Roads and Traffic Authority of New South Wales v Morio
[2008] NSWWCCPD 117
•17 October 2008
| WORKERS COMPENSATION COMMISSION | |||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||||
| CITATION: | Roads and Traffic Authority of New South Wales v Morio [2008] NSWWCCPD 117 | ||||
| APPELLANT: | Roads and Traffic Authority of New South Wales | ||||
| RESPONDENT: | Lynette Morio | ||||
| INSURER: | Self Insurer | ||||
| FILE NUMBER: | WCC1810-08 | ||||
| DATE OF ARBITRATOR’S DECISION: | 3 July 2008 | ||||
| DATE OF APPEAL DECISION: | 17 October 2008 | ||||
| SUBJECT MATTER OF DECISION: | Employer’s application to review award; section 55 of the Workers Compensation Act 1987; whether the Arbitrator’s exercise of discretion was valid and lawful. | ||||
| PRESIDENTIAL MEMBER: | Acting Deputy President Deborah Moore | ||||
| HEARING: | On the papers | ||||
| REPRESENTATION: | Appellant: | DLA Phillips Fox | |||
| Respondent: | Mackenzie and Vardanega | ||||
| ORDERS MADE ON APPEAL: | 1. The decision of the Arbitrator dated 3 July 2008 is revoked and the following decision made in its place: (1) Award in favour of the Applicant Employer in relation to weekly benefits from 6 May 2008. (2) No order as to costs. 2. No order as to costs of the appeal. | ||||
BACKGROUND TO THE APPEAL
On 18 July 2008 the Roads and Traffic Authority of New South Wales (‘the Appellant/the RTA’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision dated 3 July 2008.
The Respondent to the Appeal is Lynette Morio (‘the Respondent /Ms Morio’).
Ms Morio was employed by the RTA as a school crossing supervisor, or as she described it, a “Lollipop Lady.” She was employed as a casual, averaging 5 hours per week, at the rate of $10.57 per hour.
She injured her left knee in an accident at work on 23 October 2001.
She brought proceedings in the Commission on 14 October 2002 (WCC3480-02) seeking weekly payments and medical expenses pursuant to the provisions of the WorkersCompensation Act 1987 (‘the 1987 Act’).
In a ‘Certificate of Determination’ dated 14 July 2003, she received an award in her favour at the rate of $52.85 per week pursuant to sections 36 and 37 of the 1987 Act.
On 10 March 2008 the RTA filed an Application to review the award pursuant to the provisions of section 55 of the 1987 Act on the grounds that there had been a “change of circumstances, which warrants a variation (termination or reduction) of the award…”
The parties attended a conciliation/arbitration hearing on 6 May 2008.
On 3 July 2008 a ‘Certificate of Determination’ was issued. The Arbitrator accepted that there had been a ‘change of circumstances’, noting that Ms Morio had recently commenced part-time employment as a taxi driver earning an amount greater than her probable earnings. However, he found that Ms Morio’s capacity to earn was reduced, and in the exercise of his discretion, entered an award in her favour at the rate of $50 per week.
It is from this decision that the RTA seeks leave to appeal.
ON THE PAPERS REVIEW
Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘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 submission by both 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
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Leave to appeal is granted.
THE REVIEW PROCESS
The nature of the review process has been succinctly summarised by Deputy President Roche in a number of decisions, and recently in Universal Consultancy Services Pty Ltd v Datta [2008] NSWWCCPD 87 where he said as follows [16-18]:
“16.The Court of Appeal considered the nature of a ‘review’ under section 352 of the 1998 Act 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.’
17.McColl JA approved this passage in South Western Sydney Area Health Service v Edmonds (2007) 4 DDCR 421; [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]). Thus, on review, a Presidential member is not bound by an Arbitrator’s discretionary decision, but can reach his or her own conclusion.
18.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; (2007) 5 DDCR 287 (‘Chemler’) 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.’”
Bearing these principles in mind, I turn now to the issues in dispute.
THE ISSUES IN DISPUTE
The RTA does not dispute the Arbitrators finding that there had been a “change in circumstances”. Nor does it dispute the following findings:
·That the current probable earnings but for injury would now be $101 per week.
·That, over three weeks, Ms Morio earned $150, $180 and $50 respectively as a taxi driver, an average of approximately $127 per week.
What is in dispute is the Arbitrator’s decision that, since section 55 of the 1987 Act gave him a discretion as to whether the award should be varied, because of the “uncertainties…of continuity of work, capacity to continue such work and likely earnings” he should “…reduce the worker’s current earning capacity to $50 per week…” notwithstanding her demonstrated ability to earn an average of $127 per week.
The RTA claims that the terms of section 40 of the 1987 Act do not allow for compensation to be paid in an amount exceeding the reduction in a workers weekly earnings. Since there was no’ reduction’ in Ms Morio’s earnings, no award could be made. To do so “…had the effect of providing a windfall to [Ms Morio].”
THE GROUNDS OF APPEAL
The RTA submits that the Arbitrator erred in his interpretation of section 40 of the 1987 Act, and erred in law and in the exercise of his discretion when applying the test in Mitchell v Central West Health Service (1997) 14 NSWCCR 527 (‘Mitchell’). In short, “The Arbitrator erred in law by entering an ongoing section 40 award, the quantum of which exceeded the reduction in the Worker’s weekly earnings and provided a windfall to the Respondent Worker.”
THE RELEVANT LEGISLATION
Section 55 of the 1987 Act provides as follows:
“55 (1) Any weekly payment of compensation may, because of a change of circumstances, be reviewed by the Commission at the request of the employer or the worker or of the Authority.
(2) On any such review-
(a) the weekly payment may be ended, reduced or increased …”
Section 40 makes provision for weekly payments during periods of partial incapacity. Relevant provisions are as follows:
“40 (1) Entitlement. The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings , but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.
(2) …The reduction in the worker’s weekly earnings is…the difference between:
(a) the weekly amount which the worker would probably have been earning as a
worker but for the injury and had the worker continued to be employed in the
same or some comparable employment...: and,
(b) the average weekly amount which the worker is earning, or would be able to
earn in some suitable employment, from time to time after the injury…(3)…The determination of the amount hat an injured worker would be able to earn
in some suitable employment is subject to the following:
(a) the determination is to be based on the worker’s ability to earn in the
general labour market reasonably accessible to the worker;
(b) the determination is to be made having regard to suitable employment for
the worker within the meaning of section 43A…”
The Court of Appeal in Mitchell set out five steps to be taken when making an award under section 40 as follows:
1. Determine the weekly amount that the worker would have been earning but for the injury. [s.40(2)(a)]
2. Determine the weekly amount that the worker is earning or would be able to earn in suitable employment. [s.40(2)(b) and s.40(3)]
3. Subtract the figure calculated in step 2 from that calculated in step 1
4. Decide whether the reduction so calculated is proper in the circumstances and exercise that discretion accordingly. [s.40 (1)]
5. Make an award in the amount arrived at by step 4.
I turn now to the Arbitrator’s decision in the context of the relevant legislation and the matters raised on appeal.
THE SUBMISSIONS, EVIDENCE AND FINDINGS
The Parties’ Submissions and Evidence
In the prior proceedings, the Arbitrator found as a matter of fact that Ms Morio worked on average five hours per week. There had been conflicting evidence on this point but the ultimate finding was not challenged.
The Arbitrator also found that as a result of the injury to her left knee, Ms Morio was totally incapacitated for work from 23 October 2001, and entered an award in her favour accordingly.
The RTA filed it’s Application to review the award on 10 March 2008. The “change of circumstances” relied upon were a medical report of Dr Schutz dated 2 October 2007 and Earning Capacity Report dated 27 August 2007. At the hearing, further medical evidence was admitted.
Dr Schutz noted Ms Morio’s complaint of deterioration in the left knee and increasing symptoms in the right knee. He concluded:
“Ms Morio may not feel fit enough to do the lolly pop duties. However, most persons with knee conditions of the type described would be able to do these. If she was prepared to accept/tolerate mild symptoms she would be capable to work in her pre-injury lolly pop duties.”
The Earning Capacity Report (ECA) was prepared by Dr Robin Mitchell and Ms Angela words. The authors considered that Ms Morio had a number of “transferable skills” and noted a variety of jobs in which it was claimed she could earn the same or greater amount than that which she would have earned as a “Lollipop Lady.”
The RTA also relied upon the Statement made by Ms Morio on the same day as the hearing wherein she confirmed that she had recently commenced employment as a taxi driver. I will discuss the contents of that statement more fully below.
The Arbitrator also noted at [11] of his Statement of Reasons (‘Reasons’), the RTA’s acknowledgment that the current rate for a casual “Lollipop Lady” was $20. 24 per hour such that probable earnings “…would now be $101.00 per week.”[14]. In the RTA’s submission, as recorded by the Arbitrator at [11]:
“Accordingly the Applicant would urge me to consider a review of the original award on the basis of changed circumstances and that in accord [sic] with Section 37 and/or 40 there would be a reduction of the award to nil.”
In her statement, Ms Morio said as follows:
“4. Until recently I have not worked since the accident in 2001, other than for a few weeks I worked as a cleaner at the Central Plaza Shopping Centre in Griffith. I found that I couldn’t stand for any lengthy periods of time, as the pain in both my left and right knees was too great.
5. I have nonetheless been actively looking for work and about one month ago I started working casually as a taxi driver…I have now been working for about two weeks. The first week I earned about $150.00 and the second week I earned about $180.00. Yesterday I worked a 10 hour shift, but only earned $50.00, because I get paid on a commission basis. I don’t think I could do the job full-time, but even on a 10 hour shift, because it was not a busy day I was often able to get out of the taxi and stretch my legs…and as most of the time is just sitting in a taxi, I can cope with that work. I think at best I would be able to do about 20 hours per week at this stage…”
Medical evidence relied upon by Ms Morio included two reports from Dr Patrick dated 19 July 2007 and 5 May 2008, a report from Dr Thomson dated 7 February 2003 and a report from Dr Van Der Rijt dated 24 April 2006. A report of Dr Huntsdale dated 29 April 2005 was tendered at the hearing.
In his report of 19 July 2007, Dr Patrick opined:
“…she is not fit for physical work involving significant squatting/kneeling, handling a lot of steps/stairs or ladder work, or being on her feet for long periods of time, without the ability to rest from time to time. She would be fit for suitable light part-time work not involving such activities.”
Dr Huntsdale saw Ms Morio on 29 April 2005 and opined:
“ Lyn is certainly in extreme pain with both knees. It would appear now that the right knee has become just as painful as the left knee she still remains overweight
…I am concerned that she has a progressive arthritic deterioration of the left knee…”
Ms Morio’s submissions were recorded at [12] – [13] of the Arbitrator’s Reasons as follows:
“12. The Respondent worker would submit that it is not simply a case for the Applicant to show that there has been a change in circumstances for clearly there will have been a change in circumstance between the earlier determination on [sic] 2003 and date of hearing. Clearly, as is suggested, the worker has aged and there has been a change of demographics within the township in which she resides. The worker would submit that indeed there has been a change in circumstances in that the symptoms have increased in severity and there is nothing within the respective reports that show an improvement…such that the worker could continue to perform her duties as a lollipop attendant.
13. Turning to the Respondent’s own statement the Respondent would submit that it was simply an historical train of events with nothing to support the fact that the worker had a capacity to continue to work as a taxi driver. As the worker would submit there has been an engagement in driving a taxi for some 3 weeks, however there has been no employment for 7 years. I am then directed to the report of Dr Huntsdale…and his observations of continuing pain in both knees…despite the arthroscopy to the left knee. The worker would therefore submit that there has not been a change of circumstances, such as would warrant a variation of the original award.”
The Arbitrator’s Finding and Reasons.
The Arbitrator ‘s findings and reasons commence at [14] and continue to [19]. Relevant portions are as follows:
“14. I am satisfied that the probable earnings the Applicant [sic] would have been earning but for injury would now be $101.00 per week. It is clear that the Applicant [sic] has of most recent times returned to a form of employment, be it on a temporary measure, and has earnt figures of $150, $180 and $50 respectively over some 3 weeks. Further Dr Huntsdale opines that the worker’s condition has deteriorated since the initial award…it is a matter for conjecture as to whether or not the current problems with the right knee have [a] …causal connection…to the injury occasioned to the left knee…
15. I am satisfied that having regard for [sic] Section 55 that there has been a change of circumstances, the question remains whether such changes impact to a point where it is appropriate to vary or amend the initial award. I should note the wording of Section 55…the word ‘may’ is interposed to clearly denote the fact that some discretion is able to be exercised…
16. …the onus of proving a change of circumstances rests with the party who asserts it…having found that there are indeed changed circumstances then it is a matter as to what, if any, change ought be made in respect of the award.
17. …it is accepted that the worker would have been earning $101 but for injury.
The worker explains the …variable amounts received as being attributed to the fact that she is paid on a commission basis. The worker also indicated that she did not believe she could do the job full-time ‘I think…I would be able to do about 20 hours per week…’ Clearly it is a matter of conjecture as to whether or not the worker will be able to firstly secure work as a taxi driver, secondly whether she will be able to sustain a 20-hour working week and thirdly there remains the uncertainty as to that which she would be earning. On the basis of the information I have before me it is not unrealistic to accept that with two 10-hour shifts the worker has the capacity to generate $100 per week.18. …applying the’ Mitchell’ test I appraise the matter as follows:
a) In accord with step 1 the worker would, but for injury, have been earning currently $101 per week;
b) Considering stage 2 the amount the worker is earning or would be able to earn in suitable employment …[is] $127 per week.
Having regard for step 3 this would suggest that there is a differential that clearly suggest the worker would not sustain any loss.19. Considering however the question of whether I should exercise a discretion I am mindful of the uncertainties the worker now faces in terms of continuity of work, capacity to continue such work and likely earnings. If one were to accept that the worker could continue to work two 10-hour shifts and earn an average of $50 per shift that would almost equate with that which she is currently earning. I am not satisfied that it is appropriate to exercise a discretion to this extent and to therefore nullify the original award. I believe in the present circumstances a compromise is required due to the vagaries of the worker’s current position in terms of ongoing employment and as such I propose to exercise a discretion to reduce the worker’s current earning capacity to $50per week and as such there will be an award for the worker in the sum of $50 a week and thus a variation of the original award from $52.85 per week to $50 per week.”
Was the Arbitrator’s decision valid and lawful?
In Pira Pty Ltd t/as Langdon & Bartley v Tucker (1996) 14 NSWCCR 26 (‘Pira’) the Court of Appeal unanimously held:
“ The appropriate amount to be applied under section 40(2)(b) in determining the rate of compensation to be awarded under section 40 is, prima facie, the persons actual earnings after injury unless it is proved that the worker’s actual earnings are not a proper test, because there is some reason unconnected with the worker’s earning power which made them lower than they should be.”
The Court cited with approval its decision in J C Ludowici & Son Ltd v Cutri (1992) 8 NSWCCR 219 (‘Cutri’). In that case, the Court rejected the approach adopted by the trial judge which in effect artificially altered the figures so as to award the worker almost twice the amount she had claimed in lost overtime. Relevantly for the present case, the Court made this observation:
“It was not necessary for a judge to anticipate in the instant case the possibility that the worker may not, in the future, be able to sustain the current level of earnings. If the worker is forced to cease work, his compensation would merely need to be reassessed in accordance with…section 40 (1).”
In the present case, in line with the decision in Pira, Ms Morio’s actual earnings, which the Arbitrator noted averaged $127 per week were a reflection of her ability to earn and in my view were the “proper test” for calculation of any entitlement.
Contrary to the Arbitrator’s findings at [14], there was simply no evidence that the work as a taxi driver was “temporary”. It was certainly recent employment, and described by Ms Morio as “casual” and while I accept that there may have been some uncertainty as to her ongoing weekly earnings, that is not a relevant consideration as the Court noted in Cutri.
Ms Morio clearly stated her perceived ability to perform at least 20 hours per week as a taxi driver, an occupation properly fitting “suitable employment” as described by Dr Patrick.
In her ‘Notice of Opposition’ Ms Morio submits that reliance ought be placed on the decision of Adadee AJA in Pira quoting as follows:
“Indeed His Honour was entitled to adopt the view that it was not appropriate to apply to the period when the worker was working, the same test as to the period when she was not working. In any event, as to whether actual earnings truly reflect ability to earn is, to my mind, a question essentially of fact for the trial judge…”
I do not cavil with this statement, however, there must be a proper evidentiary basis for such a finding of fact. In the present case, I am not satisfied that there is any evidence to suggest that Ms Morio’s actual earnings were not a “proper test” for the reasons stated. Even if I were to allow for the recent and apparently intermittent nature of her employment, I am nonetheless left with her own evidence as to her ability to earn together with persuasive medical evidence of her earning capacity. These factors merely reinforce my view that Ms Morio’s actual earnings were a proper reflection of her ability to earn.
The principle error in the Arbitrator’s decision flows from his interpretation of the steps to be taken in Mitchell. At [18], he correctly embarked on an analysis of the evidence in steps one and two, but fell into error with step three. Having found probable earnings were $101 per week, and actual earnings were $127, he was merely required to subtract $127 from $101, thus confirming, as he noted, that Ms Morio “…would not sustain any loss.”
The ‘discretion’ comes into play in step four to determine if any reduction is proper in the circumstances. The Arbitrator appears to have confused the ‘discretion’ referred to in Mitchell with the ‘discretion’ he noted section 55 provided him in reviewing the award.
Once the ‘Mitchell’ calculations were complete, there was no room for the exercise of discretion on matters of “conjecture” such as job security to which the Arbitrator referred (see Cutri).
As the RTA correctly submitted:
“Once the Arbitrator embarked upon the section 40 assessment, the discretion at the fourth stage of the Mitchell test could only be used to further reduce the difference between the Worker’s pre-injury earnings and current actual earnings, not increase them.”
In the absence of any evidence to demonstrate that the actual earnings of Ms Morio were not a proper reflection of her capacity to earn, the award must be revoked. Of course should Ms Morio’s circumstances change in the future she too has the benefit of invoking the provisions of section 55 of the 1987 Act.
DECISION
The decision of the Arbitrator dated 7 April 2008 is revoked and the following decision made in its place:
(1) Award in favour of the Applicant Employer in relation to weekly benefits from 6 May 2008.
(2) No order as to costs.
COSTS
I make no order as to costs of the appeal.
Deborah Moore
Acting Deputy President
17 October 2008
I, MARIE JOHNS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DEBORAH MOORE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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