Shoes and Sox Pty Limited v Mercieca
[2006] NSWWCCPD 176
•7 August 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Shoes and Sox Pty Limited v Mercieca [2006] NSWWCCPD 176
APPELLANT: Shoes and Sox Pty Limited
RESPONDENT: Jane Mercieca
INSURER:GIO Workers Compensation (NSW) Ltd
FILE NUMBER: WCC21221-04
DATES OF ARBITRATOR’S DECISIONS: 14 June 2005 and 21 September 2005
DATE OF APPEAL DECISION: 7 August 2006
SUBJECT MATTER OF DECISION: Rates of compensation; “current weekly wage rate”; section 36(2) of the Workers Compensation Act 1987; section 42(1) of the Workers Compensation Act 1987; section 38(3) of the Workers Compensation Act 1987.
PRESIDENTIAL MEMBER: Acting Deputy President Lansdowne
HEARING:On the papers
REPRESENTATION: Appellant: Sparke Helmore
Respondent: McDonnell Schroder
ORDERS MADE ON APPEAL: 1. The decision of the Arbitrator dated 21 September 2005 is confirmed.
2. Each party is to pay their own costs of the appeal.
BACKGROUND TO THE APPEAL
This appeal was filed by the insurer (‘the Insurer’) for Shoes and Sox Pty Limited (‘the Employer’ and ‘the Appellant’ as the context requires) on 12 July 2005. The Appellant seeks leave to appeal the decision of an arbitrator (‘the Arbitrator’) initially made by Certificate of Determination dated 14 June 2005. In that decision the Arbitrator awarded Ms Mercieca (‘the Worker’) weekly compensation at two different rates for various periods from 2 May 2004 to 1 May 2005 in respect of an injury to her left foot. The appeal relates solely to the rates at which this compensation was awarded.
Prior to filing the appeal, the Employer made a request in writing dated 1 July 2005 that the Arbitrator exercise her powers of reconsideration in relation to the rates. The Worker’s solicitors opposed that course, and expressed the view that the only course open to the Employer was to file an appeal. As indicated, the Employer did so on 12 July 2005, asserting in the appeal the same matters set out in its request for reconsideration. The Worker filed her submissions in opposition to the appeal on 4 August 2005. The Arbitrator reconsidered the rates by written decision dated 21 September 2005 (‘the reconsidered decision’). Neither party has made any further submissions after the issue of the reconsidered decision, nor has the Appellant withdrawn the appeal. The reconsidered decision reduces the award but not to the extent sought by the Appellant.
The issue arises as to which decision is now appealed. In fairness to the parties, I will treat the original decision as the decision appealed against for the purpose of the grant of leave, but the reconsidered decision as the decision whose substance is under review.
THE DECISIONS UNDER REVIEW
The Certificate of Determination of the original decision, dated 14 June 2005 records the Arbitrator’s orders as follows:
“1.That the Respondent pay the Applicant weekly compensation at the rate of :
a.$836 from 2 May 2004 to 21 June 2004 under s36 of the Workers Compensation Act 1987.
b.$418 from 22 June 2004 to 27 July 2004 under s40 of the Workers Compensation Act 1987.
c.$836 from 28 July 2004 to 5 October 2004 under s36 of the Workers Compensation Act 1987.
d.$836 from 16 October to 1 May 2005 under s38 of the Workers Compensation Act 1987.
2.That the Respondent pay the Applicant’s s60 expenses up to $10,000 on production of accounts and receipts.
3.That the Respondent pay the Applicant’s costs as agreed or assessed. Pursuant to the Workers Compensation (General) Regulation 1995, Schedule 6, I certify this matter to be a complex matter.”
In the Certificate of Determination issued in respect of the reconsidered decision, dated 21 September 2005, the Arbitrator revoked order 1 and substituted it with the following order:
“That the Respondent pay the Applicant weekly compensation at the rate of:
a.$668.80 from 2 May 2004 to 21 June 2004 under s36 of the Workers Compensation Act 1987.
b.$418 from 22 June 2004 to 27 July 2004 under s40 of the Workers Compensation Act 1987.
c.$668.80 from 28 July 2004 to 5 October 2004 under s36 of the Workers Compensation Act 1987.
d.$668.80 from 16 October to 30 October 2004 under s38 of the Workers Compensation Act 1987.
e.$535.04 from 31 October 2004 to 1 May 2005 under s38 of the Workers Compensation Act 1987.”
ISSUES IN DISPUTE
The issues in dispute in the appeal are:
(1)In relation to periods during which the Arbitrator found that the Worker was entitled to compensation for total incapacity and which fell within the first 26 weeks of incapacity (i.e. section 36 of the Workers Compensation Act 1987 (‘the 1987 Act’) applies) what was the Worker’s “current weekly wage rate”, as determined in accordance with section 42 of the 1987 Act? This issue relates to order 1 paragraphs (a) and (c) of the reconsidered decision.
(2)In relation to the period of partial incapacity reflected in order 1(b) of the reconsidered decision how is the rate to be calculated?
(3)In relation to the periods of partial incapacity reflected in order 1(d) and (e) of the reconsidered decision during which the Worker was compensated as if the incapacity were total under section 38, how is the rate to be calculated?
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.”
The Appellant submits that the appeal may be determined on the papers. The Respondent does not disagree. Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by the Appellant 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 in relation to quantum at issue on the appeal and whether the appeal is filed in time. I will determine these matters on the basis of the Arbitrator’s decision as it stood at the time the appeal was filed. In respect of that decision, the appeal satisfies the minimum quantum requirements of section 352(2). The appeal was also filed within 28 days after that decision in compliance with section 352(4) of the 1998 Act. Leave to appeal is granted.
FRESH EVIDENCE?
The Appellant asserts in the appeal that it relies on fresh evidence, being a compensation claim form completed by the Worker dated 15 September 2004. The claim form is in respect of a different injury, but is relied on by the Appellant in relation to determination of the Worker’s “current weekly wage rate” under section 42 of the 1987 Act. The Worker opposes the reception of this fresh evidence.
The Arbitrator notes in her Statement of Reasons for the reconsidered decision that the claim form in question was produced under summons and was included in a bundle of late documents filed by the Employer. Inspection of the file shows this to be correct. The claim form was included in the Application to Admit Late Documents filed by the Employer on 15 March 2005 which the transcript establishes was admitted without objection at the commencement of the arbitration on 13 May 2005. Accordingly, it is not necessary to consider whether or not the form should be admitted as fresh evidence on the appeal. It was before the Arbitrator and so is not fresh evidence.
EVIDENCE AND SUBMISSIONS
I have before me all the documents before the Arbitrator, together with:
·the transcript of the arbitration conducted 13 May 2005;
·the Arbitrator’s original Statement of Reasons and original Certificate of Determination both dated 14 June 2005;
·the Worker’s responses to the Employer’s request for reconsideration dated 11 and 12 July 2005;
·the appeal (which attaches a copy of the Employer’s request for reconsideration dated 1 July 2005);
·submissions in opposition to the appeal filed 4 August 2005; and
·the Arbitrator’s reconsidered decision as set out in a Statement of Reasons and Certificate of Determination dated 21 September 2005.
DISCUSSION AND FINDINGS
The Worker was at the time of the alleged injury the sales manager of the Employer’s shoe shop in Parramatta, Sydney. She asserted an injury to her left foot on 1 May 2004, as a result of the nature and conditions of her employment from 6 April 2004 (when she returned to work after time off for a hernia operation) to 1 May 2004, her employment involving repeated climbing of a ladder to obtain stock. The key issue litigated before the Arbitrator at the arbitration was the cause of the injury to the Worker’s left foot, in particular whether the cause was her employment or an injury she suffered while stepping off a kerb after work on 1 May 2004. The bulk of the Arbitrator’s original Statement of Reasons consists of analysis of the evidence and findings in relation to this issue. The Arbitrator found that the injury to the Worker’s foot did arise out of or in the course of her employment and that her employment was a substantial contributing factor to the injury.
The Arbitrator found that the Worker was totally incapacitated for work by reason of this injury for the period 2 May 2004 to 21 June 2004 (while her foot was in plaster), partially incapacitated from 22 June 2004 to 27 July 2004 (when she worked part time on light duties), and totally incapacitated from 28 July 2004 to 5 October 2004 (which period coincided with further surgery and rehabilitation). In respect of the period from 6 October 2004 to 16 October 2004 the Arbitrator found that the Worker was totally incapacitated for work for a different cause, a further hernia, and so made no award for this period in respect of the left foot injury. From 16 October 2004 to 1 May 2005 the Arbitrator found that the Worker was partially incapacitated for work due to the left foot injury, and was not suitably employed during that period entitling her to an award under section 38 for that period.
The Appellant does not dispute any of these findings in relation to injury, incapacity or entitlement under section 38. What the Appellant does dispute is the rate at which the Arbitrator awarded compensation. I will now consider whether the Appellant has established the appeal in relation to these matters. For the purposes of that consideration I will review the Arbitrator’s reconsidered decision.
First 26 weeks of total incapacity; “current weekly wage rate”; sections 36 and 42 of 1987 Act
Section 36(1) of the 1987 Act provides that “The weekly payment of compensation to an injured worker in respect of any period of total incapacity for work during the first 26 weeks of incapacity shall be the amount of the worker’s current weekly wage rate”. Sub-section (2) of that section provides that the “current weekly wage rate” is to be determined in accordance with section 42. Section 42(1) provides a mechanism for calculating the “current weekly wage rate” depending on whether the worker was remunerated under an award (paragraph (a)); an employee of the Crown (paragraph (b)); belonged to a prescribed class of workers (paragraph (c), being some pastoral and meat industry workers); or did not fall into any of the first three paragraphs (paragraph (d)). If the worker’s employment falls into paragraph (a) then the “current weekly wage rate” is the weekly rate under the award (excluding penalty rates or over award payments - see section 42(6)), if under paragraph (d) then the “current weekly wage rate” is deemed to be the “prescribed proportion” of the worker’s “average weekly earnings”. Section 42(8) provides that the “prescribed proportion” is 80 per cent, unless otherwise specified in the regulations and provides a mechanism for calculating the worker’s “average weekly earnings”. No proportion has been specified in the regulations other than 80 per cent.
The Appellant contends that the Worker’s employment fell within paragraph (a) i.e. that she was employed under an award. The Appellant relies on a claim form completed by the Worker on 15 September 2004 in respect of a hernia she suffered in mid April 2004. The claim form states that the Worker is employed under a state award, being the Shop Employees Award at a base rate of $525.80 per week. The claim form states that her actual current rate is $836 per week. This form was contained in the Employer’s documents before the Arbitrator but the Employer’s representative made no reference to it in submissions before the Arbitrator. The Arbitrator stated in her original reasons that “It is not in issue that her weekly wage (at the time of her initial total incapacity) was $836.60” (paragraph 50). The transcript shows this to be correct. There are only two references to the Worker’s rate of pay in the transcript. The first is on page 11 during the Worker’s submissions when the Worker’s representative stated that her “rate of pay” at the date of her injury was “836 gross per week” and the Employer’s representative agreed in these words “That’s correct from the documentation” (lines 9-14). The second is on page 38 during the Employer’s submissions when its representative referred to $836 in the context of her current earning capacity for the purpose of calculating compensation for partial incapacity (line 43).
In her reconsidered reasons the Arbitrator rejected the Appellant’s contention that the Worker’s “current weekly wage rate” during the first 26 weeks of total incapacity should be the award rate. She did so on a number of grounds. First, she characterised the determination as to whether or not the Worker was remunerated under an award to be a “mixed question of fact and law about which she (the Worker) is not qualified to offer an opinion”. It appears she reached this view at least in part because there is no classification in the award for the position held by the Worker, which on her unchallenged evidence was that of “Manager” (paragraph 7 of the reconsidered reasons).
Next, the Arbitrator weighed the evidence as to the basis for the Worker’s remuneration. She noted that the claim form was the only evidence that the Worker was remunerated under an award and that the evidence provided by the Employer itself to its solicitor as to the basis of her rate of pay makes no mention of an award. Further, she noted that there is no apparent relationship between the award rate and her actual rate (paragraph 8). For these reasons, she was not satisfied that the Worker was in fact remunerated under that award. Finally, she considered the impact of section 42(3) which extends the scope of section 42(1)(a) and provides that a worker shall be deemed to be remunerated under an applicable award if “it would be fair and reasonable” to apply the award. She considered that this deeming provision did not apply, in the absence of any specific classification of “manager” in the award (paragraph 10). The Arbitrator concluded that the Worker’s “current weekly wage rate” was to be determined pursuant to paragraph (d) of section 42(1), not paragraph (a). She determined that the Worker’s “average weekly earnings” in the meaning of paragraph (d) were $836 per week. Accordingly, the prescribed proportion (80%) is $668.80 per week. The Arbitrator corrected her original orders in respect of periods of total incapacity within the first 26 weeks to replace the sum “$836” with the 80% figure of $668.80.
I do not consider that any error has been established in the Arbitrator’s reconsidered decision in relation to orders 1(a) and 1(c). The appeal in relation to these orders is dismissed.
Partial incapacity; section 40; maximum rate of compensation
The Arbitrator found in her original decision that the Worker was partially incapacitated for the period 22 June 2004 to 27 July 2004 during which she worked on restricted duties. The Appellant does not dispute this finding. The Arbitrator made an award of $418 per week for this period, being the difference between her pre-injury earnings of $836 per week and her actual earnings of $418 per week (paragraph 52 original Statement of Reasons). The Appellant asserts that this was an error as “the maximum a worker is entitled to receive is the maximum statutory rate” which, the Appellant asserts, was $323 per week for that period “for a worker with no dependants” (paragraph 5 of the Submissions on Appeal). In her reconsidered decision, the Arbitrator rejected this submission on two bases. First, she noted that the uncontested evidence was that the Worker had two dependants, being her children (paragraph 16 reconsidered Statement of Reasons). Next, she found that as the period 22 June 2004 - 27 July 2004 was within the first 26 weeks of incapacity “the rate prescribed by s40(5) is not the applicable statutory maximum but the ‘current weekly wage rate’ i.e. $668.80. As the rate awarded under Order 1(b) does not exceed that amount, s40(5) has no application” (paragraph 17).
Section 40(1) of the 1987 Act provides “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”. It is apparent that this sub-section gives the decision maker a discretion to make an award smaller in sum than the “reduction in the worker’s weekly earnings”. The Arbitrator did not consider it appropriate to exercise that discretion in her original decision (paragraph 52) and there is no issue taken by the Appellant with that aspect of the decision. Section 40(2) provides the mechanism for calculating the “reduction in the worker’s weekly earnings”, essentially by subtracting from the amount the worker would have been earning but for the injury the amount she is earning, or would be able to earn (with statutory caps that do not apply in this case). Section 40(5) provides “The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is not to exceed the weekly payment that would be payable to the worker if it were a period of total incapacity for work”.
Section 40(5) provides a cap on the amount that may be awarded under section 40(1). It applies in every instance, although the amount of the cap will depend on whether the period in question falls within the first 26 weeks of incapacity or after that period. This is because the Act distinguishes between those time periods in its provisions for payment for total incapacity. As discussed earlier, section 36 sets out the rate for the first 26 weeks of total incapacity. The rate for any subsequent period is to be determined in accordance with section 37. It is section 37 that makes provision for a maximum rate, with allowances for dependants. Thus the “maximum statutory rate” to which the Appellant refers must be a reference to section 37. In this case the Worker was totally incapacitated from 2 May 2004. The calendar period of 26 weeks after 2 May 2004 expired on 30 October 2004. Thus the Arbitrator is correct in her statement that the period 22 June - 27 July 2004 is within the first 26 weeks. Accordingly, section 37 has no application. The relevant provision for determining the cap under section 40(5) is section 36 and, for the reasons set out above, I do not consider any error has been shown in the Arbitrator’s determination that the rate payable under section 36 was $668.80. The amount awarded by order 1(b) does not exceed that amount and so does not fall foul of section 40(5). This ground of appeal fails.
Award under section 38
In her original decision the Arbitrator found that “for the period 2 October 2004 to 1 May 2005, Mrs Mercieca was partially unfit for work as a result of the injury to her left foot” (paragraph 59). She also found that Mrs Mercieca was seeking suitable employment and was not provided with the same by the Employer for this period, with the exception of the beginning of the period to 16 October 2004 when she was totally unfit for work as a result of her hernia (paragraphs 62-63). As a consequence the Arbitrator made an award in favour of the Worker for the period 16 October 2004 - 1 May 2005 pursuant to section 38 of the 1987 Act.
The Appellant does not dispute the Arbitrator’s findings that ground the making of the award under section 38 but does dispute the rate. The Arbitrator in her original decision awarded compensation at the rate of $836 per week (being the amount she awarded under section 36). The Appellant asserts that the award should have been at the rate of $420.64, being 80% of the rate the Appellant asserts was appropriate under section 36.
Section 38(1) provides that during periods in which the preconditions of section 38 are satisfied “the worker is to be compensated …as if the worker’s incapacity for work were total”. Section 38(3) provides that:
“When a worker is so compensated, the compensation is payable at the relevant rate prescribed by this Act for the period of incapacity concerned. However, after the first 26 weeks of incapacity, the rate is the greater of the following rates:
(a) 80% of the worker’s current weekly wages rate (that is, 80% of the rate prescribed by the Act for the first 26 weeks of incapacity);
(b) the statutory indexed rate (that is, the rate prescribed by this Act for a period of incapacity after the first 26 weeks).”
The Appellant is incorrect in its assertion that the rate payable under section 38 is only 80% of the rate payable under section 36. It is apparent from the wording of the section that this reduction only applies after the first 26 weeks of incapacity. Prior to that time, compensation under section 38 is payable at the rate prescribed by section 36, i.e. the whole of the worker’s “current weekly wage rate” as determined by the application of section 42. After “the first 26 weeks of incapacity” the rate reduces as set out in paragraphs (a) and (b). The Arbitrator in her reconsidered decision took this approach. She reduced the amount payable till 30 October 2004 so that it accorded with her finding as to the Worker’s “current weekly wage rate”, which is 80% of her average weekly earnings of $836 i.e. $668.80. She reduced the amount thereafter by a further 20% to $535.04 for the period after 30 October 2004 (paragraphs 20 - 21 of the reconsidered Statement of Reasons).
I consider the Arbitrator’s approach to be correct, with one possible exception. 30 October 2004 was the calendar expiration of 26 weeks after the Worker became incapacitated. The “first 26 weeks of incapacity” is not, however, necessarily the same as the calendar period. The phrase is defined in section 34, and in particular section 34(3) provides that “For the avoidance of doubt, the first 26 weeks of incapacity does not include any period during which there is no weekly compensation payable in accordance with this Division, whether because of the operation of section 40 or otherwise.” The Arbitrator did not make any award for the period 6 - 5 October 2004 inclusive arising from the left foot injury, because the Worker was unfit for work for a different cause, being her hernia. It may be, therefore, that the “first 26 weeks of incapacity” did not expire until some days after 30 October 2004. The point is not raised by either party on this appeal and I express no concluded view. In any event, the monetary effect is minor and, viewed alone, well below the quantum to justify review, and it may be that compensation was in fact payable for that period due to the hernia. It is not possible to say on the evidence before me. For these reasons I do not consider any error has been shown in the Arbitrator’s reconsidered decision in relation to the section 38 award.
DECISION
The reconsidered decision of the Arbitrator made 21 September 2005 is confirmed.
COSTS
The Appellant has been unsuccessful on the appeal, but was successful in seeking reconsideration of the Arbitrator’s original decision to some degree. Filing an appeal as well as seeking reconsideration may have been a sensible precaution in view of the time limits on appeal, but may also have been required given the Worker’s view that reconsideration was not the correct mechanism. In all the circumstances I consider that each party should pay their own costs of the appeal.
Robyn Lansdowne
Acting Deputy President
7 August 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBYN LANSDOWNE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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