Sermacs Corporate Services Pty Limited v Malik
[2006] NSWWCCPD 123
•15 June 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Sermacs Corporate Services Pty Limited v Malik [2006] NSWWCCPD 123
APPELLANT: Sermacs Corporate Services Pty Limited
RESPONDENT: Shan Malik
INSURER:CGU Workers Compensation (NSW) (No 2) Pty Limited
FILE NUMBER: WCC8033-05
DATE OF ARBITRATOR’S DECISION: 23 September 2005
DATE OF APPEAL DECISION: 15 June 2006
SUBJECT MATTER OF DECISION: Error of fact; error of law; weekly compensation and exercise of discretion pursuant to section 40(1) of the Workers Compensation Act 1987
PRESIDENTIAL MEMBER: Acting Deputy President Tydd
HEARING:On the Papers
REPRESENTATION: Appellant: Sparke Helmore Lawyers
Respondent: Stacks Goudkamp
ORDERS MADE ON APPEAL: Paragraphs 1 and 2 of the decision of the Arbitrator, dated 23 September 2005, are revoked and the following decision is made in their place:
That the Appellant pay the Respondent weekly compensation at the rate of $229.00 from 13 May 2005 to date and continuing under Section 40 of the Workers Compensation Act 1987.
Paragraph 3 of the Arbitrator’s decision is confirmed.
No order as to costs of the Appeal.
BACKGROUND TO THE APPEAL
On 20 October 2005 CGU Workers Compensation (NSW) (No 2) Pty Limited (‘the Insurer’) sough leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 23 September 2005.
The Respondent to the Appeal is Shan Malik (‘Mr Malik’). Mr Malik’s solicitor filed a Notice of Opposition to Appeal dated 15 November 2005.
Mr Malik was employed by Sermacs Corporate Services Pty Limited (‘Sermacs’) as a security officer. On 22 June 2003 Mr Malik was on night shift and slipped and fell whilst walking up the stairway at Blacktown Railway Station to answer a call for security assistance. Mr Malik sustained a fractured of his left patella which required surgery and rehabilitation. On 12 May 2004 Mr Malik was certified fit for permanently modified duties of a ‘sedentary/light’ nature. He participated in a ‘Job Action Plan’ program. However he was unable to secure suitable employment.
Mr Malik’s weekly compensation benefits pursuant to section 38 of the Workers Compensation Act 1987 (‘the 1987 Act’) expired on 20 April 2005 and the Insurer arranged an assessment in accordance with section 40(A) of the 1987 Act. The assessment found that Mr Malik could work as a telemarketer, inquiry clerk/call centre operator or administrative assistant. Based on this assessment Mr Malik’s benefits were reduced to $126.47 per week from 10 May 2005.
On 27 April 2005 Mr Malik’s solicitor requested review of the Insurer’s decision stating that the positions identified were not suitable as they required extensive customer service experience, good interpersonal skills, basic sales skills, sound computer skills and good organisational skills. Mr Malik did not possess these skills and as result of his restrictions, depression and lethargy he was not fit for work on a full-time basis. The parties did not come to an agreement and on 30 May 2005 Mr Malik’s solicitor filed an ‘Application to Resolve a Dispute’ naming Sermacs as the Respondent, disputing the reduction in weekly compensation and seeking orders for the payment of $334.10 per week from 10 May 2005 to date and continuing.
On 17 June 2005 the Commission received correspondence from Ferrier Hodgson stating that were appointed Administrators of Sermacs and that all correspondence regarding the dispute should be forwarded direct to the Insurer.
On 20 June 2005 the Insurer’s solicitors lodged a Reply to the ‘Application to Resolve a Dispute’ in which they asserted that Mr Malik’s capacity to work was correctly reflected in the assessment and Mr Malik was being correctly compensated.
On 8 August 2005 a teleconference was conducted and, as the matter was not able to be resolved it proceeded to a conciliation/arbitration hearing on 5 September 2005. These proceedings were sound recorded and a transcript has been provided to the parties. This transcript together with the ‘Certificate of Determination’ and the ‘Statement of Reasons’ provided by the Arbitrator are of assistance in determining this Appeal.
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 23 September 2005 records the Arbitrator’s orders as follows:
“1. That the Respondent pay the Applicant weekly compensation at the rate of $286.43 from13/05/04 to date and continuing under s40 of the Workers Compensation Act 1987.
2. Such weekly payments to continue in accordance with the provisions of the Act.
3. Respondent to pay the Applicant’s costs as agreed or assessed.”
ISSUES IN DISPUTE
The issues in dispute in the appeal relate to procedural and substantive issues:
Procedural Issues
· The threshold requirements of section 352(2) of Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’).
· The admissibility of the Notice of Opposition.
Substantive Issues
The Arbitrator erred in:
· the calculations made pursuant to section 40(2)(b) of the 1987 Act, and
· exercising her discretion pursuant to section 40(1) of the 1987 Act.
ON THE PAPERS REVIEW
Section 354(6) of the 1998 Act provides:
“(6) If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
PROCEDURAL ISSUES IN DISPUTE
Section 352(2) of the 1998 Act
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the1998 Act.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
In respect of section 352(2)(a) of the 1998 Act, the Insurer’s solicitor submits that, based on the Arbitrator’s award for ongoing weekly payments (from 13 May 2004 to date and continuing) at the date of lodgement of the Appeal 75 weeks had elapsed representing a monetary amount of $4,296.75; and further calculates that the $5,000.00 threshold requirement of section 352(2)(a) of the 1998 Act will be reached at 87 weeks post 13 May 2004 (the date of commencement of the award).
The Insurer’s solicitor submits that the appeal relates to the 25 per cent “vicissitude factor” applied by the Arbitrator and as such the appeal satisfies the requirement that the monetary amount be at least twenty percent of the award (Section 352(2)(b)).
Mr Malik’s solicitor concedes that the reduction sought by the Insurer “marginally exceeds the percentage threshold”. Accordingly Section 352 (2)(b) of the 1998 Act is not in dispute. However Mr Malik’s solicitor submits that the amount in dispute is $4,307.25 and therefore “falls below the threshold under Section 352(2)(a)”.
The amount of compensation at issue on the appeal is determined by reference to the amount of any monetary award made by the Arbitrator (Grimson v Integral Energy [2003] NSW WCC PD 29). Further in applying the decision in Lilly v Tomago Aluminium Co Pty Ltd [2004] NSW WCC PD 62 I have considered the ongoing nature of the Arbitrator’s award as it relates to future payments.
In the present matter the Arbitrator’s award is for the payment of $286.43 per week from 13 May 2004 and continuing. I find that the monetary award exceeded the threshold 18 weeks post 13 May 2004 (that is, 17 September 2004) and on this basis the amount at issue exceeds the threshold requirements of section 352(a) of the 1998 Act.
I am satisfied that the requirements of Section 352(2) of the 1998 Act have been met.
This procedural ground of opposition to the appeal fails and leave to appeal is granted.
Notice of Opposition
The Insurer’s solicitor opposes the admission of the Notice of Opposition on the basis that it was not lodged within 14 days of service of the Application and Mr Malik’s solicitor failed to serve an unsealed copy of the Notice of Opposition in accordance with the Practice Direction.
The Certificate of Service filed by the Insurer’s solicitor in accordance with Practice Direction No. 6 and Rule 77 of the Workers Compensation Rules 2003 (‘the Rules’) specifies that service took place on 27 October 2005.
Rule 77(5) provides that where a party seeks to oppose an Application the opposing party must lodge his/her objection within 14 of being served with the Application. In this instance Mr Malik’s solicitor dated the Notice of Opposition 10 November 2005. However it was ‘lodged’ with the Commission on 15 November 2005 (as date stamped).
I find that the Notice of Opposition was lodged with the Commission on 15 November 2005 that is, 19 days after service of the Application to Appeal and therefore five days after the Notice of Opposition was required to be filed.
Accordingly I am required to consider the admissibility of the Notice of Opposition in respect of it not complying with Rule 77(5). I have considered the Insurer’s submissions in this regard, Practice Direction Number 6, the Rules and the relevant authorities requiring the decision maker to consider the exercise of discretion to extend time to do justice between the parties (Gallo v Dawson (1990) 93 ALR 479).
Rule 77(8) provides for an extension of time in respect of the right to seek leave to appeal. It does not deal with the lodgement of a Notice of Opposition to that Appeal. However Rule 13 provides that the Commission “... may by order extend or abridge any time fixed by these rules...” and may do so of its own motion.
The discretion to extend time is given for the sole purpose of enabling a court [or tribunal] to do justice between the parties (Gallo; Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262). In Gallo, McHugh J said that this means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant; in order to determine whether the rules will work an injustice it is necessary to have regard to:
·the nature of the litigation;
·the history of the proceedings;
·the conduct of the parties;
·the consequences for the parties of the grant or refusal of the application for extension of time;
·the prospects of the applicant succeeding in the appeal, and
·upon expiry of the time for appealing, the respondent has a vested right to retain the judgment unless the application for extension of time is granted.
No explanation has been offered by Mr Malik’s solicitor as to why he failed to lodge within the prescribed time frame or file a certificate of service. In this respect the conduct of Mr Malik’s solicitor does not accord with the framework established in furtherance of the objectives of the Commission to provide a timely, fair and cost effective system for the resolution of disputes (section 367(1)(a) and (c) of the 1998 Act). However in considering the nature of the litigation and the consequences for the parties, I am satisfied that no prejudice has occurred to the Insurer by the late filing of the Notice of Opposition. The Insurer has had an opportunity to file its submissions. (Wang v Fuji Xerox Australia Pty Limited[2005] NSWWCCPD 46). Further I am satisfied that the substantive issues raised (the calculations arrived at by the Arbitrator in respect of section 40(2)(b) and the exercise of her discretion in accordance with section 40(1) of the 1987 Act) are significant; considering the consequences, and to justice between the parties I grant leave to admit the Notice of Opposition.
SUBSTANTIVE ISSUES IN DISPUTE
SUBMISSIONS AND EVIDENCE
The Arbitrator erred in calculating Mr Malik’s average weekly earnings in accordance with section 40(2)(b)
Application of the steps set out in the case of Mitchell v Central West Health Service (1997) 14 NSW CCR 527 is central to the submissions and the issues in dispute. In that case the Court of Appeal, Mason P, Beazley JA and Grove A-JA at 529, set out five steps for determining entitlement pursuant to section 40 of the 1987 Act, as follows:
“...the Court is required:
1. To determine the weekly amount the worker would probably have been earning if uninjured (section 40(2)(a))...
2. To determine ‘the 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.”
The submissions refer to the steps set out above and named as ‘Step 1’ to ‘Step 5’. Accordingly I will refer to the submissions using this classification.
Step 1 – Determination of the weekly amount the worker would probably have been earning if uninjured
Step 1 is not in dispute between the parties on appeal. However this matter was in dispute before the Arbitrator. At paragraph 19 of the Statement of Reasons the Arbitrator referred to Mr Malik’s pre-injury earnings as a security guard and found the amount Mr Malik would be able to earn but for the injury to be $752.64.
In evidence was correspondence dated 29 March 2005 from the Insurer to Mr Malik identifying his average pre-injury weekly earnings reflective of the current rate as $716.80 gross per week. The transcript reveals that Mr Malik’s solicitor made submissions that comparables at the date of hearing were $752.64 based on CPI increases (paragraph 15 page 6). The Insurer’s solicitor did not make oral submissions except to say that comparables would be $752.64 arithmetically “but I can’t agree to that” (paragraph 5 page 2). The Arbitrator accepted the submissions made by Mr Malik’s solicitor “to include the provision of CPI at his suggested rate” (paragraph 27 of the Statement of Reasons). The suggested CPI rate was referable to increases from June 2003 to date of 2.5 per cent per annum.
The Arbitrator’s finding in relation to the weekly amount Mr Malik would probably have been earning if uninjured was open to her on the evidence and was not raised on appeal.
The Insurer’s grounds of appeal are in respect of the Arbitrator’s calculations at Steps 2 and 3 and exercise of discretion at Step 4 leading to the award made at Step 5.
Step 2 - Determination of the average weekly amount that the worker is earning, or would be able to earn in some suitable employment
The Insurer’s solicitor submits that in applying section 40 of the of the 1987 Act the Arbitrator erred in calculating the amount of Mr Malik would be able to earn in suitable employment in accordance with section 40(2)(b) as $523.50. This error is referable to the calculation only and not the Arbitrator’s determination of ‘suitable employment’. The Arbitrator found Mr Malik’s earning capacity to be that of a Clerk Grade 1 “the award rate for which is $13.78 per hour” and that Mr Malik was capable of performing 38 hours per week (i.e. full time work). Accordingly the Arbitrator’s calculations at Step 2 should have been $13.78 multiplied by 38 hours to arrive at the correct amount of $523.64 per week. The Arbitrator was in error in calculating $523.50 per week. It is submitted that this is a minor error in calculation which then affects the calculations applied in Step 3 and ultimately Step 5.
Mr Malik’s solicitor submits that the award should remain undisturbed. Whilst the Arbitrator determined (at paragraph 26 of her ‘Statement of Reasons’) that the earnings of a Grade 1 clerk are $523.64 per week the Arbitrator “was clearly of the view….that the respondent would have difficulties with some of the duties of an administrative assistant.” The Arbitrator “expresses her doubts as to the ability of the respondent to achieve the weekly amount referred to in step 2” at paragraphs 24 and 26. Accordingly it is submitted that the Arbitrator “should have determined in step 2 that there be a 25% discount in the respondent’s ability to earn, so as to remove any further variation pursuant to step 4.”
The Insurer’s solicitor submits in reply that the Arbitrator made a finding of fact in relation to Step 2 that Mr Malik could perform the duties of a Grade 1 clerk and could perform those duties on a full-time basis. Therefore “should the Respondent seek to cavil with the Arbitrator’s determination on the weekly amount that the worker would be able to earn in some suitable employment then that should have been the subject of an Appeal.” and no such Appeal has been lodged.
The medical evidence relied upon by the Insurer was the report of Dr Millons, surgeon, dated 28 June 2004. In summary Dr Millons’ report records the history of injury and rehabilitation confirming that Mr Malik has reached maximum medical improvement and is not fit to return to work as a security guard.
In relation to incapacity specifically Dr Millons states:
“I think that one would have to accept that there has been loss of mobility and agility. His large size would clearly be compounding problems at the left knee.
A move is now being made to move Mr Malik along a return to work program and I think that is admirable. I believe that he ought to be fit for work of a lighter, semi-sedentary nature such as that in an office or store environment. He mentioned the possibility of sales and telemarketing. Those avenues would be reasonable and within his capacity.”
The medical evidence of incapacity relied upon by Mr Malik was the report of Dr A Kwa (orthopaedic surgeon) dated 12 May 2004 certifying that Mr Malik was suffering from ‘ Post Traumatic Arthritis’ of the left knee and was ‘fit for sedentary/light duties only.’
Additionally Mr Malik’s statement dated 30 May 2005 was also relied upon in relation to incapacity. The statement sets out:
· the factors restricting his current capacity for work, these being his inability to sit for longer than 30 minutes, walk for longer than 20 minutes and stand for more than 15 minutes, knee pain keeping him awake at night and subsequent requirement for sleep during the day;
· his lack of experience as a call centre operator, telemarketing and administrative assistant duties and defines his work experience as being in manual jobs only, and
· his inactivity, weight gain and depression as a result of the injury and unemployment.
Mr Malik’s solicitor relied on the report of Therese Hatfield (psychologist/rehabilitation counsellor employed by Advanced Personnel Management), dated 11 March 2005 and submitted that the report:
· confirmed that it would be “difficult to predict if Mr Malik’ could work eight hours a day as the Insurer’s occupational therapist advised that Mr Malik could work two hours per day and then ‘upgrade to full time hours following a work conditioning or graduated return to work program.”;
· incorrectly stated that Mr Malik possessed extensive customer service experience, good interpersonal skills, basic sales skills, was well spoken and had basic sales skills, and
· in recommending that an administrative assistant as a suitable vocational option for Mr Malik incorrectly stated that Mr Malik possessed sound computer skills, customer service skills and good organisational skills.
It was further submitted that Mr Malik had very basic computer skills following his completion of a basic Information Technology course at TAFE conducted over two hours per night one night per week. It was also submitted that Mr Malik had not been provided with rehabilitation training. Mr Malik’s solicitor indicated that he was unable to make submissions as to how much ‘he could earn, but I would say that he will not be capable of earning more than about $415.00 per week’ (transcript paragraph 15 page 11).
The Insurer’s solicitor submitted that:
· Mr Malik’s medical certificates restrict him to sedentary duties but do not restrict his hours;
· the work conditioning program recommended by the Insurer’s physiotherapist, (report of Ms J Karen dated 25 February 2005) was for a period of two weeks only;
· the rehabilitation assessments indicate that Mr Malik’s self reported limitations are greater than his objectively assessed physical abilities and his demonstrated physical tolerances are greater than those required in sedentary work;
· the report of Ms Hatfield does not restrict Mr Malik to those occupations recommended rather sedentary work can encompass positions such as process worker or console operator catering for “a limitation with a left leg”;
· the Arbitrator cannot accept the diagnosis or restrictions of sleep apnoea in determining suitable employment, and
· Mr Malik is incapacitated but given his restrictions he can earn approximately $13.00 to $16.00 per week working 30 to 38 hours and achieve $500.00 per week in suitable employment.
The medical certificate of Dr H Bittar (Mr Malik’s general practitioner) dated 14 May 2005 certifies Mr Malik as having reached maximal medical improvement and being fit for modified “sedentary/light duties” from 12 May 2005. The certificate does not detail any restrictions on Mr Malik’s working hours.
In her Statement of Reasons the Arbitrator found on the medical evidence of Dr Kwa and Dr Millons that Mr Malik is permanently unfit for his pre injury duties; that he is not suitable for work as a telemarketer and call centre operator and his sleep apnoea is not related to his work injury (paragraphs 19 – 22).
The Arbitrator set out her reasons (referable to the reports of Ms Hatfield, Ms Karan and Dr Millons) for finding that the occupation of administrative assistant is suitable employment for Mr Malik. The factors taken into account in arriving at her finding of suitable employment are set out at paragraph 24. They include an analysis of the duties of an administrative assistant; Mr Malik’s restrictions requiring him to vary his posture regularly; the length of time Mr Malik has been unemployed and the state of the labour market.
The Arbitrator concluded (at paragraph 26) that she assesses Mr Malik’s “ability to earn as on the low side for a Grade 1 clerk at $13.78 per hour for 38 hours per week.”
Step 3- Errors in calculations
The Insurer’s solicitor submits that at paragraph 27 of the ‘Statement of Reasons’ the Arbitrator erred in subtracting the incorrect amount of $523.50 (rather than $523.64) from the agreed probable earnings of $752.64 the Arbitrator arrived at the incorrect figure of $229.14 (Step 3) rather than the correct figure of $229.00.
The Insurer’s submissions regarding the correct mathematical calculations to be applied given the findings of the Arbitrator set out at paragraph 26 are not disputed by Mr Malik.
The Statement of Reasons reveals (at paragraph 27) that the Arbitrator sought to apply the steps set out in Mitchell to make the award under Section 40 of the 1987 Act. In doing so the Arbitrator found the amount the Respondent worker would be able to earn but for the injury to be $752.64 and in potential suitable employment to be $523.50 per week. In accordance with Step 3 the Arbitrator subtracted Step 2 from Step 1 and arrived at $229.14 per week as the difference between the weekly amount the worker would probably have been earning but for the injury and the average weekly amount the worker is earning or would be able to earn in some suitable employment.
Step 4 - Application of discretion
The Insurer’s solicitor submits that the Arbitrator misconceived the meaning of section 40(1) of the 1987 Act when performing Step 4 of the section 40 determination. In broad terms it is submitted that the section and its interpretation are clear. Section 40(1) of the 1987 Act provides that the weekly payment of compensation “is to be an amount not exceeding the reduction in the workers weekly earnings” and the discretion exercisable by an Arbitrator as ‘may appear proper in the circumstances’ was misapplied by the Arbitrator when she exercised this discretion to increase (emphasis added) the reduction in Mr Malik’s weekly wage by 25 per cent. The Insurer’s solicitor refers to the cases of Australian Wheat Board v Pantaleo [1984] 3 NSWLR 530 (‘Pantaleo’) and BHP Steel (AIS) Pty Ltd v Oliver (2002) 23 NSWCCR 577 (‘Oliver’) as authority to advance the submission that the discretion, if applied, should only reduce the amount of compensation.
The Insurer’s solicitor also referred to the case of Australian Way Industries Pty Limited v Nicholson (1985) 1 NSWCCR which dealt with the section 11(1)(a) of the 1926 Act which set out similar terms to section 40 of the 1987 Act. In that case it was held that the difference in earnings to be calculated “marks the upper limit” of compensation. Accordingly it is submitted that the language adopted in section 40 is clear and the discretion, if applied should only be applied to reduce the amount.
The Insurer’s solicitor submits that the reasons applied by the Arbitrator in taking into account the “vicissitude factor” have the inappropriate effect of “punishing a Respondent simply because a worker has suffered an injury in the course of employment.” Further in taking into account factors which do not effect capacity to earn the Arbitrator has applied an “illogical and punitive” approach to the operation of section 40 of the 1987 Act.
Mr Malik concedes that the “…Arbitrator erred in her application of Step 4 as set out in the Court of Appeal decision in..” Mitchell.
The transcript does not reveal submissions made by the parties in relation to the exercise of discretion contained under section 40(1) of the 1987 Act.
The Arbitrator’s ‘Statement of Reasons’ states (at paragraph 27) that she applied,
“a vicissitude factor of an increase of 25% applied to step three in respect to the disadvantage the Applicant has experienced for misdirected or ineffective assistance in vocational redeployment, his weight gain consequent to reduced mobility and his flat mood and withdrawn affect resulting from the psycho-social sequelae of the injury effecting his communications and confidence during job seeking.”
At paragraph 28 of the ‘Statement of Reasons’ the Arbitrator was satisfied that Mr Malik’s entitlement weekly benefits “should be reduced (emphasis added) to $286.43 as per the calculation in paragraph 27 above.” It is unclear why the Arbitrator indicated at paragraph 28 that she was reducing the award when in fact she applied her discretion to increase the award.
Step 5 - The award
Mr Malik’s solicitor submits that it would be unjust in the circumstances to reduce the award as the Arbitrator carefully considered the evidence and drew the conclusion that the proper award in the circumstances was $286.43 per week.
The Insurer’s solicitor relies upon the Mr Malik’s concession that the Arbitrator incorrectly applied the discretion under section 40(1) in support of their submission that Mr Malik cannot now claim that a reduction in the award would be unjust in circumstances where the Arbitrator, (in the submissions of Mr Malik’s solicitor) “carefully considered the evidence” and drew the conclusion that a proper award in the circumstances was $286.43 per week. The submissions appear to me to infer that the Arbitrator was not careful in her application of the evidence to the exercise of her discretion.
DISCUSSION AND FINDINGS
The Arbitrator erred in applying section 40(2) of the 1987 Act
I am required to consider the Arbitrator’s findings of the weekly amount Mr Malik would have been able to earn in suitable employment in accordance with Step 2 prior to considering the errors in calculation referred to by the Insurer’s solicitor.
Mr Malik’s solicitor does not place in issue on appeal the classification of Clerk Grade 1 as assessed by the Arbitrator; accordingly the classification of itself is not in dispute. Rather the matters raised on behalf of Mr Malik are that the Arbitrator “should have determined in step 2 that there be a 25% discount in the respondent’s ability to earn, so as to remove any further variation pursuant to step 4.”
Whilst there is no issue on appeal in relation to the Arbitrator’s finding in relation to ‘suitable employment’ this submission requires consideration of the factors the Arbitrator took into account in arriving at her finding.
As outlined at paragraph 45 and 46 the ‘Statement of Reasons’ confirms that the Arbitrator referred to the following evidence in considering ‘suitable employment’:
· the vocational assessment and labour market search of Ms Hatfield;
· the functional capacity evaluation of Ms Karan;
· the medical restrictions imposed upon Mr Malik by his treating orthopaedic surgeon and general practitioner, and
· Mr Malik’s employment background and completion of a two year Information Technology course.
The Arbitrator’s findings that Mr Malik was fit for sedentary/light duties on a full time basis accord with the weight of medical evidence before her (reports of Drs Kwa, Bittar and Millions).
The Arbitrator’s reasoning (at paragraphs 23 and 24) clearly set out the factors she considered in determining the amount Mr Malik would be able to earn in ‘suitable employment’ and her application of the factors required to be considered in accordance with section 43A of the 1987 Act. The Arbitrator found that the occupation of administrative assistant was suitable in the context of Mr Malik’s profile. The Arbitrator was not convinced that Mr Malik had “inadequate IT skills for this” based on the evidence of Mr Malik’s completion of an Information Technology course and his statements to Ms Hatfield regarding his computing skills as contained in her report of 10 March 2005. The Arbitrator outlined the duties of an administrative assistant and found that:
“These activities are not in the immediate experience of the Applicant’s [sic] and I take this into consideration (s43A(b)). The Applicant’s restrictions would require him to be able to vary his posture regularly. This has been taken into account (s43A(d)). I also note that the Applicant has been provided with instruction in job seeking presentation.”
The Arbitrator’s reasons demonstrate a consistent application of the evidence before her and the factors to be considered in accordance with section 43A of the 1987 Act.
I also have regard to paragraph 26 of the Statement of Reasons which provides:
“In my experience and with reference to the Clerical and Administrative Employees (State) award payments are between $523.60 per week and $680.50 per week for full time hours. I assess the Applicant’s ability to earn as on the low side for a Grade 1 clerk at $13.78 per hour for 38 hours per week.”
Mr Malik’s solicitor submits that the Arbitrator “was clearly of the view” that “the Respondent would have difficulties with some of the duties of an administrative assistant” and expressed these doubts at paragraphs 24 and 26.
The wording of paragraph 26 demonstrates that the Arbitrator’s assessment was influenced by the evidence before her in relation to the duties Mr Malik’s could undertake as specified in the reports of Ms Hatfield and Ms Karan and the submissions made by Mr Malik’s solicitor. In making an assessment on the “low side” the Arbitrator clearly indicated that she took into account the lowest award payment for a Grade 1 clerk to accommodate her view (arrived at with reference to the statement of Mr Malik) that the duties of an administrative assistant were “not in the immediate experience of” Mr Malik. In doing so the Arbitrator did not find a maximum amount that Mr Malik would be able to earn and base her calculation under section 40(2) on that amount. Rather the Arbitrator applied the correct test as set out in Mitchell with respect to determining the average of what the worker would be able to earn.
Accordingly I find that the Arbitrator correctly assessed the amount Mr Malik would be earning in ‘suitable employment’ as required by section 43A. However the Arbitrator’s calculations in accordance with Step 2 contain an error and must also be considered.
The errors of calculation raised by the Insurer’s solicitor in respect of Step 2 and Step 3 are not the subject of submissions from Mr Malik’s solicitor. However Mr Malik’s solicitor does submit that the Arbitrator determined the earnings of a Grade 1 clerk are $523.64 per week at paragraph 26. This submission is not supported by the Statement of Reasons at paragraph 26 which is set out above and does not contain the calculation of $523.64 referred to by Mr Malik’s solicitor. Rather the paragraph sets out the Arbitrator’s findings as to the number of hours Mr Malik could work and the hourly rate he could earn in ‘suitable employment’.
Having addressed the issue raised by Mr Malik’s solicitor in respect of the Arbitrator’s findings regarding ‘suitable employment’ I now turn to the calculations applied by the Arbitrator at Steps 2, 3 and 4. These calculations are set out at paragraph 27 of the ‘Statement of Reasons’. Under the heading Step Two the Arbitrator found the amount the Mr Malik would be able to earn in suitable employment as $523.50.
I find this calculation at Step 2 to be in error and the correct calculation to be applied to give effect to the Arbitrator’s findings in relation to ‘suitable employment’ (contained at paragraph 26 of the ‘Statement of Reasons’) to be $13.78 per hour multiplied by 38 hours equals $523.64 per week (in ‘suitable employment’).
Under the heading Step Three the Arbitrator subtracted the incorrect figure arrived at in Step 2 ($523.50) from Step 1 $752.64 (this figure is not in dispute) to arrive at $229.14 per week.
I find this calculation at Step 3 to be in error. The correct calculation be applied to give effect to the Arbitrator’s findings is $523.64 (as found at Step 2) subtracted from $752.64 (Step 1) to equal $229.00 (the reduction in the workers weekly earnings).
Application of Discretion – Step 4
Mr Malik’s solicitor’s concession that the Arbitrator erred in the application of her discretion is qualified by the arguments presented in respect of the Arbitrator’s findings of suitable employment and the monetary figure arrived at leading to the calculations required in accordance with Steps 2 and 3. I found no error of fact or law in the Arbitrator’s finding as to ‘suitable employment’. However I have made findings as to the Arbitrator’s calculation errors at Step 2 and Step 3 and determined the requisite calculations.
The parties are in agreement that the Arbitrator erred in the exercise of her discretion. However, as a result of the submissions raised by the Insurer’s solicitor and the Arbitrator’s ‘Statement of Reasons’ I consider it necessary to deal with the issue.
In this instance the Arbitrator’s reasons indicate that she construed the discretion to be applied to increase the difference in earnings in order to address Mr Malik’s disadvantage. The Insurer’s solicitor submits that the determination of the issue in this appeal is a matter of statutory construction.
A number of factors guide the task of statutory construction including the plain words of the section, its statutory context, the objectives and intention of the legislation and the purpose that the relevant provision serves (Raniere Nominees Pty Limited t/as Horizon Motor Lodge v WorkCover Authority of NSW[2005] NSWWCCPD 28).
The commencement point must be the relevant section.
Section 40(1) provides:
“40 Weekly payments during partial incapacity—general
(1) Entitlement
The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings, but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.”
The statutory context is one in which benefits are paid to injured workers. However the payment of weekly compensation is confined by the operation of section 40(1) of the 1987 Act which restricts the weekly payments of compensation so as not too exceed ‘the reduction in the worker’s weekly earnings…’.
In interpreting the provision with regard the exercise of discretion, the plain meaning of the section requires that the exercise of discretion is predicated on two factors a) that ‘the weekly payment of compensation to an injured worker’ does not exceed the reduction in the workers weekly earnings and b) that it is applied ‘as may appear proper in the circumstances of the case.’
The ultimate purpose of the exercise under section 40(1) is to place a monetary value on the diminution in the earning capacity of the worker which arises because of the injury (Australian Iron v Steel v Elliot (1966) 67 SR (NSW) 87; Malco Engineering v Ferreira (1994) 10 NSWLR 117).
The amount of the award cannot be more than the difference between the figures produced from s 40(2)(b) and (a), but it may be less if there are discretionary factors which dictate this course (Farrell v Metromix Pty Ltd [2001] NSWCA 166 (Farrell).
In the present case the Arbitrator exercised her discretion to increase the weekly compensation payable to Mr Malik from the amount of $229.00. In doing so the Arbitrator acted outside the confines of section 40(1).
I find that the Arbitrator erred in exercising her discretion to increase in the amount of weekly compensation payable to Mr Malik ($229.00) by 25 per cent to an amount of $286.43 per week, and accordingly her decision is revoked.
In substituting a new decision, it is now appropriate to consider if I should exercise my discretion to reduce the amount of weekly payment of compensation to Mr Malik ‘as may appear proper in the circumstances of the case’. It is not contended by the parties that the weekly payments should be less than the calculation made in accordance with section 40(2).
In considering the exercise of discretion and in the absence of submissions in this regard I am required to consider evidence of extraneous or non-injury related factors (Stranlund v The Mid Coast Meat Company Pty Ltd [1999] NSWCC 9 (‘Stranlund’); and ‘Farrell’). In Stranlund Neilson J referred to the absence of submissions from the Respondent in relation to the exercise of discretion to reduce the mathematical difference calculated. Neilson J found that the only evidence before him in this regard was of the worker spending time in Grafton Gaol which attracted notoriety and may have adversely affected the worker’s ability to obtain employment in the local area. However on the evidence of the worker Neilson J was not satisfied that this notoriety lessened his repute sufficient to interfere with the worker’s ability to sell labour at the rate determined.
Mr Malik states that, he has trouble falling asleep at night and wakes frequently due to a “combination of being uncomfortable and gasping for air” and as a result he is fatigued during the day and restricted in his capacity to work on a full time basis. The issue of Mr Malik’s “sleep apnoea” was the subject of submissions made on behalf of the Insurer (referred to at paragraph 43). The Arbitrator was not satisfied on the evidence that Mr Malik’s sleep apnoea was related to his injury. That finding accords with the medical evidence (the reports of Dr Kwa, Dr Bittar and Dr Lawson do not contain evidence of sleep apnoea being related to the injury). Therefore I see no reason to disturb that finding.
As an extraneous non-injury related factor this matter could be taken into account in exercising my discretion to reduce Mr Malik’s entitlement. However notwithstanding Mr Malik’s own assessment of his limitations in respect of fatigue I am satisfied on the evidence that he is capable of and has applied for a number of full time positions. Accordingly I am not persuaded to exercise my discretion in this regard.
The award - Step 5
Having dealt with Mr Malik’s solicitor’s submissions in respect of the Arbitrator’s consideration of all of the evidence I now proceed to determine the proper award.
For the reasons set out above and in applying the steps set out in Mitchell I find the proper award in accordance with section 40(1) to be $229.00 per week.
In conclusion I find an error of fact in relation to the calculations applied by the Arbitrator pursuant to section 40(2)(b) of the 1987 Act and law in the exercise of her discretion pursuant to section 40(1) of the 1987 Act. Accordingly the appeal has been successful.
DECISION
Paragraphs 1 and 2 of the Decision of the Arbitrator are revoked and the following decision is made in their place:
1.That the Appellant (Sermac Corporate services Pty Ltd) pay the Respondent (Shan Malik) weekly compensation at the rate of $229.00 from 13 May 2005 to date and continuing under Section 40 of the Workers Compensation Act 1987.
2.Paragraph 3 of the Arbitrator’s decision is confirmed.
COSTS
Neither the Appellant nor the Respondent has made submissions in relation to the issue of costs. Having regard to the circumstances of the case, the relevant legislation (section 341(4) and section 354(5) of the 1998 Act) in my view, it is appropriate that I make no order as to the costs of this appeal.
Elizabeth Tydd
Acting Deputy President
15 June 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ELIZABETH TYDD, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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