State Rail Authority of NSW v Russell

[2007] NSWWCCPD 192

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION

CONSTITUTED BY AN ARBITRATOR

CITATION:State Rail Authority of NSW v Russell [2007] NSWWCCPD 192

APPELLANT:  State Rail Authority of NSW

RESPONDENT:  Peter Russell

INSURER:State Rail Authority of NSW

FILE NUMBER:  WCC13315-06

DATE OF ARBITRATOR’S DECISION:          17 May 2007

DATE OF APPEAL DECISION:  6 September 2007

SUBJECT MATTER OF DECISION: Prior settlement; later claim in respect of a second condition; compensation payable under section 67 of the Workers Compensation Act 1987

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant:      Sparke Helmore Lawyers

Respondent:   Keddies Litigation Lawyers

ORDERS MADE ON APPEAL:  The decision of the Arbitrator dated 17 May 2007 is confirmed.

The Appellant, the State Rail Authority of NSW, is to pay the Respondent, Mr Russell’s costs of the appeal.

BACKGROUND TO THE APPEAL

1. On 13 June 2007, the State Rail Authority of NSW (‘the SRA’) sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 17 May 2007. The Respondent to the appeal is Peter Russell. The SRA is a workers compensation self-insurer.

1. Mr Russell was born on 21 June 1957 and is aged 50. On 6 November 2003, he was injured while undergoing a training programme in the course of his employment by the SRA as a senior transit officer. Initially, Mr Russell made a claim for a torn left rotator cuff (matter number WCC 2278-06). On 28 April 2006, this was settled by the SRA agreeing to pay Mr Russell compensation of $12,500 under section 66 of the Workers Compensation Act 1987 (‘the 1987 Act’) in respect of permanent impairment, and $10,000 under section 67 in respect of pain and suffering. Pursuant to this settlement, on 5 May 2006, the Commission registered a section 66A agreement between the parties.

1. On 14 June 2006, Mr Russell made a further claim for compensation for permanent impairment and pain and suffering - in respect of a cervical disc injury. The SRA declined this further claim. On 23 August 2006, the Commission registered Mr Russell’s ‘Application to Resolve a Dispute’ in respect of this claim. On 12 September 2006, the SRA lodged a ‘Reply’. At a teleconference with the parties on 1 November 2006, the Arbitrator referred Mr Russell to an Approved Medical Specialist (‘AMS’), Dr Richard Crane, for assessment. Dr Crane examined Mr Russell on 14 November 2006 and, on 27 November 2006, the Commission issued his Medical Assessment Certificate (‘MAC’). Dr Crane assessed Mr Russell as having a 0% whole person impairment attributable to his cervical spine, but a 12% whole person impairment attributable to his left upper extremity.

1. On 6 December 2006, Mr Russell appealed against this assessment. On 4 April 2007, a Medical Appeal Panel revoked the MAC dated 27 November 2006 and substituted a new MAC in which Mr Russell was assessed as having a 6% whole person impairment attributable to his cervical spine, and a 12% whole person impairment attributable to his left upper extremity.

1. On 26 April 2007, the Arbitrator conducted a further teleconference with the parties. On 16 May 2007, conciliation having proved unsuccessful, he conducted an arbitration hearing. He gave his decision orally at the conclusion of the hearing.

THE DECISION UNDER REVIEW

1. The ‘Certificate of Determination’, dated 17 May 2007, records the Arbitrator’s orders as follows:

“1. The Respondent is to pay the Applicant, pursuant to s 66 of the Workers Compensation Act 1987, the sum of $7,500.00 in respect of 6.0 per cent impairment of the Applicant’s neck as conclusively assessed by a medical appeal panel on 4 April 2007.
2. The Respondent is to pay the Applicant, pursuant to s 67 of the Workers Compensation Act 1987, the further sum of $5,000.00 in respect to pain and suffering due to injuries to his neck and left upper extremity.
3. The Respondent is to pay the Applicant’s costs as agreed or assessed.”

1. In the Statement of Reasons for his decision given orally at the conclusion of the hearing, the Arbitrator noted that while the SRA had accepted the assessment of the Medical Appeal Panel, it disputed having to pay any further sum in respect of pain and suffering. Thus the sole issue for the Arbitrator to determine was the compensation payable pursuant to section 67 of the 1987 Act for pain and suffering attributable to Mr Russell’s left shoulder and neck as a result of the injury on 6 November 2003.

1. The Arbitrator found that the impairments suffered by Mr Russell to his neck and left shoulder (transcript p 43:

“have resulted in restrictions in his activities, both his home duties and his charitable, community and social activities and that those restrictions have led to pain and suffering as defined, meaning actual pain or distress or anxiety. That anxiety has manifested itself in depression, and that depression has required him to take medication.

I find that the pain and suffering he suffered as a result of the impairment is significant. I think it is significantly more than the assessment of 20 per cent of a most extreme case, which was the basis for settlement, and I accept the applicant’s submission that the most appropriate award is that of 30 per cent of a most extreme case.”

1. The Arbitrator noted that Mr Russell had already accepted the sum of $10,000 in relation to his earlier section 67 claim for pain and suffering. The Arbitrator therefore made an award in favour of Mr Russell for $7,500 in respect of the claim under section 66 for the 6% whole person impairment of Mr Russell’s neck, together with a further $5,000 in respect of the claim under section 67 for pain and suffering (calculated by deducting from the $15,000 payable in respect of pain and suffering of 30% of the most extreme case, the $10,000 already paid by the SRA under the terms of the earlier settlement).

ISSUE IN DISPUTE

1. The SRA states that the issue in dispute in the appeal is the Arbitrator’s assessment of Mr Russell’s section 67 pain and suffering in the sum of $15,000. The specific grounds of appeal identified are as follows: (1) it was against public policy to award further payments pursuant to section 67; (2) the earlier settlement should have been given the effect intended by the parties – this was not addressed in the Statement of Reasons; (3) there was no material change in circumstances between the time of the earlier settlement and the further claim being made – this was also not addressed in the Statement of Reasons; (4) the Arbitrator failed to take into account the relevant evidence and submissions raised by the SRA, and did not properly address these in his Statement of Reasons; and (5) the Arbitrator failed to properly consider the evidence. 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. Having regard to Practice Directions Numbers 1 and 6, the documents before me, and the submissions by the parties that the appeal can 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. 

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

1. The SRA’s first ground of appeal is that it was against public policy to award further payments pursuant to section 67. The SRA submits the Applicant’s conduct in seeking additional compensation after accepting a settlement offends against public policy with regard to the nature of a settlement.

1. The second ground of appeal is that the settlement of 28 April 2006 included references to pain and discomfort in Mr Russell’s neck, in respect of which there was an MRI scan, and which neck symptoms were referred to by Dr Beer in his report dated 12 August 2005. Moreover, a further MRI scan was undertaken on 1 September 2005. The settlement should have been given the effect intended by the parties, a matter that was not addressed by the Arbitrator in his Statement of Reasons.

1. The third ground of appeal is that there had been no change in Mr Russell’s material circumstances between 28 April 2006 and 14 June 2006 when the new claim was made. While the Applicant now had a further section 66 component to rely on, the nature of his symptoms remained the same.

1. The SRA’s fourth ground of appeal is that the Arbitrator failed to take into account the relevant evidence and submissions raised by the SRA, and did not properly address these in his Statement of Reasons. In particular, the Arbitrator failed to consider the concession made by Mr Russell in cross-examination that he had undergone no material change between April and June 2006.

1. The fifth ground of appeal is that the Arbitrator failed to properly consider the evidence, including Mr Russell’s statement and oral evidence, and failed to provide an adequate statement of reasons for his determination in relation to section 67.

1. Mr Russell’s solicitors refute these grounds of appeal, contending that:

“At arbitration it was not the claimant’s contention that his injuries to his cervical spine had further deteriorated thus causing further impairment, but conversely, that the previous settlement for pain and suffering, to the claimant’s mind, did not incorporate a component for the applicant’s injury and subsequent impairment arising from/to the cervical spine.”

1. Mr Russell’s solicitors submit that the Arbitrator’s determination reflects this, noting that Mr Russell’s claim in the earlier proceedings were in respect of “torn left rotator cuff”, there being no reference to his cervical spine. The SRA’s submissions in relation to public policy and the lack of material change in Mr Russell’s condition are, therefore, “superfluous”. Mr Russell’s solicitors submit that while the Arbitrator’s “published reasons are perhaps laconic”, he provided extensive and coherent reasons for his determination at the conclusion of the hearing. [A short written Statement of Reasons prepared by the Arbitrator was issued at the same time as the Certificate of Determination, referring to the Arbitrator’s reasons for the decision given orally at the conclusion of the hearing.]

DISCUSSION AND FINDINGS

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, the SRA 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. I have reviewed the Arbitrator’s Statement of Reasons given orally at the conclusion of the arbitration hearing. He commenced by recounting the history of Mr Russell’s claims, including the settlement reached on 28 April 2006, noting (transcript p 36) that prior to the settlement Mr Russell had an MRI of his cervical spine showing a mild bulging protrusion of the discs at C3/4 and C5/6 (report by Dr David Ho dated 1 September 2005). The Arbitrator referred to the SRA’s submissions about “the sanctity ... of a settlement” (transcript p 38), noting that the settlement was made in relation to a claim in respect of an injury to Mr Russell’s left shoulder, no claim having been made at that time in respect of his neck. While accepting that the material available to the parties in the settlement negotiations was largely the same as that relied on in relation to the later claim, the Arbitrator said that parties negotiating over a claim for an injury involving one body part might take a different view about the level at which they should compromise to that over a claim for an injury involving two body parts (transcript p 39).

1. The Arbitrator referred to the assessment of compensation pursuant to section 67 of the 1987 Act and to the summary of relevant factors contained in the decision of the Compensation Court of NSW in Tyler v Marsden Industries (2001) 22 NSWCCR 644. He referred to Mr Russell’s statements and his oral evidence at the hearing, concluding, “that the pain and suffering that he suffered as a result of the impairment is significant”, and significantly more than the assessment of 20% of a most extreme case that was the basis of the settlement (transcript p 43). The Arbitrator concluded that the appropriate award was one based on pain and suffering of 30% of a most extreme case, and he therefore determined to make an award of $15,000 pursuant to section 67, less the $10,000 already paid in settlement of the earlier claim under section 67.

1. In my view, the critical point in this case is that the settlement was in relation to a claim in respect of Mr Russell’s left shoulder only. The second claim, which is the subject of the current proceedings, was in respect of Mr Russell’s neck. The issue in dispute in the appeal is the Arbitrator’s assessment of the compensation to which Mr Russell is entitled for pain and suffering pursuant to section 67 in respect of his neck.

1. It is clear that a worker may only claim compensation for pain and suffering pursuant to section 67 where the worker has an entitlement to compensation for permanent impairment under section 66 (Lourdes House Hospital v Wheeler (1996) 13 NSWCCR 495, at 507 (per Priestley JA)). There is no dispute that Mr Russell has an entitlement to compensation for permanent impairment in respect of his neck pursuant to section 66 which was not encompassed in the settlement of 28 April 2006. Thus, he may also claim compensation for pain and suffering in respect of his neck pursuant to section 67.

1. The complication in this matter is the settlement reached between the parties on 28 April 2006 in respect of the first claim, which was registered by the Commission on 5 May 2006 pursuant to section 66A. At the arbitration hearing, the SRA contended that the settlement took into account Mr Russell’s pain and suffering, including that affecting the left side of his neck. The SRA submitted that the aetiology of Mr Russell’s complaints was irrelevant (transcript page 29).

1. Cases involving the prior settlement of a claim have been the subject of a number of decisions of the Compensation Court of NSW and the Commission: for example, Staker v North Broken Hill Pty Ltd (1992) 8 NSWCCR 332 (‘Staker’); Galley v Pasminco Mining Ltd (1993) 9 NSWCCR 228; Trustees of the Roman Catholic Church for the Diocese of Lismore v Mackay [2006] NSWWCCPD 153 (‘Mackay’). In Staker, McGrath J rejected an argument seeking to limit the worker’s entitlement to compensation pursuant to section 67 to that agreed under the terms of a prior settlement. While if an initial claim had been determined by a court “the record would show precisely the basis upon which the determination was made”, because the claim was settled by agreement, there was no record of the matters upon which reliance was placed in reaching the settlement. His Honour said: “Once it has been invoked, section 67 is completely free of section 66. One has to look at the whole of the matters flowing from the employment injury.”

1. In my view, as Acting Deputy President Roche said in Mackay, at paragraph 59, it was not the role of the Arbitrator to look behind the settlement and ascertain the basis on which it was reached and the factors that influenced the parties in agreeing to the settlement. The Arbitrator’s role was to assess Mr Russell’s entitlement to compensation for pain and suffering pursuant to section 67 as a consequence of his entitlement to compensation for permanent impairment under section 66 in respect of his neck. In my opinion, the approach adopted by the Arbitrator was appropriate - of making an overall assessment of Mr Russell’s pain and suffering referable to the injury and then deducting from the amount of compensation that would be payable in respect of that assessment such compensation as has already been paid.

1. With regard to the SRA’s first ground of appeal, I reject its submission that it was against public policy to award further payments pursuant to section 67. Mr Russell had a potential entitlement under section 67 as a consequence of his entitlement to compensation for permanent impairment under section 66 in respect of his neck. In the absence of agreement between the parties in relation to that claim, it was the role of the Arbitrator to determine that section 67 entitlement.

1. The second ground of appeal refers to the MRI scan of the cervical spine undertaken on 31 August 2005 (report dated 1 September 2005) which showed a narrowing of C6/7 disc, degenerative change and bulging of the discs at C6/7, C5/6 and C4/5. My review of the reports of Dr J C Beer, Orthopaedic Surgeon, reveals no reference to symptoms associated with Mr Russell’s neck in Dr Beer’s report of 12 August 2005, but there is reference to Mr Russell’s neck symptoms and the results of the MRI of his cervical spine in Dr Beer’s report dated 10 May 2006, after the settlement of 28 April 2006.

1. The SRA contends that the settlement should have been given the effect intended by the parties, a matter that was not addressed by the Arbitrator in his Statement of Reasons. I note Mr Russell’s solicitor told the Arbitrator at the hearing that he had only had carriage of Mr Russell’s matter since the ‘Application to Resolve a Dispute’ was lodged in the current proceedings, and that he could not explain why the initial claim was resolved purely with respect to the left upper limb (transcript pp 7 and 12).

1. A review of the Arbitrator’s Statement of Reasons shows that he did address the fact of the earlier settlement and, in the course of doing so, referred to the MRI dated 1 September 2005. As stated above, the role of the Arbitrator was to determine Mr Russell’s section 67 entitlement in relation to the further claim in respect of Mr Russell’s neck. I therefore reject the SRA’s second ground of appeal.

1. The third ground of appeal is that there had been no change in Mr Russell’s material circumstances between 28 April 2006 and 14 June 2006, when the new claim was made. As Mr Russell’s solicitors noted, it was not Mr Russell’s contention that there had been a further deterioration of his cervical spine, the claim for permanent impairment in respect of his cervical spine not having been encompassed in the settlement. Thus, in my opinion, there was no requirement for Mr Russell to establish a material change in his pain and suffering between the time of the settlement on 28 April 2006 and the lodging of the further claim in respect of his cervical disc injury on 14 June 2006. As stated, the Arbitrator was required to make a section 67 assessment consequent upon the determination of Mr Russell’s compensable loss under section 66 in respect of the permanent impairment of his neck.

1. The SRA’s fourth ground of appeal is that the Arbitrator failed to take into account the relevant evidence and submissions raised by the SRA, and did not properly address these in his Statement of Reasons. I note that the Arbitrator acknowledged that the evidence as to Mr Russell’s pain and suffering available to the parties in these proceedings was largely the same as that in the possession of the parties at the time of the settlement. However, in making his section 67 assessment, the Arbitrator was also influenced by Mr Russell’s oral evidence at the hearing as to the restrictions on his activities caused by his impairments and the consequent pain and suffering, including anxiety and depression (transcript p 43).

1. While Mr Russell’s answers to questions in cross-examination indicate that there was little or no change in his condition between April and June 2006, in my view, as stated above, whether or not there was any material change in Mr Russell’s condition was not relevant to the task required of the Arbitrator, which was to make a section 67 assessment in relation to Mr Russell’s claim in respect of his neck. I therefore reject this ground of appeal.

1. The SRA’s fifth ground of appeal is that the Arbitrator failed to properly consider the evidence, including Mr Russell’s statement and oral evidence, and failed to provide an adequate statement of reasons for his determination in relation to section 67. In my view, I have addressed the first part of this ground in the discussion above. With regard the adequacy of the Arbitrator’s Statement of Reasons, I note the SRA’s submissions as to the requirements of such a statement pursuant to section 294(2) of the 1998 Act and rule 73 of the Workers Compensation Commission Rules 2003. The 2003 Rules were repealed on 1 November 2006 and replaced by the Workers Compensation Commission Rules 2006, but rule 15.6 of the 2006 Rules is in identical terms to rule 73 of the 2003 Rules.

1. In my view, the Arbitrator’s Statement of Reasons adequately states his material findings on relevant questions of facts and the evidence on which those findings are based, and sets out his understanding of the applicable law and the reasoning process that led to his determination. I therefore reject this ground of appeal.

1. In conclusion, I am not satisfied that the Arbitrator made any legal, factual or discretionary error in his decision. Thus, his decision must be confirmed.

DECISION

1. The decision of the Arbitrator dated 17 May 2007 is confirmed.

COSTS

1. The Appellant, the State Rail Authority of NSW, is to pay the Respondent, Mr Russell’s costs of the appeal.

Robin Handley

Acting Deputy President  

6 September 2007

I 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