Pethyon v Ottoy Pty Limited T/as Noble Toyota

[2006] NSWWCCPD 121

WORKERS COMPENSATION COMMISSION

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

CITATION:Pethyon v Ottoy Pty Limited t/as Noble Toyota [2006] NSWWCCPD 121

APPELLANT:  Dolar Pethyon

RESPONDENT:  Ottoy Pty Limited t/as Noble Toyota

INSURER:Allianz Australia Workers Compensation (NSW) Ltd

FILE NUMBER:  WCC1333-05

DATE OF ARBITRATOR’S DECISION:          23 May 2005

DATE OF APPEAL DECISION:  15 June 2006

SUBJECT MATTER OF DECISION: Section 11A of the Workers Compensation Act 1987.

PRESIDENTIAL MEMBER:  Acting Deputy President Robert Harrington

HEARING:On the papers

REPRESENTATION:  Appellant:      Galluzzo Golotta Andriano   Solicitors

Respondent:   A.O. Ellison & Co

Solicitors

ORDERS MADE ON APPEAL:  1. Paragraphs 1 and 2 of the Arbitrator’s decision dated 23 May 2005 are revoked and the following orders made:

1. Award in the favour of the Applicant (worker) in respect of his claim for weekly payments of compensation pursuant to section 36 of the Workers Compensation Act 1987 at the rate of $525.20 per week from 13 March 2004 to 16 April 2004 and thereafter an award for the Respondent.

2. Award in favour of the Applicant (worker) in respect of the Applicant’s claim under section 60 of the Workers Compensation Act 1987 in respect of reasonable medical expenses incurred between 5 March 2004 and 16 April 2004 and thereafter an award for the Respondent.

3.   The Respondent to pay the Applicant’s costs of the proceedings as agreed or assessed.

2. Paragraph 3 of the Arbitrator’s decision dated 23 May 2005 is confirmed.

3. The Respondent (employer) to pay the Appellant’s (worker’s) costs of the Appeal.

BACKGROUND TO THE APPEAL

1.On 20 June 2005 Dolar Pethyon (‘Mr Pethyon’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 23 May 2005.

2.The Respondent to the Appeal is Ottoy Pty Limited t/as Noble Toyota (‘Noble Toyota’).

3.From 8 September 2003 to 4 March 2004 Mr Pethyon was employed by Noble Toyota as a new car salesman.

4.Mr Pethyon alleges that he was unable to work after 4 March 2004 because of a psychological injury caused or aggravated by his work duties.

5.Mr Pethyon resigned from his employment with Noble Toyota on 1 April 2004.

6.Pursuant to section 267 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) provisional compensation payments were made to Mr Pethyon for a period of 5 March 2004 to 12 March 2004. Thereafter Noble Toyota’s insurer declined further liability.

7.On 28 January 2005 Mr Pethyon lodged in the Commission an ‘Application to Resolve a Dispute’.  Mr Pethyon claimed ‘the nature and conditions of employment’ from 14 October 2003 to 1 April 2004 caused him psychological injury.

8.Mr Pethyon’s allegations against his employer, as distilled from his statement and his evidence before the Arbitrator, would seem to be that Mr Pethyon suffered a psychological injury as a result of:

1.the actions of his immediate supervisor Mr Robert Fryer in that he “abused and victimised” Mr Pethyon; together with

2.the course of actions decided upon and taken in respect of Mr Pethyon by his supervisors at meetings on 6 February 2004 and 4 March 2004.

9.Mr Pethyon was unable to work following the ‘meeting’ on 4 March 2004. 

10.Mr Pethyon claims weekly compensation payments from 13 March 2004 to 27 October 2004, when he, as I understand it, commenced to work in Melbourne.  Mr Pethyon also claims medical expenses for treatment.

11.Mr Pethyon’s claim was considered by the Arbitrator on the 10 May 2005.  A determination was made by the Arbitrator on 23 May 2005.  Mr Pethyon was unsuccessful in his claim.

12.Mr Pethyon lodged in the Commission, an ‘Appeal Against Decision of Arbitrator’ on 20 June 2005.

THE DECISION UNDER REVIEW

13.The ‘Certificate of Determination’, dated 23 May 2005 records the Arbitrator’s orders as follows:

1.Award in favour of the Respondent in respect of the Applicant’s claim for weekly payments of compensation under the Workers Compensation Act 1987.

2.Award in favour of the Respondent in respect of the Applicant’s claim under section 60 of the Workers Compensation Act 1987.

3.That this matter is determined as complex within the meanings of Clause 4.10 of Schedule 6 of the Workers Compensation (General) Regulations 2003. 

ISSUES IN DISPUTE

14.The issues in dispute in the appeal are:

1.Did Mr Pethyon’s psychological injury in whole or in part result from Mr Robert Fryer’s ‘victimisation and abuse’?

2.Was the meeting of 4 March 2004, a meeting in respect of ‘performance appraisal and/or dismissal’ of Mr Pethyon?

3.If the meeting was a meeting in respect of ‘performance appraisal and/or dismissal’ of Mr Pethyon, were the actions of his supervisors in respect to the ‘performance appraisal and/or dismissal’ reasonable?

ON THE PAPERS REVIEW

15.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.”

16.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. 

LEAVE

17.Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.

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

19.The amount at issue is greater then $5000.  No award of compensation has been made in this case.  The Arbitrator’s finding resulted in Mr Pethyon receiving no compensation. Therefore the second limb of section 352(2) does not apply (see Mawson v Fletchers International Exports Pty Ltd [2002] NSWWCCPD 5).

EVIDENCE AND SUBMISSIONS

Relevant facts

20.I have before me the Arbitrator’s decision, the evidence that was before the Arbitrator which included; documentary evidence, the transcript which included the oral testimony of Mr Pethyon, his immediate supervisor Mr Robert Fryer, and Mr Steven Drane who was ‘the dealer principal of Noble Toyota’ and the parties’ submissions on appeal.

21.Mr Pethyon is 31 years of age.  He had previous experience as a car salesman.  He commenced employment with Noble Toyota on 8 September 2003.  His immediate supervisor, at that time was Mr Andy Lee.  Mr Pethyon’s asserted that under the supervision of Mr Lee he had taken 24 orders for new car sales in a 21day period.

22.On 14 October 2003, Mr Robert Fryer – who described himself when he gave evidence before the Arbitrator as a ‘trouble-shooter for Toyota’ – became Mr Pethyon’s immediate supervisor.  Mr Pethyon stated that under Mr Fryer’s supervision his average orders fell to six cars per month.

23.Mr Pethyon’s employment contract stipulated a probationary period.  That period would have expired on 8 December 2003.  However it was extended by Mr Fryer.  Mr Pethyon was of the view that the period was extended because of staffing problems at Noble Toyota.  Mr Fryer, on the other hand, stated that the period was extended because he had not had sufficient time to assess Mr Pethyon’s sales ability.  In the end I do not believe that much turns upon this issue.

24.Mr Fryer [at paragraph 4 of his statement] stated that Mr Pethyon had only sold eight vehicles during December, whereas Mr Pethyon’s sales colleagues, at Noble Toyota, had sold between 19 and 21 vehicles during the same period.  Although Mr Pethyon was not aware of the exact number of vehicles sold, in general terms he agreed that this was a correct assessment of the respective sales figures.

25.In February of 2004 Mr Pethyon was issued with a written warning in respect of the sale of a motor vehicle.  There had been a ‘trade in’ on a new motor vehicle.  It was Noble Toyota’s policy that a written clearance is obtained to confirm that the ‘trade in’ vehicle was not encumbered in any way, before the new vehicle is release to the purchaser.  Mr Pethyon had released the new vehicle without written confirmation that the ‘trade in’ was unencumbered.  Mr Pethyon’s evidence was that he did not know of that requirement prior to this written warning.

26.Mr Pethyon attended his general practitioner Dr Duc Nguyen on 23 February 2004 at 10:09am.  The doctor recorded under history:

“Been well.  Stress out at work.  Car salesman.  Was asked to resign 2/52 ago.  Worries losing his job.  Got ready for work today, drove around but did not go in.  Has problems W (sic) new manager at work.  Hasn’t slept well last 2/52 lost appetite, easy to get upset. 

Wants time off to think AB [sic] whether he should resign etc…”

27.Mr Pethyon following that consultation spoke to Mr Fryer.  Mr Pethyon in his evidence said  [21]:

“The agreement between me and Dr Nguyen was that I meet with my manager, I speak to him.  He gave me two days as off at the first visit, and I meet my manager, which is Robert Fryer.  I speak to him.  I explain and I tell him how I feel. Okay?  Which is I did and appreciated Robert Fryer and apologised for that mess.  He said, “maybe I mistreated you but I don’t know now.”  And then he goes to me, “alright. Well, from now we start a new page, we start a new thing and we treat you as everybody else.”  Which is/ I appreciate it, and the next day instead of being sick another day I attended to work…”

28.It is clear from the evidence that, following Mr Pethyon’s consultation with Dr Nguyen on 23 February 2004, Mr Fryer was aware that Mr Pethyon was having some emotional problems.

29.On 4 March 2004 Mr Pethyon attended a meeting with Mr Fryer and a Mr Horne; Mr Pethyon was issued with a second warning.  The subject of this warning was Mr Pethyon’s low sales figures.  Mr Pethyon said the following in relation to that meeting, transcript page [19]:

A.“That was a discussion that in three o’clock/sorry, sir, three o’clock we had a discussion, me and Robert Fryer.  He goes, ‘I’m going to serve you today a first warning.  If you don’t sell 3.5 by the end of next week I’m going to serve you another warning, and if you don’t do, I’m going to serve you with the final warning, and I’m going to fire you.’

I waited until 7 o’clock to get that procedure, which is/that is the right procedure, I believe, yeah, Okay.  He served me with the second warning before I signed.  Steven Horne scrapped it and put “second warning” on it, and then explained why by Monday morning if I didn’t have 3.5, I would have been served with a third warning and it would be either I resign or I get sacked.”

30.Mr Fryer’s evidence was consistent with Mr Pethyon’s perception that he was required to sell 3.5 cars prior to 8 March 2004, i.e. he had to sell 3.5 cars in three days.

31.Mr Pethyon did not return to work after this meeting as he alleged that he was incapacitated by way of psychological illness.

32.Mr Pethyon’s claim for compensation was considered by the Arbitrator on 10 May 2005.  Mr Pethyon was unsuccessful in his claim for weekly compensation payments and medical expenses before the Arbitrator and seeks to challenge that decision.

APPELLANT’S SUBMISSIONS

33.The Appellant’s submissions are:

“1.That the ‘defence’ in section 11A of the 1987 Act refers to workers in the plural and as such the section can have no application to a single worker.

2.The Arbitrator was in error in determining that the meeting of 4 March 2004 constituted ‘performance appraisal/dismissal.’

3.That the Arbitrator’s finding that “the Appellant had failed to establish that, on the balance of probabilities, he was subjected to abuse or victimisation by Mr Fryer.’ Was a finding which demonstrated that the Arbitrator had reversed the onus of proof in her application of section 11A to the facts.

4.That, accepting the psychological injury did result from action taken by Noble Toyota in respect of the ‘performance appraisal/dismissal’ the Arbitrator erred in respect of two related factual findings.  Her factual findings should have been:

(i)That the actions taken in respect of the performance appraisal/ dismissal of Mr Pethyon, by Noble Toyota, were not reasonable.

(ii)That the psychological injury was not wholly or predominantly caused by the employer’s actions in respect to ‘performance appraisal/dismissal’.  The psychological injury being caused, in part, by the ongoing ‘victimisation’ of Mr Pethyon by Mr Fryer.”

RESPONDENT’S SUBMISSIONS

34.The Respondent’s submissions deal in detail with Mr Pethyon’s legal advisor’s submissions. A distillation of the Respondent’s submissions is that the Arbitrator has not erred in fact or in law in her application of section 11A of the 1987 Act to the facts.

DISCUSSION AND FINDINGS

Section 11A of the 1987 can only be invoked as a defence to a claim when workers (in the plural) are subjected to action taken by their employer, in respect of performance appraisals, discipline or dismissal

35.Mr Pethyon’s legal advisors submit that section 11A of the 1987 Act has no application to the facts in dispute in this matter as Mr Pethyon was the only worker at Noble Toyota the subject of performance appraisal, discipline or dismissal. Mr Pethyon’s legal advisors rely on the decision of Walker J in Jackson v Work Directions Australia Pty Limited t/as Work Directions Australia (1998) 17 NSWCCR 70 (‘Jackson’) at paragraphs 106, 107 and 108.

36.In Jackson Walker J had relied on an earlier Court of Appeal decision Monier Limited v Szabo (1992) 8 NSWCCR 305 (‘Szabo’).  Szabo did not deal with section 11A; it dealt with another section of the 1987 Act.

37.The Court of Appeal in Manly Pacific International Hotel Pty Ltd v Doyle (1999) 19 NSWCCR 181 (‘Doyle’) dealt with the issue as to whether the use of the word ‘workers’ (in plural) in section 11(1)(b) encompassed the singular.  In respect of this issue Davis A-JA, with whom Mason P and Fitzgerald JA agreed, said [190]:

“The trial judge further held that, in section 11A(1)(b), the word ‘workers’ was to be read in its plural form and did not encompass action taken or proposed to be taken by or on behalf of the employer with respect to one worker. However, the word ‘workers’ in section 11A(1)(b) should be read as encompassing the singular, in accordance with section 8(c) of the Interpretation Act 1987 (‘interpretation’).”

38.Mr Pethyon’s first submission should therefore be dismissed, as there is Court of Appeal Authority to the contrary.

The Arbitrator was in error in determining that the meeting of 4 March 2004 constituted ‘performance appraisals/dismissal’

39.Relevant to this issue the Arbitrator at paragraph [63] made the following finding of fact:

“On the evidence I find that the Applicant suffered an injury as a result of the actions taken with respect of performance appraisal and/or dismissal.  The issue to be determined is whether those actions were reasonable, and in particular, whether the two warnings given to the Applicant were reasonable in all of the circumstances of the Applicant’s employment”.

40.Mr Pethyon’s legal representative’s submission focussed on the ‘act of dismissal’ and the ‘act of performance appraisal’.  In Doyle Davies A-JA said in respect of the words ‘wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer’ the following [189]:

“The principal matter debated in this appeal was whether Mr Doyle’s injury was ‘wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer’, within the meaning of s 11A(1)(b). In this provision, emphasis is placed upon action taken or proposed to be taken by or on behalf of the employer. The provision differentiates between the worker’s psychological responses to work done and required to be done in the course of employment and the worker’s psychological response to action taken or proposed to be taken by or on behalf of the employer. It is only the latter circumstance which causes the provision to operate.

The criterion of s 11A(1)(b) is ‘reasonable action taken … by or on behalf of the employer’.  The words  ‘with respect to’ are of wide application.  Transfer, demotion, promotion, etc may be the subject of the action or proposed action taken by or on behalf of the employer or matters with respect to which that action or proposed action is connected or may themselves constitute the action or a part of the action.  However, the provision does not speak of an injury caused by the transfer, demotion, promotion, etc of a worker but of an injury caused by action taken or proposed to be taken by or on behalf of the employer with respect to such a matter.  The words “performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers” all clearly refer to matters other than the performance by a worker of his duties.  The paragraph is thus looking to the worker’s response to the employer’s action or proposed action, not to the worker’s response to employment conditions encountered after a transfer, demotion, promotion, etc.  Senior counsel for Mr Doyle put the matter well when he submitted that the section was looking to the process of transfer, demotion, promotion etc rather than those acts per se.”

41.It is, as Davies A-JA said, not the act per se, it is the process of performance appraisal or dismissal.  There is no doubt from the evidence that what occurred at the meeting on 4 March 2004 involved, inter alia, actions of the employer in respect of dismissal.  Mr Pethyon himself said at [page 19], in an answer to a question in cross examination, the following:

“That was a discussion that in three o’clock/sorry, sir, three o’clock we had a discussion me and Robert Fryer… Steve Horne scrapped it and put ‘second warning’, on it, and then explained why by Monday morning if I didn’t have 3.5, I would have been served with a third warning and it would be either I resign or I get the sack.”

42.It was clearly Mr Pethyon’s view about the meeting that it was a meeting in respect of his ultimate dismissal.  Although Noble Toyota’s legal advisors did not necessarily approach the case on the basis that this meeting was a meeting in respect of Mr Pethyon’s dismissal, on the whole of the evidence it is, in my view, clear that the purpose of the meeting was the penultimate step in the dismissal of Mr Pethyon.

43.Although it is clear that the meeting of 4 March 2004 was a meeting in respect of dismissal it is not so clear that it was a meeting in respect to performance appraisal, as found by the Arbitrator.  Mr Pethyon had only sold eight cars in December as compared to upwards of twenty cars by his colleague.  In the meeting of 4 March 2004 this was discussed.  Mr Pethyon was told that unless he sold 3.5 cars within the ensuing three days he would lose his job.  This is clearly action being taken by Noble Toyota.  The question is, was it a performance appraisal?

44.The question as to what is a ‘performance appraisal’ is a question of fact.  In Doyle Davis A-JA said “the words ‘with respect to’, are of wide application”.  The question of what is a “performance appraisal” by an employer was considered by Neilson J in Bottle v Wieland Consumables Pty Limited (1999) 19 NSWCCR 135 (‘Bottle’) and by Geraghty J in Irwin v Director General of School Education NSW CC, No.14068/97 (18 June 1998, unreported) (‘Irwin’).  In Irwin, Geraghty J said:

“Performance appraisal is more like a limited, discreet process, with a recognised procedure to which the parties move in order to establish an employee’s efficiency and performance.”

45.Whereas Neilson J in the Bottle took a narrower view of the words ‘performance appraisal’.  His Honour said this [146; par30]:

“Consistent with my decision in Yeo v Western Sydney Area Health Service (1999) 17 NSWCCR 573 an assessment preliminary to demotion, transfer, retrenchment, dismissal or discipline would be part of each of these respective processes. There would be no need for there to be a separate provision for ‘performance appraisal.’ That, again, leads me to the view that ‘performance appraisal’ is putting a value or putting an estimate of value (that is monetary value) upon the work being performed by the employee”.

46.What occurred in the meeting of 4 March 2003 would not fit within the Neilson J view of the meaning of ‘performance appraisal’.  The written warning of 4 March 2004 under the heading ‘warning issued for the following reason/reasons’ recorded:

“Poor sales performance.  Not meeting national average sales.  Ninety days sales performance less than 80% of target achievement.  This performance has been discussed previously.” 

47.The meeting of 4 March 2004 and the warning of the same date would not fall within the Geraghty J wider view of ‘performance appraisal’ in my view.  Mr Pethyon’s performance had been appraised on a prior occasion.  All parties knew that he was well below the performance level.  The purpose of the meeting of 4 March 2004 and the warning were to set parameters so that ultimately Noble Toyota could dismiss Mr Pethyon.  This dismissal probably would have occurred on 8 March 2004.  As such, I am of the view, that the Arbitrator was in error in respect to her finding; that the actions of the employer in the meeting of 4 March 2004 were actions in respect of a performance appraisal.

48.This, however, does not help Mr Pethyon as there was evidence before the Arbitrator, and in my view overwhelming evidence, that the actions taken by the employer, in the meeting of 4 March 2004 were actions in respect of the dismissal of Mr Pethyon.  That dismissal would probably have occurred on 8 March 2004 or 16 March 2004 if he had continued to work after 4 March 2003.  It follows that in respect of Mr Pethyon’s legal advisors’ second submission, the appeal must fail.

The Arbitrator was in error in finding that Mr Pethyon’s psychological injury was ‘wholly or predominantly’ caused as a result of the meetings of 6 February 2004 and 4 March 2004 in which Mr Pethyon was issued with warnings

49.It is clear from the evidence that Mr Pethyon was having significant trouble in reaching the expected sales performance.  In December he had only sold eight vehicles as compared to sales figures of other Noble Toyota employees who had sold up to twenty-one vehicles for the month.  Although the evidence is not clear on this point it would seem that Mr Pethyon’s performance had not improved in January or February of 2004.  It would be understandable that Mr Pethyon’s inability to reach the sales performance level would, of itself, have caused considerable stress.  However this is not how Mr Pethyon presented his case.  Leaving to one side, for the moment, the events of 6 February 2004 and 4 March 2004, Mr Pethyon’s case was, as he stated in cross-examination, [pages 15 and 16 of the transcript] that his psychological injury was caused by Mr Fryer’s ‘victimisation and abuse’.  Mr Fryer gave evidence in the proceedings and the Arbitrator found that he was a witness of truth.  The Arbitrator preferred Mr Fryer’s evidence in respect of this issue.  Relevantly the Arbitrator, at paragraph [62] said: 

“On consideration of the evidence in this matter it is my view that the applicant has failed to establish that, on the balance of probabilities, he was subjected to abuse and victimisation by Mr Fryer.  Much of what occurred, such as the comments about being fit enough for the Olympics, depend on the perception of the Applicant.  Further I am not convinced that the behaviour of Mr Fryer led to the Applicant suffering a psychological injury.”

50.It is clear that this finding is not a finding related directly to the issues under section 11A(1) of the 1987 Act. This finding is in respect of Mr Pethyon’s allegation that the ‘nature and conditions’ of his employment being the ‘victimisation and abuse’ by Mr Fryer between December 2003 and April 2004 caused psychological injury. It was necessary for the Arbitrator to make this finding in order to deal with one of the two limbs of Mr Pethyon’s claim, as he ultimately presented his claim. The other limb being that the action of his supervisor in the meeting of 4 March 2004 (in particular) was unreasonable and caused him to suffer a psychological injury.

51.In order to disturb the Arbitrator’s finding Mr Pethyon would have to establish that there was an error of law, fact or discretion (see for example Mayne Health Group t/as Nepean Private Hospital v Sandford [2002] NSW WCC PD 6). The error must be, such that but for it, a different decision would have been made (Knight v Eyles Nominees Pty Limited t/as Processed Forest Products [2004] NSWWCCPD 73) (‘Knight’).  The Arbitrator had before her, the oral testimony of both Mr Fryer and Mr Pethyon.  In respect of this issue she preferred the evidence of Mr Fryer.  There was also, other material before the Arbitrator that would support Mr Fryer’s version of events.  That material was the extension, by Mr Fryer, of Mr Pethyon’s probationary period; the fact that Mr Pethyon’s first attendance upon a medical practitioner in relation to stress related illness was on 23 February 2004; and the fact that Mr Fryer had been on holidays for approximately the two weeks before 23 February 2004 and, as such, could not have been abusing and victimising Mr Pethyon in the period immediately before Mr Pethyon’s attendance upon the general practitioner.

52.The Arbitrator’s determination that Mr Pethyon had not established on the balance of probabilities, that Mr Fryer had victimised him and abused him, leading to a psychological injury, was open on the evidence.  Interference with an Arbitrator’s discretionary judgment as to the weight of evidence should only be done where it is manifestly obvious that the discretion has so miscarried that it has not been exercised correctly (Knight’s case).  It is my view that the Arbitrator’s decision in this regard has not miscarried. 

That the psychological injury suffered by Mr Pethyon, as a result of the meetings in February and March, were not as a result of reasonable action, by his employer, with respect to performance appraisal and/or dismissal

53.Mr Pethyon claimed in his ‘Application to Resolve a Dispute’ that his psychological injury was caused by the ‘nature and conditions of employment from 14 October 2003 to 1 April 2004.’  The words ‘nature and conditions of employment’ have been used by injured workers legal advisors for many years.  These words, particularly in the present case, are meaningless in any attempt to identify the factual basis of Mr Pethyon’s claim.  Mr Pethyon eventually presented his claim on two factual bases:

1.That Mr Fryer’s behaviour over time caused Mr Pethyon’s psychological injury and/or;

2.That the actions of Mr Pethyon’s supervisors (particularly Mr Fryer) at meetings on 6 February 2004 and 4 March 2004 caused his psychological injury and that the actions of his supervisors in respect to those meetings were unreasonable.

54.The Arbitrator rejected the first limb of Mr Pethyon’s claim.  The Arbitrator findings, in respect of the second limb of Mr Pethyon’s claim, which the parties have not challenged in this appeal, are as follows:

(i)Mr Pethyon suffered a psychological injury arising out of the course of his employment as a sales assistant with Noble Toyota.

(ii)       That Mr Pethyon’s employment was a ‘substantial contributing factor’.

(iii)That the psychological injury resulted from the meetings of February 2004 and 4 March 2004.  Her summary does not include 4 March 2004 but a reading of the decision, as a whole, clearly establishes that the summary should read:

“Weekly benefits claim: in February 2004 (and 4 March 2004) the Applicant received a psychological injury arising out of or in the course of his employment as a sales consultant with the Respondent.”

55.Of those two events it is clear that the meeting of 4 March 2004 was the precipitating cause of his incapacity as he was able to work up until 4 March 2004 albeit, probably, in a stressed state.

56.The real question in this appeal is whether the actions of Mr Pethyon’s supervisor, Mr Fryer, at the meeting of 4 March 2004, in respect to Mr Pethyon’s ultimate dismissal from employment with Noble Toyota, were ‘reasonable actions’.

57.As I understand Mr Pethyon’s case, although he made allegations that Mr Fryer ‘abused and victimised him,’ he does not allege or did not give any evidence that this occurred during the meetings of 6 February 2004 or 4 March 2004.  Where Mr Pethyon takes issue with what occurred at the meeting on 4 March 2004 is in relation to the requirement to sell 3.5 motor vehicles by 8 March 2004.  Such a requirement, he asserts, was an unreasonable requirement.  The Arbitrator relevant to this issue said [67]:

“I find that the warning issued on 4 March 2004 was in all the circumstances fair and the Respondent has established on the balance of probabilities that it was reasonable action in relation to performance appraisal and /or dismissal under s11A(1). There was no dispute between the parties that the Applicant was on probation in his employment and that his sales figures were well below national average and the average of sales consultants in the Respondent’s business. I consider that the actions taken by the Respondent in relation to the warnings were actions in relation to performance and/or dismissal and those actions were, on balance, reasonable. In particular I consider the extension of the probation period for a further 3 months, support and counselling by the Respondent as indicative of fairness appropriate in the circumstances. It may be true that the Applicant found himself in a position in early March 2004 where he had to sell 3 cars in 3 days to meet a sales target. However, given the circumstances I do not think that this was unreasonable. The setting of performance criteria on a numerical target basis is a reasonable method of appraising probationary employees in order to determine whether to retain them. It is an inevitable and proper consequence of this method of appraisal that towards the end of the trial period an employee who has underachieved will become aware that his failure to meet the quota will, in the absence of an extreme lift in performance tallies, jeopardize continuance of his employment”.

58.What are relevant matters to take into account in assessing ‘reasonableness’ was considered by Neilson J in Pirie v Franklins Limited (2001) 22 NSWCCR 346 (‘Pirie’).  His Honour after referring to passage in a judgement of Burke J in Melder v Ausbowl Pty Ltd (1997) 15 NSWCCR 454 [363: 47] said:

“It is in particular the last sentence of what fell from his Honour that is of relevance in my assessment of the facts of this case.  Whilst the antecedent relationship between the applicant and the respondent was not part of the process of his retrenchment, whether that retrenchment was reasonable or not must be seen in the light of their pre-existing relationship”.

59.There are two issues which I believe are important in relation to the pre-existing relationship; the first was referred to by Mr Fryer in cross-examination where he gave the following answers at page [37] of the transcript:

Q“All right.  Now, you had made a decision that as a salesman Mr Pethyon would not make the grade.  Is that so?

A.       I know he –

Q.       Would you agree with that? Yes. 
A.       Based on his performance?

Q.       Yes.
A.       That’s right.

Q.       And you made that decision in February?
A.       Well, that’s the litmus, but, yeah, in February.

Q.       So you decided to take steps to get rid of him?
A.       Well, took steps to counsel him.

Q.       No, I’m suggesting you took steps to get rid of him.
A.       Well, based on reviewing it.”

60.Although Mr Fryer, backtracked to some extent as the cross-examination continued, it is clear that Mr Fryer had made up his mind in February 2004 to set in train procedures to terminate Mr Pethyon’s employment unless there was some major turnaround in his performance. The first relevant element in the pre-existing relationship was therefore Noble Toyota’s intention to terminate Mr Pethyon’s employment as early as February 2004.

61.The second, relevant, element in the pre-existing relationship was that Mr Fryer, in February 2004, knew Mr Pethyon’s work problems were causing him stress sufficient for Mr Pethyon to attend a medical practitioner and to be certified unfit for work for two days.  In February 2004 following Mr Pethyon’s attendance on Dr Nguyen for ‘stress’ Mr Pethyon had a meeting with Mr Fryer.  Mr Pethyon said to Mr Fryer “I explained and tell him how I was feel” [sic] (page 21, paragraph [10] of the transcript). 

62.These two “pre-existing elements of the employment relationship” should be considered together with the following considerations:

(1)       Mr Pethyon, for the whole of December, had only sold eight vehicles; and

(2)the written warning given in the meeting of 4 March 2004 required (at least as far as Mr Pethyon was concerned) that he sell 3.5 cars in a period of three days.  This was clearly beyond Mr Pethyon’s capacity and probably, statistically, beyond the capacity of the best salesperson working for Noble Toyota (who sold 21 cars in a month).

63.I am of the view that, at least by February 2004, Mr Pethyon’s employer had set upon a course of action to terminate Mr Pethyon’s employment.  Their actions in March 2004, to achieve this aim, disregarded or were indifferent to Mr Pethyon’s emotional wellbeing.  In my view, the warning of 4 March 2004 was designed to allow Noble Toyota to terminate Mr Pethyon’s employment on 8 March 2004, or, alternatively to place Mr Pethyon under so much pressure, and to convey to him that his position was so hopeless, that he would resign his employment either immediately or sometime on or before 8 March 2004.  The meeting had the effect of causing or aggravating a psychological state in Mr Pethyon as found by the Arbitrator.

64.Noble Toyota was clearly justified in terminating Mr Pethyon’s probationary employment.  However its actions and proposed actions in respect to the process of terminating Mr Pethyon’s employment were not reasonable.  They were manifestly unreasonable, in my opinion.

65.An Arbitrator’s findings of fact should only be interfered with when the finding is clearly wrong, as Deputy President Fleming, said in Knight’s case:

“Interference with an Arbitrator’s discretionary judgement as to the weight of evidence should only be done where it is manifestly obvious the discretion has so miscarried that it has not been exercised fairly and lawfully.  In my view this is such a case. The Arbitrator has not, in her reasons, given a fair or accurate account of the evidence that was before her.”

66.I believe the Arbitrator’s discretionary finding; that the actions by Mr Pethyon’s employer in requiring Mr Pethyon to sell 3.5 cars in three days (which in my view was unattainable) to be reasonable action taken in respect of dismissal of Mr Pethyon, is a finding which is “manifestly wrong.”

67.In conclusion therefore I find that Noble Toyota’s actions, on 4 March 2004, to ultimately bring about the dismissal of Mr Pethyon, were unreasonable.

What effect does this determination have on Mr Pethyon’s claim?

68.The Arbitrator concluded that in February 2004 and March 2004 (as I stated above this date is not included in her summary but clearly was left out in error given the whole of her decision) Mr Pethyon received a psychological injury arising out of or in the course of his employment as a sales consultant with Noble Toyota.

69.The Arbitrator also found that Mr Pethyon’s employment was a substantial contributing factor to his injury. Further, she found that the actions taken by Noble Toyota in relation to performance appraisal and/or dismissal were reasonable actions within the meaning of section 11A(1) of the 1987 Act.

70.In relation to the meeting of 6 February 2004 I have not disturbed the Arbitrator’s findings. On the evidence, before me, I believe that it was open to the Arbitrator to find; that the meeting of 6 February 2004 was a meeting in relation to performance appraisal and/or dismissal and that the actions of Noble Toyota were reasonable.

71.Before the Arbitrator Noble Toyota’s legal representatives, based on Dr L Lee’s consultation and report of 13 April 2004, argued that Mr Pethyon had not been injured.  They have not however sought to challenge the Arbitrator’s decision that Mr Pethyon received a psychological injury arising out of or in the course of his employment as a sales consultant.  It follows therefore that a summary of the Arbitrator’s decision as reviewed on this appeal is as follows:

1.In February 2004 and 4 March 2004, the Applicant (worker) received a psychological injury arising out or in the course of his employment as a sales consultant with the Respondent (employer).

2.The Applicant’s employment was a substantial contributing factor to his injury.

3.The actions taken by the Respondent in relation to performance appraisal and/or dismissal in respect of the meeting of 6 February 2004 were reasonable actions within the meaning of section 11A(1) of the 1987 Act.

4.The actions taken by the Respondent on 4 March 2004 in respect to dismissal, from its employment, of the Applicant were unreasonable actions within the meaning of section 11A(1) of the 1987 Act.

72.These findings do not determine the matter as there is now a finding of one compensable occurrence leading to injury and one non-compensable occurrence leading to injury. Applying a commonsense approach to the question of causation in respect of the period of compensation claimed, (see for example Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452), the proximate cause of the incapacity will, in the absence of strong evidence to the contrary, be the most likely cause of the incapacity. Given that Mr Pethyon was able to work up until 4 March 2004 I am of the view that, consistent with authority, the events of 4 March 2004 are the most likely cause of his incapacity.

Assessment of Mr Pethyon’s entitlement to compensation

73.Consistent with the intention of the legislation a presidential member where possible should determine all issues.  The parties’ submissions in respect of this appeal do not deal with the issue of incapacity and entitlements if the appeal were to be successful.  Mr Pethyon’s legal advisors and Noble Toyota’s legal advisors agreed that the appeal could be dealt with on the papers.  I have a transcript of evidence of the submissions in relation to incapacity by Mr Pethyon’s legal advisors and Noble Toyota’s legal advisors given before the Arbitrator.  That being the case it is my opinion that there will be no injustice to the parties if I decide the ultimate issue. 

Mr Pethyon’s entitlement to weekly compensation payments

74.The medical evidence before the Arbitrator which is before me is of little assistance in determining Mr Pethyon’s entitlement.  The histories contained in all of the medical reports bear little relationship to the findings of the Arbitrator as reviewed in this Appeal. 

75.The medical histories, by and large, relate Mr Pethyon’s psychological condition to the conflict he had with Mr Fryer.  This allegation has been rejected by the Arbitrator and not disturbed on appeal.

76.The events which gave rise to Mr Pethyon’s psychological condition would not, from a layman’s point of view, result in a long lasting psychological response and this is clearly the view of the doctors and psychologist who have examined Mr Pethyon.

77.It is my view that the high point of Mr Pethyon’s claim in respect of incapacity is the report of Dr Julian Parmegiani of 4 August 2004.  The doctor stated, relevantly, under the heading “fitness for duty”:

“Mr Pethyon was probably unfit for duties for six to eight weeks after he left his employment.”

78.Mr Pethyon bears the onus of establishing the period of incapacity.  The events that occurred on 4 March 2004, from a lay and medical point of view, were not events which would result in a significant ongoing psychological response.  I am of the view that as a result of Mr Pethyon’s employment injury on 4 March 2004 he was incapacitated for a period of six weeks; that is between 5 March 2004 and 16 April 2004.

79.The employer’s report of injury form records that the award rate of pay for Mr Pethyon was $525.20 per week.

80.Mr Pethyon was paid provisional compensation payments to 12 March 2004 as such his entitlement to compensation would be at the rate of $525.20 per week for the period 13 March 2004 to 16 April 2004.

81.Mr Pethyon would be entitled to medical expenses pursuant to section 60 for the above period. It follows that there would be a determination against Mr Pethyon for any claim for compensation after 16 April 2004.

82.The Arbitrator’s decision did not address the question of costs.  The Commission’s powers of review pursuant to section 352 of the 1998 Act enable this omission to be dealt with.

83.Mr Pethyon has been successful with respect to his claim and in the circumstances I am of the view that the Arbitrator’s decision should be the subject of a new order, that being that Noble Toyota pay Mr Pethyon’s costs of the original Application as agreed or assessed.

DETERMINATION

84.In accordance with my decision:

1.Paragraphs 1 and 2 of the Arbitrator’s decision dated 23 May 2005 are revoked and the following orders made:

1.Award in the favour of the Applicant (worker) in respect of his claim for weekly payments of compensation pursuant to section 36 of the Workers Compensation Act 1987 at the rate of $525.20 per week from 13 March 2004 to 16 April 2004 and thereafter an award for the Respondent.

2.Award in favour of the Applicant (worker) in respect of the Applicant’s claim under section 60 of the Workers Compensation Act 1987 in respect of reasonable medical expenses incurred between 5 March 2004 and 16 April 2004 and thereafter an award for the Respondent.

3.The Respondent to pay the Applicant’s costs of the proceedings as agreed or assessed.

2.Paragraph 3 of the Arbitrator’s decision dated 23 May 2005 is confirmed.

COSTS

85.The Appellant, Mr Pethyon, having been successful in his appeal, the Respondent, Noble Toyota is to pay the Appellant’s costs of the appeal.

Robert Harrington

Acting Deputy President

15 June 2006

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

ASSOCIATE