONDENT:  Walter Woodyard

INSURER:CGU Workers Compensation (NSW) Limited.

FILE NUMBER:  WCC10209-06

DATE OF ARBITRATOR’S DECISION:          16 April 2007

DATE OF APPEAL DECISION:  27 September 2007

SUBJECT MATTER OF DECISION: Section 40 of the Workers Compensation Act 1987; impact of a psychiatric/psychological condition; exercise of discretion; adequacy of evidence.

PRESIDENTIAL MEMBER:  Acting Deputy President Deborah Moore

HEARING:On the papers

REPRESENTATION:  Appellant:      Lyons Barnett Kennedy

Respondent:   Carroll & O’Dea

ORDERS MADE ON APPEAL:  The decision of the Arbitrator dated 16 April 2007 is revoked and the matter is remitted to another Arbitrator for determination afresh in accordance with these reasons.

Costs of the proceedings before the Arbitrator on 17 October 2006 should follow the event when the matter is determined.

No order as to costs of the appeal.

BACKGROUND TO THE APPEAL

1. On 14 May 2007 M J Hanna & Sons Pty Limited (‘the Appellant’) sought leave to bring an ‘Appeal Against Decision of an Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision of a Commission Arbitrator dated 16 April 2007.

1. The Respondent to the Appeal is Walter Woodyard (‘the Respondent/Mr Woodyard’).

1. Mr Woodyard was born on 12 August 1960 and is presently 47 years old. He left school at 18 years of age, having completed his Higher School Certificate. He commenced a Bachelor of Arts Degree majoring in psychology at NSW University the following year but then deferred after approximately six months and went to live in the USA. He was married in America and remained working there for some years before returning to Australia. After a period operating a restaurant in Sydney for some four years, Mr Woodyard then took over a family business and remained working there until about 1992. In 1993, he went to Armidale in order to recommence his university degree at the University of New England. He stated that he remained at the University until 1998 and then, due to matrimonial difficulties, again deferred his studies. He commenced work with the Appellant as a sales assistant on 5 March 1999 working 26.5 hours per week, usually Mondays to Wednesdays and four hours on Saturdays.

1. On 30 August 1999 whilst walking up stairs to a storeroom to collect stock, he slipped and fell, sustaining an injury to his back.

1. He was off work for about a week, made several attempts to return to work but on each occasion ceased because of pain.

1. Mr Woodyard reported the injury on 31 August 1999 and submitted a Workers Compensation Claim Form on 21 September 1999. The Appellant’s workers compensation insurer, CGU Workers Compensation (NSW) Limited (‘CGU’) accepted the claim and commenced weekly payments of compensation.

1. On 6 April 2000 CGU wrote to Mr Woodyard advising that liability was denied from 6 April 2000, with weekly payments to be made until 19 April 2000.

1. On 6 July 2006 an ‘Application to Resolve a Dispute’ (‘the Application’) was registered in the Commission seeking weekly benefits compensation from 20 April 2000 to date and continuing at the rate of $466.33 gross per week together with medical expenses. The Application also identified a threshold dispute for work injury damages or commutation.

1. The Appellant filed its ‘Reply’ on 21 July 2006. A number of issues were put in dispute but the principal issue was essentially that of ‘incapacity’.

1. The matter was listed for conciliation and arbitration before a Commission Arbitrator on 17 October 2006 when it could not be resolved and proceeded to arbitration hearing. At that hearing, a number of additional documents were tendered by the parties, in particular, extensive medical records relating to Mr Woodyard’s psychiatric treatment over the years both pre and post dating his injury with the Appellant. In a reserved decision issued on 16 April 2007, the Arbitrator found in favour of Mr Woodyard entering an award pursuant to section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’) at various rates from 20 April 2000 to date and continuing. An order was made for payment of certain medical expenses in respect of Mr Woodyard’s “physical injury” together with “… the Depressive Illness associated with that injury”. The Arbitrator also determined that Mr Woodyard be referred to an ‘Approved Medical Specialist’ to assess whether the degree of permanent impairment from the injury was at least 15%.

1. It is from this decision that the Appellant seeks leave to appeal.

LEAVE TO APPEAL

1. Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the Workplace Injury Management and Workers Compensation Act 1998 Act (‘the 1998 Act’).

1. The amount at issue on appeal satisfies the threshold requirements in section 352(2) of the 1998 Act, and the appeal was filed in time in compliance with section 352(4) of that Act.

1. Leave to appeal is granted.

ON THE PAPERS REVIEW

1. Section 354(6) of the 1998 Act provides:

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

1. Both parties submit that the matter is suitable for a determination ‘on the papers’. Having regard to Practice Direction No’s 1 and 6, the documents that are before me, and the detailed submissions by both parties on appeal, 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.

THE DECISION UNDER REVIEW        

1. The ‘Certificate of Determination’ dated 16 April 2007 records the Arbitrator’s orders as follows:

“1.That the Respondent pay the Applicant the sum of $211.20 per week from 20 April 2000 to 30 June 2000 pursuant to s.40 of the Workers Compensation Act 1987.

2.That the Respondent pay the Applicant the sum of $217.40 per week from 1 July 2000 to 30 June 2001 pursuant to s.40 of the Workers Compensation Act 1987.

3.That the Respondent pay the Applicant the sum of $223.80 per week from 1 July 2001 to 30 June 2002 pursuant to s.40 of the Workers Compensation Act 1987.

4.That the Respondent pay the Applicant the sum of $230.60 per week from 1 July 2002 to 30 June 2003 pursuant to s.40 of the Workers Compensation Act 1987.

5.That the Respondent pay the Applicant the sum of $237.80 per week from 1 July 20003 to 30 June 2004 pursuant to s.40 of the Workers Compensation Act 1987.

6.That the Respondent pay the Applicant the sum of $244.80 per week from 1 July 2004 to 30 June 2005 pursuant to s.40 of the Workers Compensation Act 1987.

7.That the Respondent pay the Applicant the sum of $251.80 per week from 1 July 2005 to 30 June 2006 pursuant to s.40 of the Workers Compensation Act 1987.

8.That the Respondent pay the Applicant the sum of $277.40 per week from 1 July 2006 to date and continuing pursuant to s.40 of the Workers Compensation Act 1987.

9.That the Respondent pay the Applicant’s expenses under section 60 of the Workers Compensation Act 1987 on production of accounts or receipts in respect of the physical injury suffered on 31 August 1999 [sic] and the Depressive Illness associated with that injury.

10.That the Applicant be referred to an ‘Approved Medical Specialist’ to assess whether the degree of permanent impairment from the injury is at least 15%.

11.That the Respondent pay the Applicant’s costs as agreed or assessed.”

THE ISSUES IN DISPUTE

1. The Appellant has cited five grounds of appeal as follows:

“1.The Arbitrator erred in the application of section 40(2)(a) of the Workers Compensation Act 1987 (WCA).

2.   The Arbitrator erred in adopting evidence not before him in these proceedings.

3.   The Arbitrator erred in finding “… there was no allegation of any intervening stress factor in the Applicant’s life”.

4. The Arbitrator erred in the Application of section 40(1) WCA discretion.

5.   The Arbitrator erred in his acceptance of the worker’s psychiatric/psychological condition throughout the period claimed”.

1. In his ‘Notice of Opposition to Appeal’ filed on 30 May 2007, Mr Woodyard submits that the decision of the Arbitrator should be confirmed, since the Arbitrator was entitled to accept or reject certain evidence, and that he correctly applied the principles relevant in assessing a section 40 award.

THE REVIEW PROCESS

1. The nature of a review by a Presidential Member on appeal has been succinctly summarised by Deputy President Roche in Graham Healy t/as Hunter Glass Toronto v Santarelli [2007] NSWWCCPD 188 where he said as follows:

“22.The nature of a review and the role and function of a Presidential member on appeal has been considered in many cases in the Commission. In The King Island Company Ltd v Deery [2005] NSWWCCPD 1 it was held at [19]:

“19. A Presidential Member on appeal has a specific and limited role in the review of a decision of an Arbitrator. The review is not a rehearing. The Presidential member is not dealing with the matter de novo and is not arriving at a fresh decision based on all of the evidence available at a later time (Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Builders Licensing Board v Sperway Constructions (Sydney) Pty Ltd (1976) 135 CLR 616). The powers of the Presidential Member to revoke the decision pursuant to section 352(7) of the 1998 Act and to substitute a new decision in its place, are exercisable only where it is demonstrated that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172). Alternatively, the Presidential Member may remit the matter back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions made.”

23.The nature of a review was considered by the Court of Appeal in Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34 where Bryson JA said at [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.”

24.This passage was recently quoted with approval by McColl JA in South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16 at [134] (‘Edmonds’). To describe the relative weight and relevance of the expert evidence as “a discretionary decision which could only be disturbed on House v The King principles” was described by McColl JA as “an over-generalisation” (at [133]).

25.Before an Arbitrator’s decision will be revoked on review it must be demonstrated that it contains or has resulted from an error of fact, law or discretion. The error must be such that, but for it, a different decision should have been made (see Snow Confectionary Pty Ltd v Askin [2004] NSWWCCPD 56; Section 294 of the 1998 Act; YG & GG v Minister for Community Services [2002] NSWCA 247, and Absolon v NSW TAFE [1999] NSWCA 311).”

1. Recently, the Court of Appeal in State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA249 confirmed this approach. The Appellant had questioned “… whether a tribunal, when considering what action it should take to reverse findings of fact should remit the matter to the primary decision-maker unless it is satisfied that there could not be a different result”. Spigelman CJ said as follows [paras 18-30]:

“…I do not accept … that a Presidential member is relevantly constrained when reviewing an Arbitrator’s decision on such a finding of fact … The concept of a review on the merits are wider than the concept of an appeal in a judicial context … 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 power to remit is not constrained in the manner for which the Appellant contents.”

1. These principles must be considered in determining the matter before me.

THE SUBMISSIONS, EVIDENCE AND FINDINGS

The Section 40 and Incapacity Issue

1. The Appellant submits that the Arbitrator erred in the application of section 40(2)(a) of the 1987 Act. That section refers to “… the weekly amount which the worker would probably have been earning as a worker but for the injury had the worker continued to be employed in

   the same or some comparable employment …”

1. The evidence was clear that at the time of the injury Mr Woodyard was working 26.5 hours

   per week at an award rate of $11.68 per hour. In the Employer’s Report of Injury dated 21

   September 1999, the employer stated that the actual gross weekly rate paid to Mr Woodyard was $321.20 per week.

2. At paragraph 67 of his Statement of Reasons, the Arbitrator stated as follows:

“In my opinion it would be artificial to use the weekly rate as a base since the Applicant was, for reasons unique to him at the time and which no longer exist working only part time. It would be more realistic to assess his earning capacity on the basis that he worked a full week of 40 hours at the rate of $11.68 and index that figure by 3% per year but modified where necessary to ensure the final rate coincides with the current award rate of $14.81 per hour.”

1. In his statement dated 8 March 2006, Mr Woodyard said as follows:

“(9)     I remained at the University until 1998 for [sic] and then had matrimonial

difficulties whereupon I once again deferred my studies. I then commenced work at Hanna’s.

(12)I had been employed by Hanna’s for approximately six months prior to the accident…

(30)      It had always been my intention to return to university to complete my

Bachelor of Psychology (Hons) in 2000. This is why I was happy to take on a part time job at Hanna’s Clothing Store. I had anticipated being able to work while studying fulltime again. I had only disrupted my studies because of my divorce and because I needed to supplement my income from that offered by Austudy … The job seemed like an ideal situation for me and I was eager to resume my studies in February 2000”.

1. As I said earlier, the Appellant’s Report of Injury Form also confirmed that the Appellant’s employment at the time of his injury was part-time.

1. As the Appellant rightly points out, “… there was no evidence to support a fulltime position with the Appellant would involve 40 hours per week”. Moreover, there was no evidence from Mr Woodyard in his statement that he ever contemplated fulltime work with the Appellant. Indeed, it seems clear that his intention was to continue part time work. There is simply no evidence as to what the Appellant proposed to do once his degree was completed.

1. As the Appellant submits:

“…As a part time worker the Arbitrator was constrained to calculate his comparable employment pursuant to section 40(2)(a) on that basis. See Webb v Chapman t/as Gundowda Graze & Co (1997) 15NSWCCR @ P625. This submission was made to the Arbitrator and recorded at … paragraph 66. The Appellant submits by calculating his comparable earnings on a fulltime basis the Arbitrator has made an error in law.”

1. The Arbitrator recorded the Appellant’s submission to the effect that “… I should take his pre-injury earnings of $321.20 per week and increase that rate at 3% per year for inflation.”

1. In Webb v Chapman t/as Gundowda Graze & Co (1997) 15NSWCCR the Court of Appeal, the majority dismissing the appeal, (by Cole JA, Meagher JA concurring, Beazley JA dissenting) held that:

“Part-time means not full-time and so ‘part-time worker’ within the meaning of section 42(4) of the Workers Compensation Act 1987 means a person who has entered into a works under a contract of service with an employer part-time. Why the parties made that arrangement, or whether one party would prefer that it was otherwise than part-time, is irrelevant to the question whether a person is, at a given date of injury, a part-time worker. Likewise, the intention or desires of the worker are irrelevant to that contract of employment.”

1. The trial Judge held that Mr Webb was a part-time worker principally upon evidence that there was an agreement between the employer and Mr Webb that he would be employed for two days per week only. His award of compensation was calculated accordingly. As Cole JA said:

“To my mind ‘part-time’ should be given its ordinary meaning. It means not full-time…why the parties made that arrangement, or whether one party would prefer that it was otherwise than part-time, seems to me to be irrelevant to the question whether a person is, at a given date of injury, a part-time worker. The reason why it is irrelevant is because the Workers Compensation Act adjusts rights and obligations between an employer and the worker concerning payment of compensation. Just as intention cannot regulate whether a person is, within the definition, a worker nor, in my view, can it regulate whether he is a ‘part-time worker’. The definition of worker directs attention to the contract between the parties. Accordingly, it is that which regulates the characterisation of a person as either a worker or a part-time worker,…Duck CCJ was correct to direct his attention to the particular contract of employment between the employer and the worker.”

1. Beazley JA, dissenting, citing a number of authorities, was of the view that “… the Appellant’s expressed intention to engage in other work if he could find it was a relevant consideration.” However, in the present case, as I have said, there was simply no evidence of Mr Woodyard’s intentions to perform anything other than part time work.

1. There was no evidence to support the Arbitrator’s assertion that “it would be more realistic to assess his earning capacity on the basis that he worked a full week of 40 hours …” There was simply no evidence either that such a ’40 hour week’ job existed with the Appellant nor indeed that the Appellant ever intended to work other than part time. Having deferred his studies for personal reasons he nonetheless elected to pursue part time employment.

1. I accept the Appellant’s submission in this respect. The Arbitrator has erred in calculating “… the weekly amount which the worker would probably have been earning … but for the injury and had the worker continued to be employed …” by reference to a fulltime sales position where there was no evidence to support the basis of his conclusion.

1. Moreover, as Hodgson JA said in NSW Ambulance Service v Daniel (2000) 19NSWCCR 697 at 718:

“…If a judge’s reasons show that he or she made a finding of fact relying exclusively on material that could not as a matter of law support that finding, then although the reasons may be adequate, they will disclose an error of law.”

1. In the present case, there was simply no “material” to support the Arbitrator’s conclusion that the appropriate method of calculation of pre-injury earnings was based on a 40 hour week as a sales person.

1. Having determined that the Arbitrator erred in his calculation of the section 40 award, it follows that the matter requires redetermination, but it is nonetheless appropriate that I consider the Appellant’s additional grounds of appeal.

The “Evidence” Issue

1. The Appellant submits that “…the Arbitrator has relied on evidence not admitted in these proceedings to conclude against the Appellant’s medical evidence (Dr White)”. The Appellant refers to paragraphs 52 and 54 of the Arbitrator’s ‘Statement of Reasons’ and it is appropriate in the context of this appeal to set out the Arbitrator’s findings and reasons. They are as follows:

“(51)This is a difficult application to determine. There is much in the Respondent’s submission that the early presentation to the General Practitioner indicated a fairly minor injury and there is no doubt in my mind after reading again the material produced from the Armidale Hospital, particularly the reports by Dr Synnott that the Applicant was depressed at the time of the injury and his concerns were about his marital separation.

(52)Depression, I have been told by experts in other cases is caused by a range of factors including heredity and life stresses. It is essentially the result of an imbalance in brain chemicals called neurotransmitters and it is unclear whether the stress causes the imbalance or the imbalance amplifies the stress. What is clear is that depression and life stress coincide in some depression sufferers. Consequently, I don’t accept Dr White’s comparison of the Applicant with a ‘reasonable person’ in reaching his conclusions in his report as being a valid test in this case.

(53)I accept the Applicant’s submission as to the weight I should place on Dr White’s report. It is a preliminary report and Dr White did not have access to all the documentation.

(54)None of the medical evidence indicates that the Applicant’s depression is a result of inherited tendencies and consequently life stress events are a likely cause. Depression is not caused by one incident or a single stress factor. For some people, it appears from evidence I have heard are more likely to suffer depression as a result of life stress than others. Consequently I find that the Applicant’s evidence that he believed that he had recovered from the effect of his marital breakdown but not from his depression believable. There were a number of stressors on the Applicant, the one he was most conscious of at the time of the injury was the marital stress but it seems to me that it is probable that he would over time, as he claimed, have become more conscious of the stress resulting from his physical injury.

(55)…I am also conscious of the inconsistencies in timing between the oral evidence of the Applicant as to when he believed he had got over the marital stress and the written reports. It seems to me that recovery from stress factors occurs gradually over a continuum and it is inherently unlikely that any person can objectively say exactly when a particular stress factor ceases to have an effect.

(56)As a result of my examination of the medical reports and after considering the submissions and noting that there is no allegation of any intervening stress factor in the Applicant’s life and considering past evidence on depression I find that the effects of the physical injury are a substantial contributing cause of his continuing depression…”

1. Although not entirely clear, I assume that the Appellant’s complaint is with the Arbitrator’s apparent acceptance of information which “…I have been told by experts in other cases…” or “…from evidence I have heard…”

1. That is a valid complaint.

1. At the hearing before the Arbitrator, the Appellant sought to tender copious documents from Dr Mark Whittington, Mr Woodyard’s treating psychiatrist, the Riverside Family Practice, the Grice Avenue Medical Centre and reports from Dr I H Synnott, another treating psychiatrist whom Mr Woodyard apparently consulted from 1998 to 2000. I do not propose to canvass that material in any detail, but it is clear that Mr Woodyard suffered significant psychological problems commencing in 1998, if not earlier.

1. There is scant reference to this material by the Arbitrator in his findings and reasons commencing at paragraph 51, and it is inconsistent with the Arbitrator’s conclusion and finding that “… the Applicant’s evidence that he believed he had recovered from the effect of his marital breakdown but not from his depression believable.” For example, in a report dated 26 March 2002, some two and a half years following Mr Woodyard’s injury, Dr Whittington made no reference whatsoever to any depression or psychological symptoms emanating from the injury. Dr Whittington noted that “he is prescribed very high doses of medication for a recurrent depressive illness.” Dr Whittington went on to describe the difficulties Mr Woodyard experienced coming from “… a very dysfunctional family”. He then went on to note that “… he is involved in a very complicated access and previously [sic] custody battle with his ex-wife from whom he moved 500 kilometres to get away.” Most of the clinical notes accompanying that report in documents produced from Dr Whittington’s practice are illegible, but it seems that Mr Woodyard consulted Dr Whittington regularly, either fortnightly or monthly, commencing from 22 March 2002. It is not until a report dated 25 May 2006 that there is any reference to Mr Woodyard’s injury with the Appellant in August 1999. In that regard, Dr Whittington opined that:

“Given the multitude of physical problems that Mr Woodyard suffers, I would suggest that you do speak to his general practitioner as I am well aware that his weight, diabetic and cardiovascular problems also significantly and detrimentally affect his mental state.”

1. Dr Whittington concluded that Mr Woodyard suffers from “… a Major Depressive Disorder” and that “his depressive illness is a function of his circumstances and physical problems.” Extensive references in that report to Mr Woodyard’s “marital problems” and “a bitter separation” seem somewhat inconsistent with the Arbitrator’s findings at paragraph 54 to which I have referred.

1. Moreover, as the Appellant submits:

“…what follows in paragraph 55 is logically inconsistent when the Arbitrator asserts that because a person can’t ‘…objectively say when a particular stress factor ceases to have an effect’, he should accept the worker’s evidence that ‘after a year or two’ after moving to Queensland he was no longer affected by stressors other than his injury. This acceptance was notwithstanding the clear documented evidence of each of the doctors who were consulted to the contrary”.

1. It is perhaps appropriate at this point to consider ground 5 of the appeal relating to the Arbitrator’s “acceptance” of Mr Woodyard’s psychiatric/psychological condition over the period claimed.

1. As the Appellant submits:

“In this matter the worker sought compensation from the 20/04/2000. The Arbitrator in Pars 54, 55 and 56 determined the worker suffered depression as a result of the effects of his injury at some undetermined time after 2000 but prior to Dr Whittington’s report of the 25/05/06 based on the acceptance of the worker’s assertion that over time ‘…he had got over the marital stress…’ Dr Whittington’s report of 26/03/02 makes it abundantly clear that no such work caused injury caused stress was evident at that time.”

The Appellant then makes reference to the various documents produced under direction from various medical practices to which I have referred previously.

1. The Appellant submits that “…acceptance of the worker’s psychiatric/psychological condition related to work caused injury from 20/02/2000 is against all the medical evidence and not available to the Arbitrator in his findings as to the worker’s incapacity from that time.”

1. I accept the Appellant’s submissions on this issue. I note that Dr Synnott in a report dated 12 October 2000 similarly made no reference to Mr Woodyard’s physical injuries as in any way impacting on his psychological state. Dr Synnott noted: “Mr Woodyard complains of worsening depression, a large component of which he felt was due to the intractable situation with his ex-wife”. On “mental state examination”, Dr Synnott noted “a lugubrious ?, unhappy looking man. Exploring dissatisfaction with his wife’s behaviour and his current circumstances.”

1. In addition, notes produced by the Armidale Community Health Centre make reference to Mr Woodyard’s apparent admission to Prince of Wales Hospital “15y/ago for “depression, schiz, (6 weeks). Has seen Dr Synnott for depression”.

1. Two significant factors emerge from this material. Firstly, I accept the Appellant’s submissions in relation to ground 2 of its appeal, namely that the Arbitrator has relied on or at least referred to evidence not admitted in the proceedings and secondly, the Arbitrator’s acceptance of Mr Woodyard’s assertion that he believed he had “recovered” from the effect of his marital breakdown, at some unspecified time, is against the weight of medical evidence.

1. No doubt Mr Woodyard’s physical disabilities may have had some impact on his depressive illness, just as other documented conditions Mr Woodyard suffered such as reflux disease, asthma, hypertension, diabetes, obesity and erectile dysfunction may also have impacted. I note that Dr Michael Weidmann, Neurosurgeon, who saw Mr Woodyard at the request of CGU on 11 January 2005, after considering various radiological material, concluded that “it is likely that Mr Woodyard jarred his lumbar spine as a result of a fall on 30/09/99”. Dr Weidmann was also of the view that symptoms in Mr Woodyard’s right knee “…are more likely to be related to his obesity than this injury” and that thoracic pain “…is related to degenerative changes, and not his injury”. Indeed, Dr Weidmann was of the view that Mr Woodyard’s obesity played a significant part in his presentation.

1. In short, whilst there was some evidence to suggest that physical disabilities played some part in Mr Woodyard’s depressive condition, the evidence fell short of the Arbitrator’s ultimate conclusion that “… the effects of the physical injury are a substantial contributing cause of his continuing depression …”

1. Indeed, in his report of 25 May 2006, upon which the Arbitrator placed considerable weight, Dr Whittington concluded that “I am well aware that his weight, diabetic and cardiovascular problems also significantly and detrimentally affect his mental state”.

The “Intervening Stress Factor” Issue

1. Following my observations in the preceding paragraphs, I turn now to consideration of the Appellant’s submission that the Arbitrator erred in finding (paragraph 56) that: “… there was no allegation of any intervening stress factor in the Applicant’s life” in concluding that the effects of Mr Woodyard’s physical injuries were a “substantial contributing cause of his continuing depression…”

1. As the Appellant rightly points out, “…the above factual finding was made contrary to a plethora of material demonstrating otherwise”.

1. Much of this material I have canvassed in the preceding paragraphs, but they are appropriately summarised by the Appellant in its submissions as follows:

“Indeed, [at para 59] the Arbitrator noted the worker’s obesity as one such matter but there is evidence that a number of other stressors continued to plague the worker. Inter alia, issues concerning his divorce from his wife, the fact that his wife continues to live with his children in Armidale, the worker’s limited access to his children, the fact that his estranged mother lives with his wife and children, his restricted income on the Disability Support Pension and his multiple health issues other than those relating to his injury in the employ of the Appellant …”

1. Those other health issues I have referred to in the preceding paragraphs.

1. Whilst the evidence is clear that marital difficulties commenced well prior to Mr Woodyard’s injury with the Appellant, the evidence is clear, particularly from Dr Whittington, that those difficulties continued to impact in a significant way on Mr Woodyard’s psychiatric state certainly as described by Dr Whittington in his report of 26 March 2002.

1. A number of the doctors whom Mr Woodyard consulted made reference to his various medical problems, unrelated to the injuries he sustained with the Appellant, and to factors such as his family life and upbringing in the development of psychological problems, and I accept the Appellant’s submission that the Arbitrator’s finding in this regard was against the weight of all the evidence.

The “Section 40 Discretion” Issue

1. At paragraph 69 of his ‘Statement of Reasons’ the Arbitrator stated as follows:

“The fourth step in following the steps prescribed in Mitchell is to determine whether I should exercise a discretion to reduce the difference calculated according to the above table. I have already taken into account that there are other factors which prevent the Applicant working which are unconnected with this injury. If I were to make a further deduction I would be taking those factors into account twice.”

1. The Arbitrator concluded that the appropriate manner of assessing Mr Woodyard’s entitlements was, as I said previously, based on a 40 hour week at the rate of $11.68, indexed by 3% per year “… but modified where necessary to ensure the final rate coincides with the current award rate of $14.81 per hour.” The Arbitrator concluded that Mr Woodyard was capable of working four hours per day, five days per week, a total of 20 hours per week. He then applied the hourly rate appropriate for clerical and administrative staff being $15.75 per hour. He then set out a table with his calculations to determine his award. For example, in the year 2007, applying the current award rate of $14.81 per hour, the Arbitrator concluded that earnings but for injury would be $592.40. Applying a clerical rate of $15.75, for 20 hours per week, the Arbitrator concluded Mr Woodyard’s ability to earn was $315.00 per week, thus entitling him to an award of $277.40 per week.

1. In the Appellant’s submission, “…it is unclear where the Arbitrator took ‘into account…other factors which prevent the Appellant working which are unconnected with his injury’.”

1. The Appellant concedes that: “If the Arbitrator found a self induced diminution of earning capacity and applied that to his calculation pursuant to section 40(2)(b) then the Appellant has no objection.”

1. However, as the Appellant submits, “… the Arbitrator is required to take all matters such as the Applicant’s other supervening illnesses into account in the section 40(1) exercise …” (See Mitchell v Central West Health Service (1997) 4NSWCCR 526 and Australian Wire Industries Pty Limited v Nicholson (1985) 1NSWCCR 50 and Singh v Taj (Sydney) Pty Limited [2006] NSWCA 330).

1. In the Appellant’s submission, the Arbitrator should have taken into account factors such as Mr Woodyard’s obesity, diabetes and cardiovascular problems as described by Dr Whittington, and right knee and right carpal tunnel syndrome as described by Dr Mahony in a report dated 16 July 2004 (unrelated to the injury on 30 August 1999). In addition, in a report from Dr Anthony Ridings at the Grice Avenue Medical Centre dated 1 March 2004, Dr Ridings set out “… your several past and continuing illnesses … which included: depression, carpal tunnel syndrome, gastro-oesophageal reflux disease, asthma, sciatica”. Dr Ridings then referred to the development of “other illnesses in the course of the next two years (presumably since 2001 when Mr Woodyard first consulted Dr Ridings) as including hypertension, diabetes and erectile failure”.

1. I accept the Appellant’s submission that it is not at all clear from the Arbitrator’s statement at paragraph 69 whether or not he in fact took into account the various factors to which I have referred. However, the Arbitrator nonetheless stated that he had “already taken into account that there are other factors which prevent the Applicant working …”, but it is difficult to determine just when and where the Arbitrator considered these matters. Certainly a reference is made to Mr Woodyard’s obesity at paragraph 59, but that appears to be the only reference to his other medical conditions.

1. It is simply impossible to tell from the Arbitrator’s statement just what “factors” he took into account.

1. Commission Arbitrators have a statutory obligation to provide adequate reasons for a decision. Reasons must be capable of unveiling clearly to the parties the grounds upon which a determination was made.

1. As Mahoney JA said in Soulemezis v Dudley (Holdings) Pty Limited (1987) 10NSWLR 247:

“A judge is not required to make a finding in respect of every fact leading to the final conclusion of fact…nevertheless a judge must distinguish between the essentials and the peripherals…Reasons are necessary as an incident to a judicial decision to provide a sufficient explanation of why an order is made. The judge is to apprise the parties of the broad outline and constituent facts of the reasoning upon which he or she has acted…It is necessary that the essential grounds upon which the decision rests should be articulated.”

1. In the present case, the Arbitrator has failed to adequately identify the “essential grounds” upon which his decision in relation to the discretionary aspect of section 40 of the 1987 Act was based.

CONCLUSION

1. The appeal is allowed. The Arbitrator erred in the application of section 40 of the 1987 Act in two respects: firstly, by incorrectly calculating comparable earnings and secondly, by failing to provide adequate reasons or properly identify factors taken into account in the exercise of his discretion. The Arbitrator further erred in his apparent reliance upon “evidence” not admitted in the proceedings, and his finding that “…there is no allegation of any intervening stress factor in the Applicant’s life” in concluding that “… the effects of the physical injury are a substantial contributing cause of his continuing depression…” was against the weight of the evidence.

DECISION

1. The decision of the Arbitrator dated 16 April 2007 is revoked.

1. The matter is remitted to another Arbitrator for determination afresh in accordance with these reasons.

COSTS

1. I make no order as to costs of the appeal.

1. Costs of the proceedings before the Arbitrator on 17 October 2006 should follow the event when the matter is determined.

Deborah Moore

Acting Deputy President

27 September 2007

I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DEBORAH MOORE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE