Pikus Pty Limited t/as Banjo's Bakery v Bradica
[2009] NSWWCCPD 120
•28 September 2009
| WORKERS COMPENSATION COMMISSION | |||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||||
| CITATION: | Pikus Pty Limited t/as Banjo’s Bakery v Bradica [2009] NSWWCCPD 120 | ||||
| APPELLANT: | Pikus Pty Limited t/as Banjo’s Bakery | ||||
| RESPONDENT: | Adam Bradica | ||||
| INSURER: | Allianz Australia Workers Compensation (NSW) Limited | ||||
| FILE NUMBER: | A1-2472/09 | ||||
| ARBITRATOR: | Mr R Foggo | ||||
| DATE OF ARBITRATOR’S DECISION: | 10 June 2009 | ||||
| DATE OF APPEAL DECISION: | 28 September 2009 | ||||
| SUBJECT MATTER OF DECISION: | Application for review of weekly compensation; section 55 of the Workers Compensation Act 1987; change in circumstances; reasons; relevance of failure to seek suitable employment in calculation of compensation under section 40 of the Workers Compensation Act 1987 | ||||
| PRESIDENTIAL MEMBER: | Deputy President Bill Roche | ||||
| HEARING: | On the papers | ||||
| REPRESENTATION: | Appellant: | Sparke Helmore Lawyers | |||
| Respondent: | Whitelaw McDonald | ||||
| ORDERS MADE ON APPEAL: | Paragraph one of the Arbitrator’s determination of 10 June 2009 is revoked and the matter is remitted to a different arbitrator for re-determination in accordance with the reasons given in this decision. Paragraph two of the Arbitrator’s determination of 10 June 2009 is confirmed. The appellant employer is to pay the respondent worker’s costs of the appeal, which are assessed at $1,100.00 plus GST. | ||||
BACKGROUND
The worker, Mr Bradica, injured his back in the course of his employment with the employer, Banjo’s Bakery, whilst lifting dough mix from a spiral mixer on 19 October 1999. He was unable to return to his pre-injury duties and his employment was terminated on 19 January 2000. His claim for compensation was initially accepted, but denied in May or June 2000.
Between January 2001 and mid 2007 Mr Bradica was self-employed in his own bakery businesses. As a result of increasing back symptoms, he claimed weekly compensation in the Commission from 1 June 2000 (matter number 12478-04). That matter was heard and determined before Arbitrator Foggo on 3 December 2004. The Commission issued a Certificate of Determination on 8 December 2004 (‘the 2004 award’) in the following terms:
“1. Respondent to pay the Applicant weekly payments of compensation at the maximum rate for an Applicant with no dependant spouse and one (1) child from 1 June 2000 pursuant to Section 40 of the Workers Compensation Act and continuing in accordance with the provisions of the Act.
2. Respondent to pay the Applicant’s reasonable Section 60 expenses upon production of accounts and or receipts.
3. I certify that this was a complex matter and proceeded directly to arbitration.
4. Respondent to pay the Applicant’s costs as agreed or assessed.”
For reasons that are not relevant to the current appeal, by letter dated 7 January 2009 the employer sought a reconsideration of the above orders under section 350(3) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). Arbitrator Foggo determined that application on 11 March 2009. In his Statement of Reasons for Decision, the Arbitrator observed that the parties had “differing interpretations” of his decision of 8 December 2004 and it was appropriate that he reconsider those orders in order to do justice between the parties in accordance with the substantial merits of the case.
In the course of that reconsideration, the Arbitrator determined that the Certificate of Determination of 8 December 2004 incorrectly ordered the employer to pay the maximum statutory rate for a worker with one dependent child beyond 8 December 2004 when that was not his intention. He therefore amended the Certificate of Determination and on 11 March 2009 the Commission issued that amended Certificate in the following terms:
“The Commission determines:
1. The Respondent is to pay the Applicant weekly payments of compensation at the rate of $370.00 per week pursuant to Section 40 from 1st June 2000 and continuing in accordance with the provisions of the Act.
2. The Respondent is to pay the Applicant reasonable Section 60 expenses upon production of accounts and/or receipts and/or HIC Notice of Charge.
3. I certify that this was a complex matter and proceeded directly to arbitration.
4. The Respondent to pay the Applicant’s costs as agreed or assessed.”
By an Application to Resolve a Dispute (‘the Application’) registered in the Commission on 1 April 2009, Mr Bradica sought an increase in his weekly compensation from 11 August 2007 to date and continuing on the basis of a change in circumstances, namely a deterioration in his condition since the 2004 award and a change in comparable wages.
In a section 74 notice dated 22 April 2009 the employer’s insurer, Allianz Australia Workers Compensation (NSW) Limited (‘Allianz’), disputed liability on the ground that there had not been any change in circumstances justifying a review of the 2004 award.
The matter was listed for conciliation and arbitration before Arbitrator Foggo on 19 May 2009 when Mr Bradica was cross-examined and the Arbitrator heard lengthy submissions. In a reserved decision delivered on 10 June 2009, the Arbitrator found that Mr Bradica’s circumstances had changed because his physical condition had deteriorated and earnings but for the injury had increased. He therefore determined that Mr Bradica was entitled to an increase in his weekly compensation. He calculated Mr Bradica’s loss under section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’) to be $650.00 per week, a figure in excess of the statutory maximum weekly compensation for a worker with a dependent wife and two dependent children. The Commission issued a Certificate of Determination on 10 June 2009 in the following terms:
“The Commission determines:
1. The Respondent is to pay the Applicant weekly payments of compensation from 11th August 2007 and continuing at the maximum statutory rate for a Worker with a dependent wife and two dependent children in accordance with the provisions of the Act.
2. The Respondent is to pay the Applicant’s costs as agreed or assessed.”
By an appeal filed on 8 July 2009, the employer seeks leave to challenge the Arbitrator’s determination of 10 June 2009.
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 1998 Act.
It is not disputed that the monetary thresholds in section 352(2) of the 1998 Act 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.
ON THE PAPERS
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.
THE EVIDENCE
Mr Bradica’s evidence is set out in his statements of 25 August 2004, 1 February 2008 and 16 March 2009 and in his oral evidence given before the Arbitrator on 19 May 2009.
Mr Bradica completed high school at the age of 14 and has spent his working career as a pastry cook or labourer.
He ceased work at the end of his shift on 19 October 1999. By the time he arrived home he had pain in his lower back, which extended down his right leg. He consulted his local general practitioner, Dr Rothfield, and was referred for scans and physiotherapy. He attempted to return to work on restricted duties on 22 November 1999, but was unable to cope because of pain. He was unable to return to his pre-injury duties and his employment was terminated on 19 January 2000. His claim for compensation was initially accepted, but liability was denied on or about 1 June 2000.
In January 2001, Mr Bradica opened his own bakery business, which he operated with his wife until the business was sold in January 2002. Whilst operating the business he suffered recurrences of back and leg pain, but was able to cope with the use of pain medication.
In September 2002, Mr Bradica purchased another bakery business, which he also operated with his wife until he employed a pastry cook in April 2003 to ease his workload. In early 2004 his back pain became more persistent with varying levels of intensity. The pain also extended down his right leg to the calf area and down his left leg to the knee.
In January 2004, Mr Bradica consulted his general practitioner, Dr Robyn Fried, who referred him to Professor Ghabrial, orthopaedic surgeon.
As at August 2004, Mr Bradica suffered low back pain and pain into both legs. He took valium, nurofen, and tramal to relieve his symptoms. He was unable to sit for any period and that restriction limited his ability to drive prolonged distances. He was also unable to stand for any extended period without experiencing an increase in back and leg pain.
In 2004, Mr Bradica employed a second pastry cook because he realised that he could no longer manage most of the physical work associated with the job of a baker/pastry cook. As at August 2004 he realized that, given his physical state at that time, he would not be employable as a baker/pastry cook.
In his statement of 1 February 2008, Mr Bradica states that he continued to operate his own business until approximately 2007. His back condition became gradually worse until it became unbearable and he could no longer cope. His general practitioner again referred him to Professor Ghabrial who advised that he needed surgery. Mr Bradica’s pain levels had increased substantially. He was unable to mow the lawn, could only drive for 45 minutes, sit for 30 minutes or stand for approximately 20 minutes.
Mr Bradica said that he had become “grossly depressed” by the increasing level of his pain.
In his oral evidence before the Arbitrator on 19 May 2009, Mr Bradica agreed that the object he was shown lifting in the video (see [47] – [48] below) was a generator that weighed about 14 kilograms. On the day the video was taken he was “feeling good” (T3.36). He would feel good on one to two days per fortnight. On other days he would be “bed bound or lounge bound” (T3.40) depending on the level of pain he experienced. In respect of his riding a bicycle, he said that the physiotherapist advised him that the best exercise for his back was to ride a pushbike or to swim (T4.10).
Mr Bradica did not agree that his ability to move the generator demonstrated him to have a reasonably strong back (T4.49-58) and added that he nearly fell over when putting the generator down (T11.24). When it was put to him that he did not limp at any time in the video, Mr Bradica replied that he walked with “an unusual gait at the best of times” (T5.8).
Mr Bradica said that his business had become financially unviable by 2006 (T6.20). That was because of a number of factors, not just because of his condition but also because of “employing too many people” (T6.30). He did not agree that his profits dropped because of a reduction in turnover.
Mr Bradica disagreed that the problems with his right leg and foot related to his back injury had not changed significantly since 2004 (T7.29-33). He agreed that it was his case that he is totally unfit to work (T10.24). In response to the proposition that he could work four hours in a taxi, Mr Bradica said that it depended on how he was on the day (T10.34). In response to the suggestion that he could work as a shop assistant for 40 hours a week, Mr Bradica said “not a hope in hell” (T11.33-39). Mr Bradica disagreed that physically he was “more or less in the same state” as he was in 2004, saying that he had deteriorated (T12.2) adding that his whole body was “getting tired”. He agreed, however, that he was emotionally worse off than he had been in 2004 (T12.27). That was partly because of his financial position, but “the back problems are still there” (T12.29-35).
Though Mr Bradica agreed that he was fit for full-time work if he found a position that did not put a strain on his back and allowed him to sit or stand and move about at his discretion (T13.1-5) he later disagreed with that proposition (T13.35). He disagreed that he could work as a console operator in a service station (T13.10). He agreed that he had given up looking for work (T14.25), but did not agree that he was fit for some part-time work (T14.39).
Medical Evidence
A CT scan of the lumbosacral spine performed on 28 October 1999 revealed a minimal central protrusion at L5/S1. An MRI scan dated 1 March 2000 revealed an annular tear in the L5/S1 disc with associated bulging of the disc, but no focal protrusion and no nerve root effacement.
In a hand written report dated 16 February 2004, Dr Fried noted that Mr Bradica’s low back function was deteriorating. She expressed concern that nerve compromise was occurring and sought approval for another MRI scan. That scan was performed on 15 April 2004 and revealed “degenerate change at the L5/S1 disc with a small posterior annular fissure”.
Professor Ghabrial reported to Mr Bradica’s solicitors on 12 July 2004. He first saw Mr Bradica on 25 March 2004 when he took a history of the October 1999 injury. At examination on 25 March 2004, Professor Ghabrial observed that Mr Bradica walked with a limp and had decreased postural lordosis. Spinal movements were mildly stiff with pain on flexion to the mid calf region. Extension was decreased with discomfort, but lateral bending was normal with discomfort. Rotation was normal. There was moderate paraspinal lumbar spasm and straight leg raising was 80º on both sides with a positive right, but negative left sciatic stretch test. There was decreased sensation in the right S1 dermatome and the right ankle jerk was decreased. Surgery was discussed, but the Professor’s advice was that Mr Bradica should adjust his lifestyle to live with his disabilities.
Professor Ghabrial’s opinion was that Mr Bradica had sustained an injury to his L5/S1 intervertebral disc and that he continued to have residual symptoms in his back and both legs. He was indefinitely unfit for activities involving any lifting over 10 kilograms, excessive bending and excessive twisting. Though he thought the worker’s condition had stabilised, surgery could not be excluded in the future.
Professor Ghabrial reviewed Mr Bradica on 5 December 2007 and prepared a further report on 18 February 2008. Mr Bradica continued to complain of low back pain that radiated into both legs. He had an increasing problem with increasing sexual dysfunction as a result of his back problem. He had not worked since June 2007.
Professor Ghabrial’s clinical assessment suggested continuing right S1 radiculopathy with weakness of the S1 nerve root motor power and sensory changes in the right S1 dermatome. The right ankle jerk remained decreased.
Professor Ghabrial reviewed an MRI scan dated 30 November 2007, which suggested a small disc protrusion at the L5/S1 level with annular tear and stated that the annular tear was “bigger as compared to the MRI scan performed in 2004.” The advantages and disadvantages of surgery in the form of an L5/S1 discectomy were discussed. Professor Ghabrial considered that Mr Bradica remained indefinitely unfit for activities involving any lifting over 10 kilograms, excessive bending and excessive twisting. Apart from an increasing problem with sexual dysfunction and the MRI scan revealing an increase in the annular tear, Professor Ghabrial thought that Mr Bradica’s condition remained static and surgery could not be excluded in the future.
Dr Ishola, general practitioner, examined Mr Bradica on 10 May 2007 and reported to Mr Bradica’s solicitor on 4 April 2008. He recorded that Mr Bradica’s pain had “progressively worsened and incapacitated his functioning”. Clinical findings were in keeping with lumbosacral disc problems with spasm. Mr Bradica walked with a slight limp. The doctor felt that the injury “could be of gradual process which often deteriorates with age and will restrict capacity to function in his trade.” The injury had a significant impact on Mr Bradica’s ability to function as a baker.
Dr Ishola also provided medical certificates dated 3 August 2007 and 22 October 2007 declaring Mr Bradica unfit for work because of a “bulging disc with radiating pain to [the] knees and legs”.
The employer relies on two reports from Dr Mastroianni, consultant occupational physician, dated 17 and 19 March 2008. In his first report Dr Mastroianni took a history that Mr Bradica started two bakery businesses after Banjo’s Bakery terminated his employment. In his second business he employed seven people while he acted mainly in a managing capacity. Mr Bradica then purchased a larger bakery in 2004 and employed 24 people. This bakery was not financially viable and closed in May 2007.
Mr Bradica complained of constant pain in his lower back and that he was unable to drive long distances or lift anything heavy. His pain increased with physical activity. He also complained of a heaviness and pins and needles in both legs.
Dr Mastroianni referred to all three MRI scans and noted that the 2007 scan revealed a small posterocentral disc protrusion at L5/S1 and that the annular tear was bigger.
On examination, Dr Mastroianni observed that Mr Bradica walked with a limp favouring his right leg and that his back movements were restricted with flexion to the knee level and extension being half of the normal range. There was a loss of lumbar lordosis, but no muscle spasm. Examination of the lower limbs revealed normal reflexes and sensation, but 1.5 centimetres of wasting of the right calf and thigh. Straight leg raising in the supine position was 30º but was 80º whilst sitting.
Dr Mastroianni considered Mr Bradica to be unfit for his pre-injury duties, but fit for selected duties on a full-time basis, such as the alternative duties he performed in his business until May 2007.
In his second report, Dr Mastroianni commented on video taken of Mr Bradica on 23 November 2007 that demonstrated Mr Bradica riding a bicycle, standing, and walking without a limp. The video did not make the doctor change his opinion concerning Mr Bradica’s fitness for work.
Professor Higgs, an Approved Medical Specialist (‘AMS’), examined Mr Bradica on 24 January 2005, to assess his losses under the Table of Disabilities. The AMS took a consistent history and noted Mr Bradica to walk with a slight right sided limp. Straight leg raising was restricted to 20º and caused an aggravation of low back pain. However, Mr Bradica was able to sit on the examination couch with his torso at right angles to his extended lower limbs, a posture equivalent to a 90º straight leg raise. Notwithstanding this finding, the AMS stated that he identified no significant inconsistency in regard to Mr Bradica’s presentation. He assessed Mr Bradica to have a 15 percent permanent impairment of his back and a 5 percent permanent loss of efficient use of each leg at or above the knee, but he deducted 10 percent from those percentages because of age related degenerative pathology.
The parties registered an agreement under section 66A of the 1987 Act in June or July 2008 noting that Mr Bradica had been paid additional lump sum compensation of $7,050.00 in respect of a 15 percent loss of sexual function (resulting from his back condition) and additional compensation for pain and suffering as a result of that loss.
Video evidence
Mr Bradica was placed under surveillance for 20.5 hours over 9, 16 and 23 November 2007. During that period 17 minutes of video was exposed of Mr Bradica riding a bicycle and standing. Though the report dealing with this period of surveillance is in evidence, together with two still photos of Mr Bradica on a bicycle, the video is not.
A further 25.5 hours of surveillance was conducted over 17, 18 and 21 April 2009. On this occasion 16 minutes was exposed on 21 April 2009. This video has been tendered and I have viewed it. It records Mr Bradica standing and walking and at one stage lifting what appears to be a small generator with his right hand and carrying it a few steps before placing it on the ground. He was also seen standing and walking around a recycling yard. Whilst Mr Bradica did not demonstrate a pronounced limp when he walked, to my observation he did demonstrate a slightly uneven gait on occasions.
THE ARBITRATOR’S DECISIONS
Though there is no official transcript of the Arbitrator’s reasons in respect of the 2004 award, there is a document attached to the employer’s Reply headed “Transcription”. Neither party disputed the accuracy of that document, which indicates that the Arbitrator made the following findings in 2004:
(a) Mr Bradica’s probable earnings but for his injury were agreed at $720.00 per week;
(b) Mr Bradica’s ability to earn was $350.00 per week;
(c) the mathematical difference between probable earnings and ability to earn was $370.00 per week;
(d) he declined to exercise his discretion under section 40 to reduce the sum of $370.00 per week, as he was not persuaded that Mr Bradica’s previous ankle injury played any part in his current incapacity, and
(e) as the figure of $370.00 exceeded the statutory maximum compensation payable for a worker with a dependent child, he ordered compensation to be paid at that rate from 1 June 2000.
As noted at [4] above, the 2004 award was amended on 11 March 2009 to order the payment of weekly compensation at the rate of $370.00 per week under section 40 of the 1987 Act from 1 June 2000 and continuing. That award is also in error as it orders the payment of a rate of compensation in excess of the relevant maximum statutory rate for the period up to 1 October 2003. Neither side has taken issue with that error and it is most unlikely to be of any consequence as I assume that the previous award was satisfied at the appropriate maximum statutory rate in any event.
In his Statement of Reasons for Decision (‘Reasons’) delivered on 10 June 2009, the Arbitrator considered the evidence and the submissions, and found:
(a) other than Professor Ghabrial’s evidence that Mr Bradica’s annular tear had increased and that his sexual function had decreased, none of the material tendered provided any objective evidence that Mr Bradica’s condition had worsened;
(b) he accepted Mr Bradica’s evidence that his physical condition had deteriorated (Reasons at [30]);
(c) Mr Bradica has only ever worked as a baker/pastry chef and as a result of the failure of his business in 2007 he has been made bankrupt (Reasons at [31]);
(d) the physical activity Mr Bradica was able to put into his business was not sufficient for it to survive (Reasons at [32]);
(e) Mr Bradica’s estimate that he was only able to perform physical work for one to two hours per week in his own business was correct and provided the logical explanation as to why his business did not survive (Reasons at [33]);
(f) having viewed the video evidence, he was not persuaded that Mr Bradica was depicted as being totally pain free (Reasons at [34]);
(g) he accepted Mr Bradica’s evidence that he had good days one to two days per fortnight and that the video depicted him on a good day (Reasons at [35]);
(h) Mr Bradica’s claims of worsening physical symptoms were supported by the objective evidence of the increase in the annular tear at L5/S1 (Reasons at [37]);
(i) Mr Bradica’s oral evidence persuaded the Arbitrator that since Mr Bradica’s business failed his capacity to work had deteriorated (Reasons at [37]);
(j) $900.00 per week was, as was submitted by the employer’s counsel, the best estimate of the current level of probable earnings but for the injury (Reasons at [39]);
(k) he was satisfied that Mr Bradica’s circumstances had changed in that his capacity to work had diminished and his earnings but for injury had increased (Reasons at [41]);
(l) there was no doubt that Mr Bradica had become “significantly discouraged by the failure of his business” (Reasons at [43]);
(m) Mr Bradica’s ability to earn was $250.00 per week (Reasons at [44]);
(n) it was reasonable that Mr Bradica had not been looking for work (Reasons at [45]);
(o) he was not persuaded that there were any matters that called for the exercise of the discretion in section 40 of the 1987 Act (Reasons at [46vi]), and
(p) as the sum of $650.00 per week (the difference between probable earnings of $900.00 and ability to earn of $250.00) exceeded the maximum statutory rate for a worker with a dependent wife and two dependent children, there would be an award for Mr Bradica at the maximum statutory rate for a worker with a dependent wife and two dependent children.
ISSUES IN DISPUTE
Doing the best I can (given that the employer has not complied with Practice Direction 6 and set out the grounds of appeal on which it relies), the issues in dispute in the appeal appear to be whether the Arbitrator erred in:
(a) finding that there had been a change in circumstances warranting a review of Mr Bradica’s 2004 award (‘change in circumstances’);
(b) failing to properly consider the available medical evidence (‘medical evidence’);
(c) failing to give proper reasons as to why Mr Bradica’s oral evidence was preferred over the evidence from the treating and qualified medical specialists (‘reasons’);
(d) finding Mr Bradica’s ability to earn to be only $250.00 per week and failing to give reasons as to how that figure was reached (‘ability to earn’), and
(e) failing to take into account the fact that Mr Bradica was not seeking suitable employment (‘failure to seek suitable employment’).
SUBMISSIONS, DISCUSSION AND FINDINGS
Change in circumstances
The employer submits that there has been no change in Mr Bradica’s circumstances since the 2004 award. This submission is principally based on the fact that Professor Ghabrial’s restrictions for Mr Bradica in his 2008 report – fit for work not involving any lifting over 10 kilograms, excessive bending or twisting – are the same as the restrictions noted in his 2004 report. As the Professor did not report any increase in back or leg symptoms and did not alter his comments as to Mr Bradica’s physical restrictions, it is argued that there has been no change in Mr Bradica’s condition that is relevant to his capacity to work.
I do not accept this submission as it completely ignores Mr Bradica’s evidence of an increase in symptoms in 2007, the objective change in pathology (confirmed on MRI scan) at the L5/S1 level, Dr Ishola’s evidence that the pain had “progressively worsened and incapacitated his functioning”, and the significant increase in probable earnings from $750.00 per week to $900.00 per week. This evidence overwhelmingly supports a “change of circumstances” within the meaning of section 55 and the employer’s submission to the contrary is completely untenable.
I have carefully considered the video evidence and do not accept that it provides any support for the employer’s position. For the majority of the period he was under surveillance Mr Bradica was inactive or merely standing and walking. Though he lifted a small generator, he only moved it a few steps. That activity does not undermine Mr Bradica’s case and is of limited, if any, probative value. The video made no difference to Dr Mastroianni’s conclusion.
Medical evidence
It is submitted that the Arbitrator’s finding as to Mr Bradica’s ability to work no more than one or two hours per week is inconsistent with the opinions of Professor Ghabrial and Dr Mastroianni. This submission overlooks the fact that, except in respect of claims for lump sum compensation, an arbitrator is not bound by the medical evidence, but must use his or her knowledge and experience to weigh up the whole of the evidence to determine factual issues according to law (South Australian Emergency Commission v Workers Compensation Tribunal and anor [2009] SASC 213 at [59]).
The question of fitness for work is a factual question to be determined by an arbitrator, or, in the appropriate circumstances, by a Presidential member on appeal. Professor Ghabrial did not address the question of whether Mr Bradica was fit for full-time or part-time work, but declared him fit for work not involving any lifting over 10 kilograms, excessive bending or twisting. Dr Mastroianni conceded that Mr Bradica is unfit for his pre-injury duties. However, his assertion that Mr Bradica is fit for the alternative duties he performed in his business until mid 2007 must be weighed against Mr Bradica’s evidence that he is no longer able to perform that work on a full-time basis because of the deterioration in the condition of his back. The Arbitrator accepted that evidence and, on review, I have no hesitation in also accepting it.
Reasons
The employer submits that the Arbitrator failed to give “proper reasons” as to why Mr Bradica’s oral evidence was preferred over the evidence of both Professor Ghabrial and Dr Mastroianni.
This submission is without merit. The Arbitrator made it crystal clear that Mr Bradica’s claim of worsening physical symptoms was supported by the objective evidence of the increase in the annular tear at L5/S1. That finding was open to him and I agree with it. In addition, the Arbitrator accepted Mr Bradica’s evidence that since his business failed his capacity to work had deteriorated. That finding was also open on the evidence and provided a sound basis for the Arbitrator’s conclusion that there had been a change in circumstances.
The employer also argues that the Arbitrator failed to give any reasons as to how he calculated Mr Bradica’s ability to earn to be $250.00 per week. The Arbitrator referred to his finding in 2004 that Mr Bradica’s ability to earn was $350.00 per week and then noted that his condition had physically worsened and that he had become “significantly discouraged by the failure of his business” and, as a result, was “disheartened almost to the point of despair”. He then concluded that Mr Bradica’s “current ability to earn would be $250.00 per week” (Reasons at [44]).
The Arbitrator’s Reasons do not expose the basis for his conclusion that Mr Bradica is able to earn $250.00 per week. Mr Bradica’s evidence is that he is totally unfit for work and his counsel submitted at the arbitration that the appropriate award is one of total incapacity. The Arbitrator did not deal with that submission, but, without explaining why, assessed the claim as one for partial incapacity under section 40 of the 1987 Act and then applied the principles in Mitchell v Central West Health Service (1997) 14 NSWCCR 526 (‘Mitchell’). In adopting this approach the Arbitrator failed to engage or deal with the arguments presented on behalf of Mr Bradica and failed to indicate the basis on which he calculated Mr Bradica’s ability to earn to be $250.00 per week.
That finding is not consistent with either the medical evidence or Mr Bradica’s evidence. Though the Arbitrator referred to Mr Bradica estimating that he was able to do physical work for one to two hours per week in his own business (Reasons at [33]) that is not the evidence. At T6.7 Mr Bradica was asked the following question:
“Q. During the course of your work in your business, how many hours would you be working normally?
A. It would depend on how I was physically. Like, best, could stay to, three hours. As the years have gone on from ‘99 to now me body has actually got weaker, so I haven’t been able to – as the time was getting on towards, I suppose, ’07, it was getting really unbearable. Before that I was doing what I could when I could. I was having a go, like, you know.”
Mr Bradica did not say how many hours he could work per week when he was operating his business. His answer is ambiguous and unhelpful. It does not provide a basis for the Arbitrator’s finding. It is simply not known what time or effort Mr Bradica put into his business and whether or not he would now be able to perform all or any of the duties he performed when his business operated.
It follows that the Arbitrator has erred in his calculation of Mr Bradica’s ability to earn and this error requires that the matter be re-determined. However, due to the unsatisfactory state of the evidence I am unable to conduct that re-determination and the matter will have to be remitted to another arbitrator for that purpose.
The re-determination will not be restricted to determining Mr Bradica’s ability to earn, but must also address the principal submission made on behalf of Mr Bradica at the arbitration, namely whether he is currently totally unfit for work.
Failure to seek suitable employment
In view of the fact that this matter must be re-determined, it is not essential that I determine this issue, however, given the misguided nature of the submissions made by the employer, it is appropriate that I make certain observations. The employer submits that:
(a) Mr Bradica has a statutory obligation to seek suitable employment and the Arbitrator was obliged to take into account his failure to do so;
(b) Mitchell confirms that a failure to seek suitable employment goes “directly to the task of assessing ability to earn and had to be taken into account” (the employer’s submissions at [46]);
(c) if a worker who became discouraged or disheartened could be excused from job seeking, the provisions dealing with the requirement (for example, sections 38, 38A, 40, 43A and 52A) would become redundant and the drain on the Scheme immense;
(d) there are strong policy reasons for enforcing the obligation to seek suitable employment and non-compliance should be discouraged, and
(e) once it was accepted that Mr Bradica had a partial capacity for work, the Arbitrator was obliged to “apply a discretionary reduction” at step five of the Mitchell process to allow for the fact that Mr Bradica had given up job seeking.
These submissions seem to suggest that a failure to seek suitable employment must be taken into account in assessing a worker’s ability to earn (step two in Mitchell – section 40(2)(b)) and in the exercise of the section 40 discretion (step four in Mitchell, not step five as has been submitted). The first point may have relevance in certain limited circumstances (not applicable in this case), but the second point is incorrect.
In Mitchell, the Court held (at 534) that “self-induced diminution of earning capacity lies squarely within the exercise required to be carried out at what we have identified as the second stage.” Whilst a failure to seek employment may in certain circumstances be relevant in determining if a worker’s actual earnings are a proper measure of his or her ability to earn (see Aitkin v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 62 WN (NSW) 233), that issue does not arise in the present case because the application for a variation of the previous award seeks a variation from 11 August 2007 to date and continuing. At no stage since 11 August 2007 has Mr Bradica been employed and, therefore, his ability to earn must be determined according to the application of the established legal principles for a worker who is not earning (see Mangion v Visy Board Pty Ltd [1991] NSWCC 1; (1992) 8 NSWCCR 175 (‘Mangion’); Cowra Shire Council v Quinn [1996] NSWWC 143; (1996) 13 NSWCCR 175 (‘Quinn’); Ric Developments Pty Ltd t/as Lane Cove Poolmart v Muir [2008] NSWCA 155, (2008) 71 NSWLR 593 (‘Muir’)). In such a situation a worker’s ability to earn is determined on the basis of the authorities noted above and the matters listed in section 43A of the 1987 Act. Whether the worker is looking for work or not, his ability to earn, if the worker is out of work, is the same. If it is determined that a worker is fit for suitable duties, and that those duties are readily available in the labour market reasonably accessible to the worker, then, subject to the principles discussed in Mangion, Quinn and Muir, the wage for those duties will represent the worker’s ability to earn under section 40(2)(b) of the 1987 Act. That is so regardless of whether the worker is actively seeking that work or not. If a worker chooses not to exercise his or her found ability to earn, the employer is no worse off (see Gregson v L & MR Dimasi Pty Ltd (2000) 20 NSWCCR 520).
The submission that the failure to seek employment should be used in the exercise of the discretion under section 40 is incorrect. In Mitchell, the Court held unequivocally that there is “no justification” for taking into account at the discretionary phase a failure to seek suitable employment. Both the Commission and the Compensation Court before it have consistently applied this principle for several years. The employer’s submission is fundamentally wrong.
OTHER MATTERS
The employer has also submitted, citing Nohra v Sydney Plastering and Construction Pty Ltd [2009] NSWWCCPD 48 (‘Nohra’), that the “proper approach” to the calculation of Mr Bradica’s ability to earn is to look at what his work as a manager of a bakery would be worth if he was now employed by someone else to do that work. In Nohra, the worker was at all times the managing director of the respondent employer. As the current claim relates to the period after Mr Bradica ceased operating his own business, it is difficult to see how the principles discussed in Nohra have any relevance. Further, there is very little evidence of the nature of the work Mr Bradica performed in his own business and, in any event, his evidence is that he is now unable to perform that work. The employer’s submission is misguided.
CONCLUSION
Having conducted a review on the merits (per Spigelman CJ in State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249; (2007) 5 DDCR 287 at [28]), I have concluded that the Arbitrator failed to provide adequate reasons for his finding that Mr Bradica is partially incapacitated for work and is only able to earn $250.00 per week. This error requires the matter to be re-determined and, though I would normally conduct that re-determination, in the present case the parties have not properly addressed the issues in dispute and have not provided assistance, either by way of submissions or appropriate and relevant evidence, for that to be done. The matter must therefore be remitted to a different arbitrator for the purpose of the re-determination.
The only issues to be re-determined are whether Mr Bradica is totally or partially incapacitated for work and, if partially incapacitated, the extent of that incapacity having regard to the evidence, authorities, and section 43A of the 1987 Act. In determining whether Mr Bradica is totally or partially unfit, the parties are referred to the authorities of Lawarra Nominees Pty Ltd v Wilson (1996) 25 NSWCCR 206 and Moran Health Care Services v Woods (1997) 14 NSWCCR 499.
The future conduct of this case is a matter for the parties and the next Arbitrator. However, I would have thought that, at the least, up-to-date evidence would be obtained from Dr Ishola (or the current treating general practitioner) as to Mr Bradica’s current fitness for work, a report would be obtained from a qualified medical expert (Professor Ghabrial is a treating specialist and his reports are therefore not forensic medical reports), detailed evidence would be obtained from Mr Bradica as to the work he performed in his business and why he is unable to perform those activities and detailing his current symptoms and why his business failed, and expert evidence would be obtained dealing with Mr Bradica’s emotional problems.
DECISION
Paragraph one of the Arbitrator’s determination of 10 June 2009 is revoked and the matter is remitted to a different arbitrator for re-determination in accordance with the reasons given in this decision.
Paragraph two of the Arbitrator’s determination of 10 June 2009 is confirmed.
COSTS
Whilst I have revoked the Arbitrator’s determination, the employer has failed on all but one issue, namely the Arbitrator’s failure to give reasons. Apart from that issue, which has affected the worker as much as the employer because the Arbitrator failed to determine whether Mr Bradica is totally unfit, the employer’s submissions were misguided, unhelpful and/or fundamentally wrong. In these circumstances it is appropriate that the employer pay part of Mr Bradica’s costs of the appeal and I assess those costs at $1,100.00, plus GST.
Bill Roche
Deputy President
28 September 2009
I, TUYET WALLIS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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