Spicer Axle Australia Pty Limited v Merza
[2007] NSWWCCPD 148
•27 June 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Spicer Axle Australia Pty Limited v Merza [2007] NSWWCCPD 148
APPELLANT: Spicer Axle Australia Pty Limited
RESPONDENT: Maykel Merza
INSURER:CGU Workers Compensation (NSW) Limited
FILE NUMBER: WCC14967-04
DATE OF ARBITRATOR’S DECISION: 8 December 2006
DATE OF APPEAL DECISION: 27 June 2007
SUBJECT MATTER OF DECISION: Section 329 Workplace Injury Management and Workers Compensation Act 1998; estoppel; res judicata, and effect of Medical Assessment Certificates.
PRESIDENTIAL MEMBER: Deputy President Bill Roche
HEARING:On the papers
REPRESENTATION: Appellant: Lee and Lyons
Respondent: Ron Kramer Associates
ORDERS MADE ON APPEAL: The decision of the Arbitrator dated 8 December 2006 is confirmed.
The Appellant Employer is to pay the Respondent Worker’s costs of the appeal.
BACKGROUND TO THE APPEAL
On 15 September 2001 Maykel Merza (‘the Respondent Worker/Mr Merza’) sustained injury to his back in the course of his employment with Spicer Axle Australia Pty Limited (‘the Appellant Employer/Spicer’) when he lifted a 60-kilogram tray containing axles.
After his injury Mr Merza was placed on light duties until he ceased work on 24 May 2002 because of continuing severe pain as a result of his injury. He underwent surgery to his low back on 29 October 2002 when an L4/5 discectomy was performed.
On 22 September 2004 Mr Merza’s Application to Resolve a Dispute (‘the Application’) was registered in the Commission seeking lump sum compensation in respect of a 30% permanent loss of sexual function, 36% permanent impairment of his back, 10% permanent loss of efficient use of his left leg at or above the knee and 5% permanent loss of efficient use of his right leg at or above the knee.
By its Reply filed on 8 October 2004 the Appellant Employer disputed injury, whether Mr Merza’s employment was a substantial contributing factor to any injury and whether he suffered from any pre-existing or unrelated condition or abnormality.
The matter was listed for a teleconference before a Commission Arbitrator on 21 December 2004 when it was referred to an Approved Medical Specialist (‘AMS’) (Dr Hitchen) for assessment of Mr Merza’s losses and impairments under the Table of Disabilities and the whole person impairment threshold dispute. Two assessments were conducted, one for Mr Merza’s orthopaedic injuries by Dr Kitchens and one for his loss of sexual organs by Dr Breslin. The referral did not identify Mr Merza’s injury other than by reference to the Application, which stated “injury to lower back” (see Application Part 3).
A Medical Assessment Certificate (‘MAC’) was issued in respect of the orthopaedic injuries on 5 April 2005. Dr Hitchen found that whilst Mr Merza had disc pathology at L4/5 and L5/S1 his work injury on 15 September 2001 was only to his L5/S1 disc and that the herniation of the L4/5 disc “would not have occurred at the workplace and the herniation at L4/5, for which he had surgery, is degenerative in nature” (MAC, page seven). The MAC certified Mr Merza to have 13.5% permanent impairment of his back, a 2% permanent loss of efficient use of his right leg at or above the knee and a zero loss of use of his left leg at or above the knee under the Table of Disabilities for injuries sustained before 1 January 2002. In respect of injuries after that date, Mr Merza was certified to have a zero whole person impairment.
On 26 April 2005 Mr Merza lodged an appeal against that MAC under section 327(3) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). By decision made on 4 August 2005 the Registrar’s Delegate, Erin Stephens, determined that it did not appear that at least one of the grounds of appeal listed in section 327(3) existed and the matter was referred back to the Arbitrator for any outstanding issues to be determined.
On 4 October 2005 Mr Merza’s solicitor wrote to the Registrar enclosing further submissions in relation to the Registrar’s decision of 4 August 2005. After considering Mr Merza’s further submissions Wayne Wormald, for the Registrar, issued a letter on 13 October 2005 confirming the decision of 4 August 2005.
By an amended summons filed in the Supreme Court of NSW on 1 February 2006 (matter No. SC 30096/05, originally filed on 27 October 2005) Mr Merza sought the following orders:
“(1) A declaration that the decisions of the first defendant (the Registrar) in matter No WCC 14867 of 2004 in the matter of Maykel Merza v Spicer Axle Australia Pty Limited dated 4 August 2005 and 13 October 2005 involved error on the face of the record and jurisdictional error.
(2) An order that the decisions be quashed.
(3) An order that the first defendant carry out her functions in accordance with s327 of the Workplace Injury Management and Compensation Act 1998.
(4) Costs.
(5) Such further or other order as the nature of the case requires.”
Hoeben J heard the matter on 7 September 2006 and dismissed the summons in a reserved decision on 14 September 2006 (Merza v Registrar of the Workers Compensation Commission & Anor [2006] NSWSC 939).
The Application was listed for teleconference before a different Arbitrator on 17 November 2006 when the parties made oral submissions as to the effect of the MAC. In a reserved decision delivered on 8 December 2006 the Arbitrator issued the following Certificate of Determination:
“(i)The Applicant sustained injury to his lower back on 15 September 2001 at both L4/5 and L5/S1 levels.
(ii)The matter is to be referred to an AMS for assessment of the degree of permanent impairment resulting from the injury to the L4/5 and L5/S1 levels of the lower back. The AMS should be a different AMS from previously.
(iii)The Respondent to pay the Applicant’s costs as agreed or as assessed. I certify this matter as complex in accordance with Schedule 6, clause 4.10 as the matter proceeded directly to arbitration.”
On 8 January 2007 Spicer sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against the Arbitrator’s decision of 8 December 2006.
PRELIMINARY MATTERS
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.
ISSUES IN DISPUTE
The issues in dispute in the appeal are whether the Arbitrator erred in:
(a)finding that the issue of injury had not been determined (‘injury’);
(b)determining that the principles of res judicata did not apply (‘res judicata and issue estoppel’);
(c)determining the issue of injury (‘injury’);
(d)determining that there was no issue estoppel (‘res judicata and issue estoppel’);
(e)accepting Mr Merza’s medical evidence over that of Dr Hitchen, the AMS (‘medical evidence’);
(f)“failing to find that the issue of injury having already been agreed, did not amount to [an] abuse of process in having the matter sought to be re-determined” (Appellant Employer’s submissions 2.6 (vi)) (‘abuse of process’);
(g)rejecting the submission that if Mr Merza wanted to re-agitate the issue of injury the proper process was by appeal of Justice Hoeben’s decision of 14 September 2006 (‘decision of Justice Hoeben’), and
(h)exercising her discretion to refer the matter for a further medical assessment under section 329 of the 1998 Act (‘section 329’).
LEAVE TO APPEAL
Monetary Threshold
Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.
Section 352, as amended by the Workers Compensation Legislation Amendment (Miscellaneous Provisions) Act 2005 (‘the amending Act’), provides:
“352 Appeal against decision of Commission constituted by Arbitrator
(1) A party to a dispute in connection with a claim for compensation may, with leave of the Commission constituted by a Presidential member, appeal to the Commission as so constituted against a decision in respect of the dispute by the Commission constituted by an Arbitrator.
(1A) An appeal is to be made by application to the Registrar. The appeal is not to proceed unless the Registrar is satisfied that the requirements of this section and any applicable Rules and regulations as to the making of the appeal have been complied with.
(2) The Commission is not to grant leave to appeal unless the amount of compensation at issue on the appeal is both:
(a) at least $5,000 (or such other amount as may be prescribed by the regulations), and
(b) at least 20% of the amount awarded in the decision appealed against.
(3) If the Commission refuses to grant leave to appeal, the Commission must state reasons for the refusal in writing to the parties.
(4) An appeal can only be made within 28 days after the making of the decision appealed against.
(5) An appeal under this section is to be by way of review of the decision appealed against.
(6) Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.
(7) On appeal, the decision may be confirmed or may be revoked and a new decision made in its place.
Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission.
(7A) Section 345 of the Legal Profession Act 2004 applies to and in respect of the provision of legal services in connection with an appeal to the Commission under this section in the same way as it applies to and in respect of the provision of legal services in connection with a claim or defence of a claim for damages referred to in that section.Note: Section 345 of the Legal Profession Act 2004 prohibits a law practice from providing legal services in connection with a claim or defence unless a legal practitioner associate responsible for the provision of those services believes, on the basis of provable facts and a reasonably arguable view of the law, that the claim or defence has reasonable prospects of success.
(8) In this section, ‘decision’ includes an award, interim award, order, determination, ruling and direction, but does not include any award, order, determination, ruling or direction of an interlocutory nature prescribed by the regulations.” (emphasis added)
The amendments effected by the amending Act were the inclusion of subsections (1A), (7A) and the amendment of subsection (8) to exclude orders of an interlocutory nature from the definition of ‘decision’. Subject to the regulations and transitional provisions, these amendments commenced on 1 November 2006.
Before leave to appeal can be granted it is necessary that “the amount of compensation at issue on the appeal” is both “at least $5,000.00” and “at least 20% of the amount awarded in the decision appealed against”. The amount of compensation at issue on the appeal must be determined by reference to the amount of compensation at issue in the proceedings before the Arbitrator at first instance. In Grimson v Integral Energy [2003] NSWWCCPD 29 at [30] Deputy President Fleming held:
“The preferred interpretation, in my view, is that the Commission, constituted by a Presidential Member, may grant leave only to appeal against a decision of an Arbitrator where there is an amount of compensation at issue on the appeal that is (a) at least $5,000, and, if a monetary award has been made, (b) at least 20% of that award. The ‘. . . amount of compensation at issue on the appeal’ is determined by reference to the amount of any monetary award made by the Arbitrator or, where no monetary award is made, the amount of the claim as particularized by the Applicant.”
In Fletchers International Exports Pty Limited v Regan [2004] NSWWCCPD 7 it was held at [27] that:
“The decision must have a real capacity to put the amount of compensation, determined by reference to the decision or the claim (Sheridan v Coles Supermarkets Australia Pty Limited [2003] NSWWCC PD 3), in issue in the appeal (as in the case of the filing of a ‘Reply’ (ADCO Constructions Pty Ltd v Ferguson [2003] NSWWCC PD21)).”
As no compensation has been awarded in this matter the amount of compensation at issue on appeal is determined by reference to the compensation claimed in the Application. Mr Merza’s claim easily exceeds $5,000.00 in value. As no compensation has yet been awarded it is not necessary for the Appellant Employer to satisfy the threshold in section 352(2)(a)(b) (Mawson v Fletchers International Exports Pty Ltd [2002] NSWWCCCPD 5).
Therefore, the monetary thresholds in section 352(2) are satisfied.
Time
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.
Interlocutory Order
In light of the above amendments to section 352(8) and the issues raised in the appeal, I issued the following Direction to the parties on 4 May 2007:
“1.The parties are directed to the provisions of section 352(8) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’), as amended by Act 113 of 2005, which excludes from the definition of ‘decision’, ‘any award, order, determination, ruling or direction of an interlocutory nature prescribed by the regulations’.
Under Clause 200B of the Workers Compensation Regulation 2003, as amended, ‘for the purposes of section 352(8) of the 1998 Act, all preliminary or interim orders, determinations, rulings and directions of an interlocutory nature are prescribed’.
Under Schedule 6 Part 18J Clause 5 of the Workers Compensation Act 1987 the above amendments to section 352 ‘apply in respect of a claim for workers compensation made before the commencement of the amendments’.
2.In light of the above amendments, the parties are directed to make written submissions on the following issues:
·whether the current appeal is against an order, ruling, determination or direction of an interlocutory nature, and, if so,
·the basis on which leave to appeal can be granted.
3.The Appellant Employer’s submissions are to be filed and served on or before Thursday 17 May 2007 and the Respondent Worker’s submissions are to be filed and served on or before Thursday 31 May 2007.
4.The parties’ attention is drawn to the authority of P & O Ports Limited v Hawkins [2007] NSWWCCPD 87.”
The above timetable was amended by consent to require the Appellant Employer’s submissions on or before 31 May 2007 and the Respondent Worker’s submissions on or before 14 June 2007. The Respondent Worker’s submissions were filed within time and further submissions were filed on 19 June 2007 in response to the Appellant Employer’s submissions that were filed out of time. For reasons that were not explained, the Appellant Employer did not file its submissions until 19 June 2007. Parties should be aware that timetables for the filing of submissions in the Commission should be complied with unless they are varied by consent or further direction of the Presidential member hearing the appeal. In the circumstances of the present matter it is in the interest of justice that I have regard to all of the submissions filed and that is the course I propose to adopt.
The Appellant Employer submits that:
a) there has already been a consent finding and assessment of an entitlement consistent with that consent;
b) if the appeal is successful it will bring to an end the further litigation in respect of the matters currently outstanding and will finalise the issues of injury and this will obviate the need for a further AMS;
c) if the matter is not dealt with now the Appellant Employer will be deprived of the opportunity to agitate “for an appeal of the matter now under consideration” (Appellant Employer submissions 15 June 2007, paragraph four), and
d) the Commission’s objectives would be frustrated if the Arbitrator’s decision was not treated as a final determination.
The Respondent Worker submits that:
a) the decision appealed from was of an interlocutory nature and the appeal is incompetent and should be dismissed with costs consistent with the authority of P & O Ports Limited v Hawkins [2007] NSWWCCPD 87 (‘Hawkins’);
b) there was no “consent finding” in relation to injury;
c) in the alternative, if there has been a consent finding it is that the injury sustained by Mr Merza on 15 September 2001 included an L4/5 disc lesion with radiculopathy because the Appellant Employer accepted liability for the surgery on the L4/5 disc, and
d) even if a successful appeal finalised the issue of injury and brought to an end the need for further litigation, that does not mean that the appeal is against a determination that is not interlocutory in nature.
It is not correct to say that there has already been a ‘consent finding’ in this matter. The parties merely agreed to refer to the first AMS the assessment of Mr Merza’s losses and impairments. There was no ‘finding’ involved in that referral and injury was still in issue in the Reply.
The test of whether a court’s order, determination or ruling is ‘interlocutory’ “…depends on the nature of the order made; the test is: does the judgment or order, as made, finally dispose of the rights of the parties?” (per Gibbs J (as his Honour then was) in Licul v Corney (1976) 50 ALJR 439 at 443-444). In Hawkins I considered the application of this authority in the context of the workers compensation legislation that governs the Commission. I noted at [37 (j) and (k)]:
“j) in the absence of a definition of ‘interlocutory’ it is for the Commission to determine which matters fall within the terms of clause 200B. In my view, in order to achieve the Commission’s clearly stated statutory objectives, it is necessary and appropriate to restrict the meaning of the phrase “preliminary or interim orders…of an interlocutory nature” to matters that are genuinely preliminary, provisional or interim in nature, and
k) given the Commission’s objectives, it is not appropriate to deprive an unsuccessful party of the right to appeal to a Presidential Member in respect of a final decision on a matter that finally determines the parties’ rights on issues such as worker, injury, substantial contributing factor (or other issues that finally determine the parties’ rights) until all medical disputes have been assessed and determined under Part 7. Any order or determination by an Arbitrator on such issues should not be regarded as a matter that is a ‘preliminary or interim order of an interlocutory nature’, but should be regarded as a final order in which, provided the other thresholds in section 352 have been satisfied, leave to appeal will be granted.”
The Arbitrator’s determination deals with both the occurrence of Mr Merza’s injury (the injurious event) and the consequences that are said to have resulted from that event (the pathology in Mr Merza’s back). If the Arbitrator’s determination is upheld it will finally determine the parties’ rights because, in that event, as I understand the Appellant Employer’s submissions, it takes no further issue with Mr Merza’s entitlement to compensation. In these circumstances the determination is an order that will, subject to the medical dispute being assessed by an AMS (someone who is not part of the Commission), finally determine the parties’ rights. Therefore, whilst no monetary amount has yet been awarded, the Arbitrator’s determination involves orders and findings that have finally determined the issue of injury, a threshold issue that must be determined before a party is entitled to recover compensation.
The present matter can be distinguished from the facts in Sydney Institute of Technology – NSW TAFE Commission v Fleming [2007] NSWWCCPD 97 because in that case the appellant conceded that the order under appeal was interlocutory in nature. It can also be distinguished from Waverley Council v Sheen [2007] NSWWCCPD 127 and Hawkins where the Arbitrator’s findings merely set a reference date by which the worker’s rights were to be assessed.
In all the circumstances I do not believe that the Arbitrator’s orders and determinations were of an interlocutory nature and I grant leave to appeal.
SUBMISSIONS
The Appellant Employer submits:
a) it was “by agreement that the parties accepted a finding of injury as described to the ‘lower back’”;
b) it is accepted that the issue of injury (the injurious event) falls for consideration by the Commission and it is for the AMS to “define the medical consequences of that injury and any impairment that may flow” (the pathology);
c) there is a two stage process whereby the injurious event and the body part affected is to be determined by the Commission and the consequential pathological process is to be identified and assessed by the AMS;
d) the issue of injury was “disposed of by teleconference” before the first Arbitrator in 21 December 2004, the date of injury being specified as 15 September 2001 in respect of “a lower back”;
e) the principles of res judicata apply to agreements before or decisions of the Commission (Lambidis v Commissioner of Police (1995) 37 NSWLR 320 at 332 (‘Lambidis’) and, Spencer Bower, Turner and Handley The Doctrine of Res Judicata 3rd edition by Justice K R Handley, page 14 (‘Spencer Bower’));
f) if the agreement was not a decision then reliance is placed on the principles of estoppel by record, the agreement having been recorded by the Commission before referral to the AMS or, alternatively, issue estoppel, the issue having been agreed by the parties before referral;
g) allowing the matter to proceed to a further determination amounts to an abuse of process;
h) Mr Merza agreed with the description of injury, the body part and date of injury prior to the referral to the first AMS. In these circumstances it is not open to the worker to re-open an issue earlier agreed;
i) Mr Merza should have appealed Justice Hoeben’s decision. Having failed to do so he is bound by the agreement that the injury was an injury to the lower back on 15 September 2001;
j) to allow Mr Merza to proceed as he has is an abuse of process and undermines the legislative intention that assessments under section 326 of the 1998 Act be binding;
k) Dr Hitchen was the only doctor who, having been asked to consider the consequential pathological process as a result of the agreed injury, considered all of the radiological evidence and its chronological progression on the background of the injury and work undertaken. Accordingly, his evidence should have been preferred and the Arbitrator erred in rejecting his opinion, and
l) Mr Merza’s doctors did not disclose their reasoning process as required by the principles in Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 (‘Makita’).
The Respondent Worker submits:
a) the Appellant Employer accepted liability for Mr Merza’s injury by voluntarily paying weekly compensation and hospital and medical expenses. The claim in the Application was for lump sum compensation only;
b) Mr Merza’s medical case supported findings of injury to the L4/5 and L5/S1 discs. He underwent surgery in the form of a discectomy on L4/5 on 29 October 2002 with the approval of the Appellant Employer’s workers compensation insurer;
c) nothing in the Appellant Employer’s medical case raised any issue as to “injury causation” (Respondent Worker’s submissions, paragraph five);
d) the Reply placed all matters in issue with the exception of ‘worker’. It was in this context that the first Arbitrator referred the matter for assessment by an AMS without making any formal findings. This was consistent with the usual practice of Arbitrators in 2004;
e) the question of whether Mr Merza’s L4/5 disc had been injured had not been determined by the Commission until the determination currently under appeal;
f) the principles of res judicata do not apply because, first, the issue of whether the L4/5 disc had been injured had not been determined and, second, the principles cannot apply to what was clearly an interlocutory determination (Spencer Bower page 17). The agreement to refer the matter to an AMS at the teleconference on 21 December 2004 cannot set up a res judicata because it did not go to the extent of the injury beyond the fact that it was to Mr Merza’s lower back. The nature and extent of the injury was not considered on its merits and the ‘decision’ was not final and did not decide the issue dealt with by the second Arbitrator. The same submission is made in respect of the Appellant Employer’s estoppel argument;
g) the application before Hoeben J was one for administrative review under section 69 of the Supreme Court Act 1970 and the relief sought was against the Commission’s Registrar. The grounds for administrative review were limited to either jurisdictional error or error on the face of the record by the Registrar’s delegate in making a determination under section 327 of the 1998 Act. This was the only issue decided by Hoeben J. Therefore, in the present proceedings the Arbitrator was not bound by Hoeben J’s decision. If any res judicata or estoppel does arise from that decision it is only to the effect that Mr Merza is prevented from arguing that the determination by the Registrar’s delegate involved an error of law on the face of the record;
h) a MAC can be amended or revoked in three circumstances: first, where the Registrar determines that it contains an obvious error (section 325(3) of the 1998 Act), second, by appeal to a Medical Appeal Panel where one of the grounds in section 327(3) exists and, third, under section 329 of the 1998 Act. The Arbitrator in the present matter acted under section 329;
i) the factual scenario in the present matter is one of the situations contemplated by section 329, namely, an appeal under section 327 being unavailable and the MAC having been issued on the basis of an insufficiently precise referral to the AMS;
j) the Arbitrator has now rectified the basis for the referral by making factual findings as to the nature and extent of Mr Merza’s injury. Until that factual determination was made for the first time by the Commission on 8 December 2006 the proper assessment of Mr Merza’s losses and impairments was incapable of determination, and
k) the Arbitrator analysed the medical evidence and accepted evidence that was neither based on speculation nor unsubstantiated assumption (South Western Sydney Area Health v Edmonds [2007] NSWCA 16 (‘Edmonds’)).
REVIEW
The nature of a review and the role and function of a Presidential member on appeal has been considered in many cases in the Commission. In The King Island Company Limited v Deery [2005] NSWWCCPD 1 it was held at [19]:
“19. A Presidential Member on appeal has a specific and limited role in the review of a decision of an Arbitrator. The review is not a rehearing. The Presidential member is not dealing with the matter de novo and is not arriving at a fresh decision based on all of the evidence available at a later time (Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Builders Licensing Board v Sperway Constructions (Sydney) Pty Ltd (1976) 135 CLR 616). The powers of the Presidential Member to revoke the decision pursuant to section 352(7) of the 1998 Act and to substitute a new decision in its place, are exercisable only where it is demonstrated that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172). Alternatively, the Presidential Member may remit the matter back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions made.”
The nature of a review was considered by the Court of Appeal in Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34 where Bryson JA said at [38]:
“A review is a different process to an appeal and the matters which may be considered and the manner in which they may be considered are somewhat wider. See Boston Clothing Co Pty Ltd v. Margaronis (1992) 27 NSWLR 580 at 584 (Kirby P). An attack, on review or otherwise, on an Arbitrator's discretionary decision in controlling procedure may be based on the test stated in House v. R (1936) 55 CLR 499 at 504 - 505; but that is not the only basis on which the Presidential member may act. The powers of a Presidential member on review are somewhat wider and extend to power to reopen consideration of a matter of which an Arbitrator has disposed; the manner in which the powers of the Presidential member are to be exercised is itself the subject of discretion of the Presidential member.”
McColl JA recently quoted the above passage with approval in Edmonds at [134]. To describe the relative weight and relevance of the expert evidence as “a discretionary decision which could only be disturbed on House v The King principles” was described by McColl JA as “an over-generalisation” (at [133]).
Before an Arbitrator’s decision will be revoked on review it must by demonstrated that it contains or has resulted from an error of fact, law or discretion. The error must be such that, but for it, a different decision should have been made (see Snow Confectionary Pty Ltd v Askin [2004] NSWWCCPD 56; Section 294 of the 1998 Act; YG & GG v Minister for Community Services [2002] NSWCA 247; Absolon v NSW TAFE [1999] NSWCA 311).
I intend to apply the above principles in the matter before me.
DISCUSSION AND FINDINGS
Injury
It is essential to consider the meaning of ‘injury’. The definition of injury in the 1987 and 1998 Acts is of limited assistance. It states:
“injury:
(a) means a personal injury arising out of or in the course of employment, and
(b) includes:
(i) a disease contracted by a worker in the course of employment, where the employment was a contributing factor to the disease, or
(ii) the aggravation, acceleration, exacerbation or deterioration of any disease, where the employment was a contributing factor to the aggravation, acceleration, exacerbation or deterioration, …”
In Lyons v Master Builders Association of NSW (2003) 25 NSWCCR 422 (‘Lyons’) Judge Neilson held that ‘injury’ means both the ‘injurious event’ (the work event or incident) and the ‘pathology’ arising from that event. I agree with that statement. Therefore, the determination of the issue of ‘injury’ requires not only an assessment of whether the ‘injurious event’ occurred in compensable circumstances but also whether the pathology found to exist (if any) has been caused by the work event. These are both threshold liability issues to be decided by the Commission not by an AMS. Employment must be a substantial contributing factor to the work event and to the pathology found before liability arises under the legislation. The determination of these issues requires a consideration of all of the factual and legal issues in the case. It is not simply a medical question.
A MAC is not a decision of the Commission within section 350 of the 1998 Act (see Campbelltown City Council v Vegan [2004] NSWSC 1129) and it does not determine liability (Jopa Pty Limited t/as Tricia’s Clip-n-Snip v Edenden [2004] NSWWCCPD 50). Once the issue of injury has been determined a MAC is then “conclusively presumed to be correct” as to the degree of permanent impairment of a worker as a result of the injury so found by the Commission and whether any proportion of the permanent impairment is due to any previous injury or pre existing condition or abnormality.
I do not accept that there was any finding of ‘injury’ “accepted by the parties” as is suggested by the Appellant Employer. The matter came before the first Arbitrator at a teleconference. In accordance with the usual practice it was referred to an AMS for assessment. No argument was heard and no determination made on the issue of injury. The facts do not support any other conclusion.
One possible inference to be drawn from the by consent referral to an AMS is that the Appellant Employer no longer wished to dispute injury to the L4/5 disc, notwithstanding the fact that it put injury in issue in its Reply. That inference is a compelling one given that liability had been accepted for Mr Merza’s weekly compensation and for the cost of the L4/5 discectomy performed by Dr Sheridan. Nevertheless, in light of the terms of the Appellant Employer’s Reply, such a conclusion would not have been open without a clear admission by the Appellant Employer in the light of all the evidence or finding by the first Arbitrator. There was no such admission or finding at the teleconference before the first Arbitrator.
I do not accept the Appellant Employer’s argument before the Arbitrator that the Commission’s role is merely to determine whether the injurious event occurred in compensable circumstances and the nature of the pathology following from that event is to now be decided by an AMS. For the reasons explained in Connor v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2006] NSWWCCPD 124 (‘Connor’) the issue of whether the pathology found to exist has been caused by the injurious event is a liability issue over which the Commission has exclusive jurisdiction (section 105 of the 1998 Act). The determination of that issue does not merely require a medical assessment but involves legal, factual and medical considerations based on all of the available evidence.
Once all liability issues are determined, the question of what, if any, loss or impairment has resulted from the injury as found by the Commission is then to be determined by an AMS.
This is exactly the approach adopted by the Arbitrator in the present matter (Statement of Reasons for Decision (‘Reasons’) at paragraph 51). It was consistent with the terms of the legislation and with recent authority on this question and it discloses no error.
Therefore, the issue of injury had not been determined and the second Arbitrator was not in error in determining injury after hearing full argument from each side.
Res Judicata and Estoppel
The principle of res judicata is stated in Spencer Bower at page four paragraph 9 as follows:
“Where a final judicial decision has been pronounced on the merits by an English or (with certain exceptions) a foreign judicial tribunal with jurisdiction over the parties and the subject matter, any party to such litigation, as against any other party …is estopped in any subsequent litigation from disputing such decision on the merits, whether it be used as the foundation of an action, or as a bar to any claim, indictment, affirmative defence or allegation, provided the party entitled raises the point at the proper time.”
There is no doubt that the doctrine applies not only to courts but also to statutory tribunals such as the Commission (Lambidis). I do not agree, however, that any res judicata estoppel arises in the present matter. At the time of the referral to the first AMS there had been no determination or decision by the Commission on any issue. All that happened at the teleconference on 21 December 2004 was that the assessment of Mr Merza’s losses and impairments was referred to an AMS. That referral was made without argument, determination or finding.
The same conclusion applies to the Appellant Employer’s argument that an issue estoppel or estoppel by record arises from the referral to the first AMS. In Blair v Curran (1939) 62 CLR 464 at 531 Dixon J (as he then was) described estoppel by record or issue estoppel as:
“A judicial determination directly involving an issue of fact or law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies.”
This case talks about a “judicial determination” of an issue of fact or law. There was no determination of any kind in the referral to the first AMS.
Dixon J added:
“The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.” (emphasis added)
The referral to the first AMS did not determine any issue of fact or law but merely followed the usual practice of Arbitrators at that time when faced with a claim for lump sum compensation. If any estoppel arose it is arguable that the Appellant Employer is estopped from contesting injury to the L4/5 disc in circumstances where Dr Sheridan sought approval from the relevant workers compensation insurer before proceeding with the surgery. I infer from the fact that the surgery went ahead that that approval was given. However, as the Respondent Worker has not argued any estoppel against the Appellant Employer it is not appropriate that I reach a concluded view on this issue.
It follows that I reject the Appellant Employer’s arguments based on estoppel and res judicata arising from the first referral to the AMS.
Medical Evidence
The Arbitrator considered all of the medical evidence in the light of Mr Merza’s evidence and was satisfied on the balance of probabilities that on 15 September 2001 he injured his back “at both the L4/5 and L5/S1 levels” (Reasons 52). The evidence in support of her conclusion includes the following:
a) Mr Merza’s evidence in his statement of 8 September 2004 that he had never suffered back pain prior to 15 September 2001 and that he experienced continuing pain ever since his injury;
b) on 1 November 2001 Mr Merza underwent an MRI scan which revealed a small broad based posterolateral disc protrusion at L4/5 and a posterior rupture of the disc annulus at L5/S1 with a small left posterolateral disc protrusion causing encroachment on the left S1 nerve root;
c) Dr Teychene, neurologist, reported on 15 November 2001 that an EMG nerve conduction study of Mr Merza’s legs revealed findings consistent with a bilateral L5/S1 radiculopathy and that Mr Merza’s bilateral radiculopathy was consistent with disc prolapses at L4/5 and L5/S1;
d) the report of Dr Lee (Mr Merza’s treating orthopaedic surgeon) dated 15 November 2001 in which it was noted that the MRI scan “confirmed a large prolapse at L5/S1 but there was also some other disc injury elsewhere”;
e) the report of Dr Sheridan (Mr Merza’s treating neurosurgeon) dated 27 August 2003. Dr Sheridan first saw Mr Merza on 18 December 2001 when he took a history of him injuring his back at work whilst lifting axles on “15 May 2000” and suffering persisting pain into both legs. It does not seem to be contested that this is an obvious error and the correct date of injury is 15 September 2001. He referred to the November 2001 MRI scan demonstrating L4/5 and L5/S1 disc damage. Mr Merza complained to Dr Sheridan on 3 June 2002 that he had returned to work with a lot of bending and “had severe exacerbation of his pain” (report 27 August 2003, page two). On review on 24 July 2002 Dr Sheridan examined a follow up CT scan dated 1 July 2002, which showed no change compared to the previous scan. On 13 September 2002 Dr Sheridan saw Mr Merza and examined a further CT scan dated 10 September 2002 which showed a large L4/5 disc protrusion on the right “causing marked displacement at the right L5 nerve root” that was “now worse than his previous scan” (report 27 August 2003, page two). Surgery was recommended in the form of an L4/5 discectomy and, after obtaining approval from the Appellant Employer’s workers compensation insurer, that surgery was carried out on 29 October 2002. On the issue of causation Dr Sheridan concluded that Mr Merza’s disability was “entirely the after effect of his original injuries as described to me”;
f) the report of Dr Giblin dated 9 September 2002 who took a history of Mr Merza hurting his back at work on 15 September 2001 when he bent down and lifted a tray containing axles. He also noted that Mr Merza worked on restricted duties until 25 May 2002 when he had another exacerbation of pain and “was sent home by the work’s sister”. He concluded that Mr Merza’s injuries were consistent with “the accident described and he initially most likely sustained a rupture of the L5/S1 disc and possibly an injury to the L4/5 disc as well” (report 9 September 2002, page three), and
g) the report of Dr Weisz dated 10 September 2003. Dr Weisz reviewed and commented on several of the radiological investigations in evidence. In particular he stated that the first CT scan dated 2 October 2001 showed “a moderate disc protrusion at L4/5 disc space level and a similar one with extruded disc at 5/S1 level” (report 10 September 2003, page three). In respect of the MRI scan (“the most superior of the diagnostic modalities”, according to the doctor), he stated “the myelographic images of the test showed a disc protrusion at 4/5 and 5/S1 levels, reaffirming the CT findings, with mild neural compression”. Significantly, the doctor observed that the “discographic images showed a High Intensity Zone at 4/5 [sic] disc level (slice 7 on T2 images – not reported) indicating a tear in the protective ring surrounding the nucleus of the disc. This signal is interpreted in the medical literature as a source of discogenic pain” (report 10 September 2003, page four). He added, “the subsequent MRI scans reaffirmed the double disc pathologies”. On the issue of causation Dr Weisz stated “the mechanism of injury as presented is plausibly the cause of the detected pathology…there is evidence of continuity of symptoms since the accident and there is repeated objective documentation of a precise diagnosis. Therefore, I accept that the accident at work was a substantial contributing factor to his disability, and this lead to a detriment in an objective and reasonable sense”.
The Appellant Employer relies on reports from Dr Roarty dated 18 December 2003. He took a consistent history of back pain on lifting at work on 15 September 2001 and that “eventually, following MRI scan investigation, he came to surgical treatment of his low back injury on 29 October 2002” (report 18 December 2003, page one). Dr Roarty did not comment on whether Mr Merza injured one disc or two on 15 September 2001 but accepted that his “present condition can be attributed to the incident as described during the course of his work on 15 September 2001” (report 18 December 2003, page three).
The Appellant Employer also relies on the MAC prepared by Dr Hitchen and dated 5 April 2005. Dr Hitchen carefully reviewed the radiological evidence that confirmed the presence of disc protrusions at L4/5 and L5/S1 as early as 2 October 2001 and the presence of an acute herniation of the L5/S1 disc revealed on MRI scan dated 1 November 2001. He commented on the 10 September 2002 CT scan that revealed a large right L4/5 paracentral disc herniation that was not present on the scan done on 1 July 2002. He concluded that on the balance of probabilities the work “injury caused an acute herniation of the L5/S1 disc upon a background of degenerative change” and that the herniation at L4/5 revealed on the 10 September 2002 scan was a “degenerate disc herniation that had nothing whatsoever to do with the workplace” (MAC 5 April 2005, page seven). He concluded that the diagnosis was “multiple level degenerative disc disease, with a work-related traumatic herniation of the L5/S1 disc. There was a later spontaneous degenerative herniation of the L4/5 disc for which surgery was undertaken” (MAC 5 April 2005, page seven).
Dr Hitchen considered and commented on all of the medical evidence referred to above. In respect of Dr Sheridan’s report of 27 August 2003 Dr Hitchen states that the presence of the large L4/5 protrusion in the September 2002 CT scan “caused Dr Sheridan to operate in October 2002” (MAC 5 April 2005, page 13). Dr Hitchen then stated:
“Dr Sheridan’s report does not give any explanation as to how the L4/5 disc herniation spontaneously appeared. It is my opinion that surgery was undertaken on the L4/5 level for a degenerative lesion that could not possibly have occurred at the work place. Dr Sheridan notes that the L5/S1 herniation improved and that there was no role for surgery at that level.”
Dr Hitchen did not deal with Dr Weisz’ opinion on causation but only with his assessment of Mr Merza’s thoracic spine, which is not in issue on appeal.
The Arbitrator concluded at paragraph 55 of her Reasons:
“I am satisfied on the basis of the preponderance of medical evidence before me that, on a balance of probabilities, the Applicant sustained injury to both levels – L5/S1 and L4/5 on 15 September 2001. The medical evidence set out above is compelling and persuasive and I prefer it to the opinion of Dr Hitchen. Although he is an independent medical expert, the evidence I have relied on in reaching my conclusion is from medical experts who examined the Applicant close in time to the incident and who had the advantage of treating him and monitoring his progress and symptoms.”
The above conclusion was open to the Arbitrator and does not disclose any error of fact, law or discretion. The evidence strongly supports her conclusion. That evidence included the opinion of Mr Merza’s treating neurosurgeon, Dr Sheridan, who explained to Mr Merza on 24 July 2002 that “flare ups of pain are fairly common in this condition” and there was a risk that “he could deteriorate in the future” (report 27 August 2003, page two). There is no evidence that Mr Merza suffered any significant change in the level or nature of his symptoms in the period leading up to September 2002. The absence of that evidence tends to rule out any external cause for Mr Merza’s problem. As the treating neurosurgeon, Dr Sheridan’s opinion was entitled to significant weight. His opinion was that Mr Merza’s condition was “entirely the after effect of his original injuries as described to me” (report 27 August 2003, page three). The only work injury Dr Sheridan had a history of was the incident when Mr Merza lifted axles at work and suffered sudden low back pain which then radiated into both legs.
I do not accept that Mr Merza’s doctors did not adequately explain their reasoning process. Both Drs Weisz and Sheridan took detailed histories of the work incident and its consequences. Both concluded that Mr Merza’s condition had resulted from that incident. The Arbitrator was entitled to rely on that evidence in reaching her conclusion that Mr Merza’s sustained injury to both his L4/5 and L5/S1 discs when he lifted axles at work on 15 September 2001. Her reasoning process was sound and her conclusion was well supported by the evidence and the authorities on causation (see Kooragang Cement Pty Ltd v Bates (1994) 10 NSWCCR 796). I agree with her conclusion.
Abuse of Process
I do not accept that the proceedings before the Arbitrator were an abuse of process. No authority is cited in support of this submission. A worker is entitled to make such application for compensation as he or she thinks is appropriate. Provided the Commission has jurisdiction to hear the claim (and it is not suggested that the Commission did not have jurisdiction in the present matter) then it is entitled to rule on it. No previous award has been entered in this matter. Mr Merza is not ignoring the appeal process and is not challenging the decision by Hoeben J. He seeks a further assessment by a different AMS under section 329 of the 1998 Act. The Application does not undermine the legislative intention that assessments under section 326 of the 1998 Act are binding. As noted above and held in Connor and Issott v North Sydney Leagues Club Ltd t/as Seagulls Club [2005] NSWWCCPD 38, MACs are not binding on issues of causation. That is the issue Mr Merza argued before the Arbitrator and he was entitled to do so.
Decision of Justice Hoeben
The relevance of his Honour’s decision must be determined in light of the relief sought in the Supreme Court summons. Mr Merza sought “a declaration that the decisions of the first defendant (the Registrar) in matter No WCC 14867 of 2004 in the matter of Maykel Merza v Spicer Axle Australia Pty Limited dated 4 August 2005 and 13 October 2005 involved error on the face of the record and jurisdictional error”. That application was made under the provisions of the Supreme Court Act 1970. His Honour declined to grant that relief and dismissed the summons.
The question for his Honour to determine was whether the Registrar was in error when she determined, through her delegate, that the MAC had not been made on the basis of incorrect criteria and did not contain a demonstrable error. He determined that she was not. That decision does not touch on any of the issues before the Arbitrator in the present application. Therefore, his Honour’s decision does not create any res judicata estoppel or issue estoppel.
Section 329
The only submission made by the Appellant Employer on this issue seems to be that the referral under section 329 was an abuse of process. I do not agree. Section 329 of the 1998 Act gives the Commission power to refer a matter again on one or more further occasions for medical assessment by an AMS. There are no terms or restrictions on when or in what circumstances the Commission may make such referral. The scope and operation of this provision was considered in Target Australia Pty Ltd v Mansour [2006] NSWWCCPD 286 where I noted at [68] that section 329 “is in broad unlimited terms without any need for preconditions to be satisfied before it can be used by the Commission”.
In determining the scope of operation of section 329 I have had regard to the objectives of the legislation that require the provision of a “fair…system for the resolution of disputes” (section 367(1)(a) of the 1998 Act) and to the terms of section 354(3) of the 1998 Act which requires that the Commission is to “act according to equity, good conscience and the substantial merits of the case”. The Arbitrator has acted in compliance with the requirements of the legislation.
It follows that as issues of liability and causation are matters to be determined by the Commission and not by an AMS, it was appropriate for the Arbitrator to determine those issues and to request a further AMS to determine the medical dispute resulting from that determination. The Arbitrator did not misuse her discretion by referring the matter to a further AMS under section 329.
DECISION
The Arbitrator’s determination of 8 December 2006 is confirmed.
COSTS
The Appellant Employer is to pay the Respondent Worker’s costs of the appeal.
Bill Roche
Deputy President
27 June 2007
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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