NSW Police Force v Kearns - [2008] NSWWCCPD 29

WORKERS COMPENSATION COMMISSION

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

CITATION:NSW Police Force v Kearns and Anor [2008] NSWWCCPD 29
APPELLANT:  NSW Police Force
FIRST RESPONDENT:  Darren Paul Kearns
SECOND RESPONDENT:  Insurance Australia Group Services Pty Ltd
FIRST RESPONDENT’S INSURER:                 Allianz Australia Insurance Limited, as agent for NSW Self Insurance Corporation
SECOND RESPONDENT’S INSURER:            Employers Mutual Indemnity (Workers Compensation) Limited
FILE NUMBER:  WCC6830-07
DATE OF ARBITRATOR’S DECISION:          2 November 2007
DATE OF APPEAL DECISION:  4 March 2008
SUBJECT MATTER OF DECISION: Disease provisions; apportionment; sections 15, 16, 22 and 40 of the Workers Compensation Act 1987; fresh evidence on appeal; calculation of probable earnings but for injury
PRESIDENTIAL MEMBER:  Deputy President Bill Roche
HEARING:On the papers
REPRESENTATION:  Appellant:      DLA Phillips Fox
First Respondent:     Palmieri Law Firm
Second Respondent:  Edwards Michael Lawyers

ORDERS MADE ON APPEAL: The Arbitrator’s decision dated 2 November 2007 is confirmed.
The Appellant Employer is ordered to pay the costs of each of the Respondents to the appeal.

INTRODUCTION

This matter concerns a claim for weekly compensation by Darren Kearns (‘the Respondent Worker’) a former police officer who suffers a partial incapacity for work as a result of post traumatic stress disorder (‘PTSD’) sustained as a result of his employment with the NSW Police Service (‘the Appellant Employer/Police Service’) while working with the Hunter Region Crash Investigation Unit (‘Hunter Crash Unit’) from 1999 until 27 January 2001, and as a result of his employment with Insurance Australia Group Services Pty Ltd (‘the Second Respondent/IAG’) from 2001 until December 2004. Mr Kearns succeeded before the Arbitrator who ordered that the award of weekly compensation be satisfied 80% by the Police Service and 20% by IAG. The appeal concerns:

(a)whether the Police Service should be allowed to tender as additional or fresh evidence on appeal, wage material that was available but not tendered at the arbitration;

(b)the application of the disease provisions of the Workers Compensation Act 1987 (‘the 1987 Act’), and

(a)the application of the apportionment provisions in section 22 of the 1987 Act.

BACKGROUND TO THE APPEAL

Mr Kearns joined the Police Service as a Probationary Constable in April 1992 and resigned on 27 January 2001, by which stage he had reached the rank of Senior Constable Level 3. In the course of his duties with the Hunter Crash Unit he investigated numerous fatal and serious motor vehicle accidents. As a result he developed PTSD. On 5 February 2001 he commenced employment with IAG as an internal personal injury investigator. Until late 2002 or early 2003 his work only required him to investigate minor accidents and public liability claims. Whilst he did not have to attend accident scenes immediately after an accident, he continued to experience the symptoms of PTSD, though to a lesser degree. In late 2002 or early 2003 Mr Kearns began to investigate more serious accidents, which resulted in his symptoms of PTSD worsening. As a result he ceased work from November 2003 until March 2004 when he returned on clerical duties, initially in Sydney and then in Newcastle. In June or July 2004 he returned to IAG’s investigation unit, but was not required to investigate any fatal or serious accidents. At the end of 2004 he was subpoenaed to give evidence in relation to a serious accident he had attended at Karuah in either late 2002 or 2003. Having to relive this accident scene and investigation again brought on the more serious symptoms of his PTSD.

About Christmas 2004, Mr Kearns was investigating an accident scene at New Lampton when a car passed close to him and caused him a fright. This incident caused him to shake, tremble, and feel sick. He ceased work at that time and took a redundancy with effect from 1 July 2005.

In October 2005 Mr Kearns commenced work in Maitland with the Infringement Processing Bureau, as an adjudication officer. He worked full time in this position until mid 2006 when his hours were reduced to 21 per week. In October 2006 he started work as a Senior Regulatory Officer with the Newcastle City Council where he remained as at the date of the arbitration. In this job Mr Kearns reviews and updates policy and procedures and conducts audits on the owners of dangerous dogs.

It is agreed that Mr Kearns continues to suffer from the effects of PTSD though the level of his symptoms has decreased to a degree. The Arbitrator found (Statement of Reasons for Decision (‘Reasons’), paragraph 15), and it is not challenged on appeal, that Mr Kearns is, as a result of his condition, unfit for work in which he would be required to investigate any type of motor vehicle accidents, not just serious or fatal accidents.

In his Application to Resolve a Dispute (‘the Application’) registered in the Commission on 6 September 2007 Mr Kearns claimed weekly compensation from both the Police Service and IAG under section 40 of the 1987 Act in the sum of $480.71 per week from 14 November 2006 to 26 March 2007 and in the sum of $471.71 per week from 27 March 2007 to date and continuing.

All parties were legally represented at the arbitration on 24 October 2007. Each employer submitted that liability lay with the other. In a Certificate of Determination dated 2 November 2007 the Arbitrator made the following orders:

“1. That the Respondents make weekly payments of compensation to the Applicant under section 40 of the Workers Compensation Act 1987 at the following rates:
a. $480.71 a week for the period 14 November 2006 to 26 March 2007; and
b. $471.71 a week for the period 27 March 2007 to date and continuing.

2. That liability to pay compensation pay in accordance with order 1 to be apportioned between Respondents such that the First Respondent pay 80% and the Second Respondent pay 20%.
3. That the Respondent pay the Applicant’s costs as agreed or assessed.”

By an appeal filed on 28 November 2007 the Police Service seeks leave to appeal the above determination.

LEAVE TO APPEAL

Monetary Threshold

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 (‘the 1998 Act’).

There is no dispute that the thresholds in section 352(2) are satisfied.

Time

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

I grant leave to appeal.

PRELIMINARY MATTERS

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

ISSUES IN DISPUTE

The issues in dispute in the appeal are whether the Police Service should be allowed to introduce wage material as fresh or addition evidence on appeal, and whether the Arbitrator erred in:

(a)finding that Mr Kearns’ pre-injury earnings with the Police Service were $1,490.00 per week (‘probable earnings’);

(b)failing to deal with the Police Service’s submissions surrounding the application of the Court of Appeal decision in Blayney Abattoirs Pty Ltd v McConnell (1998) 16 NSWCCR 205 (McConnell) (‘application of Blayney Abattoirs v McConnell’);

(c)failing to correctly apply section 16 of the 1987 Act (‘section 16’);

(d)apportioning liability under section 22 of the 1987 Act (‘section 22’), or , in the alternative;

(e)apportioning liability 80% to the Police Service and only 20% to IAG.

FRESH EVIDENCE

The introduction of fresh evidence or additional evidence on appeal is governed by section 352(6) of the 1998 Act, which provides:

“(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 background to the Police Service’s application to rely on fresh evidence on appeal is that, based on a PAYG Payment Summary (the PAYG statement) for the year ending 30 June 2001 (wrongly referred to as a group certificate by the Appellant Employer), the Arbitrator found Mr Kearns’ probable earnings but for injury to be $1,490.00 per week. The PAYG statement indicated that Mr Kearns had been paid $44,704.00 for the period from 1 July 2000 to 27 January 2001, in addition to a lump sum payment of $1,159.00. The Arbitrator divided $44,704.00 by the number of weeks in the period concerned (30) to arrive at the figure of $1,490.00 (Reasons, paragraph 61).

At some time in 2001 Mr Kearns made an application to the Police Service for “payment of pro-rata Extended Leave” of 292.76 hours. The Police Service approved that application by letter dated 14 May 2001. The Arbitrator considered this at paragraph 60 of his Reasons and found that whilst there was no evidence as to when Mr Kearns received this payment, it could not have been received in the period 1 July 2000 to 27 January 2001 and, therefore, it was not a payment included in the PAYG statement.

The Police Service seeks to introduce into evidence on appeal a “Summary Report” of Mr Kearns’ earnings for the financial year ending 2001 (wrongly referred to as the 2000 financial year in the Appellant Employer’s submissions) and a copy of the NSW Police salary scale from March 1987. The Summary Report indicates that Mr Kearns received a number of payments for “leave” in the financial year ending 30 June 2001. The Police Service’s argument is that the payment of 292.72 hours of pro-rata extended leave was in fact included in the sum of $44,704.00 and those payments together with other payments for leave should not have been taken into account in determining Mr Kearns’ average weekly earnings under section 43 of the 1987 Act. It is argued that if those items are excluded then Mr Kearns’ total earnings for the period 1 June 2000 until 27 January 2001 were $34,436.61, or an average of $1,142.56 per week over 30.14 weeks.

In support of its application to rely on fresh evidence the Police Service submits:

(a)it was never made clear, either at the commencement of filing the Application or at the teleconference, that Mr Kearns’ claim was that his pre-injury earnings with it in 2000-2001 equated to $1,485.71 per week;

(b)Part 5.2 of the Application indicates that Mr Kearns’ pre-injury earnings of $1,485.71 per week were those under the “NRMA Employee Agreement” as an “Investigator” and makes no mention of his earnings as a police officer;

(c)Accordingly, the Police Service was never placed on notice or made aware that any claim was being made for pre-injury earnings during Mr Kearns’ employment with it from 2001;

(d)Mr Kearns only attached to his Application the Salary Scale for NSW Police Officers covering the period from 2005;

(e)the wage information is now required because of the Arbitrator’s errors in calculating probable earnings and is of fundamental importance to the appeal;

(f)the wage information was not available or provided previously “as there was never any indication that it would not be accepted by an Arbitrator that payment of the Respondent Worker’s pro-rata leave, would not be calculated as part of his leave” [sic] (Appellant Employer’s submissions 28 November 2007, paragraph 13);

(g)as Mr Kearns (and presumably his legal representative) was aware that the pro-rata leave payment was made in the 2001 financial year (wrongly referred to as the 2000 financial year) and thus formed part of the Group Certificate served, “it was incumbent upon him to clarify this point with the Arbitrator when specifically questioned about the same at the hearing” (Appellant Employer’s submissions 28 November 2007, paragraph 14);

(h)Mr Kearns failed to provide tax returns for the financial year 2001, which would have showed all payments claimed had already been made by it;
(i)there is no prejudice to Mr Kearns in allowing the new evidence to be introduced on appeal as it simply confirms a factual matter the parties were well aware of at the time and which Mr Kearns failed to disclose, and

(j)the refusal to admit the evidence on appeal will amount to a denial of natural justice to it and would also “permit and perpetuate a fraudulent and/or mistaken representation by the Respondent Worker of his pre-injury earnings with the Appellant for the 2000 [sic, 2001] financial year” (Appellant Employer’s submissions 28 November 2007, paragraph 17).

The Respondent Worker opposes the introduction of the wage material and submits:

(a)only in the most exceptional circumstances can a party raise on appeal an issue not argued before the Arbitrator (Department of Corrective Services v Evans [2005] NSWWCCPD 58 (Evans));

(b)a distinction must be drawn between “new evidence” and “more evidence”;

(c)Part 5.1 of the Application detailed the weekly compensation claimed and at Part 5.2 provided a Schedule of Wages Claimed setting out the period, actual earnings, comparable earnings, and the relevant NSW State Police Award;

(d)the Application included statements from Mr Kearns detailing wages, group certificates and copies of the relevant award;

(e)the Appellant Employer filed a Reply on 27 September 2007 which stated at Part 4 under “Claim Details” “To be advised”. No wage material was attached to the Reply and no wage material was sought to be tendered at the arbitration;

(f)the Appellant Employer did not put in issue or dispute the wage details in the Application during cross-examination of Mr Kearns or during its submissions at the arbitration;

(g)allowing the wage material into evidence will cause severe prejudice to Mr Kearns;

(h)the Appellant Employer has failed to provide evidence to satisfy the test of “exceptional circumstances”, and

(i)the Appellant Employer has not provided any reasons why the “new evidence” was not attached to the Reply in compliance with the Commission’s rules.

IAG also opposes the introduction of the wage material, noting that the Appellant Employer did not file any wage material or schedule at the arbitration and did not cross-examine Mr Kearns about his earnings. It makes the additional point that the salary scales now sought to be introduced are not relevant as they do not show earnings by way of overtime or other additional payments earned by Mr Kearns prior to his injury with the Appellant Employer.

Discussion and Findings – Fresh Evidence

The question of the introduction of fresh evidence on appeal was considered by the Court of Appeal in Haider v JP Morgan Holdings Aust Ltd t/as JP Morgan Operations Australia Ltd [2007] NSWCA 158, (2007) 4 DDCR 634 (‘Haider’) where Basten JA referred to Akins v National Australia Bank (1994) 34 NSWLR 155 (‘Akins’) and other authorities. In Akins, Clarke JA (Sheller JA and Powell JA agreeing) stated at 160 that three conditions need to be met before “fresh evidence” can be admitted:

“These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible.”

However, in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116 Heydon JA stated at [15]:

“Even if the three tests stated in the Akins case are applicable and are not satisfied, a question remains: is it just to admit the further evidence in this case?”

In considering an application to rely on fresh evidence or further evidence on appeal, the Commission must balance two competing requirements: the public interest that litigation should not continue indefinitely against the need to ensure that justice is done in all the circumstances of the case. In balancing these matters the Commission must also keep in mind its statutory duty to act “according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms” (section 354(3) of the 1998 Act).

The Appellant Employer’s arguments in support of its application to rely on additional evidence on appeal are misguided, misleading and wrong. Adopting the numbering set out in paragraph [20] above, I make the following observations and findings:

(a)the Appellant Employer’s submission indicates a fundamental misunderstanding of the Application and the legislation. Mr Kearns made it abundantly clear in Part 5.2 of Schedule A of his Application (in which he set out particulars of his claim against the Police Service) that he alleged his “comparable/probable earnings” but for his injury were $1,485.71. That is exactly what the legislation required him to do. It is true that Mr Kearns never claimed that his pre-injury earnings with the Police Service were $1,485.71 per week. Mr Kearns’ pre-injury earnings were of limited relevance to his claim, which dated from 14 November 2006 not from 2001. The Police Service should, if it wished to contest the level of comparable or probable earnings but for injury, have tendered evidence of comparable employees. It did not do that at the arbitration and has not sought to do it on appeal;

(b)the Appellant Employer’s reference to the “NRMA Employee Agreement” is a reference to Schedule B of the Application, which deals with the claim against IAG. Schedule A of the Application sets out the claim against the Police Service and refers to “NSW State Police Award” and the classification of “police officer”;

(c)the Police Service was on notice, by virtue of the Application, that Mr Kearns claimed weekly compensation from 14 November 2006 and alleged “comparable/probable earnings” of $1,485.71 per week from 14 November 2006. The reference to the Police Service not being “placed on notice or made aware of any claim being made for pre-injury earnings” indicates an extraordinary lack of understanding of the claim Mr Kearns made and the particulars clearly set out in Schedule A of the Application;

(d)the fact that Mr Kearns only attached the salary scale for NSW Police covering the period from 2005 is of no consequence. As Mr Kearns’ claim was at all times under section 40 of the 1987 Act, the award rate (the current weekly wage rate under section 42 of the 1987 Act) as at 2001 is of no relevance in the claim;

(e)this submission assumes an error by the Arbitrator. The Arbitrator determined the case on the evidence tendered and the submissions made. An arbitration is not a trial run where the parties await the result and then seek to tender on appeal evidence that could and should have been tendered at the arbitration;

(f)this submission is difficult to understand. I assume it was intended to submit that the wage material was not available or provided previously because it was not indicated that the Arbitrator would accept the figures in Mr Kearns’ PAYG statement as evidence of comparable earnings. This submission fails to acknowledge that the Police Service had every opportunity in the conciliation and arbitration process (starting with the filing of its Reply and continuing at the teleconference and at the arbitration itself) to tender wage material and/or make submissions on wages, but it did neither. The Arbitrator relied on a PAYG statement attached to the Application and served on the Police Service. He was entitled to do so. The wage material now sought to be relied on was information available to the Police Service at the time of the arbitration and no valid explanation has been offered as to why it was not attached to the Reply, as required by Part 10 Rule 10.3 of the Workers Compensation Commission Rules 2006 (‘the Rules’). Further, at the arbitration the Arbitrator identified the issues in dispute and said at T1.51 “I should say, that [what] Mr Kearns would probably be earning but for the injury is as set out in the schedule of wages in the Application to Resolve a Dispute, being $1,485.31”. The Arbitrator then asked the parties whether that accorded with their understanding and counsel for the Police Service said that he agreed with the issues outlined by the Arbitrator but added that the Arbitrator would also have to “examine the applicability of either section 15 or 16 of the Act in respect of the second period of employment”. At no stage did counsel for the Police Service indicate that comparable wages were in issue;

(g)there is no evidence that Mr Kearns was aware that his pro-rata leave payment was included in his PAYG statement for the 2001 financial year and the basis for this submission is not established. Mr Kearns attached to his Application the evidence in support of his claim and served that Application in accordance with the Rules. It was then a simple matter for the Police Service to prepare and file its evidence in response. It did not do that. Further, experienced counsel represented the Police Service at the arbitration and he made no submissions on wages. Whilst Mr Kearns was sworn and asked to identify and confirm the contents of his unsigned statement of August 2006 and the Arbitrator asked if “anyone” (T6.3) wanted to ask any question, no questions were asked of Mr Kearns;

(h)that Mr Kearns did not provide tax returns for the financial year ending 2001 is of no consequence. He was not required to do so;

(i)Mr Kearns will suffer prejudice if the wage material is now admitted on appeal as he will suffer the inconvenience of a delay in the resolution of his claim and the potential further cost of a further arbitration, which he may not recover, and

(j)to suggest that the refusal to allow the wage material into evidence on appeal will amount to a denial of natural justice ignores the fact that the Police Service had every opportunity during the conciliation and arbitration process to submit wage material in accordance with the Commission’s Rules, to challenge Mr Kearns about his claim, and to make submissions on wages. It did not do so. The argument that if the new evidence is not admitted it will “permit and perpetuate a fraudulent and /or mistaken representation by the worker” about his earnings with the Police Service in the 2001 financial year is a submission that has no support and should not have been made.

Considering and applying the principles discussed in Akins and Haider, I make the following additional observations and findings. First, the material now sought to be relied on was available at the time of the arbitration and is material that was always available to the Police Service. Second, the evidence sought to be tendered is not such that there is a high degree of probability that the result will be substantially different. It is not evidence of earnings in “comparable employment” but of the award rates of pay. It makes no allowance for potential advancement by Mr Kearns in the Police Service or for overtime and other penalty rates. The Police Service’s submissions ignore the fact that section 40(2)(a) of the 1987 Act requires a consideration of Mr Kearns’ earnings in “the same or some comparable employment”. The meaning of this phrase is discussed at [77] below. Therefore, for the reasons set out at [74] to [79] below, the interests of justice do not require that the wage material should now be allowed into evidence on appeal because, even if it were admitted, the end result would be substantially the same as that reached by the Arbitrator.

The Appellant Employer’s application to rely on fresh evidence on appeal is refused.

REVIEW

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.”

The nature of a review was considered by the Court of Appeal in Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34, (2006) 4 DDCR 358 (‘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.”

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]).

The nature of a review was further considered by the Court of Appeal in State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249 where Spigelman CJ said at [28] and [30]:

“28. The concept of a review on the merits is wider than the concept of an appeal in a judicial context. There is a well established line of authority on the use of the terminology of ‘review’ instead of ‘appeal’ with respect to the workers compensation system in this State which establishes the breadth of a review on the merits.
30. 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 contends.”

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).

I intend to apply the above principles in the matter before me.

SUBMISSIONS DISCUSSION AND FINDINGS

Sections 16 and 22 of the 1987 Act

The Appellant Employer submits:
(a)the Arbitrator found Mr Kearns’ condition of PTSD to be a disease of such a nature as to be contracted by a gradual process that arose as a result of his employment with it and which entitled him to claim compensation from 27 January 2001, the date on which he could have claimed compensation for his partial incapacity as a result of his disease injury;
(b)he then found that Mr Kearns’ exposure to critical incidents during his employment with IAG caused an aggravation of his PTSD under section 16(1)(b) of the 1987 Act which resulted in him being unable to work since December 2004 at any scene involving minor or major accidents;

(c)applying section 16, IAG is liable for the whole of any award in favour of Mr Kearns;

(d)the apportionment provisions in section 22 of the 1987 Act have no application in a case to which section 16 applies (MLC Insurance Ltd v Pinto and anor (1994) 10 NSWCCR 101 (Pinto)), and

(e)as IAG was Mr Kearns’ only employer in the 12 month period preceding his incapacity from 30 October 2003, IAG is liable for the whole of the award of weekly compensation.

The Respondent Worker submits that the Arbitrator correctly applied sections 16 and 22 of the 1987 Act and his decision discloses no error of law.

IAG argues that Pinto is not applicable to the present matter because the Arbitrator found two separate and distinct injuries, one with it and one with the Police Service, and he correctly applied section 22 of the 1987 Act. As there was only one employer and insurer involved at the date of the second injury there was no requirement for the Arbitrator to refer to section 16(1)(b) of the 1987 Act. IAG also argues that, if there is to be a review of the decision, it should be on the basis that the aggravation with it has ceased.

The Legislation

All references below are to the 1987 Act, unless otherwise stated. Section 9 provides:

“9 Liability of employers for injuries received by workers-general

(1) A worker who has received an injury (and, in the case of the death of the worker, his or her dependants) shall receive compensation from the worker’s employer in accordance with this Act.
(2) Compensation is payable whether the injury was received by the worker at or away from the worker’s place of employment.”

Injury is defined in section 4 as follows:

“4 Definition of ‘injury’

In this Act:
‘injury’:
(a) means personal injury arising out of or in the course of employment,
(b) includes:
(i) a disease which is contracted by a worker in the course of employment and to which the employment was a contributing factor, and
(ii) the aggravation, acceleration, exacerbation or deterioration of any disease, where the employment was a contributing factor to the aggravation, acceleration, exacerbation or deterioration, and

(c) does not include (except in the case of a worker employed in or about a mine) a dust disease, as defined by the Workers’ Compensation (Dust Diseases) Act 1942 , or the aggravation, acceleration, exacerbation or deterioration of a dust disease, as so defined.”

As can be seen, section 4 provides for three distinct classes of injury: “an actual injury (‘personal injury arising out of or in the course of his employment’); a work-caused disease; and a work-aggravated disease” (per Mahoney A-P in Crisp v Chapman (1994) 10 NSWCCR 492 at 494 (Crisp)). The “actual injury” is often referred to as an “injury simpliciter” or as a “frank injury” and for the purposes of this decision I will refer to it as a “frank injury” though that term is not referred to in the Act. I will refer to a “work-caused disease” as a “disease injury” or a “section 4(b)(i) injury” and to a “work-aggravated disease” as a “disease aggravation injury” or a “section 4(b)(ii) injury”.

In respect of a disease injury, section 15 provides:

“15 Diseases of gradual process-employer liable, date of injury etc

(1) If an injury is a disease which is of such a nature as to be contracted by a gradual process:
(a) the injury shall, for the purposes of this Act, be deemed to have happened:
(i) at the time of the worker’s death or incapacity, or
(ii) if death or incapacity has not resulted from the injury-at the time the worker makes a claim for compensation with respect to the injury, and

(b) compensation is payable by the employer who last employed the worker in employment to the nature of which the disease was due.

(2) Any employers who, during the 12 months preceding a worker’s death or incapacity or the date of the claim (as the case requires), employed the worker in any employment to the nature of which the disease was due shall be liable to make to the employer by whom compensation is payable such contributions as, in default of agreement, may be determined by the Commission.
(2A) The Commission is to determine the contributions that a particular employer is liable to make on the basis of the following formula, or on such other basis as the Commission considers just and equitable in the special circumstances of the case:
‘C’ is the contribution to be calculated for the particular employer concerned.
‘T’ is the amount of compensation to which the employer is required to contribute.
‘A’ is the total period of employment of the worker with the employer during the 12 month period concerned, in employment to the nature of which the injury was due.
‘B’ is the total period of employment of the worker with all employers during the 12 month period concerned, in employment to the nature of which the injury was due.

(3) Total or partial loss of sight which is of gradual onset shall for the purposes of subsection (1) be deemed to be a disease and to be of such nature as to be contracted by gradual process.
(4) In this section, a reference to an injury includes a reference to a permanent impairment for which compensation is payable under Division 4 of Part 3.
(4A) In this section, a reference to employment to the nature of which a disease was due includes a reference to employment the nature of which was a contributing factor to the disease.
(5) This section does not apply to an injury to which section 17 applies.”

The disease injury is one that is contracted over a period of time and during that time a worker may have had several different employers. The purpose of section 15 is to fix a notional date of injury and to provide an arbitrary method for determining which of several employers is liable to compensate the worker and in what proportion. It does not create a liability for compensation but assumes that a disease injury has been received (Crisp at 495E).

The same function section 15 performs for a disease injury is performed by section 16 for a disease aggravation injury. Section 16 provides:

“16 Aggravation etc of diseases-employer liable, date of injury etc

(1) If an injury consists in the aggravation, acceleration, exacerbation or deterioration of a disease:
(a) the injury shall, for the purposes of this Act, be deemed to have happened:
(i) at the time of the worker’s death or incapacity, or
(ii) if death or incapacity has not resulted from the injury-at the time the worker makes a claim for compensation with respect to the injury, and

(b) compensation is payable by the employer who last employed the worker in employment that was a substantial contributing factor to the aggravation, acceleration, exacerbation or deterioration.

(2) Any employers who, during the 12 months preceding a worker’s death or incapacity or the date of the claim (as the case requires), employed the worker in any such employment shall be liable to make to the employer by whom compensation is payable such contributions as, in default of agreement, may be determined by the Commission.
(2A) The Commission is to determine the contributions that a particular employer is liable to make on the basis of the following formula, or on such other basis as the Commission considers just and equitable in the special circumstances of the case:
‘C’ is the contribution to be calculated for the particular employer concerned.
‘T’ is the amount of compensation to which the employer is required to contribute.
‘A’ is the total period of employment of the worker with the employer during the 12 month period concerned, in employment that has been a substantial contributing factor to the aggravation, acceleration, exacerbation or deterioration concerned.
‘B’ is the total period of employment of the worker with all employers during the 12 month period concerned, in employment that has been a substantial contributing factor to the aggravation, acceleration, exacerbation or deterioration concerned.

(3) In this section, a reference to an injury includes a reference to a permanent impairment for which compensation is payable under Division 4 of Part 3.
(4) This section does not apply to an injury to which section 17 applies.” (emphasis added)

As with section 15, the purpose of section 16 is to fix a notional date of injury and to provide an arbitrary method for determining which of several employers is liable to compensate the worker and in what proportion. It does not create a liability for compensation but assumes that a disease aggravation injury has been received (Crisp at 495E).

The apportionment provisions in the 1987 Act are set out in sections 22 and 22A:

“22 Compensation to be apportioned where more than one injury

(1) If:
(a) the death or incapacity of a worker, or
(b) a permanent impairment suffered by a worker as referred to in Division 4 of Part 3, or
(c) a liability under Division 3 of Part 3 to a worker,

results from more than one injury to the worker, liability to pay compensation under this Act is to be apportioned in such manner as the Commission determines.
(1A) Death, incapacity, loss or liability that results partly from one injury and partly from one or more other injuries is taken to have resulted from more than one injury.
(2) Liability to pay compensation under this Act includes:
(a) the liability of an employer (including an employer who is a self-insurer), and
(b) the liability of an insurer under a policy of insurance in respect of the payment of that compensation (including a direct liability to the worker), and
(c) a liability in respect of a claim under Division 6 of Part 4, and
(d) in the case of a worker who is partially incapacitated for work, a liability that arises because the worker is entitled to be compensated under this Act as if totally incapacitated.

(3) Liability to pay compensation under this Act is not to be apportioned by the Commission if the parties to whom the liability relates have agreed on the apportionment.
(4) Liability to pay compensation under this Act may be apportioned by the Commission even though it is the liability of a single insurer in respect of different periods of insurance, but only if the employer or the Authority applies for such an apportionment.
(5) The Commission may, on the application of any insurer or employer concerned or of the Authority, determine a dispute as to whether:
(a) liability to pay compensation under this Act should be apportioned under this section, or
(b) any such liability should be apportioned under this section in respect of different injuries.

The determination of the Commission has effect despite any agreement on apportionment if the application for determination was made by an employer (in the employer’s own right) or the Authority.
(7) A person who is liable to pay compensation under this Act is not entitled in any proceedings under this Act to a reduction in that liability by apportionment on account of the existence of any other person who is also liable to pay any part of that compensation unless that other person is a party to the proceedings.
(8) This section applies to any liability arising before or after the commencement of this Act.

22A Further provisions concerning apportionment of liability under section 22

(1) The apportionment of liability under section 22 is:
(a) in the case of the apportionment of liability between employers-to be on the basis of the relative length of the worker’s employment with each employer concerned (not including any period of employment after the last relevant injury was received), or on such other basis as the Commission considers just and equitable in the special circumstances of the case, and
(b) in the case of the apportionment of liability between insurers of the same employer-to be on the basis of the relative length of the employer’s period of insurance with each insurer concerned during which the worker concerned was employed by the employer (not including any period of insurance after the last relevant injury was received), or on such other basis as the Commission considers just and equitable in the special circumstances of the case.

(2) If a worker’s partial incapacity for work results from more than one injury to the worker and consequently more than one person would be liable to pay compensation in respect of that incapacity were the worker not entitled to compensation under section 38 of this Act or section 11 (2) of the former Act (as applied by Schedule 6 to this Act), those persons are nevertheless liable for the compensation so payable and accordingly that liability may be apportioned under section 22.
(3) Liability may be apportioned under section 22 even if the liability has been discharged.
(4) When liability to pay compensation is apportioned under section 22 between 2 or more persons, the Commission may order that the compensation is payable to the worker by one of those persons and that the other persons are to pay (by way of contribution) their apportioned share of that compensation to that person.
(5) The person ordered under subsection (4) to pay compensation to the worker is to be:
(a) in the case of apportionment between employers-the employer who most recently employed the worker, or such other of the employers as the Commission considers reasonable in the special circumstances of the case, and
(b) in the case of apportionment between insurers-the insurer of the employer at the time of the last injury, or such other of the insurers as the Commission considers reasonable in the special circumstances of the case.

(6) An order is not to be made under subsection (4) if the parties concerned have agreed as to the payment by one of them of the compensation concerned.
(7) In this section a reference to an insurer includes a reference to a self-insurer and a reference to a period of insurance includes a reference to a period of self-insurance. A liability in respect of a claim under Division 6 of Part 4 is for the purposes of this section taken to be a liability of the insurer of the employer concerned during the period that is relevant to that liability.
(8) In a case to which section 22 applies, if all of the insurers concerned (being either insurers of the same employer or of the different employers concerned) are insurers within the meaning of Division 4 of Part 7 and the entitlement of the worker (or other claimant) to receive compensation is not disputed:
(a) the compensation is (despite subsection (5)) payable by the last insurer or the last employer (as relevant to the case), with no apportionment of liability under section 22, and
(b) for the purposes of calculating an insurance premium payable by any of those employers, their claims histories are to be determined on the assumption that liability had been apportioned under section 22 (without the need for a determination of, or agreement as to, that apportionment).

(9) The operation of section 22 is not to be limited because of the fact that it provides for liability to be apportioned rather than providing for payment of contributions.”

The Authorities

In Pinto, the Court of Appeal considered the application of section 22 (since amended) to ‘disease’ cases. That case concerned the power of the former Compensation Court of NSW to apportion liability to indemnify an employer amongst two or more insurers in circumstances where the worker recovered an award of compensation against that employer for total incapacity resulting from the aggravation of a disease caused by his duties with the employer. The worker injured his back in a frank injury in 1983 and as a result of “multiple traumata constituted by heavy work” from May 1983 to April 1988. The employer changed insurers on 30 June 1987. The trial judge apportioned liability 85% to the first insurer and 15% to the second. The Court of Appeal held that the power to apportion under the then terms of section 22 was conditioned on a finding that the incapacity resulted from more than one injury (per Clarke JA at 103G). As the trial judge made no such finding in that case section 22 did not permit an apportionment of liability. Clarke JA gave detailed consideration to the terms of section 16 of the 1987 Act and said at 107D:

“It is clear to me that the provisions of section 16(1)(b) and (2) provide, in effect, a code in disease cases and there is no room for apportionment of liability to a worker between employers. The only claim for relief which is authorised by the section is the claim by an employer for contribution under section 16(2). As Handley JA has pointed out in Insurers Guarantee Fund – NEM General Insurance Association Ltd (In Liq) v GIO General Ltd [Insurers Guarantee Fund (1994) 33 NSWLR 247] contribution and apportionment are quite different concepts. It should also be observed that section 16 is supplemented by section 18 which makes provision for liability of insurers to indemnify a person ordered to make a contribution under section 16(2). In cases of personal injury arising out of, or in the course of, employment section 22 applies and in disease cases section 16 and section 18 apply.”

His Honour added at 107F:

“The only proviso to these conclusions is that I cannot exclude the remote possibility that there may be a case in which the incapacity is found to result from each of a frank injury and the aggravation of a disease. In that event difficult questions would arise as to apportionment and it may be that section 22 would enable an apportionment between different employers, or insurers.” (emphasis added)

Section 22 was amended in 1995 to add, among other things, section 22(1A) (Act No. 30 of 1995 and Act No. 89 of 1995), which reads “incapacity…that results partly from one injury and partly from one or more other injuries is taken to have resulted from more than one injury.” The Court of Appeal considered the effect of the amendments in Sutherland Shire Council v Baltica General Insurance Co Ltd (1996) 39 NSWLR 87 (Baltica) where Clarke JA (with whom Priestley JA and Hunter A-JA agreed) held that the legal position had been substantially changed by the amendments. The first test is whether incapacity resulted from more than one injury and second test involves whether the incapacity was so connected with a number of injuries that as a matter of ordinary commonsense and experience it should be regarded as having resulted from all or any of them (Baltica at 94F).

The Court of Appeal again considered the question of apportionment and the application of section 16 in Australian Conveyor Engineering Pty Ltd v Mecha Engineering Pty Ltd (1998) 45 NSWLR 606 (Mecha). In that case the worker was injured in a fall on 11 February 1992 (a frank injury) in the course of his employment with the first employer. The nature of the injury was the aggravation of pre-existing degenerative changes in his back (aggravation of a disease). The worker suffered a further injury to his back with his second employer between 13 November 1995 and 29 April 1996 as a result of the nature and conditions of his employment with that employer (a ‘nature and conditions injury’, which further aggravated his degenerative condition). The trial judge awarded compensation from 29 April 1996 and apportioned liability between both employers under section 22 of the 1987 Act. On appeal it was held that though the injury on 11 February 1992 could have satisfied either definition of ‘injury’ in section 4 (either ‘frank injury’ or ‘injury in the nature of an aggravation of a disease’) the words “injury consists in the aggravation …of a disease” in section 16(1) should be construed as not referring to something which is an injury independently of its aggravating effects on a previously existing disease, but as being confined to what are entirely injuries by aggravation (Sheller JA at 616). In other words, the frank injury and the nature and conditions injury were considered to be separate and distinct injuries each giving rise to separate rights and liabilities. A finding that a worker suffered a frank injury which also aggravated a pre-existing disease does not mean that the worker may not also have suffered an aggravation of a disease as a result of the nature and conditions of his or her employment during a different period of employment with the same or a different employer. The Court rejected the argument that because a disease aggravation injury had been received section 16 meant that the compensation had to be paid wholly by the last relevant employer as determined under that section.

A similar situation arose in Colliar & Colliar t/as Mid North Coast Mushrooms v Bulley & another (2000) 19 NSWCCR 302 (Colliar). In that case the worker was employed in 1989 (by the first employer) to pick mushrooms. That work aggravated an underlying osteoarthritic condition in his knees. The second employer (the appellants) acquired the business in 1991 and the worker continued with the same duties until the business closed in 1992. About a year later the third employer employed the worker as a domestic in its motel where, on 6 October 1995, she slipped in a spa and fell heavily onto her knees. The trial judge found that the worker’s employment with the first and second employers was a contributing factor to the aggravation of her osteoarthritic disease and that on 6 October 1995 she suffered a “frank injury” to her knees in the employ of the third employer, such injury “being in the nature of a further aggravation of degenerative changes”. The trial judge held that section 16 applied against the first and second employers and found two injuries, the deemed date of the first of which was the last day of employment with the second employer, 15 December 1992 (this being the section 4(b)(ii) injury) and the second injury, suffered on 6 October 1995 (being the section 4(a) injury). The trial judge also held that section 16 had no application to the third employer as the worker had not relied on “the nature and conditions of her employment” against that employer. In addition the trial judge had not found that the third employer last employed the worker in employment that was a contributing factor to the aggravation, which would invoke the operation of section 16(1)(b) of the 1987 Act. The trial judge apportioned lump sum compensation between the second and the third employers under section 22 of the 1987 Act.

The second employer successfully appealed. Davies A-JA (Meagher JA agreeing) held that an injury which constitutes an aggravation or other exacerbation of a disease and to which the employment has contributed, does not fall outside section 16 of the 1987 Act simply because the claim for compensation was, or could have been, framed in terms of paragraph (a) of the definition of “injury” in section 4 of the 1987 Act. As a result the judge erred in not applying section 16. His Honour stated that the trial judge’s approach was inconsistent with the decision in Pinto. At [76] his Honour added:

“When s16 applies, it applies as a code and excludes the operation of other provisions such as s22. In MLC Insurance Ltd v Pinto, at 109, it was pointed out by Handley JA, with whom Meagher JA agreed, that once s16(1)(b) applies, there can be no ground for apportionment under s22 since there is no common liability to apportion. Of course, s 16 applies only when the injury in respect of which compensation is sought consists in the aggravation, acceleration, exacerbation or deterioration of a disease. In Yates Bros (Stratford) Pty Ltd v Neil [1999] NSWCA 108 at [14], Handley JA, with whom Mason P and Stein JA agreed, said of the analogous s 15 of the Act:
‘Section 15 is a self contained code which deals exclusively with injuries of the kind which fall within its terms. One can express the same point by saying that it is a special provision which stands outside the general provision in s 22.’”

In a detailed dissenting judgment, Priestley JA noted that in a case of a ‘progressive disease injury’ (the term used by his Honour to describe an injury to which section 4(b)(ii) applies) it may be difficult to fix any date as the date of injury and when the disease has been progressing through successive employments with more than one employer, some rule is needed for deciding which employer should be liable for the one injury created by the definition (Colliar, at [14]). His Honour then quoted section 16(1) and added at 309:

“Thus, (1), s 16(1) fixed a date when a progressive disease injury was deemed to have happened; and (2), the liability to pay compensation for a progressive disease injury was put upon the last employer of the worker in employment that was a substantial contributing factor to the injury, thus adding the word ‘substantial’ to the otherwise identical words in the relevant part of s 4(b)(ii).”

His Honour concluded that Pinto was not an authority on the facts of the case before him nor on the relevant provisions of the Act, which had been materially amended in 1995. His Honour added that the principle stated by Powell JA in Mecha should be treated as the governing rule that emerges from that case. Powell JA said at 619 of Mecha:

“it was open to the trial judge to hold that the worker’s impairments were due to two discrete ‘injuries’ - a simple ‘injury’ in 1992 and an ‘injury’ brought about by the nature and conditions of his employment with the first respondent and that he did not err in doing so. This being so, it seems to me that the case did not call for the application of the provisions of s 16 of the Act.”

In Lyons v Master Builders Association of NSW Pty Ltd (2003) 25 NSWCCR 422 (Lyons) Neilson J considered the apparent conflict between Mecha and Colliar and concluded that the weight of judicial opinion in the Court of Appeal favoured the view expressed in the majority decision in Mecha. His Honour added at [22]:

“Here I have found a frank injury initiated chondromalacia patellae which is a degenerative disease process. That should be injury simpliciter within s4 and one does not need to have recourse to s15 or s16 of the Act. Indeed, if I might respectfully say so, the majority decision in Colliar v Bulley really fails to distinguish between the receipt of the injury or the injurious event and the pathology arising from the event. Unfortunately, the word ‘injury’ refers to both the event and the pathology arising from it. It is often necessary to draw the distinction. The Act makes the receipt of injury compensable, not the injury itself.”

The Court of Appeal reviewed the above authorities in Rail Services Australia v Dimovski & anor (2004) 1 DDCR 648; [2004] NSWCA 267 (Dimovski). In that case the worker relied on a nature and conditions claim for the period 25 January 1990 to 30 June 1996, and on frank injuries on 9 May and 6 June 1995 against his first employer (‘SRA’). He relied on a nature and conditions claim for the period from 1 July 1996 to 15 August 1998, and a frank injury on 28 May 1998 against his second employer (‘Rail Services’). The trial judge followed the majority decision in Colliar and held that section 16 applied so the whole award had to be met by the Rail Services. On appeal, Handley JA noted (at [29]) that the trial judge did not find that the worker was suffering from a disease, nor that his employment after the injury on 28 May was a substantial contributing factor to the aggravation of any disease (section 16(1)(b)) and if Colliar is authority for the proposition that an injury “of this nature is within s16 I would decline to follow it for the reasons given by Neilson CCJ in Lyons”.

Hodgson JA considered the decision of Mecha and said at [64]:

“The majority held that, although the injury on 11 February 1992 could fall within either paragraph (a) or (b)(ii) of the definition in s.4, the words ‘injury consists in the aggravation...of a disease’ in s.16(1) should be construed as not referring to something which is an injury independently of its aggravating effects on a previously existing disease, but as being confined to what are entirely injuries by aggravation.” (emphasis added)

His Honour added at [68]:

“In my opinion, the decision in Mecha is to be preferred. Section 16 applies only if the injury ‘consists in’ the aggravation etc of a disease. If there is an event that satisfies paragraph (a) of the definition of injury, and if that is the injury relied on and proved, the circumstance that it aggravated the disease and thus could have supported a case under paragraph (b)(ii) does not mean that this injury ‘consists in’ the aggravation of a disease. One strange result of the contrary view would be that a frank injury relied on and proved would, if it happened to aggravate a disease, and if incapacity did not commence immediately, be deemed under s.16(1)(a) to have happened at some time other than when it in fact happened.”

His Honour concluded at [70] that:

“In the present case compensation is payable by Rail Services for incapacity resulting from two injuries, namely a nature and conditions injury and a frank injury on 28 May 1998. The former could possibly be considered an injury under paragraph (b)(ii) and falling within s. 16(1); but the latter could not. Accordingly, the application of s. 22 was not excluded by s.16. The primary judge should have considered whether the incapacity of the worker giving rise to the entitlement to weekly compensation resulted partly from injury occurring in the course of the worker’s employment by SRA, as well as from injuries occurring in the course of his employment with Rail Services.” (emphasis added)

Young CJ in EQ concluded (at [85]) “the Mecha view is correct”.

Arbitrator’s Findings

The Arbitrator found:

(a)Mr Kearns suffered PTSD as a consequence of his duties when working for the Police Service in the Hunter Region Crash Investigation Unit and that that condition is a disease, these matters having been conceded by the Police Service (Arbitrator’s Statement of Reasons for Decision (‘Reasons’), paragraphs 17, 21);

(b)the disease of PTSD was contracted by a gradual process when Mr Kearns was employed with the Police Service (Reasons, paragraph 57);

(c)the PTSD resulted in Mr Kearns being unable to perform his work with the Crash Investigation Unit (Reasons 58);

(d)the PAYG statement from the Police Service for the financial year ending 2001 disclosed wages the Police Service paid to Mr Kearns for the period 1 July 2000 to 27 January 2001 were $44,704.00, plus an additional lump sum of $1,159.00 (Reasons, paragraph 59);

(e)working off the PAYG statement, Mr Kearns’ average weekly earnings for the period 1 July 2000 to 27 January 2001 (30 weeks) were $1,490.00 per week (Reasons, paragraph 61);

(f)Mr Kearns’ average weekly earnings with IAG between 5 February 2001 and 30 June 2001 were $1,070.15 per week (Reasons, paragraph 62);

(g)as Mr Kearns suffered a partial incapacity as a result of his disease injury and had an entitlement to weekly compensation from 27 January 2001, his deemed date of injury under section 15 was 27 January 2001 (Reasons, paragraph 67);

(h)as a result of his work with IAG Mr Kearns suffered an aggravation of his PTSD (under section 4(b)(ii)) which he had contracted with the Police Service (Reasons, paragraph 74);

(i)for the purposes of section 16, the deemed date of injury in respect of the disease aggravation injury is either December 2004 or November 2003 and IAG is liable to pay compensation for the incapacity resulting from that injury (Reasons, paragraph 76);

(j)as a combination of what happened to Mr Kearns with the Police Service and with IAG, he is unfit to work in employment that involves him in investigating any type of motor vehicle accident (Reasons, paragraph 81);

(k)the effects of the aggravation with IAG have not ceased (Reasons, paragraph 81 and 85);

(l)applying the principles set out in Baltica (see paragraph [48] above), Mr Kearns’ incapacity resulted partly from the PTSD (the disease injury) he contracted with the Police Service and partly from the aggravation of that disease (the disease aggravation injury) with IAG (Reasons, paragraph 84);

(m)the predominant cause of Mr Kearns’ current incapacity is his underlying PTSD that he contracted as a consequence of his duties with the Police Service. The work with IAG made the disorder worse, but only to a minor degree relative to what occurred with the Police Service (Reasons, paragraph 85);

(n)liability should be apportioned 80% to the Police Service and 20% to IAG;

(o)Mr Kearns’ average weekly earnings but for his injury (section 40(2)(a)) are $1,490.00 per week (Reasons, paragraph 87);

(p)Mr Kearns’ actual earnings from 14 November 2006 to 26 March 2007 were $1,005.00 per week and in the period from 27 March 2007 to date $1,014.00 per week (Reasons, paragraph 88) and these earnings are a proper measure of his ability to earn under section 40(2)(b), and

(q)the difference between Mr Kearns’ probable earnings and his ability to earn exceeded the statutory maximum for a worker with a dependent spouse and child, and there was no reason not to award the whole of that difference.

Discussion and Findings

Having regard to the above authorities, it now seems to be settled that the apportionment provisions in section 22 apply where a worker has sustained a frank injury (section 4(a) of the 1987 Act) and a separate disease aggravation injury (section 4(b)(ii) of the 1987 Act), even though the frank injury may have also resulted in an aggravation of a disease. In other words, the words “injury consists in the aggravation…of a disease” in section 16 should be confined to “what are entirely injuries by aggravation” (per Hodgson JA referring to Mecha at [64] of Dimovski).

The principles in Mecha are clear: the terms of section 16 do not prevent liability being apportioned under section 22 if incapacity or impairment has resulted from more than one injury, even if one of those injuries (a frank injury) has also resulted in an aggravation of a disease. In the present matter the Arbitrator found two injuries. First, a disease injury under section 4(b)(i) with the Police Service and, second, a disease aggravation injury under section 4(b)(ii) with IAG. He also found, as required by the authority of Baltica, that Mr Kearns’ incapacity resulted from more than one injury (the disease injury and the disease aggravation injury) and the incapacity was so connected with those two injuries that as a matter of ordinary commonsense and experience it should be regarded as having resulted from both of them. Those findings were open on the evidence and I agree with them. The Police Service has not challenged the finding of a disease aggravation injury with IAG but has restricted its grounds of appeal to those matters listed at [15] above. That being so it was not only appropriate but also necessary for the Arbitrator to then apply the terms of section 22 and apportion liability.

Davies A-JA reference to Pinto in Colliar must now be read in the light of the decision of Dimovski where the Court of Appeal expressly endorsed the contrary approach in Mecha. As a result, the reasoning of Priestley JA in Colliar is to be preferred to the majority decision in that case. His Honour expressly noted that Pinto was not an authority on the facts of the case before him nor on the relevant provisions of the Act, which have been materially amended in 1995. Similarly, Pinto is not authority on the facts before me.

There is no doubt that section 15 provides a code under which a deemed date of injury is determined, and contribution is calculated, among multiple employers in cases where there are two or more employers who have employed a worker in employment “in the nature of which the disease was due” (section 15(1)(b)). Such a situation arose in Grate Lace Pty Ltd t/as Grate LaceBricklaying Co v Theiss Watkins White (Constructions) Pty Ltd & others (1995) 12 NSWCCR 365 (‘Grate Lace’). In that case the Respondent Worker was a bricklayer who contracted a dermatological condition caused by exposure to an allergen in cement. His symptoms first appeared in January 1985 working as a bricklayer for Grate Lace. He was off work for a period and paid compensation. He returned to work for Clover Bricklaying in June 1985 and was retrenched in August 1985. In that period he still had dermatological symptoms but had no time off. The Respondent Worker then worked for Theiss as a bricklayer from 11 September 1986 until 26 November 1986 when he stopped work because of dermatitis. His claim was initially accepted by Theiss and paid until 26 October 1987. He then worked for Commercial Enterprises on light duties involving no exposure to cement. He claimed compensation from Grate Lace, Clover and Theiss. The parties accepted that the dermatitis was a disease of such a nature to be contracted by a gradual process.

The first hearing was before a Commissioner of the Compensation Court of NSW (‘the Compensation Court’). The Commissioner found liability against the last employer, Theiss. On a review before a Judge of the Compensation Court that decision was reversed and liability was found against Grate Lace. The reasoning adopted by the Judge was similar to the reasoning set out in the Appellant Employer’s submissions in the case before me. The Judge said that the disease manifested itself in the employment with Grate Lace and, therefore, the incapacity must have commenced then because the applicant was unfit for any work for a period and he was prevented from continuing in his employment without risk of acute disability if he was exposed to cement (see Sheller JA at 372).

Ultimately the case came before the Court of Appeal, which unanimously restored the Commissioner’s decision. Justice Kirby noted that the Act talks of an employment “to the nature of which the disease was due” (page 368) and added:

“But I do not take that adjectival clause to have the consequence which Manser CCJ derived from it in this case. It is simply designed to excuse a completely irrelevant employment, e.g. a bricklayer temporarily working in a florist shop where there is no exposure to an allergen such as Dycromate, found in cement, which apparently triggered off the Respondent Worker’s recurrent bouts of dermatitis which, in turn, occasioned his incapacity in this case.”

His Honour found that the mistake made by Manser CCJ was “in endeavouring to return to the assignment of liability according to a notion of true causation” (page 368). His Honour continued at 369B:

“…that approach overlooked the semi-arbitrary but very practical purpose of section 15 of the 1987 Act. That section obliged the Court to do what Commissioner Grayson in the initial hearing did, i.e. fix Theiss Watkins (Constructions) Pty Ltd (Theiss) with liability, as the last employer. That employer was no florist shop, but another employer in the bricklaying industry in whose employ the worker was exposed to the allergen which, once again, triggered off his dermatitis. It was therefore an employer which fell within the terms of section 15(1)(b) of the 1987 Act. It was the employer by whom compensation was payable. Because the previous relevant employment (ie by Clover Bricklaying Pty Ltd) concluded on 14 August 1985, more than one year before Theiss employed the worker, no basis for contribution under section 15(2) arose. Unfortunately for it, Theiss had to accept the liability for paying weekly compensation, so long as the worker was incapacitated within the meaning of the Act.”

As the factual findings in the present matter are quite different to those in Grate Lace, nothing decided by the Arbitrator is inconsistent with that authority. The Arbitrator did not find that the employment with IAG was employment to the nature of which the disease of PTSD was due, but found that Mr Kearns aggravated his already existing disease in that employment. The Police Service has not challenged that finding and has not argued on appeal that the Arbitrator should have found a section 4(b)(i) injury against IAG. Therefore, section 15 does not apply to the claim against IAG. The Arbitrator’s factual findings were open on the evidence and, whilst they were unusual and may have in part resulted from the way the case was conducted by the Police Service, they disclose no error.

The comments I have made above about the application of section 15 also apply to section 16. That section, like section 15, does not create liability for compensation but assumes that an injury has occurred and provides a code for determining when the injury is deemed to have happened, by whom compensation is payable and in what amounts.

Sections 15 and 16 are intended to deal with separate and distinct situations, which may overlap in some cases but do not do so in the present matter. Section 15 deals with disease conditions of such a nature as to be contracted by a gradual process. Section 16 assumes that the worker already has a disease (whether caused by work or not) and considers whether employment has been a substantial contributing factor to the aggravation of that disease. Its operation is “confined to what are entirely injuries by aggravation” (emphasis added) (per Hodgson in Dimovski at [64]). Mr Kearns’ injuries are not ‘entirely injuries by aggravation’ but include a disease injury under section 4(b)(i), which is a separate and distinct injury. The Arbitrator found that Mr Kearns’ incapacity resulted from the combined effect of both injuries and, applying Baltica, apportioned liability under section 22. His approach discloses no error and is consistent with accepted authorities on the disease and apportionment provisions.

Moreover, this approach is consistent with the wording of section 16, which provides in subsection (2) for contribution from any employers who in the 12 months preceding the workers death or incapacity employed the worker in “any such employment”. The reference to “any such employment” is a reference to employment described in section 16(1)(b), namely, “employment that was a substantial contributing factor to the aggravation, acceleration, exacerbation or deterioration” of the disease. The employment with the Police Service was not found to be “such employment” but was employment “to the nature of which the disease was due” (section 15(2)).

Appellant Employer’s Alternative Argument

In the alternative the Appellant Employer states that there is no basis to determine that apportionment of liability between it and IAG should be any less than 50:50. No submissions are made in support of this assertion.

In a carefully prepared and well-reasoned decision the Arbitrator dealt with the question of apportionment from paragraphs 77 to 86 of his Reasons. He considered the evidence and the law in detail and correctly applied the law to the facts as he found them. I agree with his conclusion on apportionment and no reasons have been advanced in support of any different apportionment. I reject the Appellant Employer’s statement on apportionment.

Probable Earnings

If I am wrong in refusing to allow the Appellant Employer’s additional wage material into evidence on appeal, it is appropriate that I consider this ground of appeal on the assumption that that material has been allowed into evidence. The Appellant Employer challenges the Arbitrator’s finding that Mr Kearns’ probable earnings but for injury were $1,490.00 per week. The challenge is on the basis that the figure of $44,704.00 in the PAYG statement includes payment for 292.76 hours of pro-rata extended leave and, therefore, the correct figure for probable earnings should be $1,142.56 per week (Appellant Employer’s submissions 28 November 2007, paragraph 29).

The Appellant Employer also argues, as I understand it, that even without the additional evidence sought to be tendered on appeal, the evidence before the Arbitrator established that as at 1 January 2007 a Senior Constable Level 3 earned $1,252.00 per week inclusive of allowances and, therefore, it is improbable that Mr Kearns would have earned $1,490.00 per week in 2001 and the Arbitrator erred in finding that figure to be probable earnings but for injury. This argument is flawed because it fails to distinguish between current weekly wage rate (the award rate, as set out in the pay scales in evidence) and average weekly earnings (the worker’s actual earnings, as set out in the PAYG statement). The only evidence of Mr Kearns’ actual earnings in the period July 2000 to 27 January 2001 is in the PAYG statement, which the Arbitrator was left to interpret as best he could in circumstances where neither party tendered any additional clarifying evidence nor made any submissions on this issue. On the evidence available and given the lack of submissions on this issue by the Police Service at the arbitration, the Arbitrator’s finding was open on the evidence.

However, in light of the additional material now sought to be tendered on appeal, it is arguable that the Arbitrator’s finding of probable earnings of $1,490.00 per week may have been an error as it is possible that the payment of pro-rata leave was included in Mr Kearns’ PAYG statement for the year ending 30 June 2001. If that is so it may have inflated the calculation of his probable earnings with the Police Service as at 2001.

That is not, however, the end of the analysis. The Appellant Employer’s submissions ignore the fact that section 40(2)(a) requires that a worker’s probable earnings but for injury be calculated on the basis that the worker “continued to be employed in the same or some comparable employment” (emphasis added). The High Court considered the meaning of this phrase in Johnston v Commissioner of Railways [1973] HCA 46; (1973) 128 CLR 632 (‘Johnston’) in the context of section 11 of the Workers Compensation Act 1926 (‘the 1926 Act’), which was in substantially the same terms as section 40 of the 1987 Act. The Court considered the situation where the worker was a “cleaner, acting foreman” at the time of his injury but the trial judge accepted evidence that he would have progressed to the position of an engine-driver and awarded him compensation on the basis that the wage of an engine-driver was the “same or some comparable employment”. Stephen J held at 640:

“If, in the relevant phrase of s 11(1)(a), ‘employment’ bears the meaning ‘occupation’ the reference to the worker continuing ‘to be employed in the same or some comparable employment’ means that the worker is to be treated as if he continued in the same or some similar occupation as that in which he was engaged when injured. Neither the same employer nor the same task, classification or rank is stipulated but this will occasion no difficulty; the Court is, by the subsection, required to form its own view of what would ‘probably’ have been the worker’s weekly earnings but for the injury and must, from the evidence before it, determine how the worker would have fared in his occupation had he not been injured.” (emphasis added)

In Australian Wheat Board v Pantaleo (1984) 3 NSWLR 530 (‘Pantaleo’) the NSW Court of Appeal considered the situation where a secretary became a beautician after her injury. The trial judge calculated her potential earnings as an uninjured beautician (found to be $400.00 per week) and compared them to “her earnings situation” (at 534), which he found to be $350.00 per week and he awarded the difference. The Court of Appeal set aside the award because, among other things, the trial judge had not addressed whether the work as a beautician was “comparable” to that of a secretary. On that issue Glass JA (with whom Samuels JA agreed) noted at 545 that the evidence disclosed “no point of comparison” between the work of a beautician and that of a secretary. Kirby P (as he then was) stated at 540 that:

“Judging comparability of employment requires commonsense and experience of the labour market and its variety such as judges of the Compensation Court acquire in performing their duties. It is essentially a factual question though regard may be had to a variety of indicia of comparability in this context. It may, for example, refer to the physical attributes of the former and the hypothesized job. It may refer to the career progression that could reasonably have been expected of the worker, uninjured. It may refer to the award classifications likely to be open to a person such as the injured worker. It may refer to the range of salaries that might reasonably have been within the worker’s pre-injury achievement, as a worker; whilst the decision-maker is involved in a hypothetical exercise, the requirement of comparability keeps the speculation within practical bounds. That is its objective. It should not be read narrowly as confined to physical attributes only. Nor is the speculation to be limited strictly to the orthodox career path of uninjured workers with the respondent employers, where evidence establishes the likelihood of other career prospects. It is a matter for the application of the commonsense and experience of the decision-maker in each case.”

In the present matter Mr Kearns did move to another employer. In determining if an occupation is “comparable” the Commission is not bound to look at the “same employer nor the same task, classification or rank” but is required to form its own view of what would ‘probably’ have been the worker’s weekly earnings but for injury (per Wyndyer J in Johnston). The question arises as to whether Mr Kearns work with IAG can be said to be comparable to his work with the Police Service. With the Police Service Mr Kearns’ final posting was as a Specialist Accident Investigator, which position he started in 1999. His duties required him to attend and investigate fatal and serious motor vehicle accidents. Mr Kearns started with IAG as an Internal Personal Injury Investigator working in its compulsory third party and public liability claims division. From the time he started until late 2002 or possibly early 2003 his work only required him to investigate minor accident and public liability claims. In late 2002 or early 2003 his duties required him to investigate more serious accidents of the type he investigated with the Police Service. These duties were clearly “comparable” to the duties he performed with the Police Service and, but for his injury, were duties he would have been capable of performing. Mr Kearns’ income with IAG was initially lower than with the Police Service, but in the financial years ending 30 June 2004 and 30 June 2005 his average weekly earnings were $1,487.96 and $1,485.21 respectively. Given that the claim for compensation did not commence until 14 November 2006, a minor adjustment for inflation gives a figure in excess of the Arbitrator’s finding of $1,490.00 per week. Therefore, even if the wage material now sought to be relied on by the Appellant Employer were admitted into evidence, it would make no material difference to the outcome because “comparable” earnings as at November 2006 were clearly of the order of the amount allowed by the Arbitrator, if not higher.

Application of Blayney Abattoirs v McConnell

Relying on the fresh evidence on appeal it is submitted that in 2001 Mr Kearns “would have earned approximately $1,008.57 [per week] whilst in the employ of the appellant” (Appellant Employer’s submissions 28 November 2007, paragraph 39). As that figure is less than Mr Kearns’ initially earned with IAG, it is argued that he has suffered no loss of earnings and has no entitlement to compensation against the Police Service. This submission is fundamentally wrong and I reject it. It fails to acknowledge the difference between the current weekly wage rate (the award rate of pay) and average weekly earnings (the actual rate at which a worker is remunerated). Even using the Police Service’s own figures (sought to be tendered on appeal), Mr Kearns’ average weekly earnings for the period from I July 2000 until 27 January 2001 were $1,142.56 but his average weekly earnings with IAG for the period 5 February 2001 until 30 June 2001 were only $1,070.15, revealing a loss of $72.41 per week.

The Appellant Employer’s reliance on McConnell is misguided. The trial judge in that case did not award weekly compensation solely against the last employer in time, as the Appellant Employer has submitted. He apportioned liability for lump sum compensation between the three respondent employers but found the first employer in time (the appellant) to be wholly liable for the award of weekly compensation because the injuries with the subsequent employers “had not increased the worker’s incapacity for work” (per Stein JA at [21]). The evidence in the present matter is that when Mr Kearns attempted to perform with IAG the duties he previously performed with the Police Service, he suffered a significant increase in his symptoms and was unable to cope. Thus, whilst Mr Kearns’ potential ability to earn in his employment with IAG was, at times, greater than his earnings with the Police Service the evidence is clear that, as a result of his injury with the Police Service (aggravated with IAG), he was not able to cope with that employment. Therefore, Mr Kearns’ sustainable post injury ability to earn was not greater than his earnings with the Police Service as he could not do the job with IAG.

DECISION

The Arbitrator’s decision dated 2 November 2007 is confirmed.

COSTS

The Appellant Employer is ordered to pay the costs of each Respondent to the appeal.

Bill Roche
Deputy President
4 March 2008

I NONG DONG CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

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Citations

NSW Police Force v Kearns [2008] NSWWCCPD 29

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