Scholz v BR & FT Croghan trading as Dubbo Ex-Government Trucks and Plants
[2006] NSWWCCPD 216
•4 September 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Scholz v BR & FT Croghan trading as Dubbo Ex-Government Trucks and Plants [2006] NSWWCCPD 216
APPELLANT: Stephen David Scholz
RESPONDENT: BR & FT Croghan trading as Dubbo Ex-Government Trucks and Plants
INSURER:Allianz Australia Workers Compensation (NSW) Ltd
FILE NUMBER: WCC7212-05
DATE OF ARBITRATOR’S DECISION: 30 September 2005
DATE OF APPEAL DECISION: 4 September 2006
SUBJECT MATTER OF DECISION: Section 40 of the Workers Compensation Act 1987: assessment; discretion.
PRESIDENTIAL MEMBER: Acting Deputy President Robert Harrington
HEARING:On the papers
REPRESENTATION: Appellant: North and Badgery
Respondent: Hicksons Lawyers
ORDERS MADE ON APPEAL: 1. The decision of the Arbitrator, dated 30 September 2005, is revoked and the following decision is made in its place:
1.That the Respondent [BR & FT Croghan trading as Dubbo Ex-Government Trucks and Plants] pay the Applicant’s [Mr Scholz’s] expenses under section 60 of the Workers Compensation Act 1987 on production of tax invoices and/or receipts.
2.That the Respondent pay the Applicant weekly compensation at the rate of $200 per week from 22 February 2001 to 29 June 2003 pursuant to section 40 of the Workers Compensation Act 1987.
3.That the Respondent pay the Applicant weekly compensation at the rate of $645 per week from 30 June 2003 to 11 August 2003 pursuant to section 36 of the Workers Compensation Act 1987.
4.That the Respondent pay the Applicant weekly compensation at the rate of $200 per week from 12 August 2003 to 30 April 2006, pursuant to section 40 of the Workers Compensation Act 1987.
5.That the Respondent pay the Applicant weekly compensation at the rate of $245 per week from 1 May 2006 pursuant to section 40 of the Workers Compensation Act 1987, such weekly payments to continue in accordance with the provisions of the Act.
6.That the Respondent pay the Applicant’s costs as agreed or assessed.
2. The Respondent is to pay the Appellant’s cost of the appeal.
3. The matter is remitted to the Arbitrator to finalise any outstanding claims.
BACKGROUND TO THE APPEAL
On 27 October 2005 Mr Stephen David Scholz (‘Mr Scholz’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 30 September 2005.
The Respondent to the Appeal is BR & FT Croghan trading as Dubbo Ex-Government Trucks and Plants (‘the Croghans’).
Mr Scholz was born on 31 January 1962. He is 44 years old.
Mr Scholz was employed by the Croghans from October 1991 to June 1993. Although he was employed as a casual he worked five days per week and 40 hours per week as a fitter and machinist.
On 17 July 1992, whilst in the employ of the Croghans, Mr Scholz sustained an injury to his left wrist when two foreign bodies (metal) entered the wrist. The foreign bodies remained there until an operation to remove them was performed on 30 June 2003.
Mr Scholz was self-employed between July 1993 and 21 February 2001. Mr Scholz has not worked since 22 February 2001.
On 16 May 2005, Mr Scholz filed an ‘Application to Resolve a Dispute’ in the Commission claiming, inter alia, weekly compensation (later amended) from 22 February 2001 to date and continuing.
Mr Scholz’s claim was heard before a Commission Arbitrator on 9 September 2005. The Arbitrator handed down his ‘reasons for decision’ on 30 September 2005. Mr Scholz was successful in his claim, but not as successful as he would like to have been. The Arbitrator awarded him weekly compensation from 30 June 2003 to date and continuing. It is against this decision that Mr Scholz seeks leave to appeal.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 30 September 2005, records the Arbitrator’s orders as follows:
“1.That the Respondent pay the Applicant’s expenses under section 60 of the Workers Compensation Act 1987 on production of tax invoices and/or receipts.
2.That the Respondent pay the Applicant weekly compensation at the rate of $645 from 30 June 2003 to 11 August 2003, pursuant to section 36 of the Workers Compensation Act 1987.
3.That the Respondent pay the Applicant weekly compensation at the rate of $200 per week gross from 29 January 2004 pursuant to section 40 of the Workers Compensation Act 1987. Such weekly payments to continue in accordance with the provisions of the Act.
4.That the Respondent pay the Applicant’s costs as agreed or assessed.
5.I direct that a further Teleconference be scheduled to enable the parties to further discuss settlement of the dispute and if necessary to appoint an Approved Medical Specialist, to assess the Applicant’s entitlements pursuant to Section 66 of the Workers Compensation Act 1987.”
ISSUES IN DISPUTE
The issues in dispute in the appeal are:
·Mr Scholz’s entitlement to weekly compensation between 22 February 2001 to 29 June 2003 and 12 August 2003 to 28 January 2004.
·The Arbitrator’s failure to give reasons as to why he exercised his discretion to reduce Mr Scholz’s compensation payments in respect of periods of partial incapacity from $245 to $200 per week.
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.”
Mr Scholz submits that the complex nature of his claim makes it inappropriate for the appeal to be heard ‘on the papers.’ I do not, however, believe that the nature of this claim is complex or that Mr Scholz would be disadvantaged if the appeal is determined ‘on the papers.’ Further having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by the Croghans 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 amount of compensation, at issue on appeal in this matter exceeds $5,000 such that section 352(2)(a) is satisfied. Section 352(2)(b) is satisfied as the appeal concerns an approximate 2 ½ year closed period of compensation and the extent of Mr Scholz’s continuing entitlement to compensation.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
SUBMISSIONS ON APPEAL
On appeal Mr Scholz submits:
·The Arbitrator failed to consider his claims for weekly compensation in respect of the period 22 February 2001 to 29 June 2003.
·The Arbitrator failed to give reasons in respect of the exercise of his discretion to reduce the weekly compensation payments from $245 to $200.
In reply, the Croghans submit that:
·In the periods 22 February 2001 to 29 June 2003 and 12 August 2003 to 28 January 2004 Mr Scholz had unrelated health problems which would have prevented him from working in any event, and that Mr Scholz had not been looking for work because of these unrelated health problems.
·The Arbitrator was correct in exercising his discretion to reduce the weekly payments to Mr Scholz, as:
- Mr Scholz’s tax returns established that for the financial years 30 June 1996 to 30 June 2001, Mr Scholz’s weekly income was less than $645 per week as found by the Arbitrator to be his average weekly earnings but for injury.
- Mr Scholz was not, during the relevant period, looking for work.
DISCUSSION AND FINDINGS
Mr Scholz’s entitlements in the periods 22 February 2001 to 29 June 2003 and 12 August 2003 to 28 January 2004
There is no dispute Mr Scholz claimed compensation from 22 February 2001 to date and continuing. The Arbitrator in his statement of reasons awarded Mr Scholz weekly compensation payments from 30 June 2003 to 11 August 2003. The Arbitrator did not then deal with the period 12 August 2003 to 28 January 2004. The Arbitrator also awarded Mr Scholz weekly compensation payments with respect to partial incapacity from 29 January 2004 to date and continuing.
The Arbitrator failed to deal with Mr Scholz’s claim for compensation in respect of the two periods 22 February 2001 to 29 June 2003 and 12 August 2003 to 28 January 2004 either directly or inferentially. The Arbitrator’s failure to deal with these periods amounts to a reviewable error. In order to determine whether it is appropriate to remit the claim to an Arbitrator for re-determination or to determine Mr Scholz’s entitlement to compensation in respect of these periods myself, it is necessary to review the evidence that was before the Arbitrator and the Arbitrator’s decision.
The Arbitrator, having considered the evidence of Mr Scholz stated at paragraph [29]:
“I accept the Applicant as a witness of credit.”
Mr Scholz’s evidence in respect of the relevant period was (transcript, page 3 lines [35] to [50]):
“Q.And you stopped work in your own business, on 22 February 2001?
A.That’s correct.
Q.When was it that you noticed a problem with your left wrist? How long before you stopped work approximately?
A.Approximately 18 months before.
Q.And that was-what did you notice about your left wrist?
A.It got increasingly sorer and started to swell up, painful to move.
Q.And why did you stop work?
A.It swelled up completely, and I couldn’t touch it and it just -- --
Q.Right.
A.I’m not sure what you call it. It went altogether.”
In addition to his left wrist problems Mr Scholz gave evidence about problems with his left elbow. Mr Scholz said he had problems with his left elbow for about 18 months before June 2003. He said that his left elbow became increasingly “sorer”, “swollen” and felt “crunchy.”
Mr Scholz was not cross-examined in respect of his reasons for giving up work in 2001, nor was he cross-examined in respect of the onset of symptoms in his left elbow.
There was a conflict of medical evidence in respect of incapacity and the relationship between Mr Scholz’s left elbow problems, and his work injury. The Arbitrator accepted the evidence of Dr Neil Berry (surgeon) in respect of these issues. The Arbitrator, said [29]:
“I accept the Applicant as a witness of credit. I further accept the assessment of Dr Neil Berry, dated 7 April 2004 as a more comprehensive and up to date report submitted in the proceedings. In the circumstances, I accept that the Applicant could not return to full time duties or be able to sustain himself in his own business.”
Relevantly, Dr Berry’s report contained the following history and diagnosis:
“He continued to work with some degree of pain in his wrist but by February 2000 [sic] the patient developed marked swelling in the left wrist and also limited movement and found that in many activities he was resting the left arm on the elbow in order to be able to get the wrist into a usable position. He also developed a swelling on the elbow.”
Later in his report, the doctor said:
“I would therefore be of the opinion that his left arm symptoms and disabilities are a direct consequence of his work injury.
On the basis of today’s examination, if one puts aside the patient’s back and right foot problems, the left arm disability is sufficient to preclude him from working as a fitter/welder and machinist. He would be fit for lighter duties, which did not require the forceful and repetitive use of the left arm.”
The Arbitrator’s award of weekly compensation payments commenced on 30 June 2003. I infer that the Arbitrator chose this date because it is when Mr Scholz was admitted to St Luke’s Hospital to have the foreign bodies removed from his left wrist. This, however, does not explain why he did not deal with the periods: 22 February 2001 to 29 June 2003 and 12 August 2003 to 28 January 2004.
Based on the evidence before the Arbitrator and the Arbitrator’s uncontested findings, there is no reason to infer other than that Mr Scholz’s incapacity in the period 22 February 2001 to 29 June 2003 was at least equivalent to his incapacity (other than periods of total incapacity) that was found to exist by the Arbitrator after 30 June 2003. If anything, the removal of the foreign bodies on 30 June 2003 should have improved his capacity to work.
The Arbitrator made the following findings in respect of Mr Scholz’s entitlement to weekly compensation payments from 30 June 2003:
(i)The weekly amount the Applicant would have been earning, but for the injury is agreed at $645 per week gross.
(ii)Secondly, I am required to determine the weekly amount that the Applicant is earning or would be able to earn in suitable employment. I am satisfied that the Applicant has the capacity to earn up to $400 per week gross.
(iii)The difference between the weekly amount he would have earned and the amount that I have determine he could earn in similar employment is $245 gross per week.
The Arbitrator’s findings make it clear that in the period 12 August 2003 to 28 January 2004 Mr Scholz was entitled to weekly compensation payments on the basis of partial incapacity, in the sum of $200 per week (after the Arbitrator exercised his discretion). It would seem that the only explanation as to why the Arbitrator failed to award compensation during this period was that the Arbitrator forgot.
The parties have not in this appeal, attempted to disturb the Arbitrator’s findings as set out in paragraph 28 above. It is desirable, if possible, that a Presidential Member who upholds an appeal finally determines the matter (see Chubb Security Australian Pty Ltd v Trevarrow [2004] NSWCA 344 (‘Chubb’)). In this matter, I believe it is appropriate for me to determine Mr Scholz’s entitlement to compensation in respect of the periods that the Arbitrator failed to determine. I am of this view for the following reasons:
·Mr Scholz’s credit is not an issue.
·The Arbitrator has determined Mr Scholz’s entitlement after 30 June 2003 under section 40 of the 1998 Act. The parties have not sought to interfere with this finding. Logically, based on the lay and medical evidence accepted by the Arbitrator, Mr Scholz’s work injury induced incapacity prior to 30 June 2003 would be at least equivalent to his work injury induced incapacity after 30 June 2003.
·The Arbitrator applied the correct methodology (except for his use of the phrase: “has the capacity to earn up to” in subparagraph (ii)) in determining Mr Scholz’s entitlement to weekly compensation payments after 30 June 2003.
It follows therefore that in respect of the period 22 February 2001 to 29 June 2003 the difference between the weekly amount that Mr Scholz would probably have been earning, as a fitter and turner, but for injury and the average weekly amount, which Mr Scholz would be able to earn in some suitable employment, from time to time after his injury is $245 per week.
In respect of the period 12 August 2003 to 28 January 2004, the Arbitrator has already made findings (the Arbitrator in his summary of findings dates partial incapacity from 1 July 1993. This is clearly a typographical error for 1 July 2003) which would entitle Mr Scholz to weekly compensation payments of $245 per week subject to the exercise of the discretion under section 40 of the 1998 Act.
This leaves the final stage to be determined under section 40 of the 1987 Act: are there reasons to exercise discretion to adjust the mathematical difference of $245 per week?
The Arbitrator’s failure to give reasons in respect of the exercise of the discretion under section 40 of the 1987 Act
The Arbitrator’s reasons for exercising his discretion under section 40 are contained in a single sentence:
“In my discretion, I find in all the circumstances that a proper award pursuant to
section 40 is $200 per week based on the reasons already given as to his
considerable experience and ability.”
To the extent that reasons can be distilled from the Arbitrator’s decision it would seem that the Arbitrator exercised his discretion to reduce Mr Scholz’s weekly compensation under section 40 on the basis of Mr Scholz’s ability to earn in suitable employment from time to time, after his injury. That finding falls into the same error the trial judge fell into in Mitchell v Central West Health Service (1997) 14 NSWCCR 526 (‘Mitchell’). The court consisting of Mason P, Beazley JA and Grove A-JA said (page 534):
“The discretion is a broad one and it is proper to refrain from endeavouring to define its outer limits. Nevertheless it may be possible to identify a situation where discretion has miscarried because of reference to an extraneous factor: R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 and 49. In our view this can be done here, not only because the reasoning discloses a punitive element, but because 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. The matters to which Egan A-CCJ referred go directly to the “worker’s ability to earn in the general labour market reasonably accessible to the worker” and are therefore required (by section 40(3)(a)) to be taken into account in the section 40(2)(b) exercise. In consequence, there can be no justification for taking into account in the additional discretionary phrase.”
The Arbitrator was in error in basing the exercise of his discretion upon Mr Scholz’s “considerable experience and ability.” These factors “go directly to the worker’s ability to earn in the general labour market reasonably accessible to the worker.” As such, these factors are taken into account in assessing ‘stage two of a section 40 assessment’ and not the discretionary phase.
Having upheld the second basis of Mr Scholz’s appeal the question once again arises as to whether the matter should be remitted to an Arbitrator to determination the discretionary element of section 40 according to law. As there is no issue as to Mr Scholz’s credit, there would be no procedural advantage in referring the matter back to the Arbitrator.
Section 40 discretion
A review of the authorities establishes the following principles applicable to the section 40 discretion:
·If the discretion is exercised the Commission is required to give reasons as to why the discretion has been exercised (Pettitt v Dunkley (1971) 1 NSWLR 377).
·The discretion is a broad one (‘Mitchell’).
·The discretion should not be exercised punitively (‘Mitchell’).
·Factors which go to the worker’s ability to earn in the general labour market reasonably accessible to the worker should not form the basis for the exercise of discretion (‘Mitchell’).
·In the exercise of discretion, the reduction to nil is not permissible (Kesen v Luke Singer Pty Ltd (1989) 18 NSWLR 566).
·Retirements from the workforce, imprisonment and statutory prohibitions against working in particular industries have been held to be relevant considerations in the exercise of the discretion (SRA v Davis (1995) 11 NSWCCR 314; Pratt & Another v Claydon (1996) 14 NSWCCR 86).
Applying those principles to the undisputed findings of the Arbitrator in Mr Scholz’s claim, I am of the view that there are two distinct periods which require analysis as to whether the ‘section 40 discretion’ should be exercised:
·22 February 2001 to 30 April 2006; and
·1 May 2006 to date and continuing.
In the first period (22 February 2001 to 30 April 2006) Mr Scholz gave the following evidence which would impact on the discretionary elements under section 40 of the 1987 Act (page 4 lines [45] to [50]):
“Q.There is mention in the medical reports of you having a problem with, I think it’s your right foot. What’s the situation with your right foot?
A.It’s been operated on and seems to be healing up now and I can put shoes on now.”
Later in cross-examination Mr Scholz said (page 6, line [5]):
“Q.Have you been looking work?
A.No, I haven’t been able to because of the injury to my foot. I couldn’t wear shoes until four or five weeks ago.”
In re-examination Mr Scholz said (page 9, line [50]):
“Q.And since the operation to your right foot in April this year, you said, you’re now back to wearing shoes. Is that correct?
A.Yeah, correct.”
Mr Scholz’s evidence establishes that because of his (unrelated to the work injury) right foot problems he was unable to look for work (he could not place a shoe on his right foot) so that he could not work up until April 2006 (30 April 2006) when he underwent operative treatment, which has now allowed him to wear shoes. I believe that the Arbitrator’s discretion to reduce his weekly compensation payments from $245 to $200 per week is appropriate in respect of the periods Mr Scholz was unable to look for work because of an unrelated health problem, was justified.
In re-determining the award I intend to accept the Arbitrator’s assessment of the appropriate discretionary allowance and apply that to the period 22 February 2001 to 30 April 2006 when Mr Scholz was unable to work because of his right foot problem.
In the second period (1 May 2006 to date and continuing) there were no non work-related health impediments to Mr Scholz exercising his residual earning capacity. The Croghans have submitted on appeal that in the financial years: 1996 to 2001 Mr Scholz’s business, on a gross basis, generated income of between $19,867 and $31,747 per financial year. It is submitted that this resulted in Mr Scholz having an income of between $5,703 and $10,670. These submissions were not made before the Arbitrator nor was Mr Scholz asked any questions in relation to these matters in cross-examination. There are financial advantages additional to the actual income in being self-employed and running a business. Mr Scholz’s income seems to decrease in the latter years leading up to 2001. This is consistent with his evidence of deterioration of his left arm in that period. In any event, but for his left arm injury, Mr Scholz would be in a position to obtain work, in his trade as a fitter and machinist. In all the circumstances, I do not believe it is appropriate to exercise the discretion to reduce Mr Scholz’s weekly entitlement to compensation from 1 May 2006.
Finally, the Croghans have submitted that contrary to the Arbitrator’s finding, they did not agree that Mr Scholz’s earnings but for injury would have been $645 per week. The ‘first stage of a section 40 calculation’ requires: the calculation of 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. The Croghans concede on appeal that the amount of $645 per week is the comparable rate of a tradesman of Mr Scholz’s qualifications as a fitter and machinist. Mr Scholz was working at the time of his injury as a full-time casual, in his trade as a fitter and machinist. It follows, therefore, that the appropriate figure in respect of first stage of the section 40 assessment (whether agreed to or not, by the Croghans) is $645 per week as found by the Arbitrator.
It follows therefore, that I re-determine Mr Scholz’s entitlements to be (other than during the period that the Arbitrator found Mr Scholz to be totally incapacitated): $200 per week from 22 February 2001 to 30 April 2006 and $245 per week from 1 May 2006 to date and continuing.
DECISION
The decision of the Arbitrator, dated 30 September 2005, is revoked and the following decision is made in its place:
1.That the Respondent [BR & FT Croghan trading as Dubbo Ex-Government Trucks and Plants] pay the Applicant’s [Mr Scholz’s] expenses under section 60 of the Workers Compensation Act 1987 on production of tax invoices and/or receipts.
2.That the Respondent pay the Applicant weekly compensation at the rate of $200 per week from 22 February 2001 to 29 June 2003 pursuant to section 40 of the Workers Compensation Act 1987.
3.That the Respondent pay the Applicant weekly compensation at the rate of $645 per week from 30 June 2003 to 11 August 2003 pursuant to section 36 of the Workers Compensation Act 1987.
4.That the Respondent pay the Applicant weekly compensation at the rate of $200 per week from 12 August 2003 to 30 April 2006, pursuant to section 40 of the Workers Compensation Act 1987.
5.That the Respondent pay the Applicant weekly compensation at the rate of $245 per week from 1 May 2006 pursuant to section 40 of the Workers Compensation Act 1987, such weekly payments to continue in accordance with the provisions of the Act.
6.That the Respondent pay the Applicant’s costs as agreed or assessed.
COSTS
The Respondent is to pay the Appellant’s cost of the appeal.
Robert Harrington
Acting Deputy President
4 September 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBERT HARRINGTON, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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