Roads & Traffic Authority of New South Wales v Smith & Anor
[2007] NSWWCCPD 134
•6 June 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Roads & Traffic Authority of New South Wales v Smith & Anor [2007] NSWWCCPD 134
APPELLANT: Roads & Traffic Authority of NSW
FIRST RESPONDENT: Lindsay Smith
SECOND RESPONDENT: State of New South Wales
INSURERS:Treasury Managed Fund (Appellant)
Allianz Australia Workers Compensation (NSW) Ltd (Second Respondent)
FILE NUMBER: WCC10619-06
DATE OF ARBITRATOR’S DECISION: 10 November 2006
DATE OF APPEAL DECISION: 6 June 2007
SUBJECT MATTER OF DECISION: Misstatement of evidence, not affecting the result; causation; section 40 discretion; prevention of dual benefits - section 46 of the Workers Compensation Act 1987.
PRESIDENTIAL MEMBER: Acting Deputy President Michael Snell
HEARING:On the papers
REPRESENTATION: Appellant: Thompson Cooper
First Respondent: Firths
Second Respondent: Ellison Tillyard Callanan
ORDERS MADE ON APPEAL: The decision of the Arbitrator dated 10 November 2006 is confirmed.
The Appellant is to pay the costs of both Respondents, of the appeal.
BACKGROUND TO THE APPEAL
On 27 November 2006 the Roads & Traffic Authority of New South Wales (‘RTA’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 10 November 2006.
The Respondents to the Appeal are Lindsay Smith (‘the worker’), and the State of New South Wales (‘the State’).
The worker was born on 8 June 1957, his wife works and is not dependant, he has two dependant sons born 4 April 1992 and 4 August 1995. He was schooled to Year 10, obtained some qualifications in farm management and animal husbandry, and ultimately obtained a Diploma in Business (Valuation) from the University of Western Sydney, qualifying as a valuer. He commenced working with the Department of Conservation and Land Management (CALM) as a valuer/field officer in 1983, and whilst there obtained a degree in Land Economy from the University of Western Sydney, in 1990. The position at CALM had physical aspects, as much of the worker’s time was spent out of the office, inspecting and reporting on unimproved Crown land, driving and walking around rough country, for example in the Blue Mountains.
The worker was involved in a motor accident in the course of this employment on 28 April 1988, when the shoulder of a fire trail on which he was driving collapsed, causing the four wheel drive vehicle he was driving to roll twice, coming to rest on its roof. He injured his neck and back, and was off work for about three weeks, before resuming on light office duties. After carrying out the lighter duties for about six weeks, the worker resumed his normal duties, although states he had ongoing pain in his neck and back. He describes thereafter having problems with aspects of this work, such as driving over rough terrain, and lengthy periods of driving (statement at [10]). The State is joined as a party to the proceedings as it is legally responsible for the consequences of this injury with CALM.
The worker took proceedings in the Compensation Court of NSW against CALM in matter number 15385 of 1994, seeking lump sum compensation in respect of his neck and back impairments. Terms of Settlement indicate this matter settled on an unspecified date, on the basis of 20% neck impairment, 15% back impairment, and a sum of $15,000 for pain and suffering.
The worker left CALM and joined the RTA, commencing there on about 6 December 1995, as a property portfolio manager. The history recorded by Dr Lovric indicates he progressed to manager of major projects, and then sales manager, in his position with the RTA. The duties with the RTA were less physical than the position at CALM, and also better paid. He was involved in a further motor accident in the course of his employment on 12 October 2002, when the vehicle he was driving was hit in the rear by another vehicle, whilst he was travelling to visit a client. He said this accident made his neck and back problems worse. He also suffered depression, which will be dealt with in more detail subsequently in these reasons, as it is an issue on the appeal. Dr Vote records a history of the worker having about ten days off after this accident, and then resuming his duties, but with periodic absences due to neck and back pain. The worker’s statement describes carrying on at work taking various medications (at [21]), and with significant difficulties (at [18] to [23]).
Allegations were made that the worker had engaged in conduct the RTA regarded as unethical, in relation to the supply of certain window coverings for private use in late 2003, and the use of some Cabcharge vouchers on 16 December 2003. These allegations were made in about February 2004. The worker submitted to formal interviews regarding such matters on 1 March 2004 and 5 July 2004, but continued carrying out his duties. On 15 December 2004 he received a formal letter from the RTA outlining alleged breaches of its Code of Conduct and Ethics, and requiring a response (which he made). The worker was certified unfit for work from 16 December 2004, and has not worked since. The RTA paid weekly compensation on a voluntary basis until 19 January 2006. On 26 May 2005 the RTA wrote to the worker terminating his employment, on the basis of the allegations of breach of its Code of Conduct and Ethics. The worker brought proceedings against the RTA in the Industrial Relations Commission of New South Wales, alleging unfair dismissal. These proceedings were resolved on 25 October 2006, with the RTA agreeing to pay the worker a sum of $45,000, and give him a statutory reference (T11.45 to 12.15).
The Application to Resolve a Dispute lodged 12 July 2006 pleads the motor accidents of 28 April 1988 and 12 October 2002, and claims weekly compensation from both the State and the RTA, from 19 January 2006 on a continuing basis. It also seeks from both these employers a general order for the payment of medical and related expenses pursuant to section 60 of the Workers Compensation Act 1987 (‘the 1987 Act’). There is a claim for lump sum compensation pursuant to sections 66 and 67 in respect of 13% whole person impairment (and associated pain and suffering) pleaded against the RTA. No claim for lump sum compensation is pleaded against the State. The injury pleaded against the State is described as “psychiatric injury”, and against the RTA as “psychiatric injury, injury to back, injury to neck”.
The matter proceeded to arbitration hearing on 6 November 2006 (although described in the transcript as 15 November 2006). All parties were represented by counsel. Counsel for the worker sought to amend the Application as against the State, to add injury to the neck and back, in addition to the psychiatric injury pleaded against the State. The State objected to this course, and the amendment was not made (T5 to 6). The worker gave some short evidence, and was briefly cross-examined by counsel for the two employers. Counsel addressed.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 10 November 2006 records the Arbitrator’s orders as follows:
“1.That there is an award in favour of the First Respondent in respect to the claim for weekly payments.
2. That the Second Respondent pay the Applicant weekly compensation at the rate of $484.60 from 10 January 2006 to 30 March 2006, $494.50 from 1 April 2006 to 30 September 2006, and $503.70 from 1 October 2006 to date and continuing.
3. That the Second Respondent pay the Applicant’s expenses under s60 of the Act on production of accounts or receipts.
4. That the matter be referred to an Approved Medical Specialist for an assessment of permanent impairment, if any.
5. That the Second Respondent pay the Applicant’s costs as agreed or assessed.”
At the request of the solicitors for the RTA, the Certificate of Determination was varied to substitute “20 January 2006” for “10 January 2006”, and “31 March 2006” for “30 March 2006”, in order [2].
Pursuant to order [4], the worker was examined by an approved medical specialist, Dr Dixon, on 8 December 2006. A medical assessment certificate issued on 9 February 2007, certifying the worker to have 11% whole person impairment, resulting from the injuries to his neck and back in the accident of 12 October 2002.
ISSUES IN DISPUTE
The issues raised by the RTA in its grounds of appeal are:
(i)The Arbitrator misstated the evidence in saying “There is no indication of any specific psychological treatment prior to the second motor vehicle accident in 2002”, and finding “I am of the opinion that the psychological injury became manifest after as a result of the injuries sustained in the second accident”. It is submitted the evidence has numerous references to psychological illness prior to the second accident. Reference is made to histories obtained by, and observations of Drs Naidoo, Blake and Patrick, and to the worker’s statement, in which he describes suffering from depression and being prescribed anti-depressants prior to the accident of 2002. It is submitted an appropriate finding would be one that psychological disability results from both motor accidents, and the weekly award ought be entered against both employers, apportioned equally between them pursuant to section 22 of the 1987 Act.
(ii)The Arbitrator erred in how he approached the circumstances surrounding the worker’s termination. It is submitted the worker was unemployed from May 2005 due to his dismissal, rather than the effects of injury. It is submitted the worker would probably have continued in the RTA’s employ if not for his termination for reasons unrelated to injury, and “his incapacity does not result from any injury, but from the matters leading to the termination of his employment”. It is also stated that although the worker “was paid workers compensation benefits to 19 January 2006…it is not suggested this compensation was paid by RTA” (at page 8.5 of the submissions). This last observation seems rather at odds with the copy letter from Treasury Managed Fund, headed “RTA Workers Compensation Unit” to the worker, dated 5 January 2006, advising “that RTA decline any further liability for Ongoing payments and/or benefits”, and would cease payments from 19 January 2006.
(iii)The Arbitrator erred in awarding weekly compensation for the period prior to 10 July 2006, as the worker had effectively been paid up to this date by a combination of his weekly compensation (up to 19 January 2006), and the equivalent of six months salary, paid in settlement of his wrongful dismissal action in the Industrial Relations Commission of NSW.
The submissions in the Notice of Opposition to the appeal lodged on the worker’s behalf raise the following points:
(i)Whilst the Arbitrator’s statement of the evidence at [36] of his reasons (described in part at [13(i)] above) is not supported by the evidence, this misstatement of the evidence would not have affected the outcome. This is because the evidence overall supported the conclusion reached by the Arbitrator, that the worker’s incapacity, including that flowing from the psychiatric injury, resulted from the injury in 2002.
(ii)There is no evidence to support the contention referred to at [13(ii)] above, that the worker would have continued to carry out duties with the RTA, if not for his termination. It is submitted the RTA’s submission on this point also fails to take account of the fact the worker had been off work certified totally unfit from 16 December 2004, many months prior to his termination.
(iii)The sum paid to the worker in settlement of his wrongful dismissal claim cannot be characterised simply as payment of six months salary, as it was a sum paid to settle all claims brought by the worker against the RTA, and cannot be dissected to isolate a wage component, in the manner contended by the RTA.
(iv)The worker submits the Arbitrator’s award should not be disturbed.
Submissions lodged on behalf of the State raise the following:
(i)Although there was some evidence of psychological sequelae resulting from the first accident, there was no evidence significant depressive symptoms continued beyond 1999. The State adopts the submissions of the worker paraphrased at [14(i)] above.
(ii)The circumstances surrounding the worker’s termination would justify an exercise of discretion when an award is being entered under section 40 of the 1987 Act.
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 all 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 quantum of the award for weekly payments well exceeds the sum of $5,000 referred to in section 352(2)(a) of the 1998 Act. At least one half of it is in issue on the appeal, that being the apportionment the RTA submits ought be made against the State pursuant to section 22 of the 1987 Act. Section 352(2)(b) is satisfied.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Neither respondent to the appeal submits leave should not be granted. I grant leave to appeal.
DISCUSSION AND FINDINGS
The Nature of the Review Process
The Appeal comes before me as one by way of review, pursuant to section 352(5) of the 1998 Act. The Arbitrator’s decision should only be disturbed if it contains an error of law, fact or discretion, and then only if the error is such that but for it a different decision would have been made (South Western Sydney Area Health Service v. Edmonds [2005] NSWWCCPD 18). In Westpac Banking Corporation v Kilby & Bananacoast Credit Union Ltd [2005] NSWWCCPD 24 (Byron DP) at [54] said:
“As stated in South Western Sydney Area Health Service v Edmonds [2005] WCCPD 18, the weight and relevance to be given to evidence before an Arbitrator is a matter in the discretion of that Arbitrator. The decision of the Arbitrator should not be overturned unless it can be demonstrated that the Arbitrator has failed to exercise that discretion fairly and according to law. This may occur when an Arbitrator has acted upon an incorrect legal principle, allowed irrelevant considerations to influence the decision, made a material mistake as to the facts, or failed to take into account relevant and material considerations, (House v The King (1936) 55 CLR 499 at 504-505; Norbis v Norbis (1986) 161 CLR 513 at 520, and In the Matter of National Roads and Motorists Association Ltd [2003] FCAFC 206 at [21]).
The review process is broader than correction of error of the kind identified in House v The King. In Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34 (‘Zheng’) Bryson JA said:
“A review is a different process to an appeal and the matters which may be considered and the manner in which they may be considered are somewhat wider. See Boston Clothing Co Pty Ltd v. Margaronis (1992) 27 NSWLR 580 at 584 (Kirby P). An attack, on review or otherwise, on an Arbitrator's discretionary decision in controlling procedure may be based on the test stated in House v. R (1936) 55 CLR 499 at 504 - 505; but that is not the only basis on which the Presidential member may act. The powers of a Presidential member on review are somewhat wider and extend to power to reopen consideration of a matter of which an Arbitrator has disposed; the manner in which the powers of the Presidential member are to be exercised is itself the subject of discretion of the Presidential member.”
This passage was recently quoted with approval by McColl JA in South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16 (‘Edmonds’) at [134]. Thus, where there was expert evidence on a medical question amounting to a bare ipse dixit, it was insufficient to regard the weight and relevance to be attached to such evidence as a matter in the discretion of the Arbitrator. To describe the relative weight and relevance of the expert evidence as “a discretionary decision which could only be disturbed on House v The King principles” was described by McColl JA as “an over-generalisation” (at [133]).
The Misstatement of Evidence Point
It is desirable that I quote in full paragraph [36] of the Arbitrator’s reasons, which are the subject of the first part of the RTA’s submissions on the appeal, paraphrased at [13(i)] above:
“36. His incapacity in so far as it relates to psychological injury does not result from the first accident. The evidence, particularly that in the chronology and the Applicant’s statement, is that there was no reference to any psychological injury prior to his changing employment from the first to the second Respondent in 1995. Mr Smith did take leave on numerous occasions during the period between the two accidents, but this related to his physical problems and not to any psychological causes. There is no indication of any specific psychological treatment prior to the second motor vehicle accident in 2002. I am of the opinion that the psychological injury became manifest after and as a result of the injuries suffered in the second accident.”
No party contends this is an accurate statement of the evidence regarding the existence of psychological symptoms between the two accidents. There were a number of references to psychological symptoms both prior to the worker’s change of employer in December 1995, and between then and the second accident in 2002.
Dr Brooks, an orthopaedic surgeon to whom the worker was referred by his general practitioner, Dr Chambers, reported on 3 November 1994 “Mr Smith has become quite depressed about the ongoing nature of these pains and the effect they are having on his ability to work” (at page 2.2). Dr Blake, orthopaedic surgeon, examining the worker on 15 November 1994 at the request of his solicitors, expressed the opinion “Prognosis remains uncertain, in view of the apparent psychological element” (page 4.7 of report dated 8 December 1994). The chronology of treatment with Dr Chambers, attached to the Application, records “Notification to GIO that Allegron was prescribed for depression. Prescription filled for Allegron on 30.7.99 and subsequently filled (repeat X 1) on 16.10.99”.
The worker’s statement at [13] records:
“Eventually, I started becoming mildly depressed and at times experienced an inability to concentrate at the same level that I used to prior to my 1988 injuries. I became frustrated with my reduced capacity to concentrate because it was taking longer to complete tasks. I believe that I was first prescribed Allegron for mild depression in approximately 22 July 1999 and notification was provided to the Workers Compensation Insurer. I continued to be prescribed Allegion (sic) and was on this medication for approximately three to four months. I stopped taking it because I did not think it was assisting me and in hindsight, the daily dosage of the medication was not a therapeutically a (sic) sufficient dosage.”
There are other references in medical histories recorded after the accident in 2002, to psychological problems prior to that accident (for example, see the report of Dr Naidoo, psychiatrist dated 30 January 2005 at page 2.1).
The misstatement of the evidence on this topic amounts to error, however it is only appealable error if it is of such a nature that, but for the error, a different result would have been reached. The response of the two respondents to the appeal is to submit the same result would have been reached in any event, because it is consistent with the evidence overall. This submission, in my view, is soundly based.
Whilst there are references in the medical evidence, and in the worker’s statement, to psychological symptoms prior to the second accident, these are not extensive. The chronology of treatment with the general practitioner, Dr Chambers, contains numerous references after 16 October 1999, to treatment for accident related symptoms, involving the neck and back. However there are no references in this chronology to psychological difficulties, after 16 October 1999 (when a prescription for anti-depressants was filled), up to the date of the second accident on 12 October 2002. This is a period of about three years. Bearing in mind the worker’s preparedness to discuss such symptoms with Dr Chambers in 1999, one would reasonably infer, from the absence of such complaints over this three years, that psychological symptoms were not a feature, or at least not a significant feature, of the worker’s presentation over that time. The isolated treatment afforded the worker by Dr Chambers for depression, in 1999, represents the only treatment of a psychiatric or psychological nature prior to the second accident. The worker’s statement at [14] records he was still able to perform his work at the time he suffered from some depressive symptoms, prior to the second accident.
The pattern of treatment for such symptoms changed markedly after the accident of 12 October 2002. The report of Dr King, neurologist dated 30 July 2003 records complaints on that day which include “Decreased memory, a depressed feeling and it takes him four times longer to read things that he needs to absorb”. Dr King said he would leave it to Dr Chambers and the worker to decide “whether a psychiatric opinion may be worthwhile”. The chronology of treatment with Dr Chambers reveals an entry for 4 August 2003 that the worker “is suffering from episodes of confusion and poor concentration at work aggravated by surges of neck pain. Health deteriorating, depression evidenced and self-depreciation”. A report of Dr Chambers dated 4 August 2003 notes “there is now a huge mental factor”. Dr Naidoo, the psychiatrist to whom the worker was referred by Dr Chambers, recorded a history of the worker commencing to have anxiety and panic attacks at work in 2003, with anxiety levels so high he would sometimes be unable to read (page 2.6 of his report). There is a further consultation with Dr Chambers on 15 September 2003, for depression, at which that doctor prescribed medication, and scheduled an appointment with a psychotherapist, Caryn Walsh. Dr Naidoo’s report includes an opinion that, by the time of the events of late 2003 which formed the basis for the RTA’s disciplinary action against the worker, the worker was probably suffering from “Major Depression with Anxiety” (at page 4.9 of his report).
In the worker’s case, Dr Naidoo, in his report of 30 January 2005, expressed the following opinion on causation of the worker’s psychiatric symptoms:
“In my opinion there is no doubt whatsoever that this patient has had a severe pain syndrome over many years. This has worsened following a second accident in 2002. As a consequence of this he has developed major symptoms of anxiety and depression, together with panic attacks.” (at page 4.6)
The other psychiatrist to report in the matter was Dr Lovric, whose report of 25 August 2005 formed part of the RTA’s case. The diagnosis she reached was one of adjustment disorder, and she summarised her views on causation as follows:
“In summary, I would see Mr Smith’s psychiatric disorder as developing in the context of the initial motor vehicle accident in 1988 and worsening after the second motor vehicle accident and in the context of excessive analgesia, benzodiazepines and a brief period of alcohol excess and probably having worsened at the time of the investigation into his work-related inappropriate conduct.” (at page 12.5)
The RTA’s submissions on this appeal refer to the judgment of the NSW Court of Appeal in Kooragang Cement Pty Limited v Bates (1994) 35 NSWLR 452, where Kirby P (as he then was) in a well known passage said:
“The result of the cases is that each case where causation is in issue in a
workers compensation claim, must be determined on its own facts. Whether
death or incapacity results from a relevant work injury is a question of fact.
The importation of notions of proximate cause by the use of the phrase
"results from", is not now accepted. By the same token, the mere proof that
certain events occurred which predisposed a worker to subsequent injury or
death, will not, of itself, be sufficient to establish that such incapacity or
death "results from" a work injury. What is required is a commonsense evaluation of the causal chain. As the early cases demonstrate, the mere
passage of time between a work incident and subsequent incapacity or death,
is not determinative of the entitlement to compensation. In each case, the
question whether the incapacity or death "results from" the impugned work
injury (or in the event of a disease, the relevant aggravation of the disease),
is a question of fact to be determined on the basis of the evidence, including,
where applicable, expert opinions.” (at 463G to 464A)
The view of causation which I have formed on review, is that the worker’s psychiatric condition, subsequent to 18 January 2006 (when the pleaded claim commences) resulted from the motor accident of 12 October 2002. The worker had not, prior to that accident, had any recorded treatment of a psychiatric nature for about three years. Even when the worker suffered from some psychiatric symptoms in 1999, these were described as “mild”, and did not prevent him performing his normal work at the RTA (worker’s statement at [13] to [14]). There is a marked change in the psychiatric symptomatology after the 2002 accident, as referred to at [32] above. Dr Naidoo, whilst he recorded a history of some depression going back to the time of the 1988 accident, expressed the view the worker’s psychiatric condition after 2002 was a consequence of the worsening of his pain syndrome in that accident. This is consistent with the evidence regarding the worsening of both the neck and back complaints, and the psychiatric complaints, after the accident of 2002. The way in which Dr Lovric describes the role of the 1988 accident in the passage quoted at [34] above, is in my view consistent with regarding that earlier accident as a pre-disposing factor, to pick up the language of Kirby P in the passage quoted at [35] above. Applying the “commonsense evaluation of the causal chain” leads me to the view the worker’s psychiatric injury, at least from 18 January 2006 when the weekly claim commences, resulted from the motor accident of 12 October 2002.
In South Western Sydney Area Health Service v Edmonds [2005] NSWWCCPD 18 Fleming DP said:
“The Arbitrator’s decision should only be disturbed if it contains an error of law, fact or discretion (Allesch v Maunz (2000) 203 CLR 172; 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 (YG & GG v Minister for Community Services[2002] NSWCA 247).
Accordingly, although the Arbitrator misstated the evidence at [36] of his reasons, as is common ground between the parties, in my view that error was not such that a different result was reached as a consequence of that misstatement. For this reason the ground of appeal paraphrased at [13(i)] above fails.
The Circumstances of the Worker’s Termination
I have sought to summarise the RTA’s submissions going to this topic, at [13(ii)] above. Effectively, it amounts to a submission the worker was not incapacitated after May 2005, and his failure to resume his usual work at the RTA resulted from his termination, rather than from any incapacity for work. The submissions of the State, in response, raise a different point, that the termination, in all of the circumstances, would represent an appropriate basis for reducing any section 40 award to which the worker may be entitled, on a discretionary basis. If this was a submission the RTA sought to make, it did so very obliquely.
The reference in the RTA’s submissions, to it not being suggested compensation paid voluntarily up to 18 January 2006, was paid by the RTA, would simply seem to be mistaken, having regard to the letter from Treasury Managed Fund dated 5 January 2006, attached to the Application.
The Arbitrator’s primary finding on ‘incapacity’ is at [33] and [34] of his reasons:
“33. Is the worker suffering incapacity for work from January, 2006.
34. The answer to this question is clearly yes. The medical evidence for the Applicant is strong and even the Respondent’s doctor, Dr Vote, says that as late as June, 2006, that he would have difficulty with office work and is incapable of performing any manual employment.”
The Arbitrator goes on at [40] to [44] to find the worker’s incapacity is partial. He then proceeds, at [45] to [55], to make an assessment of the worker’s entitlement to an award under section 40 of the 1987 Act, applying the steps in Mitchell v Central West Health Service (1997) 14 NSWCCR 526 (‘Mitchell’).
The Arbitrator’s finding the worker was incapacitated from 18 January 2006 was supported by the preponderance of the medical evidence. The only orthopaedic evidence to suggest otherwise was Dr Limbers, part of the RTA’s case, who in his report dated 22 June 2005 said “Strictly from the orthopaedic point of view, Mr Smith is, in my opinion, fit for his normal pre-injury duties” (at page 7.1). The other orthopaedic evidence used in the RTA’s case was the report of Dr Vote, orthopaedic surgeon, dated 21 June 2006. He expressed the view the aggravation of the worker’s symptoms caused by the motor accident of 12 October 2002 continued (at page 5.9), and said:
“Given his long term cervical and lumbar problems, I believe Mr Smith would have difficulty even with prolonged office work which involves computer work or postural stresses on his neck or back.
He is however, a well motivated man and quite intense worker and would probably be able to cope full-time with some discomfort in both areas.” (at page 6.7)
The psychiatric report used by the RTA, Dr Lovric dated 25 November 2005, on the topic of incapacity said:
“Given his prominent irritability, I would think it would be unlikely Mr Smith would be capable of liaising with customers and colleagues as was required by (sic) him in his previous job.”
Dr Lovric went on to describe the worker, at the time of her assessment, as “unfit to perform his pre-injury duties in their full state at present, he may be capable of working at least 3-4 hours a day in the clerical aspects of his pre-injury role if such a position were available to him.” (at page 8.7).
Looked at overall, the RTA’s medical case, on balance, supported a finding the worker was partially incapacitated. This is without describing the worker’s medical case, which was supportive of the existence of incapacity. Thus the evidence overall clearly supported the finding made by the Arbitrator, that the worker was partially incapacitated, and unfit for his normal duties at the RTA, subsequent to 18 January 2006. This finding having been properly made on the evidence, such incapacity does not cease to exist, as a consequence of the worker’s employment being terminated (for whatever reason) by the RTA. The submission on the appeal, that the worker’s incapacity “does not result from any injury, but from the matters leading to the termination of his employment” (at page 8.7) is not borne out by the evidence. The appropriate point at which to consider the effect, if any, of the termination, upon the worker’s award pursuant to section 40, is not when calculating the upper and lower limbs of the section 40 equation (steps 1 and 2 of the process described in Mitchell), but rather at step 4 of that process. This is consistent with the decision of the NSW Court of Appeal in Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50 (‘Australian Wire’), and also with the judgment of Armitage J in Harding v Transfield Pty Limited (2003) 25 NSWCCR 86.
Was it then an error on the part of the Arbitrator, not to reduce the section 40 award on a discretionary basis, to take account of the worker’s termination and the reasons for it? The Arbitrator dealt with his discretion under section 40 at [54] of his reasons, where he said:
“Given that the statutory maximum is far less than the weekly amount the worker has lost as a result of his injury, I see no grounds for exercising my discretion to further reduce the amount payable to him pursuant to the fourth step.”
This to some extent throws up a question considered in Bruce v Grocon Limited (1995) 11 NSWCCR 247 (‘Bruce’), and Baker v R J Fletcher & Co (1999) 19 NSWCCR 36 (‘Baker’), of whether, in considering the application of the discretion under section 40 of the 1987 Act, in circumstances where the ‘cap’ on earnings in section 40 operates, one applies any discretionary reduction before or after applying the ‘cap’. In Bruce Neilson J held the discretion should be exercised on the actual difference, before the caps are applied, saying:
“I accept Mr McManamey’s submission that I ought to exercise my discretion on the actual differences rather than on the statutory difference as to do otherwise would be not only inequitable to the worker but also would fail to fulfil the statutory terms of the discretion. To exercise the discretion on the statutory difference would be highly artificial and not “proper” in the circumstances of this case.” (at 255C)
In Baker Truss J, after referring to Bruce, said:
“With great respect to his Honour, I do not consider that at any point in the process it is appropriate for the Court to have regard to earnings in excess of the statutory caps.
I reject the submission by Mr Martin that the statutory caps should be ignored for the purposes of steps 1 and 2 but had regard to only when the Court has deducted the ability to earn from the probable earnings ignoring the caps. This would in effect require the Court to ignore the words ‘but not exceeding $1,000’ in s 40(2)(a) and 40(2)(b).” (at [8] to [9])Given the view I have ultimately reached regarding the need for any reduction pursuant to the section 40 discretion, the conflict between these views is not one I need to deal with in this case. However in my view it is clear operation of the section 40 cap does not, of itself, militate against the exercise of the discretion, if it is otherwise appropriate the discretion be exercised to reduce the mathematical difference produced by the section 40 equation. This being so, the reason given by the Arbitrator for not exercising his discretion in the circumstances demonstrate error.
The Arbitrator did not allude to the termination, as a potential basis for exercising his discretion under section 40. In Australian Wire McHugh JA (as he then was) said:
“The third step in the process requires the Compensation Court to look at the circumstances of the case. The weekly payment awarded must bear such relationship to the differential amount – which is the result of the exercise under the first and second steps – as under the circumstances of the case is proper. This third step therefore calls for the exercise of a judicial discretion of a kind with which courts have long been familiar.
It is at this stage that the Compensation Court can and must examine all the facts. The matters which can be examined include such matters as retirement, other supervening illnesses or injuries, the personal employment history of the worker and so on. See Australian Iron & Steel Pty Ltd v Elliott (1966) 67 SR (NSW) 87 at 92f; Morgan v Commissioner of Railways (1972) 46 WCR (NSW) 33; Metropolitan Coal Co Ltd v Duffy [1966] 1 NSWR 379.
What I have said is enough to show that the retirement of the applicant or his intention to retire at 65 could not as a matter of law defeat his claim, and indeed Mr Shore for the appellant has now conceded the point.” (at 54F to 55B)
The stage of the process described as “the third step” in Australian Wire, is the discretionary stage, described as step 4 of the process in Mitchell. Matters which may operate to reduce the arithmetical difference, pursuant to the section 40 discretion, have been considered in a number of cases. As was observed in Mitchell, “The discretion is a broad one and it is proper to refrain from endeavouring to define its outer limits” (at 534F). Some examples are a worker who retired (Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50), a worker who would have been precluded by law from carrying out the work in a coal mine on which his probable earnings were based (Australian Iron & Steel Pty Limited v Elliott (1966 67 SR (NSW) 87), a worker who was imprisoned (Stranlund v Mid Coast Meat Co Pty Ltd (1999) 19 NSWCCR 91), and a worker who was not seeking to work due to pregnancy and child birth (Wrigley Co Pty Ltd v Holland (2002) 23 NSWCCR 463).
In the current matter, the worker’s employment history (described at [3] to [6] above) is of leaving school after year 10, but then studying to obtain various qualifications, ultimately at tertiary level, qualifying him as a valuer. He has progressed through long term employment, with two public sector employers, to occupy relatively senior positions with the RTA. The Wages Schedule described his probable earnings if not for injury, subsequent to 18 January 2006, as $1,712.08 per week. He was forty-eight years of age as at 18 January 2006 (when the weekly claim commences), and his two sons at that time were aged thirteen and ten. There is no suggestion the worker intended withdrawing from the workforce, and he gave evidence of continuing to look for work (T12.25).
The sequence of events leading to the worker’s termination by the RTA is described briefly at [7] above. The view formed by the RTA regarding its justification for this course, is set out in the letter from Mr Skinner, Director, Finance, to the worker dated 26 May 2005, in which notice of his termination is given. This letter relies upon two instances of behaviour by the worker, which are said to be “conduct which constitutes a serious breach of the RTA’s Code of Conduct and Ethics, and which is unacceptable to the RTA”. The first instance relied upon is an allegation the worker gained a “government/commercial discount rate” on blinds purchased by him for his own residence, by misrepresenting to a supplier the blinds were being purchased on the RTA’s behalf (‘the blind incident’). The second instance relied upon is an allegation the worker engaged in unauthorised use of two Cabcharge vouchers, on 16 December 2003, totalling $102.00 (‘the Cabcharge incident’). Mr Skinner’s letter describes these allegations as being substantiated “on the balance of probabilities”. The material which led Mr Skinner to this conclusion was not in evidence.
The worker took action in the Industrial Relations Commission of NSW, against the RTA, for unfair dismissal (T11.45 to 12.15). That matter was settled on 25 October 2006, with the worker receiving a sum of $45,000, and the RTA also agreeing to give the worker a statutory reference. The sum paid was described as the equivalent of 26 weeks of wages (T12.55). The worker in cross-examination was asked “Which is I think as much as you could obtain under that system, isn’t it?”, to which he responded “It was more.” (T12.55 to 13.5). The State relied upon an affidavit of the worker sworn 18 August 2005, obtained pursuant to Direction for Production served on the Industrial Relations Commission of NSW.
The worker’s version of events relating to the blind incident is described at [23] to [33] of the affidavit. It is unnecessary that I record all of that material here. It sets out a version which, if accepted, would indicate a lack of any dishonest intent, or intention to deceive, on the worker’s part, in respect of that incident. Whilst the worker was cross-examined briefly by counsel for both employers, he was not challenged as regards the truthfulness of the version of events contained in this affidavit.
The worker’s version of events relevant to the Cabcharge incident is set out at [34] to [46] of the affidavit. He describes hosting a social function, at Crows Nest, with a colleague from the RTA, for staff from a coffee lounge, in December 2003, to thank them for “good work and service” during the year. The worker’s letter to Mr Skinner, attached to the RTA’s Application to Admit Late Documents lodged 3 November 2006, says he frequently took clients to the coffee lounge for work purposes. The affidavit describes the worker paying for meals and wine at this function. He says there was a problem with trains on the North Shore line that evening. He gave a Cabcharge voucher to one of the guests, a lady who was ill who said she did not have money to get home. He describes later giving another Cabcharge voucher to another of the guests, so she and her companions could get home. The worker conceded an impairment of judgement in handing over the Cabcharge vouchers ([42] of the affidavit), and said he was stressed by a busy period at work at that time, and also suffering from depression (which is consistent with Dr Naidoo’s view of his condition at that time). The worker said it was his intention to refund to the RTA the cost of the Cabcharge vouchers, but he did not know precisely how much was spent on them, and could not find out whilst the coffee lounge was closed over the period 24 December 2003 to 12 January 2004 ([44] of the affidavit). The affidavit describes various reasons proffered by the worker for why the question of reimbursement was not attended to thereafter, prior to the matter being raised with him by Mr Gregory on 12 February 2004. The worker’s version, if accepted, would indicate a lack of any dishonest intent on his part in relation to the Cabcharge incident.
Thus the state of the evidence overall, going to the conduct of the worker leading to his termination, is that certain views were taken by the RTA regarding the propriety of the worker’s conduct, Mr Skinner regarded the matters as having been established on the balance of probabilities (on material not in evidence), and there is an affidavit of the worker which, if accepted, would establish a lack of any dishonest intent on the worker’s part, as regards either of the instances of misconduct relied upon by Mr Skinner as justifying the termination. In addition it is known the RTA settled proceedings brought by the worker for wrongful dismissal, by the payment of $45,000 and agreement to provide a form of reference. This material could not satisfy me the worker had in fact been guilty of the matters complained of in the RTA’s letter of 26 May 2005, terminating his employment, on the balance of probabilities.
Accordingly, I would not regard it as having been established the worker did anything to lead to the cessation of his employment with the RTA. If that employment came to an end because of a view taken by the RTA, which may or may not have been validly based, this does not, in my view, amount to a basis for reduction of the arithmetical difference between the upper and lower limbs of the section 40 equation, in the exercise of my discretion under section 40. Employment with the RTA being removed from the worker, there was no reason, if not for injury, why the worker would not have been expected to carry out similar and equally remunerative work elsewhere, having regard to his qualifications, experience, and motivation to continue working. There can be no suggestion the worker has retired, so as to withdraw himself from the labour market, as for example was the case in Willcocks v New Broken Hill Consolidated Ltd (1990) 6 NSWCCR 200. In my view the facts are not such as to call for a reduction, pursuant to my discretion.
The Double Compensation Point
The RTA also submits moneys paid to the worker in settlement of his wrongful dismissal case represented the equivalent of twenty-six weeks salary. It is submitted he had already been paid voluntary compensation up to 18 January 2006, and the moneys paid in settlement of the wrongful dismissal case represented payment of any loss of wages the worker suffered, for a further twenty-six weeks. Accordingly it is said any weekly award should not commence until twenty-six weeks after 18 January 2006. The RTA makes reference to section 89(5) of the Industrial Relations Act 1996. Sections 49 and 50 of the 1987 Act deal with adjustment of weekly compensation to take account of holiday pay and sick leave, and are not relevant for current purposes. Section 46 of the 1987 Act provides:
“(1) The Commission may, on the determination of an application for any weekly payment of compensation or on a review under this Act of any weekly payment of compensation, order that the weekly payment be reduced to prevent dual benefits of the same kind being payable by the employer during and in respect of the incapacity for work. (emphasis added)
(2) Any such order shall have effect according to its tenor.
(3) This section does not affect the operation of section 49 or 50.”
Section 89(5) of the Industrial Relations Act 1996 provides:
“If the Commission considers that it would be impracticable to make an order for reinstatement or re-employment, the Commission may order the employer to pay to the applicant an amount of compensation not exceeding the amount of remuneration of the applicant during the period of 6 months immediately before being dismissed. If the applicant was on leave without full pay during any part of that period, the maximum amount of compensation is to be determined as if the applicant had received full pay while on leave.”
The power conferred by section 46 is discretionary, and operates to prevent payment of “dual benefits of the same kind”. The submission made by the worker is that the settlement in the Industrial Relations Commission of NSW was “of all claims the worker brought against his former employer”, and one cannot distinguish what part of the settlement is “actual wages”. The evidence does not include the pleadings in the Industrial Commission of NSW, nor the deed (or whatever other document) effected the settlement. Accordingly, the only information available for the purpose of characterising the settlement payment is the worker’s evidence at T11 to 14.
The forerunner of section 46, section 13 of the Workers Compensation Act 1926 was dealt with by the High Court in Steggles Pty Limited v Vandenberg [1987] 163 CLR 321 (‘Steggles’). Section 13 provided:
“In fixing the amount of the weekly payment, regard shall be had to any payment, allowance or benefit (other than any payment, allowance or benefit from a superannuation or similar fund to which the worker has contributed) which the worker may receive from the employer during the period of his incapacity.” (emphasis added)
The High Court in a joint judgment rejected an argument payment to a worker, pursuant to an industrial award, for a rostered leisure day, should result in compensation not being payable for the same day, pursuant to section 13:
“The payment for the rostered leisure day was in no sense a payment in respect of the respondent's incapacity. Nor was it a payment of wages for work which was done or which would, but for the incapacity, have been done on that day. It was in truth a payment of wages for work done within the ordinary working week, being work done in 0.4 of an hour on nineteen previous days in accordance with the provisions of cl 5 of the Award. The case is therefore not one in which a worker receives both a payment of compensation and a payment of wages for work done on the same day.” (at 327)
Whilst Steggles dealt with a differently worded section, there are similarities. In section 46, as in the previous section 13, application of the section requires that the amount payable by the employer be related to the worker’s incapacity. Indeed the required connection between the payment and the incapacity is greater under section 46 than its forerunner. Section 13 required that the payment be “during the period of his incapacity”, whereas section 46 requires that it be “during and in respect of the incapacity for work”. It is impossible to characterise the sum paid by the RTA, in settlement of the wrongful dismissal proceedings, in this way. The precise basis of the payment is unclear from the evidence. The RTA submits it represented a payment pursuant to section 89(5) of the Industrial Relations Act 1996. Assuming this to be so, having regard to the wording of section 89 of that Act, the payment could not possibly be regarded as one “in respect of the incapacity for work”. Accordingly, the discretion pursuant to section 46 is not enlivened, and this ground of appeal cannot succeed.
DECISION
For the foregoing reasons, the decision of the Arbitrator dated 10 November 2006 is confirmed.
COSTS
The RTA will pay the costs of both the worker and the State, of this appeal.
Michael Snell
Acting Deputy President
6 June 2007
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF MICHAEL SNELL, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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