Scone Shire Council v Sullivan
[2007] NSWWCCPD 239
•7 December 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Scone Shire Council v Sullivan [2007] NSWWCCPD 239
APPELLANT: Scone Shire Council
RESPONDENT: Colin Sullivan
INSURER:CGU Workers Compensation (NSW) Ltd
FILE NUMBER: WCC18291-06
DATE OF ARBITRATOR’S DECISION: 20 June 2007
DATE OF APPEAL DECISION: 7 December 2007
SUBJECT MATTER OF DECISION: Section 40 of the Workers Compensation Act 1987; section 40 discretion
PRESIDENTIAL MEMBER: President Greg Keating DCJ
HEARING:On the papers
REPRESENTATION: Appellant: Sparke Helmore
Respondent: Firths
ORDERS MADE ON APPEAL: Paragraph 1 of the decision of the Arbitrator dated 20 June 2007, is revoked and the matter is remitted to different arbitrator for determination afresh of the Worker’s entitlement to compensation pursuant to section 40 of the Workers Compensation Act 1987 in accordance with these reasons.
Paragraphs 2 to 4 of the Arbitrator’s decision dated 20 June 2007 were not the subject of appeal.
No order as to costs of the appeal.
BACKGROUND TO THE APPEAL
On 18 July 2007 Scone Shire Council (‘the Council/Appellant’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 20 June 2007. The Respondent to the Appeal is Mr Colin Sullivan.
Mr Sullivan was born on 26 May 1966 and is 41 years old. Prior to commencing work with the Council he worked in various labouring jobs and later as a roustabout for ten years after which he commenced work with the Council as a driver/labourer/machine operator in or about 1993.
On 5 May 1998 during the course of his employment with the Council Mr Sullivan suffered injury to his neck and left shoulder when the vehicle in which he was a passenger struck a cattle grid and he was propelled forward into the windscreen and dashboard. At the time of the injury he was not wearing a seatbelt. He was treated at Scone hospital and underwent radiological investigations. There was a suggestion that it was initially thought that he had suffered a fracture to the C6 cervical vertebra that was later proved not to be the case, although he has continued to complain of neck pain and stiffness. He also experienced left shoulder pain that worsened in 2000 and he underwent arthroscopic acromioplasty and subacromial decompression at the hands of Dr Creer in August 2001.
Mr Sullivan initially brought proceedings in the Commission for lump sum compensation (WCC5910-2003). He was examined by an Approved Medical Specialist (‘AMS’), Dr Bates who issued a Medical Assessment Certificate and the claims settled with a Certificate of Determination issuing from the Commission on 27 November 2003, detailing an award in favour of Mr Sullivan pursuant to section 66 of the Workers Compensation Act 1987 (‘the 1987 Act’) in respect of 8% permanent impairment of the neck, 10% permanent loss of efficient use of the left arm at or above the elbow and $9,300.00 pursuant to section 67 for pain and suffering.
The Council provided Mr Sullivan with alternative duties. He had shoulder surgery in August 2001, after which he underwent further rehabilitation but he was unable to upgrade to his pre-injury duties and his employment was terminated on 22 August 2002.
On 20 May 2003 Mr Sullivan was involved in a motor vehicle accident, unrelated to his employment. He was driving at somewhere between 40 and 60 kilometres per hour and his vehicle struck a ute attempting to perform a U turn. Mr Sullivan attended at his general practitioner on 21 May 2003 complaining of increased right-sided neck pain.
With the exception of two days bus driving in 2005, Mr Sullivan has not worked since ceasing work with the Council. He however received weekly compensation payments for all periods of incapacity until 10 January 2006 when payments stopped after the workers compensation insurer (CGU Workers Compensation Ltd) declined ongoing liability by letter dated 30 November 2005.
On 19 December 2006, Mr Sullivan lodged an ‘Application to Resolve a Dispute’ (‘the Application’) with the Commission seeking weekly compensation of $800.00 per week from 30 November 2005 to date and continuing, he claimed three dependant children and an addition claim was made for compensation pursuant to sections 66 and 67. In its reply, the Respondent denied Mr Sullivan has any ongoing incapacity and disputed that he was entitled to further compensation pursuant to sections 66 and 67.
When the parties were unable to resolve the claim, the matter proceeded to arbitration hearing on 4 April 2007. At the hearing both parties were represented and Mr Sullivan gave oral evidence and was cross-examined. The Arbitrator issued a Certificate of Determination dated 20 June 2007 accompanied by a written statement of reasons bearing the date 4 April 2007.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 20 June 2007, records the Arbitrator’s orders as follows:
“The determination of the Commission in this matter is as follows:
1. An award for the Applicant in the sum of $405.55 per week as and from 10 January 2006 to date and continuing.
2. Respondent to meet the reasonable and necessary medical expenses incurred by the Applicant pursuant to Section 60;
3. The Applicant to be referred to an Approved Medical Specialist for the determination of further impairment relative to the neck and the left arm at or above the elbow;
4. The Respondent to pay the Applicant’s costs as agreed or assessed.”
ISSUES IN DISPUTE
The issue in dispute in the appeal are:
a. Did the Arbitrator err in the application of the discretion in section 40(1) of the 1987 Act?
b. Did the Arbitrator err “in taking into account matters properly already considered in the second step of the Mitchell test when deciding not to apply his discretion in the fourth step of the Mitchell test”?
REVIEW
A Presidential member’s powers in conducting a review pursuant to section 352 of the 1998 Act, were discussed in The King Island Company Limited v Deery [2005] NSWWCCPD 1. Byron DP said:
“A Presidential Member on appeal has a specific and limited role in the review of a decision of an Arbitrator. The review is not a rehearing. The Presidential member is not dealing with the matter de novo and is not arriving at a fresh decision based on all of the evidence available at a later time (Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Builders Licensing Board v Sperway Constructions (Sydney) Pty Ltd (1976) 135 CLR 616). The powers of the Presidential Member to revoke the decision pursuant to section 352(7) of the 1998 Act and to substitute a new decision in its place, are exercisable only where it is demonstrated that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172). Alternatively, the Presidential Member may remit the matter back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions made.” (at [19])
In Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34, it was confirmed that the review process was broader than correction of error of the kind identified in House v The King. Bryson JA said at:
“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.”
McColl JA in South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16 at [134] quoted this passage with approval in holding that it was “an over-generalisation” 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” (at [133]).
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 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.”
Before an Arbitrator’s decision will be revoked on appeal it must be demonstrated that the decision contains, or has resulted from, an error of fact, law or discretion. The error must be such that, but for it, a different decision should have been made (see Snow Confectionary Pty Ltd v Askin [2004] NSWWCCPD 56; Section 294 of the 1998 Act; YG & GG v Minister for Community Services [2002] NSWCA 247; Absolon v NSW TAFE [1999] NSWCA 311).
I intend to apply the above principles in the matter before me.
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.
I am satisfied that the appeal reaches the monetary threshold requirements to satisfy the provisions of section 352 and that the appeal is not an interlocutory appeal pursuant to section 352(8) of the 1998 Act.
The appeal was lodged on 18 July 2007, within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Leave to appeal is granted.
SUBMISSIONS
In support of the ground of appeal that the Arbitrator erred in applying the discretion in section 40(1) of the 1987 Act, the Appellant submits that:
“The Arbitrator deals with the discretion referred to in the fourth step in Mitchell v Central West Health Service (1997) 4 NSWCCR 526, at paragraph 36(d) of the judgment (p.36 (d) J)
If the Arbitrator found a self induced diminution of earning capacity and applied that to his calculation pursuant to section 40(2) (b) then the Appellant has no objection. Mitchell v Central West Health Service (1997) 4 NSWCCR 526
However, the Arbitrator is required to take all factual matters into account in the fourth step in the section 40 (1) exercise (Mitchell above) see Australian Wire Industries Pty v Nicholson 1 NSWCCR p 50 per McHugh JA at p 55A:
‘It is this stage that the Compensation Court can and must examine all the facts. The maters which can be examined include such matters as retirement, other supervening illnesses or injuries, the personal employment history or the worker, and so on.’
Failure to undertake that step represents an error of law.”
The Appellant also submits the Arbitrator should have taken into account the following matters in relation to Mr Sullivan:
a) the subsequent development of seizures/fits;
b) the long term problem with alcohol;
c) the more recent motor vehicle accident on the 20 May 2003, resulting in increased neck pain and the onset of right shoulder problems and the failure to inform Dr Bates, AMS, of this accident;
d) his completion of a TAFE course and his failure to actively job search;
e) his ability to play touch football post injury, and
f) the lack of medical evidence supporting his alleged inability to sit for prolonged periods, his self limiting behaviour during rehabilitation assessment contrasting with his previous ability to work on light duties five hours per day five days per week.
No submissions are made to elaborate on, or support, the ground of appeal that the Arbitrator erred “in taking into account matters properly already considered in the second step of the Mitchell test when deciding not to apply his discretion in the fourth step of the Mitchell test.”
The relief sought by the Appellant is that “the orders and determination of the Arbitrator be revoked and the matter remitted to the Commission for determination in accordance with the Presidential member’s findings.”
In reply Mr Sullivan submits:
1) whilst supervening injuries and illnesses should be taken into account in the exercise of discretion, the mere existence of supervening injuries and illnesses does not “ as a matter of course” cause the discretion to be exercised in favour of the employer (see Anijies Pty Limited t/as Anita Villa v Merchant [2006] NSWWCCPD 118 (‘Merchant’));
2) there is no demonstrable error in the Arbitrator’s calculating the section 40 award. The Arbitrator had proper regard to relevant matters referred to in the Appellant’s submissions on appeal (see [25] (a)-(f) above);
3) matters raised in (d)-(f) in paragraph [25] above are relevant to the section 40 entitlement, they are not matters that go to the discretion “or that would be in any way determinative of the matter”;
4) “It is submitted that the approach complained of in paragraph 2 of the grounds [see paragraph [26] above] does not disclose an error”, and
5) the Council has failed to demonstrate that the Arbitrator erred in fact, law or discretion and the Arbitrator has not erred and has had proper regard to all relevant matters as raised by the Council in the determination of the section 40 award.
LEGISLATION
The five step test for calculating the award of weekly compensation pursuant to section 40 of the 1987 Act is set out by the Court of Appeal in Mitchell v Central West Health Service (1997) 4 NSWCCR 526 (‘Mitchell’) (at 529-350) as follows:
“1.To determine the weekly amount the worker would probably have earned but for the injury (section 40 (2)(a)).
2.To determine ‘average weekly amount that the worker is earning or would be able to earn in some suitable employment from time to time after the injury’ (section 40(2)(b)). Section 40(3) provides that the determination of this amount 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’
3.To subtract the figure derived from 2.from the figure derived from 1. (section 40(2))
4.To decide whether and to what extent the reduction calculated as above bears ‘such relation to the amount of that reduction as may appear proper in the circumstances of the case’ (section 40(1)).
5.To make an award in the amount arrived at in step 4.”
Section 40(1) requires the determination of the average weekly amount that the worker would have earned but for the injury. It is a hypothetical assessment based on the assumption that the worker’s pre injury work would have continued (see Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50 (‘Nicholson’)).
Section 40(2)(b) requires the determination of what the worker is earning or is capable of earning in suitable employment after the injury, subject to the provisions of section 40(3) and section 43A (step 2).
Section 40(3) provides:
“(3) Ability to earn in suitable employment
The determination of the amount that 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.”
Section 43A provides:
“43A Suitable employment
(1) For the purposes of sections 38, 38A and 40:
‘suitable employment’, in relation to a worker, means employment in work for which the worker is suited, having regard to the following:(a) the nature of the worker’s incapacity and pre-injury employment,
(b) the worker’s age, education, skills and work experience,
(c) the worker’s place of residence,
(d) the details given in the medical certificate supplied by the worker,
(e) the provisions of any injury management plan for the worker,
(f) any suitable employment for which the worker has received rehabilitation training,
(g) the length of time the worker has been seeking suitable employment,(h) any other relevant circumstances.”
AUTHORITIES
Consideration of the exercise of discretion in section 11 of the Workers Compensation Act 1926 (which is in substantially the same terms as section 40 of the 1987 Act) was discussed by Kirby P in Australian Wheat Board v Pantaleos [1984] 3 NSWLR 530, where his Honour held:
“It is here [at the exercise of discretion] that artificialities that may result from the hypotheses required in the first stage can be adjusted, by reference to realities of law and facts proved in the evidence of the particular case.”
In Australian Wire Industries v Nicholson (1985) 1 NSWCCR 50 (‘Nicholson’), a case that also involved the application of section 11 of the Workers Compensation Act 1926, the Court of Appeal held that the fact that a worker was compelled to retire did not defeat his claim for weekly compensation. McHugh J, in discussing the steps required before an award of partial incapacity is made, noted that the first step in section 11(1) in determining what a worker would probably have earned is based on the hypothesis that, but for the injury, the worker retained the same or comparable employment, “Whether or not the actual facts of the worker’s employment are consistent with that hypothesis is beside the point” [at 54D]. Step two requires a determination of what the worker is or is capable of earning and the difference between the two figures marks “the upper limit of the compensation that can be awarded”[at 54]. It is at step three, with the exercise of judicial discretion that the “…actual as opposed to the hypothetical circumstances of the employment are relevant…” (emphasis added)
In relation to the exercise of discretion His Honour stated at [55A]:
“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.”
In the recent Court of Appeal decision of Singh v TAJ (Sydney) Pty Limited [2006] NSWCA 330, the exercise of the decision maker’s discretion was explained by Santow JA at 58.
“…The discretion is simply to be exercised having regard to those circumstances relevant to whether there would be a disproportionately high level of weekly compensation if the figure were left at the level of reduction in weekly earnings calculated in accordance with the earlier hypothetical process. …”
As was observed by the Court in Mitchell, the discretion exercised in step 4 “is a broad one and it is proper to refrain from endeavouring to define its outer limits”(at page 534F).
It has been held to be appropriate to use the discretion to reduce the arithmetical difference between steps 1 and 2 in the following situations: where the worker has retired or suffered some supervening illness or injury (Nicholson at 55, and Australia Iron & Steel Pty Ltd v Elliott (1966) 67 SR (NSW) 87); where the worker had been retired for two years before the injury which occurred during a short period of work which was a one-off job (Pratt v Claydon (1996) 14 NSWCCR 86); where the worker was imprisoned during a period of partial incapacity (Stranlund v Mid Coast Meat Co Pty Ltd (1999) 19 NSWCCR 91), since the injury the worker has been dismissed because of a criminal conviction (Morgan v Commissioner for Railways [1972] WCR 33); in a situation where before the injury the worker chose to work for only limited periods each year (May v Eisenhower [1967] WCR 137), and in circumstances where the worker was pregnant (Wrigley Co Pty Ltd v Holland (2002) NSWCCR 463).
In Merchant, Roche DP held at paragraph [48] that the Arbitrator’s decision not to reduce the amount of compensation awarded, despite the fact the worker in that case had suffered a stroke at a date after the work injury, disclosed no error:
“48. The Arbitrator considered the impact of the stroke on the Respondent Worker and concluded that she was not satisfied that it had “impeded her ability to earn in the open labour market beyond the impediments as a result of the injury” (Reasons paragraph 54). This finding was open to the Arbitrator. In assessing whether an error has been made in the exercise of discretion the Commission noted in Rohloff v Diacut Pty Limited (in Liquidation) [2005] NSWWCCPD 17 at [26]:
“It is only where the Arbitrator can be said to have failed to exercise his discretion fairly and according to law that his decision should be overturned. This occurs where the Arbitrator has acted upon a wrong 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] HCA 40; (1936) 55 CLR 499 at 504-505; Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 520, Re National Roads and Motorists’ Association Ltd [2003] FCAFC 206 at [21] to [21]).”
In exercising the section 40 discretion it is never appropriate to reduce the arithmetical difference to nil (Kesen v Luke Singer Pty Ltd (1989) 5 NSWCCR 298).
DISCUSSION AND FINDNGS
Section 40 calculation
The Appellant’s submissions that: “If the Arbitrator found a self induced diminution of earning capacity and applied that to his calculation pursuant to section 40(2)(b) then the Appellant has no objection; Mitchell v Central West health Service (1997) 4 NSWCCR 526” and that the Arbitrator erred “in taking into account matters properly already considered in the second step of the Mitchell test when deciding not to apply his discretion in the fourth step of the Mitchell test” are ambiguous. I have interpreted them as submitting that the Arbitrator erred in taking into account factors in step 4 of the test in Mitchell that he should have considered in step 2 and therefore his reasoning and determination in relation to both step 2 and step 4 are challenged on this appeal.
The Appellant does not challenge the Arbitrator’s findings that Mr Sullivan has an ongoing partial incapacity for work as a result of the neck and shoulder injuries sustained in the course of his employment on 5 May 1998. The Arbitrator, at [35] in his reasons, notes that the parties agreed that the amount Mr Sullivan would earn but for the injury is $670.00 per week.
Mr Sullivan relied on the medical report from Dr Patrick, surgeon dated 26 June 2006. Dr Patrick diagnosed a significant cervical zygophyseal joint injury, some probable thoracic facet joint injury and post traumatic subacromial bursitis / impingement of the left shoulder. He considered that Mr Sullivan was permanently unfit for his pre injury duties and it was likely that his condition had deteriorated since the examination by Dr Bates in September 2003. He concluded that Mr Sullivan was fit for part-time work not involving heavy lifting or activities requiring the left arm outstretched or overhead.
Mr Sullivan also relied on a number of rehabilitation reports dated from 7 June 2001 to 23 August 2002. It would appear from these reports that the Worker was referred at an earlier date to the rehabilitation provider, although the earlier reports were not in evidence. The report dated 7 June 2001 records that he was examined on 28 March 2001 and 14 May 2001 at which time his condition remained unchanged and he complained of neck and shoulder pain and “depression due to his lack of activity and social interaction.” The reports record that following the shoulder surgery Mr Sullivan participated in rehabilitation and selected duties in a position in the parks and garden area of the Council and by 26 March 2002 was working 6 hours a day, 5 days per week. His duties were upgraded to 8 hours a day performing traffic control duties. It would appear that Mr Sullivan experienced exacerbations of his symptoms and a functional assessment on 29 July 2002 demonstrated decreased fitness and lifting capacity. As a result of the Council’s inability to provide suitable duties on an ongoing basis Mr Sullivan’s employment was terminated on 22 August 2002.
Dr Abbott, the treating general practitioner, in a report dated 7 April 2006 concluded that with “a major limitation of left shoulder function” Mr Sullivan would have a lifting restriction of 2.5kg to 5 kg in the right arm and “minimal for the left”.
Dr Bates, AMS, examined Mr Sullivan on 16 September 2003. He obtained a history from Mr Sullivan that he had headaches and neck pain following the injury and at a later time developed pain, sensory changes and reduced strength in his left shoulder, and he underwent shoulder surgery and the rehabilitation programme. Dr Bates concluded that Mr Sullivan was not fit for his pre injury duties driving trucks, heavy equipment and performing maintenance activities. The doctor diagnosed a musculo-ligamentous injury of the neck, and left shoulder, an intra-articular fracture of the left acromio-clavicular joint and depression and adjustment disorder associated with chronic pain. Despite these conclusions, Mr Sullivan has not claimed psychological injury in the form of depression and adjustment disorder.
Mr Sullivan relied on a statement dated 19 October 2006, in which he stated that he had always been employed in physical labouring work and that since the injury his employer had provided him with a ‘made up’ position performing clerical filing duties, which was ultimately withdrawn. He confirmed that his sporting and recreational activities which included touch football, squash, tennis and golf were curtailed by the injury and at the time of signing the statement were “virtually non existent”. Mr Sullivan stated that due to his age, education and experience and the state of the labour market in Scone, he did not believe “that there were any real prospects of returning to any suitable employment.”
At the arbitration hearing Mr Sullivan gave oral evidence and was cross examined in relation to his capacity for work (transcript pages 2-11). He stated that he experienced difficulties whilst undertaking the TAFE course in 2003 because of prolonged sitting and that he needed to regularly change positions and walk around. He also gave evidence that the only work he had undertaken since his employment was terminated by the Council was driving a courtesy bus for Scone RSL club on two consecutive night on or about 31 December 2005 and that he could not sit in one position for too long and did not believe that he could cope after two nights. He also conceded that on the second night’s driving he suffered a seizure.
Mr Sullivan also gave evidence that he had not applied for work because he believed that he was “unreliable” because of fluctuations in his pain levels. He conceded however, that on a good day he could work 2 to 3 hours light duties (transcript page 4, line 45).
Mr Callaway, counsel for Mr Sullivan submitted in relation to Mr Sullivan’s capacity for employment that he had no tertiary qualifications, he had been a council worker in Scone, following the shoulder surgery he returned to light duties and had only worked two nights driving since ceasing work with the council and “he experienced pain, discomfort when he was driving the bus and says that he's not tried to do that again because he couldn't cope with it.” (transcript, page 12 line 9 ) and:
“…My respectful submission is that he's effectively - notwithstanding he's got some residual capacity and he's not totally incapacitated in terms of being unable to function, he's effectively totally incapacitated because of his disabilities combined with the physical limitations.” (transcript page 15,line 38)
The Council relied on the report of Dr Thomson dated 17 November 2005 who obtained a consistent history of the work injury. He noted that the majority of radiological investigations were predominantly normal and he was of the opinion that the Worker had recovered from the effects of the work injuries. He concluded that there was no physical diagnosable cause of his symptoms and that Mr Sullivan exhibited inconsistencies between formal and informal examination and was fit for his pre-injury duties.
The Council also relied on a report from Dr Wong, general practitioner, dated 27 September 2005, in which the doctor confirmed that he had treated Mr Sullivan on five occasions since 2004. On 23 September 2005 Mr Sullivan complained of increasing neck and bilateral arm symptoms. The doctor certified him totally unfit but expected that he should be able to resume light duties.
Dr Posel, treating orthopaedic surgeon, in a report dated 6 December 2002, concluded that he could find no ongoing pathology in the left shoulder and that he should be fit to return to his pre-injury duties.
A functional and vocational assessment report prepared by Workforce Australia dated 26 August 2005 identified service station console operator, delivery driver and process worker as suitable occupations but concluded that Mr Sullivan’s employability was poor due to his “…pain experience, perceived functional capabilities, self limiting behaviour in the Physical Work Performance Evaluation, current medical certification, limited transferable skills and qualifications and limited labour market and availability of suitable jobs within Mr Sullivan’s capabilities and restrictions” (page 3).
Mr Baker, counsel for the Appellant, in relying on the clinical notes from Dr Abbott’s surgery for the period 19 October 1998 to 17 January 2007, referred to inconsistencies in attendances and in the histories given to the various doctors whom Mr Sullivan consulted at the practice. Mr Sullivan’s credit was challenged on his failure to disclose a subsequent motor vehicle accident on 20 May 2003, to Dr Bates, the AMS, at the examination on 16 September 2003, the inconsistent history in relation to his engagement in sporting activities and the development and number of seizures suffered by him since New Years Eve 2005.
Mr Baker on behalf of the Council submitted that:
“So our submission is that he has a capacity to actually earn near enough to the $670 he would have been earning but for the injury. If you're against me on that and you think that he's only fit, for example, for part‑time work, well, the hourly rate of the part‑time work really is between somewhere like $13.50 and about $22 on the figures I just gave you. In our respectful submission, he could do most of that. In our respectful submission, he exaggerates his disability, he's been keen to get on a disability support pension and to retain his benefits and has under whelmed just about everybody who's tried to help him, from the TAFE people through to the CMS, until they eventually gave up. This fellow has other problems, and if you come to a view that he had a loss you need then to review whether or not he's entitled to the whole of the difference between his pre‑injury comparable of $670 and, say, an earning capacity, in our respectful submission, at least in the 500s and determine whether or not he's entitled to the difference, given – ” (transcript page 35-36).
It was further submitted on behalf of the Appellant that Mr Sullivan had an ability to work a 30-hour a week or 6 hours per day earning between $13.50 per hour and $22.00 per hour (transcript page 36, line 3).
The Council submitted forcefully at the arbitration hearing that even allowing for a residual earning capacity of $550.00 per week, at step 2 of the Mitchell test, deducting this figure from $760.00 results in a difference of $210.00 per week and that this amount should be further reduced to reflect the effects of the injury to Mr Sullivan’s neck sustained in the non work related motor vehicle accident on 20 May 2003 and the impact on his employability of a history of heavy alcohol consumption and the development of seizures (see transcript page 36, lines 43-52).
At paragraph [35] of his reasons the Arbitrator completed steps 1, 2 and 3 of the Mitchell test. The Arbitrator noted that the “comparable wage” [probable earnings] was agreed at $760.00. He found that Mr Sullivan had a residual earning capacity of $264.45 per week based on a capacity to work 3 hours per day 5 days per week, and the difference between the two, representing the “upper limit” of compensation payable was $405.55 per week.
The Arbitrator’s statement of reasons demonstrates that he considered the medical and factual evidence, the inconsistencies in Mr Sullivan’s own evidence and his attendances on doctors, and the submissions made by both parties at the hearing, in finding that Mr Sullivan suffered injury to his neck and left shoulder on 5 May 1998, the effect of those injuries continued and that there had been a degree of further deterioration requiring referral to an Approved Medical Specialist. (Reasons, paragraphs [28]-[32]).
In assessing Mr Sullivan’s ability to earn in suitable employment, the Arbitrator was required to take into account all of the factors listed in section 43A and the labour market reasonably accessible to him (section 40(3)). The evidence relevant to the calculation in step 2 included Mr Sullivan’s age, education, training and skills, including his TAFE training and education, his previous work history of physical and labouring jobs, his residence in Scone, and the labour market readily available to him, the rehabilitation he had undergone, the details given in the medical certificates in respect of his fitness for work and the restrictions placed on him, the length of time he has been seeking work, and the nature of his injury and incapacity.
The Arbitrator’s statement of reasons demonstrates that he was mindful of the section 40 exercise and the steps to be taken in determining the award. However his reasoning process in paragraph [35] of his Reasons does not disclose that he considered all of the factors in section 43A and section 40(3) in his determination of Mr Sullivan’s ability to earn in suitable employment and what employment was suitable employment for Mr Sullivan, taking into account the evidence before him, the injury and incapacity. I am therefore satisfied that the Arbitrator’s reasons are not clearly articulated such as to disclose to the parties that he properly considered and weighed and applied the evidence relevant to, and necessary in, determining the Worker’s ability to earn in suitable employment in step 2 before proceeding to then consider the evidence relevant to the exercise of discretion in step 4.
Discretion –step 4
Turning to step 4 and the exercise of discretion under section 40(1), the Appellant challenges the amount of compensation awarded on the basis that the Arbitrator failed to take into account all of the relevant facts in the exercise of his discretion pursuant to section 40(1) and failed to exercise his discretion and reduce the award of weekly compensation to an amount “proper” in the circumstances. The Appellant makes no submissions on what it considers would be an appropriate reduction in the award of compensation, should the appeal succeed, but, rather, seeks that the matter be remitted for redetermination.
The authority of Nicholson requires that “supervening illness or injury” be taken into account by the Arbitrator in assessing whether the “weekly payment of compensation to an injured worker” is in an amount that is “proper in the circumstances of the case” (section 40(1)).
Whilst the Appellant Employer’s submissions in support of this ground of appeal are very brief, it would appear that the thrust of the submission is that Mr Sullivan’s development of seizures and fits, his long term problems with alcohol and the injuries sustained on the motor vehicle on 20 May 2003 resulting in increased neck pain and the onset of right shoulder pain, were supervening illnesses and injuries that needed to be taken into account by the Arbitrator in exercising his discretion.
In addition the Appellant submits that Mr Sullivan’s completion of a TAFE course, his ability to play touch football post injury, the lack of medical evidence supporting his alleged inability to sit for prolonged periods, his self limiting behaviour during rehabilitation assessment, contrasting with his previous ability to work on light duties five hours per day five days per week are also factors relevant to the exercise of the discretion.
Whilst the seizures, the alcoholism and the car accident in May 2003 are relevant matters to be weighed and considered in the Arbitrator’s discretion in determining whether to reduce the amount of the award, the other factors submitted by the Appellant as detailed above, are not matters relevant to step 4 but are matters that lie squarely in the exercise required in step 2. The submission that the Arbitrator was required to consider them in step 4 is misconceived.
Failure to job search is not a matter for either section 40(2)(b) or the discretion.
Mr Sullivan submits that the Arbitrator’s decision discloses no error of fact, law or discretion and the mere existence of supervening injuries and illnesses does not “as a matter of course” cause the discretion to be exercised in favour of the employer (see Merchant).
The Arbitrator, at paragraph [34] of his Reasons, stated:
“I am also mindful of the Respondent’s submissions that some discretion ought be exercised having in mind the Applicant’s unrelated potentially contributing factors to inability to work namely the observations of his treating General Practitioner, Dr Beiboer, where in his clinical notes of 2 January 2007 he opines “Chronic alcoholic. Unreliable historian. Seizures? Seizures recently, painful right shoulder, etc”. However, there is then the subsequent comment by Dr Abbott of 3 January 2007 in which the following comment is made namely “Also getting more frequent fits”. I believe these are issues that need to be brought to account when considering the question of discretion pursuant to Section 40 and the application of the ‘Mitchell’ test.” (emphasis added)
The Arbitrator’s reasons in relation to the exercise of his discretion are set out in paragraph 36 subparagraph (d). He states:
“36 d) In applying any reduction by way of an exercise of discretion, I am mindful I have already alluded to the Respondent’s submissions, however, I am similarly mindful of the fact that the only employment the Applicant has sought, and obtained, is that of a bus driver and as is put to me by the Applicant’s representative, this would continue to pose a problem for the Applicant due to the difficulties with his neck and the need for it to be rotated. There is, therefore, a balancing act between the discretion that I should have regard for in addressing the concerns of the Respondent, namely seizures and alcoholism, as opposed to the inbuilt impediment the Applicant will have in that he has an impairment to the neck. All matters considered, I believe in the circumstance not to apply any discretion. I am also mindful that in having determined the capacity for the Applicant to generate an income, I am taking into account the fact that there may only be a limited amount of available work to the Applicant having regard for the location and employment market generally.” (emphasis added)
In relation to the seizures, the medical evidence is inconclusive as to diagnosis, however, there appears to have been a number of episodes, the first occurring whilst driving the bus in or about New Years Eve 2005. There is reference in Dr McInerney’s letter of referral dated 7 February 2006, to Mr Sullivan lacerating his face during a seizure sustained at his mother’s house and Dr Beilboer records on 2 January 2007, “Chronic alcoholic. Unreliable historian
?seizures recently…..”
The report of Dr Loiselle, from the neurology centre to whom Dr McInerney referred Mr Sullivan, addressed to Dr McInerney dated 10 April 2006 confirms that Mr Sullivan failed to attend the neurology appointment on 10 April 2006 but that the history of at least two seizures would prevent him from driving until he had been on medication for six months and would prevent him continuing as a “passenger driver” (presumably meaning driving a passenger vehicle) for at least five years on medication and after a normal ECG.
Submissions on behalf of Mr Sullivan dealt only cursorily with the matters raised by the Council in pressing the Arbitrator to exercise his discretion to reduce the amount of compensation awarded. Whilst not entirely clear, it would appear that it was essentially submitted on behalf of Mr Sullivan at the arbitration hearing that he was not capable of driving due to the residual neck symptoms from the work injury and that the limitations on driving as a result of the seizures were therefore of little relevance.
Dr Abbott’s clinical notes record the long history of the excessive alcohol consumption. The clinical notes produced in these proceedings date from 19 October 1998 and the first entry in relation to alcohol consumption is on 22 October 1998 when Mr Sullivan is advised to “decrease alcohol”. There are various references throughout the notes to depression, family problems and excessive drinking / chronic alcoholism and Mr Sullivan’s attendance at a rehabilitation centre in March 2006.
The evidence relied upon by the Council in relation to the injuries sustained in the subsequent motor vehicle accident on 20 May 2003 is contained in the clinical notes from Dr Abbott’s surgery. Dr Wong, on 21 May 2003, records Mr Sullivan’s attendance giving a history of the motor vehicle accident the day before and complaining of right-sided neck pain. The doctor comments that the examination was difficult due to the residual symptoms from the work injury.
Mr Sullivan in cross examination conceded that he could not recall informing Dr Bates of sustaining further injury to his neck in the car accident on 20 May 2003, nor could he recall attending Dr Wong on 21 May 2003 or that he had received any treatment for injuries sustained in the accident.
Whilst Mr Sullivan is correct in his submission on appeal that the existence of supervening illnesses and injuries are not determinative of a reduction in an award of compensation under section 40(1), supervening illness and injuries are factors that the Arbitrator must have regard to in determining “whether there would be a disproportionately high level of weekly compensation if the figure were left at the level of reduction in weekly earnings calculated in accordance with the earlier hypothetical process” (Santow JA in Singh v TAJ (Sydney) Pty Limited [2006] NSWCA 330 at [58]).
As referred to in paragraph [66] above, there were a number of issues for consideration by the Arbitrator in the exercise of his discretion as to whether the amount of $405.55 was the “proper” amount of weekly compensation in the circumstances of the case. Whilst at paragraph [34] of his Reasons the Arbitrator acknowledged that the seizures and the alcoholism were raised by the Appellant Employer as “issues that need to be brought into account when considering the question of discretion…”, he makes no reference to the impact, if any of the injuries sustained in the supervening motor vehicle accident in May 2003 nor do his reasons disclose that he did in fact have proper regard to all the issues and the evidence relevant to the exercise of his discretion as required by section in 40(1), or what weight, if any, he placed on them.
Whilst the Commission is not bound by the rules of evidence and its proceedings are to be conducted with “as little formality and technicality as the proper consideration of the matter permits” (section 354 of the 1998 Act), the decision maker’s reasoning must be disclosed to enable the reader to understand the essential steps in the decision making process and failure to do so constitutes an error of law (see Mitchell, Housing Commission NSW v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247).
Whilst the Arbitrator has clearly identified the task before him in the exercise of his discretion under section 40(1), he has failed either to correctly identify and apply the evidence that was relevant to the step 2 and step 4 test in Mitchell, or, to clearly articulate the reasoning process that led to the exercise of his discretion.
I am satisfied that the Appellant’s grounds of appeal that the Arbitrator erred in law in the application of section 40 of the 1987 have been established. It is apparent from the Arbitrator’s reasons that the evidence relevant to the assessment and determination under step 2 and step 4 of the Mitchell test have been confused and his reasoning process has not been clearly articulated. The Arbitrator was not assisted greatly by the parties’ submissions, which did not distinguish clearly the factors and evidence as they related to step 2 and step 4 of the section 40 exercise. It is not clear whether the Arbitrator incorrectly considered the matters such as the history of developing seizures and the recorded history of alcoholism, in his analysis at step 2 rather than step 4, and having so done did not apply them again in step 4, where he should properly have considered them.
Given the errors identified, the decision of the Arbitrator in relation to the calculation of, and award pursuant to, section 40 is revoked and the matter is remitted to a different arbitrator to determine afresh Mr Sullivan’s entitlement to compensation pursuant to section 40 of the 1987 Act.
DECISION
Paragraph 1 of the decision of the Arbitrator dated 20 June 2007, is revoked and the matter is remitted to a different arbitrator for determination afresh of the worker’s entitlement to compensation pursuant to section 40 of the Workers Compensation Act 1987 in accordance with these reasons.
Paragraphs 2 to 4 of the Arbitrator’s decision were not the subject of appeal.
COSTS
No order as to costs of the appeal.
His Honour Judge Greg Keating
President
7 December 2007
I, MELANIE CURTIN CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF HIS HONOUR JUDGE GREG KEATING PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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