New South Wales Police Service v Teofilo
[2007] NSWWCCPD 190
•4 September 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:New South Wales Police Service v Teofilo [2007] NSWWCCPD 190
APPELLANT: New South Wales Police Service
RESPONDENT: Adam Teofilo
INSURER:Allianz Australia Insurance Limited.
FILE NUMBER: WCC17269-06
DATE OF ARBITRATOR’S DECISION: 12 April 2007
DATE OF APPEAL DECISION: 4 September 2007
SUBJECT MATTER OF DECISION: Section 40 claim; exercise of discretion.
PRESIDENTIAL MEMBER: Acting Deputy President Deborah Moore
HEARING:On the papers
REPRESENTATION: Appellant: DLA Phillips Fox
Respondent: Walker Legal
ORDERS MADE ON APPEAL: 1. Paragraph 1 of the Certificate of
Determination dated 12 April 2007 is revoked and the following decision made in its place:
“(i). That the Respondent pay the Applicant weekly benefits in the amount of $200.00 per week for the period 31 August 2006 to date and continuing.
(ii) Credit to the Respondent for any payments made to date.”
2.Paragraphs 2 and 3 of the ‘Certificate of Determination’ are confirmed.
3.No order as to costs of the appeal.
BACKGROUND TO THE APPEAL
On 12 April 2007 the New South Wales Police Service (‘the Appellant’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision of a Commission Arbitrator dated 12 April 2007.
The Respondent to the Appeal is Adam Teofilo (‘Mr Teofilo/the Respondent’).
Mr Teofilo was born on 2 August 1974. He commenced employment with the Appellant in 2000 as a general duties police officer. He claimed that on 31 January 2003 he injured his back lifting a corpse. After a brief period off work, he continued on full duties until he sustained a further injury in an accident on 16 August 2005. On that occasion, he was dismounting his push bike and suffered further injury to his back.
Following the incident on 16 August 2005, Mr Teofilo was off work until 28 November 2005 when he resumed employment with the Appellant on ‘light duties’ three days a week, four hours per day.
On 2 February 2006, Mr Teofilo was charged with a criminal offence. He was suspended from employment with the Appellant on full pay. He was convicted of the offence on 30 August 2006, and on 10 October 2006 was sentenced to four months imprisonment. He subsequently lodged an appeal.
Following his conviction on 30 August 2006, Mr Teofilo’s pay was withdrawn.
On 31 October 2006 Mr Teofilo filed an ‘Application to Resolve a Dispute’ in the Commission seeking weekly benefits compensation from 30 August 2006 to date and continuing pursuant to the provisions of the Workers Compensation Act 1987 (‘the 1987 Act’).
On 16 November 2006, Mr Teofilo was served with an Order pursuant to section 181D(1) of the Police Act 1990 under the hand of the Commissioner of Police wherein he was removed from the New South Wales Police Service, and his employment terminated.
In its Reply filed on 21 November 2006, the Appellant claimed, inter alia, that as a result of Mr Teofilo’s criminal conviction and subsequent termination of employment, he was not ready, willing or able to undertake employment, and that he was no longer incapacitated in any event as a consequence of the back injury he sustained on 16 August 2005
The parties attended a conciliation/arbitration hearing on 26 February 2007. The Arbitrator gave an ex-tempore decision contained in the transcript of that date. His Certificate of Determination was issued on 12 April 2007. The Arbitrator’s determination was as follows:
“1.That the Respondent pay the Applicant weekly benefits in the amount of $321.93 per week for the period 31 August 2006 to date and continuing.
2.That the Respondent pay the costs of the Applicant as agreed or assessed.
3.That this is a complex matter and proceeded direct [sic] to arbitration for the purposes of Item 4.11 of the Workers Compensation Regulation.”
It is from this determination that the Appellant seeks leave to appeal.
LEAVE TO APPEAL
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’).
The amount at issue on appeal satisfies the threshold requirements in section 352(2) of the 1998 Act. The Appellant has included detailed submissions as to its ‘delay’ in filing the appeal noting that the Commission failed to provide a ‘Certificate of Determination’ as soon as practicable as is required by section 294(1) of the 1998 Act. Whilst I note the parties attended an arbitration hearing on 26 February 2007, and ex-tempore decision was given on that date, it appears that there were difficulties in obtaining a transcript and in any event, the ‘Certificate of Determination’ did not issue until 12 April 2007. In those circumstances, I am satisfied that the appeal was filed in time in compliance with section 352(4) of the 1998 Act, notwithstanding Mr Teofilo’s submissions to the contrary.
Leave to appeal is granted.
ON THE PAPERS REVIEW
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.”
Both parties submit that the matter is suitable for a determination ‘on the papers’. Given the fairly limited issues on appeal, and both parties’ detailed submissions, and having regard to Practice Directions numbers 1 and 6, 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.
FRESH EVIDENCE
‘Fresh evidence’ on appeal is governed by section 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”.
The Appellant seeks to rely upon ‘fresh evidence’ which is described in the appeal as “… the Certificate of Determination in Matter No 597-07 along with a section 66 Complying Agreement, being the only new evidence relied upon”. This material was not attached to the appeal application. Mr Teofilo objects stating that “the Appellant has not fully complied with Practice Direction 6” and that “… no substantial prejudice or injustice can be demonstrated by the Appellant …”.
Since I do not have a copy of the ‘fresh evidence’ nor know its relevance, I am not in a position to admit it. The Appellant has clearly identified the issues in dispute on appeal which essentially focus upon the Arbitrator’s exercise of his discretion in relation to the section 40 award. I cannot see that the material sought to be relied upon by the Appellant could have any particular bearing on this issue.
Accordingly, the application to adduce fresh evidence is refused.
THE ISSUES IN DISPUTE
The Appellant has cited the following grounds of appeal:
“1.Error of Fact and Law in stating that the NSW Police Commissioner applied his discretion to terminate the Applicant in accordance with section 181D of the Police Service Act 1990, and that as a result of the use of this discretion the [sic] unable to return to his employment with NSW Police Force.
2.Error of Law in Failing to apply discretion pursuant to section 40 in accordance with precedent case law.
3.Failure to Give Reasons as to why the medical evidence of Dr Lee, was not to be relied upon in applying his discretion pursuant to section 40 of the Act.”
THE ARBITRATOR’S FINDINGS AND REASONS
The Arbitrator gave an ex tempore decision at the conclusion of the Arbitration hearing on 26 February 2007 commencing at page 51 of the transcript.
The Arbitrator noted that there was no real dispute that Mr Teofilo injured his back whilst dismounting his bicycle on 16 August 2005, and further noted that his employment was a substantial contributing factor to that injury (page 51).
He then noted that early in February 2006 Mr Teofilo was charged with a criminal offence, and suspended from employment with the Appellant (on full pay). He noted his employment was terminated on 16 November 2006 following his conviction and sentencing.
The Arbitrator then stated (page 52):
“There is sufficient medical evidence, and it stands to reason, as a matter of commonsense, that being charged and convicted with a relatively serious criminal offence in circumstances where the Applicant has continued to claim his innocence, has caused him and his family a great deal of stress, and that stress over lays the real undisputed physical injury that occurred in August 2005.”
Much of his later comments were unfortunately “inaudible”.
The Arbitrator then noted Mr Teofilo’s claim for weekly benefits from 30 August 2006 pursuant to either section 38 or 40 of the 1987 Act. The Arbitrator dismissed the claim under section 38 principally on the basis that there was no evidence that any medical certificate with respect to Mr Teofilo’s partial incapacity had been provided, such that “… the claim under section 38 must fail, regardless of my determination of incapacity” (page 54).
The Arbitrator then considered the claim pursuant to section 40. There is no dispute between the parties that, uninjured, Mr Teofilo would have earned $921.93 per week in the employ of the Appellant.
The Arbitrator then went on to consider the medical evidence before concluding (page 55) that Mr Teofilo’s disability “… is quite severe”. He then noted the opinion of the treating specialist, Dr Dalton, that Mr Teofilo’s condition “… continued to improve after that return to work and, quite clearly, the physical restrictions became less over a period of time”. The Arbitrator then stated “that’s consistent with the finding of Dr Bodel in relation to incapacity when Dr Bodel said in November 2006 he should have been fit for light duties work long ago, at least four hours a day, five days a week …”
The Arbitrator then posed the question: “What is his capacity to earn income as a result of the disabilities?” The Arbitrator then stated:
“So I make some findings in relation – oh, sorry, there is the overlay of the stress and emotional trauma of the prosecution and subsequent conviction, and Dr Dalton suggests that that did make the condition worse but doesn’t say that – sorry, but he also says that physical incapacity is still there, and I think that’s supported by Dr Bodel as well.”
The Arbitrator then noted (page 56) that Mr Teofilo had claimed that: “There was some psychological sequelae as a result of the physical injury itself”. The Arbitrator then stated:
“Having looked at the medical evidence, I can’t find that there is any psychological sequelae that’s caused an incapacity for work as a result of the physical injury itself. The stress, certainly from Dr Dalton, all seems to have been attributed to the prosecution and the conviction.”
The Arbitrator then concluded that “… on the basis of what Dr Dalton and Dr Bodel say, I do find that the Applicant is incapacitated, physically incapacitated, and those physical incapacities give him some restriction for work and that means he would be unable to return to work full-time policing as a senior constable, …”
The Arbitrator then considered the ‘five step’ process in formulating an award contained in the decision of Mitchell v Central West Health Service (1997) 14 NSWCCR 527 (‘Mitchell’). As I said, the parties had agreed on the probable earnings but for injury. The Arbitrator then considered Mr Teofilo’s physical restrictions before concluding that he was capable of working 30 hours per week, earning $20.00 per hour “… so his economic capacity post-injury is $600.00 per week, giving him a net loss of $321.93”.
The Arbitrator then noted (page 57) that: “Section 40 requires me to exercise a discretion, if I think its appropriate, to reduce that amount if I think that there are circumstances which would limit the Applicant’s capacity or ability to work …”
The Arbitrator then noted the submission by Counsel for the Appellant that he should “… exercise that discretion because the Applicant, on the evidence before me, committed and was convicted of an offence and inevitably that would mean that his employment would be terminated by the Police Force”.
The Arbitrator then went on to consider a number of authorities referred to by Counsel for the Appellant where injured workers were “… incarcerated in prison…” but then noted that “this is not a case such as that”. The Arbitrator then stated:
“It wasn’t just the conduct of the Applicant but the decision of the Commissioner based on the conduct of the Applicant, that caused his employment to be terminated. The mere fact of a criminal conviction doesn’t disentitle anybody or isn’t such that I would exercise my discretion to reduce the payments under section 40, and I don’t believe that it is the inevitable consequence of that conduct and a conviction for that conduct that the Applicant’s position would be terminated or that he put himself out of the labour market.
If my findings in relation to his present capacity are correct, then he still has a reduced capacity, because had he not been working in the Police Force, it is my view that he would have been earning the same as he earned in the Police Force, in any event, and, because of that, the conduct and the conviction is not a reason why I would exercise my discretion to reduce the amount that I have determined under section 40.”
The Arbitrator then went on to determine that “… there be an award for the Applicant in the sum of $321.93 from 31 August 2006 to date and continuing.”
Counsel for the Appellant then asked the Arbitrator to give reasons in relation to the argument that the psychological impact of Mr Teofilo’s conviction “… would impact on the discretion as well”. Counsel for the Appellant said “… you don’t appear to have given reasons on the discretion re the psychological condition.”
The Arbitrator then concluded (page 58) “… I think that what’s lacking there is any evidence that that psychological condition would impact upon the Applicant’s capacity to earn. I certainly think that it might make him feel his symptoms more but it doesn’t impact on his capacity that is, … 30 hours at $20.00 per week.”
THE SUBMISSIONS, EVIDENCE AND FINDINGS
The Police Commissioner’s Termination of Employment
In brief, the Appellant submits that the Arbitrator improperly or inappropriately considered the impact of the letter of termination issued to Mr Teofilo by Commissioner Moroney of the NSW Police, the Arbitrator having stated (page 22 transcript):
“But there is no statutory prohibition. Just because you are convicted of an offence doesn’t mean you can’t serve in the Police Force.”
The Appellant makes the following submission:
“The Arbitrator is essentially making comment on the statutory authority of the Commissioner of the NSW Police Force to ensure that members of the Force adhere to the NSW Police Code of Conduct and Ethics.
… The Applicant’s termination letter from the Commissioner of the NSW Police Force … noted that the Applicant’s conduct was a breach of the NSW Police Code of Conduct and Ethics and as a direct result of his actions and subsequent criminal offence, the Applicant’s employment was terminated by the NSW Police Force in accordance with section 181D of the Police Service Act 1990.
The Appellant submits that the Arbitrator has made an error of law and fact in attempting to imply that the Commissioner of NSW Police was incorrect in exercising his discretion to terminate the employment of the Applicant, thereby removing the Applicant’s ability to perform suitable employment.
… The Appellant submits that it is not within the Arbitrator’s powers or jurisdiction to make comment or pass judgment upon the discretionary power of the NSW Police Commissioner under the auspice of the Police Service Act 1990.
The Appellant submits that the Applicant’s actions were a breach of the NSW Police Force Code of Conduct and Ethics sufficiently grave for Commissioner Moroney to find no confidence in his position as an acting police officer.
In this regard, the Appellant submits that the Arbitrator erred in finding that the employer used its discretion to remove the Applicant from future employment, rather than finding, based upon the available evidence that the Applicant in fact acted in such a manner as to place himself outside of his employment.
The Appellant submits that the Arbitrator has ignored the fact that but for the criminal actions of the Applicant and his subsequent conviction, his employment would have continued with the NSW Police Force and in accordance with the medical evidence of Dr Bodel, it was likely he would have retuned to his pre-injury duties, or suitable duties on full-hours.”
In an ‘Application to Admit Late Documents’ filed on 23 January 2007, the Appellant attached copies of correspondence from, inter alia, the Commissioner of Police. A document titled “Order Under Section 181D(1) of Police Act 1990” stated as follows:
“I, Kenneth Edward Moroney, Commissioner of Police, having considered your conduct, do not have confidence in your suitability to continue as a police officer. By this Order, I remove you from the NSW Police.
In reaching my decision, I have carefully considered the matters raised in the submission prepared in relation to you and the Notice served upon you pursuant to section 181D(3)(a) of the Police Act 1990. I have also taken into account the written response you have submitted to me via your legal representative.
The reasons for my decision are annexed hereto under the ‘Statement of Reasons’.
Your removal takes effect from the date of this order.”
The order was dated 16 November 2006. Detailed reasons for the Commissioner’s “determination” were attached to that order.
I note that the order dated 16 November 2006 included a notation as follows:
“If you wish to contest this order you must file an Application for a Review under section 181E of the Police Act 1990 with the Industrial Relations Commission within fourteen (14) days of having been given a copy of this order.”
It is not clear from the evidence before the Arbitrator as to whether Mr Teofilo contested the order.
The concluding paragraph in the Commissioner’s ‘Statement of Reasons’ was as follows:
“I therefore exercise my statutory responsibility and make a determination that I do not have confidence in your suitability to remain a member of the New South Wales Police. I therefore remove you from your position as a police officer.”
Mr Teofilo was charged with the offence of “incite person under 16 years to commit act of indecency T2 Crimes Act 1900” and “behave in an offensive manner in/near public place/school Summary Offence Act 1988.” He was convicted and ultimately sentenced to a term of four months imprisonment.
Reading this document as a whole, it seems to me that the Arbitrator indeed erred in concluding that there was “… no statutory prohibition” and that “just because you’re convicted of an offence, doesn’t mean you can’t serve in the force”. That may or may not be the case in some circumstances, but in this particular case, it is clear from the order of Commissioner Moroney that he was exercising his “statutory responsibility” to dismiss Mr Teofilo from the Police Force as a result of his conviction for the offences to which I have referred.
In other words, any suggestion that the Commissioner’s exercise of his discretion to terminate the employment of Mr Teofilo was in some way ‘incorrect’ is simply not supported by the evidence. It is not clear on what basis the Arbitrator concluded that:
“… I don’t believe that it is the inevitable consequence of that conduct and a conviction for that conduct that the Applicant’s position would be terminated or that he put himself out of the labour market”.
The Arbitrator’s determination appears to be based on his own “belief” and failed to have proper regard to the terms of the Order issued by the Commissioner.
Accordingly, I accept the Appellant’s submissions on this aspect of the appeal. Having said that, it follows that I must now consider the issue of the exercise of the discretion contained in section 40 of the 1987 Act.
Section 40 and a Failure to Apply Discretion
The Appellant submits that the Arbitrator failed to exercise his discretion pursuant to section 40 “in accordance with precedent case law”. The Appellant cites a number of authorities to which I will refer more fully below.
Section 40(1) of the 1987 Act provides as follows:
“The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings, but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.”
In other words, the section provides a discretion in awarding weekly payments of compensation for partial incapacity.
As McHugh JA said in Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50:
“Compensation for lost earnings as the result of work injuries remains the primary purpose of the statute. Money which was not likely to be earned cannot be regarded as lost earnings for that purpose.”
There have been a number of decisions in both the former Compensation Court and Court of Appeal where the courts have exercised the discretion to reduce a worker’s entitlement to compensation because of an inability to earn caused by various factors such as incarceration, leaving the jurisdiction or pregnancy.
As the Appellant rightly points out, “… the exercise of discretion pursuant to section 40 of the Act is not merely to be applied when a worker is incarcerated.”
The Arbitrator distinguished cases involving incarceration, in particular, Stranlund v The Mid-Coast Meat Company Pty Limited (1999) 19 NSWCCR 91 and Hadchiti v Llandilo Staircases Pty Limited & WorkCover Authority of NSW [2002] NSWCC10 stating as follows:
“This is not a case such as that. It wasn’t just the conduct of the Applicant but the decision of the Commissioner based on the conduct of the Applicant, that caused his employment to be terminated.”
This statement is flawed for the reasons I have stated previously. The Order of the Commissioner terminating Mr Teofilo’s employment dated 16 November 2006 was evidence the Arbitrator ought to have taken into account. As the Appellant submits:
“… The actions of the Applicant in committing a criminal offence for which he has been convicted, directly and consequentially resulted in his employment being terminated by the NSW Police Force. But for his actions, the Applicant would have continued to earn his usual weekly income, and thus this matter is amenable to the exercise of discretion in accordance with the above case law.”
The Appellant makes a further submission that the Arbitrator “erroneously calculated” the section 40 Assessment since the comparable rate of pay of a police officer was an inappropriate determinant and that the comparable wage rate “… should be that of a person in the Applicant’s position as a convicted felon …”
This argument is flawed since section 40 makes provision for payments of weekly compensation to be made as a consequence of injury and are to be calculated on the basis of the worker’s “pre-injury employment”. In other words, the proper calculation is with respect to Mr Teofilo’s earnings prior to his injury in August 2005. Factors such as Mr Teofilo’s conviction for a criminal offence are matters for discretion.
These matters were recently considered by me in Singh v Taj (Sydney) Pty Limited [2007] NSWWCCPD 152 (Singh), a matter which was remitted to me by the Court of Appeal. (See Singh v Taj (Sydney) Pty Limited [2006] NSWCA 330). I summarised the Court of Appeal’s findings as follows:
“4.In the Court of Appeal, Beazley JA (with whom Santow and Tobias JJA agreed) determined as follows:
“(i) Section 40 of the Workers Compensation Act requires at least three steps to be taken before an award for incapacity payments may be made: the calculation of what the employee would have earned but for the injury assuming the same or comparable employment; the assessment of the employee’s post-injury earning capacity; and the exercise of a discretion.
Mitchell v Central West Health Service (1997) 14 NSWCCR 526 (followed); Australian Wire Industries Pty Limited v Nicholson (1985) 1 NSWCCR 50 (followed)
(ii) The process that engages the decision maker under ss 40(2)(a) and (b) of the Workers Compensation Act is a hypothetical one. Viliami v National Springs (1993) 9 NSWCCR 453 (disapproved)(a)Under s 40(2)(a), a determination has to be made as to the weekly amounts that the worker would probably have been earning but for the injury in the same or some similar employment; in this case, the appellant’s position with the respondent. The Arbitrator erred in finding that the appellant’s probable earnings were nil.
(b)Under s 40(2)(b), a determination has to be made as to what the worker would be able to earn in some suitable employment. The appellant’s visa status was not a relevant consideration in determining suitable employment, and the Arbitrator erred in so taking it into account.
(iii) The Arbitrator’s wrong construction of the Workers Compensation Act was an error in point of law; therefore the Presidential Member’s decision was also an error in point of law.
(iv) That the appellant had no entitlement to work does not foreclose an application for weekly payments for partial incapacity. The decision of this Court in Nonferral v Taufia, which allowed such payments in relation to a previous incarnation of the Workers Compensation Act, may recommend itself to the primary decision maker; or there may be other discretionary factors.
Nonferral (NSW) Pty Limited v Taufia (1998) 43 NSWLR 312; (1998) 16 NSWCCR 130 (discussed)
(v) The further determination of this matter will depend upon the proper application of the law and upon such facts and discretionary considerations as are found to be relevant at the time of the rehearing.”
5. Santow JA made the following observations:
“(vi) The calculation of pre-injury future earnings (step one) and post-injury future earnings (step two) assume legality in the hypothetical employment. If that assumption is contrary to the fact, s 40 of the Workers Compensation Act mandates that fiction for both steps one and two.
(vii) If the weekly payment of compensation calculated using steps one and two does not bear a proper relation to the amount of the reduction in weekly earnings, an adjustment is made in the final discretionary step (step three). This is not to be treated as automatically requiring an adjustment downwards to take account of the illegality earlier excluded from consideration.
(viii) The compensation in this case does not depend on unlawful conduct; rather, it depends upon the statutory mandate provided by s 40 of the Workers Compensation Act.Smith’s Newspapers Ltd v Becker (1932) 47 CLR 279 (distinguished); Nonferral (NSW) Pty Ltd v Taufia (1998) 43 NSWLR 312 (distinguished)
(ix) Assuming nothing further changes with respect to the appellant’s immigration status, and assuming the current legal constraint on his work under that changed visa status remains the same, this of itself would not have any weight as a relevant consideration. To conclude otherwise would work an outcome not in accordance with the statutory purpose evinced by the compensation regime.”
Relevantly to the facts of this case is the observation of Santow JA that “the compensation in this case does not depend on unlawful conduct; rather, it depends upon the statutory mandate provided by s.40 of [the 1987 Act]”.
As noted earlier, the parties had agreed that, but for injury, Mr Teofilo would have earned $921.93 per week. The Arbitrator, in considering the “second step” referred to by the Court of Appeal in Singh determined that Mr Teofilo’s “post injury earning capacity” was $600.00 per week. The Arbitrator declined to exercise his discretion to reduce the differential amount, namely $321.93 per week and accordingly entered an award in favour of Mr Teofilo in that amount.
For the reasons stated, in my view the Arbitrator ought to have considered the impact of Mr Teofilo’s conviction and sentence in exercising his discretion pursuant to section 40 of the 1987 Act.
It is appropriate at this point to also consider ground 3 of the appeal and the Appellant’s submission that the Arbitrator failed to give adequate reasons as to why he determined that Mr Teofilo’s “psychological condition” as a consequence of the stress of his conviction would not also have some impact on the exercise of the discretion.
In a report dated 31 January 2007 Dr Lee, psychiatrist, opined that:
“… His psychological disorder is not consistent with his back injury, despite what he reports, but is more likely to be related to the charge and conviction”.
Dr Lee went on as follows:
“… His employment is not a substantial contributing factor to his psychological disorder as the substantial injury that cause it is separate to the back injury. Moreover, Dr Dalton indicates that the non-injury related ‘stress’ is contributing to his physical complaint … In my opinion, there is no psychiatric reason related to his back injury that he could not resume work.”
In a report dated 21 February 2006 Dr Dalton, Mr Teofilo’s treating orthopaedic specialist, opined as follows:
“The recent events and forthcoming court case has been particularly stressful and, in my opinion, are acting adversely on his physical health and recovery … I believe that the stress surrounding the recent allegation against him is primarily responsible for the deterioration of his condition.”
As to this evidence, the Arbitrator said this (page 56 transcript):
“… The Applicant did press on me that there was some psychological sequelae as a result of the physical injury itself. Having looked at the medical evidence, I can’t find that there is any psychological sequelae that’s caused an incapacity for work as a result of the physical injury itself. The stress, certainly from Dr Dalton, all seems to have been attributed to the prosecution and the conviction.”
At page 57 of the transcript, Counsel for the Appellant asked the Arbitrator to provide reasons in relation to Mr Teofilo’s psychological state and the exercise of discretion pursuant to section 40 of the 1987 Act. At page 58, the Arbitrator stated as follows:
“… I think that what’s lacking there is any evidence that that psychological condition would impact upon the Applicant’s capacity to earn. I certainly think that it might make him feel his symptoms more but it doesn’t impact on his capacity …”
The evidence, particularly from Dr Dalton, was to the effect that the stress associated with Mr Teofilo’s conviction had an adverse impact “… on his physical health and recovery”. Nothing in Dr Dalton’s report addresses the issue of capacity. Dr Lee concluded that “I note no objective evidence of any clinically depressed mood”. Dr Lee’s report essentially focused on discounting any claim that there was any psychological sequelae to Mr Teofilo’s back injury.
The Arbitrator’s reasons (page 58 transcript) although brief, in my view accord with the evidence. There was no evidence to suggest that any psychological condition resulting from stress over the conviction had any impact upon Mr Teofilo’s capacity to earn. As Dr Dalton pointed out, it might certainly have impacted upon his “physical health”, but there was no specific reference in the medical evidence as to its impact on his capacity for employment. This evidence does not, as the Appellant asserts, demonstrate that Mr Teofilo “… is suffering from stress and anxiety as a result of criminally [sic] conviction affecting his ability to return to work”.
I am not persuaded that the Appellant has demonstrated any error by the Arbitrator in relation to this aspect of the claim.
Clearly the principal issue in dispute is the Arbitrator’s failure to exercise his discretion pursuant to section 40 in relation to Mr Teofilo’s conviction. At page 57 of the transcript, the Arbitrator stated as follows:
“Section 40 requires me to exercise a discretion, if I think it is appropriate, to reduce that amount if I think that there are circumstances which would limit the Applicant’s capacity or ability to work and [Counsel for the Appellant] … says I should exercise that discretion because the Applicant, on the evidence before me, committed and was convicted of an offence and inevitably that would mean that his employment would be terminated by the Police Force.”
The Arbitrator then went on to consider a number of authorities to which he had been referred but distinguished those on the basis that they involved persons who had been incarcerated. The Arbitrator concluded as follows:
“This is not a case such as that. It wasn’t just the conduct of the Applicant but the decision of the Commission [sic] based on the conduct of the Applicant, that caused his employment to be terminated. The mere fact of a criminal conviction doesn’t disentitle anybody or isn’t such that I would exercise my discretion to reduce the payments under section 40, and I don’t believe that it is the inevitable consequence of that conduct and a conviction for that conduct that the Applicant’s position would be terminated or that he put himself out of the labour market”.
The difficulty with this statement is that the basis of the Arbitrator’s decision not to exercise his discretion in the circumstances of this particular case is based on a wrong premise, i.e., that it was not the conduct of Mr Teofilo that brought about his termination but rather the decision of the Police Commissioner. It may well be that in some occupations a criminal conviction would not necessarily lead to the “inevitable consequence” of termination, but that is to some extent merely speculative. There is no adequately explained reasons for the Arbitrator’s “belief” that Mr Teofilo would not necessarily have his employment terminated consequent upon a criminal conviction. On the contrary, the terms of the order under section 181D(1) of the Police Act 1990 were clear, the Commissioner having determined that Mr Teofilo had breached the NSW Police Code of Conduct & Ethics “… in the most serious way”. As a consequence, the Commissioner, exercising his “… statutory responsibility …” terminated his employment.
The Arbitrator appears to have effectively ignored the terms of this order in determining that he should not exercise his discretion to reduce the award made pursuant to section 40 of the 1987 Act.
It is a well established requirement that adequate reasons are necessary to provide a sufficient explanation of why a decision or order is made. (See Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 per Mahoney JA).
Moreover, as Hodgson JA said in NSW Ambulance Service v Daniel (2000) 19 NSWCCR 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.”
In the present case, the Arbitrator’s finding in relation to the section 181D Notice appears simply to have reflected his “belief” which could not as a matter of law support that finding.
It is appropriate at this point to consider my function on review of an Arbitrator’s decision. This was succinctly summarised by DP Roche in Ecowize North Pty Limited v Ballard [2007] NSWWCCPD 179 where he said as follows:
“21.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 Limited 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.”
22. The nature of a review was considered by the Court of Appeal in AluminiumLouvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34 (‘Zheng’) 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.”
23. 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]).
24. Before an Arbitrator’s decision will be revoked on review it must by 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; Absolon v NSW TAFE [1999] NSWCA 311).”
In the present case, the Arbitrator’s decision contains an error of discretion and must be revoked. In line with my function on review, I consider that I am able to substitute my own decision based upon all the material before me.
Having determined that the Arbitrator erred in his reasons for declining to exercise his discretion, I turn now to a consideration of factors relevant to the exercise of discretion.
The determination of what a worker “… would be able to earn in some suitable employment …” (section 40(3)) is to be made by reference to section 43A of the 1987 Act. That section sets out a number of factors to take into account in determining “suitable employment”.
As Burke J as he then was said in Mangion v Visy Board Pty Limited (1992) 8 NSWCCR 175 at 180:
“When assessing a capacity to earn under section 40(2) it is not sufficient to merely identify a particular potential avenue of employment and attribute the income from such a job as a mans capacity to earn. Allowance must be made for the availability to work – availability not such much in the sense of a presently depressed labour market, but in the sense of general availability in any labour market … one always seeks to assess the capacity to earn of this particular worker in his particular circumstances.”
In the present case, Mr Teofilo’s “particular circumstances” mean that he is confronting a labour market with a criminal conviction. Employment opportunities would inevitably be limited by this factor. This in my view is a “relevant circumstance” as set out in section 43A(1)(h).
In Kesen v Luke Singer Pty Limited (1989) 5 NSWCCR 298, the trial Judge, having found the worker partially incapacitated, declined to enter any award during the period the worker had returned to Turkey to visit his father. On appeal, the court held:
“What seems to us to be the clearest error of law appearing in the passage from his reasons set out above is his assumption that a weekly payment of nothing is a weekly payment. The subsection [s11(1) 1987 Act] requires that if partial incapacity is found, a weekly payment is to be made.”
The Court noted that, of the ‘five step’ approach adopted in Mitchell, “the discretion involves making a judgment in which the step (3) figure is an essential ingredient. Without a step (3) figure, the discretion cannot be exercised.”
In Hirst v Illawarra Health Service (2000) 21 NSWCCR 82, Neilson J as he then was entered an award of $10.00 per week during a period of the worker’s pregnancy. His Honour noted that “... the mere fact of being pregnant and the fact of subsequent motherhood does not disentitle a lady to compensation for partial incapacity” but that “clearly, pursuing the process of giving birth to a child and breast feeding it or otherwise nursing it in its early years is an activity incompatible with employment.” Accordingly, His Honour took that factor into account in considering the exercise of his discretion pursuant to section 40 of the 1987 Act.
As the Arbitrator rightly pointed out, there was clear and unequivocal evidence that Mr Teofilo suffered and continues to suffer physical restrictions as a consequence of his back injury on 16 August 2005. However, in my view, the Arbitrator ought to have considered the consequences of Mr Teofilo’s criminal conviction and sentence in calculating his entitlements. His conviction must be seen as “incompatible” with various avenues of employment.
Taking all the matters into account to which I have referred, in the exercise of my discretion, it seems to me that the appropriate sum to award in all the circumstances of this particular case is $200.00 per week.
CONCLUSION
The appeal is allowed. The Arbitrator’s determination that the circumstances of this case did not warrant the exercise of his discretion pursuant to section 40 of the 1987 Act was based upon a flawed premise.
DECISION
1. Paragraph 1 of the Certificate of Determination dated 12 April 2007 is revoked and the following decision made in its place:
“(i).That the Respondent pay the Applicant weekly benefits in the amount of $200.00 per week for the period 31 August 2006 to date and continuing.
(ii)Credit to the Respondent for any payments made to date”
2.Paragraphs 2 and 3 of the ‘Certificate of Determination’ are confirmed.
COSTS
I make no order as to costs of the appeal
Deborah Moore
Acting Deputy President
4 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
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