Shore v Tumbarumba Shire Council - [2013] NSWWCCPD 1

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:		Shore v Tumbarumba Shire Council [2013] NSWWCCPD 1
APPELLANT:		Douglas Ralph Shore
RESPONDENT:		Tumbarumba Shire Council
INSURER:		StateCover Mutual Ltd
FILE NUMBER:		A1-9376/11
ARBITRATOR:	Mr J Phillips SC
DATE OF ARBITRATOR’S DECISION:		26 September 2012
DATE OF APPEAL DECISION:		7 January 2013
SUBJECT MATTER OF DECISION:		Psychological injury; causation; whether psychological injury wholly or predominantly caused by transfer; whether action with respect to transfer was reasonable; s 11A of the Workers Compensation Act 1987
PRESIDENTIAL MEMBER:		Acting President Bill Roche
HEARING:		On the papers
REPRESENTATION:		Appellant:	White Barnes
Respondent:	Bartier Perry
ORDERS MADE ON APPEAL:		1. The Arbitrator’s determination of 26 September 2012 is revoked and the respondent employer’s defence under s 11A of the Workers Compensation Act 1987 fails. 2. The matter is remitted to a different Arbitrator to determine the outstanding issue of the applicant worker’s entitlement to weekly and other compensation. 3. The respondent employer is to pay the appellant worker’s costs of the appeal and of the first arbitration, as agreed or assessed. 4. The first arbitration is certified as complex with an uplift in costs for both parties of 20 per cent.

BACKGROUND

Douglas Shore has worked for the appellant employer, Tumbarumba Shire Council (the Council), as a “generic labourer” in its parks and gardens section for 34 years. He claimed compensation for a psychological injury (an adjustment disorder with depressed and anxious mood) received by him on 8 July 2010 when, at a meeting on that day, the Council informed him he was to be transferred to a different position. Prior to that date, he had a history of psychological symptoms as a result of having to re-open a grave in the course of his employment.
The Council did not dispute that Mr Shore had received a psychological injury, or that his employment was a substantial contributing factor to that injury, but disputed liability under s 11A of the Workers Compensation Act 1987 (the 1987 Act) on grounds that Mr Shore’s psychological injury was wholly or predominantly caused by reasonable actions with respect to performance appraisal, discipline and/or transfer. At the hearing, the Council only relied on “transfer”.
In an Application to Resolve a Dispute (the Application) registered in the Commission on 21 October 2011, Mr Shore claimed weekly compensation from 8 July 2010 to date and continuing. The date of injury was pleaded as 8 July 2010 and the injury was described as “Psychological injury”. Part 4 of the Application said that injury occurred as follows:
“The applicant had a limited history of psychological injury as a result of the re-opening of a grave the applicant had to do as part of his employment duties. In summary we refer generally to the attached witness statements. The events of

8 July 2010 whereby the respondent made a decision to transfer the applicant after

34 years of service without firstly consulting him, failing to give notice of the nature of the meeting that transpired, and failing to take into account the applicant’s side of the story caused, aggravated, accelerated, exacerbated and/or deteriorated the psychological injury suffered by the applicant.
The nature and the conduct of the meeting on 27 July that took place with no support persons for the applicant further aggravated his psychological injury. The nature and conduct of the meeting of 3 August 2010 with a new job description given to the Applicant caused him further distress and anxiety due to the nature and quality of the job and whether he would be able to cope given the injury.”
The background to the transfer was that a worker with whom Mr Shore had worked as a fellow member of a team for five years, Celina Staunton, had had a car accident in May 2010 when she passed out. She believed that she passed out because of stress she felt at having to work with Mr Shore. She said that Mr Shore would often come to work and say he was stressed, cry, and “express self-harm issues”. In addition, he had attended at her home on occasions uninvited.
At a meeting on 6 June 2010, Ms Staunton told Ms Clarke, the Council’s human resources officer, about the car accident and about Mr Shore’s behaviour, and said she could no longer work with him because it was “becoming just too much for her”.
Ms Clarke said that she had a meeting on 7 June 2010 with Ms Staunton, Alison Blake (Ms Staunton’s partner), and Mr Stoll, the Council’s director of environmental services, and that “a decision was made to move [Mr Shore] to another area within Council in accordance with [his] position description as a Labourer and the terms of his employment”. The Council made that decision because it believed it had a responsibility to return Ms Staunton to her substantive position and to remove any “issues affecting her health and well-being”. Ms Clarke had spoken with Ms Staunton’s doctor, who had strongly recommended that all identified areas of stress be removed from Ms Staunton’s workplace. She told the doctor that the Council would take the required steps to ensure that Ms Staunton did not work with Mr Shore.
The Arbitrator said that, presented with a statement from a co-worker, the Council had “little alternative but to transfer [Mr Shore] from working with Ms Staunton” ([23]). He added that it was apparent from Ms Clarke’s evidence that, by 6 June 2010, Mr Shore was “already in a fragile psychological state”.
Mr Shore was told of the transfer at a meeting on 8 July 2010. Though he had been given no notice of the meeting until the morning of 8 July 2010, he attended with his wife and with union representatives. According to Ms Clarke, Mr Shore refused to cooperate at the meeting and said he would only work with Ms Staunton. He left the meeting visibly upset.
The Arbitrator referred to Mr Stoll’s evidence that the meeting on 8 July 2010 was to “obtain [Mr Shore’s] comment and input” and that the Council wanted a “conciliatory approach” to the “matter of moving [Mr Shore] and discussing issues and [wanted to] see what his comments were”. Mr Stoll said “[t]he outcome of the meeting did not go very well”. Mr Shore and his wife were “very hostile” though the Council tried to hold the meeting in a “non-threatening manner”.
Mr Stoll said, “[w]e simply asked [Mr Shore’s] opinion on how we could manage the situation”. It was difficult to get through to Mr Shore and he said, “we were threatening him”. Mr Shore blamed Ms Staunton’s partner and, according to Mr Stoll, refused to separate issues or assist in possible solutions. Mr Stoll said that Mr Shore’s wife interjected and influenced Mr Shore “in a negative way” and that “[w]e did not resolve anything and were not able achieve any conciliatory or satisfactory negotiation”.
Dealing with a submission by Mr McManamey, counsel for Mr Shore, that the description of the injury in the Application was broader than merely the incident on 8 July 2010, the Arbitrator said that his reading of the Application was that “there was an injury on 8 July 2010” and that injury was in the context that Mr Shore had a history of psychological injury in the past.
The Arbitrator added that the “the injury about which the complaint was made was because of the events of 8 July 2010” ([32]). He said that Part 4 of the Application also dealt with some aggravations to that injury that happened on 27 July 2010 and 3 August 2010, upon which Dr Westmore, a psychiatrist qualified by Mr Shore, did not attach any significance. He then quoted the following passage from Dr Westmore:
“I would accept that there was a pre-existing condition present at the time the reported incident occurred on 8 July 2010. He may have been more vulnerable because of that prior incident, but I cannot state to what degree he was depressed in a clinical sense on 8 July 2010. He said he was coping or managing at that time in relation to previous depression.”
The Arbitrator said that this accorded with what he regarded as a “fair reading of [Mr Shore’s] description of injury”, that is, that there had been some prior problem and perhaps Mr Shore was “psychologically fragile”, but the claim in the Application related to 8 July 2010 and the meeting on that day.
The Arbitrator concluded (at [34]) that Mr Shore suffered a psychological injury on 8 July 2010, that work was a substantial contributing factor to that injury, and that he suffered the injury “as a result of the meeting which was called to discuss and direct his transfer from working with Ms Staunton”. He concluded that the separation of the two workers was “appropriate” and that, in determining what was reasonable, he had to exercise a value judgment. In his opinion, Ms Clarke and Mr Stoll had behaved in a reasonable way and the Council had made out its defence under s 11A.
In a Certificate of Determination issued on 26 September 2012, the Arbitrator made an award for the Council and no order as to costs.
Mr Shore has appealed that determination.

ON THE PAPERS

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 Nos 1 and 6, the documents that are before me, and the submissions 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.

ISSUES ON APPEAL

Mr McManamey has alleged that the Arbitrator erred in that he:
(a)     failed to consider that Mr Shore relied upon events other than the meeting of 8 July 2010 as being causative of his injury;
(b)     failed to consider relevant evidence from Mr Shore and his wife;
(c)     failed to consider the evidence of Louise Clarke that the decision to transfer Mr Shore was made prior to the meeting of 8 July 2010 and without prior consultation with him, and
(d)     failed to properly consider the evidence of Dr Westmore.
There are really two issues on appeal: first, what was the whole or predominant cause of Mr Shore’s psychological injury (causation), dealt with in grounds one and four and, second, if the psychological injury was wholly or predominantly caused by action taken with respect to the transfer of Mr Shore, whether the Council’s conduct with respect to the transfer was reasonable (reasonableness), dealt with in grounds two and three.

CAUSATION

Submissions

Mr McManamey submitted that the description of the date of injury is not the same thing as the cause (or causes) of injury. When describing how the injury occurred at Part 4 of the Application, it was stated “[Mr Shore] had a limited history of psychological injury as a result of the re-opening of a grave [he] had to do as part of his employment duties. In summary we refer generally to the attached witness statement”. The Application then described the events of 8 July 2010.
It was clear from the Application, so Mr McManamey submitted, that the earlier events relating to the re-opening of the grave were alleged to be, at least in part, causative of Mr Shore’s condition “which fell within the general description of ‘psychological injury’”. In recounting Part 4 of the Application (at [21] of his decision), the Arbitrator omitted the first two paragraphs and, in doing so, he failed to consider the totality of the matter before him.
The terms of s 11A require a consideration of the causes of an injury and, to attract the provisions of the section, it is necessary to show that the psychological injury was wholly or predominantly caused by reasonable action taken with respect to certain specific matters (in this case, transfer). There is a distinction between the cause or causes of an injury and the date on which the injury occurred. By failing to consider the first two sentences of the description of injury in the Application, the Arbitrator failed to consider whether any of the events prior to 8 July 2010 contributed to the psychological injury described by Dr Westmore as an adjustment disorder with depressed and anxious mood.
The Arbitrator failed to consider what injury it was he was considering and he limited his consideration to the events of 8 July 2010 as being potential causes of the injury. If he had examined the other events, he would have considered the opinion of Dr Westmore, which attributed the condition to all of Mr Shore’s workplace difficulties, and he would have considered the other lay evidence (from Ms Staunton, Mr Stoll, Mr Bradley and Mr Shore), which was consistent with Mr Shore having a significant depressive injury prior to 8 July 2010.
Had the Arbitrator considered this evidence, he would have concluded that, as a result of the grave re-opening incident, Mr Shore had a longstanding depressive condition for which he was receiving treatment. He would then have had to consider to what extent Mr Shore’s psychological injury as a whole was attributable to those earlier events as opposed to the events of 8 July 2010.
The Council carried the onus of establishing that the injury was wholly or predominantly caused by reasonable action with respect to transfer and the only (medical) opinion before the Arbitrator was from Dr Westmore, who attributed the injury to all of the incidents at work. While the doctor attributed Mr Shore’s decompensation to difficulties with a co-worker and a subsequent move to another area of employment, he did not address the question of whether the events of 8 July 2010 were the whole or predominant cause of the overall condition.
Mr McManamey submitted that the Arbitrator failed to appreciate that there is a distinction between the fact of decompensation and the psychological injury that Dr Westmore found to be an adjustment disorder with depressed and anxious mood. The question for the Arbitrator was whether the events of 8 July 2010 were the whole or predominant cause of that condition. When dealing with that question, the Arbitrator failed to address or appreciate the significance of Dr Westmore’s opinion that the pre-existing incident in the workplace had resulted in Mr Shore becoming depressed. While he quoted that passage, he made no comment about it.
When Dr Westmore specifically addressed the question of causation, he said, “the adjustment disorder arises as a direct result of his workplace difficulties”. The doctor set out the “workplace difficulties” in his report and recorded that “the original problem started with a grave incident”. When the history of the workplace incident is read, it is clear that Dr Westmore attributed the adjustment disorder to a number of causes, the incident of 8 July 2010 being only one. The Arbitrator failed to consider this evidence.
Notwithstanding that experienced counsel represented the Council at the arbitration, the Council’s submissions on appeal have been prepared by its solicitor, Ms Hewish. She submitted that Mr Shore appeared to be seeking a review and that the grounds of appeal did not appear to challenge the Arbitrator’s finding that the defence under s 11A was made out in respect of the meeting of 8 July 2010. She said there was no basis to disturb the Arbitrator’s findings and inferences.
Ms Hewish said it was apparent from the Arbitrator’s reasons that he considered that Mr Shore was relying on the events other than the meeting of 8 July 2010 as causative of his injury, but he did not accept that such events were causative of the alleged incapacity and need for treatment the subject of the claim. At [1] of the decision, the Arbitrator summarised the particulars of the claim, as pleaded, and he referred to the submissions surrounding that aspect.
In coming to his conclusions, Ms Hewish said that the Arbitrator considered all the available evidence and, in particular, the medical evidence addressing the cause of any psychological condition and came to a “proper conclusion” on causation and the claim. The evidence does not support any other conclusion.
Dealing with Dr Westmore’s evidence, Ms Hewish submitted that it was quite clear from the Arbitrator’s reasons that he properly considered the medical opinion of Dr Westmore and applied that consideration appropriately.

Discussion

I reject Ms Hewish’s submissions that Mr Shore appears to be seeking a review and that the grounds of appeal do not challenge the Arbitrator’s finding that the s 11A defence was made out. The grounds of appeal allege specific errors by the Arbitrator in his approach and support those allegations of errors with detailed submissions that conclude with the assertion that the correct decision is that the Council had not made out its defence under s 11A and that the Arbitrator erred in finding that it had.
Before dealing with the substance of the appeal, I note that the pleadings in this matter were unsatisfactory and created uncertainty, rather than clarity, about exactly what was alleged. The first two sentences in the description of how the injury occurred were a narrative of previous events that may or may not have been part of the cause of injury. While the Commission is not a court and is not bound by strict pleadings, the Application to Resolve a Dispute should clearly and succinctly identify the alleged cause of injury and the nature of the case. It is unacceptable to set out a narrative of events and to refer to the “attached witness statements”.
The uncertainty created by the Application was compounded by the teleconference on 1 December 2011 before Arbitrator McGrowdie. In response to an assertion that the Council would object to any reliance by Mr Shore on any events preceding 8 July 2010, Mr McGrowdie recorded that Mr Shore “appeared content to confine the claim to the events on or after 8/7”. Notwithstanding these matters, subject to compliance with the rules of procedural fairness, and with the terms of s 74 of the 1998 Act, cases should be determined on the evidence and arguments presented (Banque Commerciale SA (in liq) v Akhil Holdings Ltd [1990] HCA 11; 169 CLR 279 at 296–297).
The issues in dispute are ultimately determined by the way the parties present their respective cases. As observed by Isaacs and Rich JJ in Gould v Mount Oxide Mines Ltd [1916] HCA 81; 22 CLR 490 at 517 (applied in CMA Corporation Ltd v SNL Group Ltd [2012] NSWCA 138 at [14] and [15]) “pleadings are only a means to an end” and if, in the running of the case, the parties choose to restrict them, enlarge them, or to disregard them, “it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest”.
Consistent with his argument on appeal, Mr McManamey submitted at the arbitration that the “causes” of Mr Shore’s psychological injury included the history of the psychological injury that resulted from the re-opening of the grave (T32.7). While it would have been prudent for that incident to have been pleaded as one of the causes of the injury, rather than having it referred to as essentially background material, the failure to properly plead it was not, in the circumstances of this case, fatal. The Council was well aware of its significance, it having been referred to in Mr Shore’s statement of 18 July 2011, which was served on the Council on 9 August 2011 when he sought a review of the Council’s decision to deny liability.

Dealing with the pleadings, the Arbitrator said (at [32]) that, on his reading of Part 4 of the Application, “there was an injury on 8 July 2010”. He added, “the injury was in the context that [Mr Shore] had a history of psychological injury in the past”, but the injury about which the complaint was made was because of the events of 8 July 2010. He added that Dr Westmore did not attach any significance to the events on 27 July 2010 and 3 August 2010 and (I infer) neither did the Arbitrator.
After referring to the passage from Dr Westmore that accepted there was a pre-existing condition present at the time of the incident on 8 July 2010 and that Mr Shore may have been more vulnerable because of that prior incident (quoted in full at [12] above), the Arbitrator said at [33] and [34]:
“That accords with what I regard to be a fair reading of the application’s description of injury. That is, there had been some prior problem. Perhaps the applicant was psychologically fragile, but nevertheless, the claim as defined by the Application relates to 8 July 2010 and the meeting on that day. Insofar as there are any aggravations subsequent to that date, there is no medical evidence to that effect.
In my opinion, the applicant did suffer psychological injury on 8 July 2010. I find that work was a substantial contributing factor in that injury. He suffered that psychological injury as a result of the meeting which was called to discuss and direct his transfer from working with Ms Staunton. The applicant was upset that he had to transfer from work with Ms Staunton.”
The Arbitrator then went on to deal with the reasonableness of the transfer, which I discuss below, but said no more about causation.
The difficulty with the Arbitrator’s approach is that he appears to have considered that the finding on injury and substantial contributing factor satisfied the causation requirements in s 11A because “the claim as defined by the Application relates to 8 July 2010 and the meeting on that day”. That was an error. That Mr Shore suffered a s 4 injury as a result of the events on 8 July 2010 and that employment was a substantial contributing factor to that injury was never disputed and did not require a finding.
The causation issue before the Arbitrator was not causation in the sense dealt with under ss 4 or 9A, but was the causation test in s 11A. That section requires the employer to prove that the relevant psychological injury was “wholly or predominantly” caused by the employer’s reasonable action with respect to, in this case, transfer. That is a different, and more difficult, test to satisfy and it required the Arbitrator to consider more than just the events on 8 July 2010.
To succeed with its defence under s 11A, the Council had to prove that Mr Shore’s injury (an adjustment disorder with depressed and anxious mood) had been wholly or predominantly caused by reasonable action by it with respect to transfer. While the Arbitrator referred to part of Dr Westmore’s evidence, and acknowledged that there had been some prior problems, and that “perhaps” Mr Shore was psychologically fragile and more vulnerable, he failed to do so in the terms required by s 11A. Rather, he said that the “claim as defined by the Application relates to 8 July 2010 and the meeting on that day”.
While I agree that the Application alleged that the injury had been caused by the transfer and, in that sense, the claim related to the meeting on 8 July 2010 (when Mr Shore was told of the transfer), given the evidence of Mr Shore’s prior psychological problems because of the grave re-opening (which arose out of his employment with the Council), and the arguments presented at the arbitration, that was not the end of the analysis of the causation issue under s 11A.
The fact that Mr Shore had not formally pleaded the grave re-opening incident did not relieve the Council of its obligation to prove the elements required to establish a defence under s 11A. A similar situation arose in Jetstar Airways Pty Ltd v Canterbury [2011] NSWWCCPD 54. In that case, the fact that the worker withdrew one of the alleged causes of his injury (which was not relevant to the s 11A defence) did not prevent the Arbitrator from finding that that matter had been a factor in the development of the worker’s psychological injury and that the injury had therefore not been wholly or predominantly caused by action with respect to discipline.
In the present case, there was no dispute that Mr Shore received a psychological injury as a result of the events on 8 July 2010, or that his employment was a substantial contributing factor to that injury. It is trite law, however, that a condition can have more than one cause (ACQ Pty Ltd v Cook [2009] HCA 28; 237 CLR 656 at [25] and [27]). Given the way Mr McManamey argued the case at the arbitration, and given the (albeit unsatisfactory) pleadings, there can be no doubt that there was a live issue as to whether the transfer was the whole or predominant cause of Mr Shore’s accepted psychological injury. That issue could not be properly determined by saying that the claim, as defined by the Application, related to 8 July 2010 and the meeting on that day.
When the issue is approached in this way, Dr Westmore’s evidence that the adjustment disorder arose as a direct result of Mr Shore’s “workplace difficulties” is of critical importance. While the Arbitrator referred to passages from Dr Westmore’s report, he did not refer to the doctor’s opinion under “Causation” in his report. That was an error. The workplace difficulties identified by Dr Westmore started with the grave re-opening incident, and included the statement from Ms Staunton shown to Mr Shore by an investigator (which upset him) and allegations that he kept trying to see Ms Staunton (which Mr Shore said were untrue), as well as the matters of the transfer effected on 8 July 2010.
Given Dr Westmore’s history as to the importance of the grave re-opening incident (which he recorded as the start of Mr Shore’s problems), and his clear opinion on causation, that is, that Mr Shore’s psychological injury was due to his “workplace difficulties” (which included but were not limited to the transfer), it is impossible to conclude that the transfer (or action with respect to it) was the whole or predominant cause of Mr Shore’s psychological injury. That is especially so in circumstances where Dr Westmore was the only medical expert in the case who expressed an opinion on causation and his evidence was unchallenged.
Furthermore, Mr Shore’s evidence as to the effect the grave re-opening incident had on him was also unchallenged. That evidence was that it played on his mind and that every time after it when he had to re-open a grave he became distressed. Dr Westmore recorded that Mr Shore had developed disturbing images and dreams about (grave) re-openings, and that the depression caused by it “never closed”. From that time until the recent stress (because of the transfer), Mr Shore’s depression had been “manageable” and he was treated with Aropax. In other words, the effects of the grave re-opening had not resolved by 8 July 2010.
It follows that, consistent with Dr Westmore’s evidence, and having regard to the whole of the evidence, the transfer was only one of several factors that caused the psychological injury.
I do not accept Ms Hewish’s submission that the Arbitrator considered that Mr Shore was relying on events other than the meeting on 8 July 2010 as causative of his injury, but did not accept that such events were causative of the alleged incapacity and need for treatment. First, merely saying, as the Arbitrator said, that there had been some prior problem and that perhaps Mr Shore was psychologically “fragile” did not deal with the causation issue in the terms required by s 11A.
Second, the issue is not whether the other events were causative of the alleged incapacity or need for treatment, which requires an application of the “results from” test in Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452, but whether the transfer was the whole or predominant cause of the admitted psychological injury. On this issue, the Arbitrator failed to consider the nature of the relevant psychological injury and the relevant evidence from Dr Westmore dealing with the cause of that injury. Instead of considering the terms of s 11A, he approached the question from the point of view that “the claim as defined by the Application relates to 8 July 2010 and the meeting on that day”.
It follows from the above analysis that the s 11A defence cannot succeed because, regardless of whether the Council’s actions were reasonable, the Council has not discharged its onus of establishing that those actions were the whole or predominant cause of Mr Shore’s psychological injury.
While this finding means that the appeal must succeed, and it is therefore unnecessary to consider the reasonableness issue, in view of the Arbitrator’s comments, and the parties’ submissions on appeal, it is appropriate that I deal with this issue.

REASONABLENESS

Submissions

Mr McManamey submitted that the Arbitrator did not refer to the evidence from Mr Shore or his wife. Mr Shore disputed many of the claims made by Ms Staunton, and it was those claims that formed the basis on which the Council decided to act. Neither Mr Shore, nor the union organiser or his delegate, received any prior notice of the purpose of the meeting on 8 July 2010. Mr Stoll refused to give Mr Shore notice of what was to be raised at the meeting. Mr Shore asserted that, at the meeting, he was simply being told about the outcome and was not consulted about it. These were all matters of significance to the question of whether the Council’s actions were reasonable.
The Arbitrator had to consider if the events of 8 July 2010 and the decision to transfer Mr Shore was carried out in a reasonable manner. He had to consider the evidence of Mr Shore that no notice was given about the purpose of the meeting, he was never provided with the substance of the complaint from Ms Staunton nor given an opportunity to answer those complaints and, more specifically, the decision to transfer him was made prior to the meeting and without any consultation. The Arbitrator failed to consider those matters.
In addition, on the reasonableness issue, Ms Clarke’s evidence confirmed that a decision had been made prior to the meeting of 8 July 2010 to transfer Mr Shore. This was consistent with the evidence from Mr Shore and his wife, but inconsistent with the evidence from Mr Stoll that the meeting was simply to ask Mr Shore’s opinion on how they could manage the situation. Ms Clarke’s evidence is significant because it demonstrates that the Council had made a decision to act adversely to Mr Shore by transferring him in an unreasonable manner.
The Arbitrator failed to consider the following matters: that there was no evidence that any inquiries had been made to verify any of the matters raised by Ms Staunton; that there was no evidence to associate Ms Staunton’s car accident with any action of Mr Shore; that, prior to making the decision (to transfer Mr Shore), there was no attempt to consult with Mr Shore, an employee of 34 years standing; and that there was no evidence that the Council considered any other option for facilitating a return to work by Ms Staunton other than transferring Mr Shore.
In his reasons at [35] (set out at [70] below) the Arbitrator did not consider the lack of consultation and whether, on the basis of one discussion, an absence of investigation and a failure to accord procedural fairness to Mr Shore, it was reasonable for him to be treated as the guilty party and transferred. At the time the Council decided to transfer Mr Shore (that is, on 7 June 2010), it knew that Ms Staunton did not want to work with Mr Shore, but little more.
Ms Hewish submitted that the Arbitrator made no error and considered all available evidence. The Arbitrator accepted that the actions of the Council’s employees were reasonable and thereby appropriately invoked the s 11A defence. This finding does not appear to be challenged by the grounds of appeal. In doing so, the Arbitrator referred to making a “value judgment” and, by inference, preferred the evidence of Ms Clarke and Mr Stoll.
Ms Hewish added that the Council relied on the “deliberations of the Arbitrator in his consideration of the need to transfer and conduct generally and in making a ‘value judgment’ in the circumstances”. This did not appear to be challenged by the grounds of appeal.

Discussion

I reject Ms Hewish’s submission that the reasonableness of the Council’s actions was not challenged on appeal. Mr McManamey clearly asserted that the Arbitrator erred in his approach and conclusion on this issue, and that the proper conclusion from the evidence was that the s 11A defence had not been made out. He directly challenged the Arbitrator’s conclusion that the Council’s actions were reasonable and supported that challenge with well-reasoned arguments.
It is appropriate to consider first the authorities.
The often-quoted statements by Geraghty CCJ in Irwin v Director-General of School Education (unreported, 18 June 1998) (Irwin) and Truss CCJ in Ivanisevic v Laudet Pty Ltd (unreported, 24 November 1998) (Ivanisevic) remain the best guide to determining reasonableness. In Irwin, Geraghty CCJ said:
“The question of reasonableness is one of fact, weighing all the relevant factors. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of ‘reasonableness’ is objective, and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.”
In Ivanisevic, Truss CCJ said:
“In my view when considering the concept of reasonable action the Court is required to have regard not only to the end result but to the manner in which it was effected.”
These passages were quoted with approval by Foster AJA (Sheller and Santow JJA agreeing) in Commissioner of Police v Minahan [2003] NSWCA 239; 1 DDCR 57 at [42], where his Honour said:
“I prefer the construction which has been accorded to it in the decisions in the Compensation Court referred to in this judgment and in his Honour’s judgment. The words ‘reasonable action’, in a statute dealing with Workers Compensation rights of employees should be given a broad construction, unfettered by considerations as to whether the employee can or cannot also bring an action at common law against the employer, founded upon breach of a duty of care.”
Spigelman CJ (Hodgson and Bryson JJA agreeing) observed in Department of Education & Training v Sinclair [2005] NSWCA 465; 4 DDCR 206 at [69], [97], [99] and [100] that one must look at the entire process to see if it was reasonable action within s 11A. That includes looking at the circumstances surrounding the action, both before and after the action (Buxton v Bi-Lo Pty Ltd [1998] NSWCC 13; 16 NSWCCR 234 at 249; Melder v Ausbowl Pty Ltd (1997) 15 NSWCCR 454 at 458).
Determining if an employer’s actions were reasonable requires an objective assessment of those actions (Jeffery v Lintipal Pty Ltd [2008] NSWCA 138 at [50]). It is not enough that the employer has complied with its own protocols; those protocols must be objectively reasonable (Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle v Broad [2008] NSWWCCPD 139; 7 DDCR 193 at [45], [47], [48], and [63]).
There will be many cases where the particular action concerned was justified but, having regard to the parties’ previous relationship, the process adopted was unreasonable (see, for example, Pirie v Franklins Ltd (2001) NSWCCR 346, where the dismissal of a longer-term employee without prior notice or warning was held to have been unreasonable).
Dealing with whether the Council’s actions were reasonable, the Arbitrator said, at [34] and [35]:
“The applicant was upset that he had to transfer from work with Ms Staunton. However, I believe that in looking at the reasonableness of that action one needs to take into account the evidence of Ms Clarke and Mr Stoll. Both of whom sensitively took into account the applicant’s pre-existing psychological state.
At the meeting, Ms Clarke and Mr Stoll indicated the reasons why the transfer was to take place. One would understand that if a co-worker had concerns of the kind expressed by Ms Staunton that the approach by the employer was appropriate. In such circumstances, even leaving aside the rights or wrongs of what she was saying, a separation of the two workers was appropriate. Secondly, the applicant was able to have union representatives there, together with his wife. When presented with the prospect of a transfer of work crews the applicant refused to do so and then became visibly upset. In determining what is reasonable one has to exercise a value judgment. In my opinion, Ms Clarke and Mr Stoll, in dealing with this issue, behaved in a reasonable way and the respondent is able to enlist the section 11A defence.”
It may well be that it was “appropriate” for the Council to take action to address the concerns expressed by Ms Staunton, and even that a “separation” of the two workers was appropriate. In approaching the matter in that way, however, the Arbitrator looked at the wrong issue. The issue in s 11A was not whether it was appropriate to separate the two workers, but whether, making an objective assessment of the actions concerned, the action the Council took was reasonable.
In looking at this question, the following matters are relevant:
(a)     Ms Staunton had an issue with Mr Shore’s conduct;
(b)     Mr Shore was an employee of many years’ service;
(c)     the Council gave Mr Shore no prior notice of the meeting;
(d)     the Council gave Mr Shore no notice of what was to be raised at the meeting, or of its intention to transfer him, and
(e)     the Council made the decision to transfer Mr Shore prior to the meeting on 8 July 2010, which was inconsistent with Mr Stoll’s evidence that the meeting was simply to ask Mr Shore’s opinion on how they could manage the situation.
In looking at reasonableness, it was appropriate for the Arbitrator to take into account the evidence of Ms Clarke and Mr Stoll, but not to the exclusion of the evidence from Mr Shore and his wife. The Arbitrator was required to weigh their evidence with the other evidence and the surrounding circumstances. Contrary to Ms Hewish’s submission, he did not do that. He did not consider the evidence from Mr Shore or his wife on this issue.
Determining whether action is reasonable under s 11A is not simply a “value judgment”, as the Arbitrator suggested. It requires an objective assessment of the employer’s actions and a weighing of the rights of employees against the objective of the employer. The Arbitrator did not undertake that process. The fact that Mr Stoll and Ms Clarke indicated (at the meeting on 8 July 2010) why Mr Shore was to be transferred did not properly address the fundamental issue of whether the Council’s conduct was objectively reasonable in all the circumstances.
Having regard to the matters listed at [72] above, an objective assessment of the facts leads to only one conclusion, namely, that the Council’s actions with respect to the transfer were not reasonable. There were three main areas where the Council’s conduct was unfair to Mr Shore:
(a)     its failure to tell Mr Shore (prior to the meeting of 8 July 2010) of Ms Staunton’s complaints (which were first raised on 6 June 2010) was unfair because it denied him the opportunity to respond to those complaints and to address them in a way that might have avoided a transfer;
(b)     its failure to give Mr Shore notice of the meeting (other than on the morning of 8 July 2010) was unfair because it deprived him of the opportunity to properly prepare for it, and
(c)     its refusal to tell him of the purpose of the meeting was unfair because it denied him the opportunity to prepare a response to the complaints made.

It is difficult to see how Ms Clarke and Mr Stoll had “sensitively” taken into account Mr Shore’s pre-existing psychological state, as the Arbitrator found, in circumstances where they gave him no notice of the meeting, or its purpose, and they did not seek his response to Ms Staunton’s comments before they decided to transfer him. In the context of a worker who had been with the Council for over 30 years with an (apparently) good record, and who had a history of depressive symptoms caused by his work duties, that was unreasonable.
Moreover, contrary to Mr Stoll’s evidence, the meeting was not to seek Mr Shore’s opinion on how to manage the situation, which may well have been a reasonable step to take, it was to inform him of the decision to transfer him. The Council took that decision on 7 June 2010, before Mr Shore was aware of any complaint and before he had a chance to respond.
It follows that, if the action taken, or proposed to be taken, with respect to the transfer of Mr Shore was the whole or predominant cause of his psychological injury, the Council failed to establish that its actions were reasonable and the s 11A defence fails.

OTHER MATTERS

The pleadings in the present matter were unsatisfactory. Pleadings in the Commission should clearly and succinctly state the nature of the injury and the alleged cause of that injury. The Commission has repeatedly criticised pleadings that set out a narrative and/or simply refer to attached statements. The profession is again reminded of its obligation to properly plead claims.
The Commission has recently delivered several decisions where it has expressed surprise at the now common practice of briefing counsel at the arbitration but not on the appeal. The Council adopted that practice in this matter. As I have observed in previous cases, that practice is counterproductive and does not advance the interests of the party concerned (NSW Department of Education and Communities v Murray [2012] NSWWCCPD 76; Nolan v Department of Education & Training [2012] NSWWCCPD 74; Krstevska v Fast & Fluid Management Australia Pty Ltd [2012] NSWWCCPD 69). Those observations are applicable in this matter.

CONCLUSION

The Arbitrator erred in his approach and conclusions on both issues in dispute. Applying the correct approach to those issues, the Council’s s 11A defence fails and Mr Shore is entitled to compensation. As the Arbitrator did not assess Mr Shore’s entitlement to compensation, the matter must be remitted to a different Arbitrator for that purpose.
I note that the parties made written submissions to the Arbitrator about whether the s 74 notice had disputed Mr Shore’s entitlement to weekly compensation. That question is not an issue on appeal and it therefore a matter for the next Arbitrator. I note in passing, however, that the s 74 was restricted to the two s 11A issues dealt with on appeal. On the face of it, the insurer will need leave to dispute incapacity. In the circumstances, it is difficult to see why that leave would not be granted.
On the issue of whether Mr Shore is entitled to two awards of total incapacity, the decision in Baker v NSW Police Force [2010] NSWWCCPD 10 may be relevant.

DECISION

The Arbitrator’s determination of 26 September 2012 is revoked and the respondent employer’s defence under s 11A fails.
The matter is remitted to a different Arbitrator to determine the outstanding issue of the applicant worker’s entitlement to weekly and other compensation.

COSTS

The respondent employer is to pay the appellant worker’s costs of the appeal and of the first arbitration, as agreed or assessed.
The first arbitration is certified as complex with an uplift in costs for both parties of 20 per cent.

Bill Roche

Acting President
7 January 2013

I, MARGOT UNDERCLIFFE, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, ACTING PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE