Star City Pty Ltd v Kariyawasam

[2007] NSWWCCPD 226

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE

COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:Star City Pty Ltd v Kariyawasam [2007] NSWWCCPD 226

APPELLANT:  Star City Pty Ltd

RESPONDENT:  Sarath Kariyawasam

INSURER:Star City Pty Ltd

FILE NUMBER:  WCC3726-07

DATE OF ARBITRATOR’S DECISION:          19 July 2007

DATE OF APPEAL DECISION:  16 November 2007

SUBJECT MATTER OF DECISION: Section 40 of the Workers Compensation Act 1987; treatment of submissions and evidence

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant:      McLean Lawyers

Respondent:   Carroll & O’Dea Lawyers

ORDERS MADE ON APPEAL:  The decision of the Arbitrator dated 19 July 2007 is confirmed.

The Appellant, Star City Pty Ltd, is to pay the costs of the Respondent, Mr Kariyawasam in this appeal.

BACKGROUND TO THE APPEAL

1. On 16 August 2007, Star City Pty Ltd sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 19 July 2007. The Respondent to the appeal is Sarath Kariyawasam. Star City is a workers compensation self-insurer.

1. Mr Kariyawasam was born on 24 October 1949 and is aged 58. He is married with two dependent children. Mr Kariyawasam commenced employment with Star City as a chef in August 1995. On 23 August 2003, he injured his left knee when he slipped and fell in the course of his employment. On 28 August 2003, he claimed workers compensation. After a week “off work”, Mr Kariyawasam returned to work on light duties and then, on 31 October 2003, he underwent an arthroscopy on his knee. He was off work until 11 December 2003, when he returned to work on light duties. When, on 11 March 2004, Mr Kariyawasam was asked to return to full-time work, he ceased work because, he said, he was unable to manage this. He was paid weekly compensation until 11 March 2004 when Star City declined further liability.

1. On 15 June 2006, the Commission registered an agreement between the parties pursuant to section 66A of the Workers Compensation Act 1987 (‘the 1987 Act’) whereby Star City agreed to pay Mr Kariyawasam $3,750 compensation for the injury to his left knee under section 66 in respect of a 3% whole person impairment.

1. On 23 May 2007, the Commission registered Mr Kariyawasam’s ‘Application to Resolve a Dispute’ in respect of his claim for weekly compensation from 12 March 2004 to date and continuing. On 13 June 2007, Star City lodged a ‘Reply’. On 27 June 2007, the Arbitrator conducted a teleconference with the parties. On 4 July 2007, conciliation having proved unsuccessful, he conducted an arbitration hearing. On 19 July 2007, the Arbitrator made a decision in the terms set out below.

THE DECISION UNDER REVIEW

1. The ‘Certificate of Determination’, dated 19 July 2007, records the Arbitrator’s orders as follows:

“1. The Respondent will pay the Applicant at a rate equivalent to the maximum statutory rate for a worker with two dependent children applicable from time to time from 12 March 2004 to 19 June 2006 pursuant to s 40.
2. The Respondent will pay the Applicant the sum of $276.92 from 20 June 2006 to date pursuant to s 40.
3. The Respondent will pay the Applicant’s costs as agreed or assessed.”

1. In the Statement of Reasons for his decision, the Arbitrator noted that the issue of injury was not in dispute. However, Star City claimed Mr Kariyawasam was no longer entitled to weekly compensation or, alternatively, that the Arbitrator should exercise his discretion under section 40(1) of the 1987 Act. The Arbitrator noted there was no dispute that at the time of the injury Mr Kariyawasam was earning $919 per week. He identified Mr Kariyawasam’s ability to earn as the central issue in the case.

1. The Arbitrator noted that Mr Kariyawasam had obtained work as a chef with a company called ‘Chefs on the Run’, and that his average weekly earnings for the period to 17 June 2007 were $642.08 (paragraph 41). Nevertheless, the Arbitrator found that Mr Kariyawasam was not fit for full-time work because of the limitations placed on him because of his knee condition. The Arbitrator was satisfied that Mr Kariyawasam “remains incapacitated by the injury to his left knee” (paragraph 42).

1. The Arbitrator found that in terms of Mr Kariyawasam’s age, education, skills and work experience, his ability to earn was best demonstrated by the work he had been doing since June 2006, working for Chefs on the Run.

1. The Arbitrator referred to the evidence that Mr Kariyawasam had experienced symptoms in his left knee for two years prior to the injury, and there was apparently some question of whether Mr Kariyawasam should have also brought a ‘nature and conditions’ claim. The Arbitrator noted that the Appeal Panel, who reviewed the assessment made by the Approved Medical Specialist (‘AMS’), Dr James Bodel, Orthopaedic Surgeon, found that one quarter of the 4% whole person impairment in respect of Mr Kariyawasam’s knee was due to pre-existing degenerative change or injury.

1. The Arbitrator declined to exercise his discretion under section 40(1) of the 1987 Act. He noted that the Commission was not bound by the strict rules of pleading and, having discussed Mr Kariyawasam’s evidence and the evidence of Dr Peter Conrad, Surgeon, the Arbitrator said (paragraph 73):

“On balance, I cannot be satisfied that the pre-existing condition of the knee was not rendered symptomatic by the nature of the Applicant’s employment as a chef. Such a reservation dissuades me from exercising my discretion.”

1. The Arbitrator noted that in neither of Mr Kariyawasam’s statements was there any reference “to what the Applicant was doing from 11 March 2004 to the expiry of the s 38 entitlement period on 19 November 2004” (paragraph 80). Mr Kariyawasam could not, therefore, prove his entitlement to benefits under section 38 and thus an award would only be made under section 40.

1. With regard to Mr Kariyawasam’s capacity to earn, the Arbitrator said (paragraph 82):

“I am satisfied that the Applicant was unable to earn more that $220.00 per week in any alternative work until he returned to cheffing in June 2006, albeit under desperate circumstances. His entitlement would therefore be in the region of $719.00 per week, which is above the statutory maximum for a worker with two dependant children, and an award on the latter basis will be made.”

ISSUES IN DISPUTE

1. The grounds of appeal identified by Star City are as follows:

(1) the Arbitrator relied upon submissions he attributed to Star City’s counsel when that was not the case;
(2) the Arbitrator made findings and determinations in relation to matters that were neither argued nor proposed in Mr Kariyawasam’s case and that were in any event contrary to the evidence;
(3) the Arbitrator erred in the application of sections 40 and 42 of the 1987 Act; and
(4) the Arbitrator erred in the exercise of his discretion under section 40(1), which was not justified by the evidence, and amounts to an error of law.

The parties’ submissions are discussed below.

ON THE PAPERS REVIEW

1. 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.”

1. I have had regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submissions of the parties: Star City submits that the arguments are of sufficient complexity to warrant a hearing, while Mr Kariyawasam’s solicitors submit that the matter can be dealt with ‘on the papers’. Having considered these documents and submissions, 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. 

1. Neither party sought to adduce fresh evidence.

LEAVE

1. Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. With regard to section 352(2), I am satisfied that the amount of compensation at issue is at least $5,000 and at least 20% of the amount awarded in the decision appealed against. Accordingly, I am satisfied that the section 352 threshold has been met, and I grant leave to appeal.

SUBMISSIONS AND DISCUSSION

1. The role of the Presidential Member on appeal is to review the Arbitrator’s decision as a whole. The review is not a rehearing. In this case, Star City must demonstrate that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172; The King Island Company Limited v Deery [2005] NSWWCCPD 1) in order to enliven the Presidential Member’s power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act.

1. With regard to the first ground of appeal, Star City contends that its counsel, Ivan Judd, did not make the submission attributed to him by the Arbitrator at paragraph 41 of his Statement of Reasons, namely that it did not make sense to average the two schedules of earnings separately and that the proper method was to average the combined total of the schedules. Rather, counsel for Mr Kariyawasam, Phillip Perry, made this submission, and Mr Judd submitted it was “just a nonsense” (transcript p 42) to look at the average weekly earnings as a combined total.

1. Mr Kariyawasam’s solicitors acknowledge that the Arbitrator made an error in this regard, but submit Star City have failed to identify any legal or factual error that flows from this misattribution. Indeed, Mr Kariyawasam’s solicitors submit that the conclusion reached by the Arbitrator was correct as a matter of law and in accordance with section 40(2)(b) of the 1987 Act which refers to the worker’s residual earnings in terms of an “average weekly amount”.

1. I agree with Mr Kariyawasam’s solicitors’ submissions that while the Arbitrator made a mistake in attributing the relevant submission, Star City have not identified any error by the Arbitrator that would justify my interfering with his decision. I also agree that pursuant to section 40(2)(b), given the circumstances of Mr Kariyawasam’s post injury work history, it was open to the Arbitrator to calculate Mr Kariyawasam’s residual average weekly earnings by combining the total from the two schedules of earnings. Thus, Star City has failed to establish its first ground of appeal.

1. The second ground of appeal is that the Arbitrator made findings and determinations in relation to matters that were neither argued nor proposed in Mr Kariyawasam’s case and that were in any event contrary to the evidence. As noted by Mr Kariyawasam’s solicitors, Star City’s submissions on this ground appear to be set out in paragraph 20 of its submissions, where it states that:

“At paragraphs 52 and 53 Arbitrator Wynyard on his own instigation determined the intentions of Dr Chan and Dr Kannangara. This was not canvassed at the hearing and it is not open to Mr Wynyard to make the determination he did. There is no evidence for Arbitrator Wynyard to include and rely on that finding.”

1. Mr Kariyawasam’s solicitors note that the Arbitrator, while referring to the ambiguity in the WorkCover certificates issued by Mr Kariyawasam’s treating specialist, Dr Siri Kannangara, Physician, ultimately declined to infer anything from Dr Kannangara’s failure to fill in the hours/days template in the certificates. In doing so, the Arbitrator was responding to Mr Judd’s submission, referred to at paragraph 51 of the Arbitrator’s Statement of Reasons, that Mr Kariyawasam was fit for full-time duties.

1. My review of the Arbitrator’s Statement of Reasons indicates that Mr Kariyawasam’s solicitors’ submission is correct. The question of the number of hours per week Mr Kariyawasam can work was raised by Mr Judd during oral submissions at the arbitration hearing, and Mr Judd specifically referred to Dr Kannangara’s not having put any limitation on the hours Mr Kariyawasam was capable of working (transcript p 37). In this context, in my view, it was relevant for the Arbitrator to also refer to the WorkCover certificates issued by Dr Michael Chan, Mr Kariyawasam’s general practitioner. Thus, Star City has failed to establish its second ground of appeal.

1. The third ground of appeal is that the Arbitrator erred in the application of sections 40 and 42 of the 1987 Act. As noted by Mr Kariyawasam’s solicitors, Star City’s submissions contain no reference to section 42 and this ground appears to be concerned with the application of section 40(2). Star City submits that it was not open to the Arbitrator to find that when Mr Kariyawasam was earning over $1,000 per week, he was doing so because of because of financial hardship. Section 40(2)(b) required the Arbitrator to determine Mr Kariyawasam’s physical capacity to earn and not his emotional motivation. Star City submits Mr Kariyawasam clearly demonstrated that he was physically capable of earning $1,000 per week, albeit with some pain.

1. Mr Kariyawasam’s solicitors refer to the judgment of Jordan CJ in Aitkin v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20 (‘Aitkin’), at 22-23:

“As to the phrase ‘is earning’, it has been held that if the partially incapacitated worker is earning something his actual earnings must prima facie be taken as the basis, and the rate of compensation provided for by s 9 [of the Workers Compensation Act 1926] reduced by a calculation based on the excess of his pre-injury average weekly earnings above what he is actually earning: Blakemore v Delta Mill (1919) Ltd (1). If, however, it is proved that his actual earnings are not a proper test, because there is some reason unconnected with his earning power which makes them lower than they should be, the other alternative, what is he ‘able to earn’, must be adopted.”

1. Mr Kariyawasam’s solicitors submit that that there is no reason to displace Mr Kariyawasam’s prima facie (average) earnings as a true reflection of his post-injury capacity. There was no suggestion of Mr Kariyawasam idling or taking lower paid work, or actual earnings reduced by something unconnected with injury.

1. I note that at paragraph 43 of his Statement of Reasons, the Arbitrator referred to Mr Kariyawasam’s oral evidence where he agreed that during a number of weeks in 2006,when he worked for ‘Chefs on the Run’, he had earned over $1,000 (transcript pp 17-19). Mr Kariyawasam explained that he felt he had no option because of the financial “hardship” he was under - the strain imposed by his housing loan and other debts, and the need to buy groceries for his family. In order to earn more, he also worked at weekends because he was paid at a higher rate of pay. The effect on his knee was that it was “very painful” (transcript p 20). He said if he works about two or three days a week, “when I work less hours it doesn’t hurt anything for me my knee” (transcript p 21). The Arbitrator said Mr Kariyawasam was clearly distressed as he gave this evidence - distress the Arbitrator accepted as genuine.

1. In my view, it was reasonable for the Arbitrator to take into account Mr Kariyawasam’s explanation for the fluctuation in his earnings from week to week during this time, and to rely on his average weekly earnings as the appropriate indicator of his ability to earn post-injury. It is well established that under section 40(2)(b) of the 1987 Act, the determination of average weekly earnings is a hypothetical one: see, for example, the NSW Court of Appeal decision in Singh v Taj (Sydney) Pty Ltd [2006] NSWCA 330, at paragraph 33 (per Beazley JA). Pursuant to Aitkin, reference to the worker’s average earnings will only be displaced where there is evidence that those earnings are unreliable as an indicator of ability to earn post injury. I am not satisfied that there was such evidence in Mr Kariyawasam’s case. Thus, Star City’s third ground of appeal must also fail.

1. The fourth ground of appeal is that the Arbitrator erred in the exercise of his discretion under section 40(1), which was not justified by the evidence, and amounts to an error of law. At paragraph 67 of his Statement of Reasons, the Arbitrator refers to Mr Judd submitting that the nature and conditions of Mr Kariyawasam’s employment with Star City since August 1995 could not now be raised as another cause of his incapacity since Mr Kariyawasam’s solicitors had eschewed any reliance on this. However, Mr Judd appeared to submit (transcript p 37) that, given this pre-existing condition, the discretion in section 40(1) should be exercised to reduce the amount of the award.

1. At paragraphs 69 to 73, the Arbitrator discusses Mr Kariyawasam’s evidence as to the pre-existing condition and that of Dr Conrad. The Arbitrator concluded that “[o]n balance, I cannot be satisfied that the pre-existing condition was not rendered symptomatic by the nature of the Applicant’s employment as a chef” (paragraph 73).

1. Mr Kariyawasam’s solicitors submit it was not necessary for the Arbitrator to consider whether or not he was satisfied that the pre-injury pathology was related to the nature and conditions of employment since the medical evidence did not support it, or, even if it did, it was a matter going to incapacity rather than the exercise of the discretion. Alternatively, if it was a matter relevant to the exercise of the discretion, the conclusion reached by the Arbitrator was correct. The Appeal Panel’s decision in making a deduction of 25% for a pre-existing permanent impairment suggests that 75% of Mr Kariyawasam’s whole person impairment is related to the injury.

1. Mr Kariyawasam’s solicitors submit it was for Star City to identify the facts supporting the exercise of the section 40(1) discretion. They refer to the NSW Court of Appeal decision in Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50, at 55, where McHugh JA noted that the matters that can be examined in the exercise of the discretion “include such matters as retirement, other supervening illness or injuries, the personal employment history of the worker and so on”. However, in this case, the only available evidence before the Arbitrator suggested that the pre-injury pathology was work-related.

1. Having reviewed the Arbitrator’s decision, I am not satisfied by Star City’s submissions that the Arbitrator erred in deciding not to exercise his discretion under section 40(1). It was for Star City to identify the facts to support its submission for the exercise of the discretion to reduce the amount determined at step 3 in the process prescribed by the NSW Court of Appeal in Mitchell v Central West Area Health Service (1997) 14 NSWCCR 527 (‘Mitchell’), at pages 529 to 530. I am not satisfied by Star City’s submissions that the Arbitrator made any error of law or fact in finding, essentially, that Star City had failed to do so. As set out in his Statement of Reasons, it was open to the Arbitrator on such evidence as there was before him relating to Mr Kariyawasam having a pre-existing condition, to conclude that he could not be satisfied that such pre-existing condition was not rendered symptomatic by the nature of his employment.

1. Thus, Star City have also failed to establish its fourth ground of appeal and its appeal must therefore be dismissed.

DECISION

1. The decision of the Arbitrator dated 19 July 2007 is confirmed.

COSTS

1. The Appellant, Star City Pty Ltd, is to pay the costs of the Respondent, Mr Kariyawasam in this appeal.

Robin Handley

Acting Deputy President  

16 November 2007

I, MARIE JOHNS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBIN HANDLEY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE