State Transit Authority of NSW v Chemler No 2

[2006] NSWWCCPD 332

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
STATUS: Remitter: This decision is a decision on remitter from the Court of Appeal decision in State Transit Authority of NSW v Chemler [2006] NSWCA 249; (2007) 5 DDCR 287; Decision upheld on appeal in State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249
CITATION:		State Transit Authority of NSW v Chemler No 2 [2006] NSWWCCPD 332
APPELLANT:		State Transit Authority of NSW
RESPONDENT:		Fritz Chemler
INSURER:		State Transit Authority of NSW
FILE NUMBER:		WCC509-04
DATE OF ARBITRATOR’S DECISION:		10 August 2004
DATE OF INITIAL APPEAL DECISION:		10 August 2005
DATE OF REMITTER FROM COURT OF APPEAL:		8 September 2006
DATE OF DECISION ON REMITTER:		4 December 2006
SUBJECT MATTER OF DECISION:		Section 11A(1) of the Workers Compensation Act 1987: whether the psychological injury wholly or predominantly caused by reasonable disciplinary action.
PRESIDENTIAL MEMBER:		Acting Deputy President Robin Handley
HEARING:		On the papers
REPRESENTATION:		Appellant:	Sparke Helmore, Lawyers
Respondent:	Turner Freeman, Lawyers
ORDERS MADE ON APPEAL:		1. The Appellant, the State Transit Authority of NSW, is to pay the Respondent, Mr Chemler, weekly compensation at the rate of $843.30 from 7 June 2003 to 6 December 2003 pursuant to section 36 of the Workers Compensation Act 1987.
2.       The Appellant is to pay the Respondent weekly compensation at the rate of $460.50 from 7 December 2003 to 31 March 2004, and at the rate of $468.90 from 1 April 2004 to 27 June 2004 pursuant to section 37 of the 1987 Act.
3.       The Appellant is to pay the Respondent weekly compensation at the rate of $468.30 from 28 June 2004 pursuant to section 40 of the 1987 Act, such weekly payments to continue in accordance wit the provisions of the Act.
4.       The Appellant is to have credit of any payments of weekly benefits made in the periods above.
5.       The Appellant is to pay the Respondent’s expenses not already paid by the Appellant under section 60 of the 1987 Act up to the sum of $5,637.00 on production of accounts or receipts.
The Appellant, the State Transit of NSW, is to pay the Respondent, Mr Chemler’s costs of the proceedings before the Arbitrator as agreed or assessed and the costs of the appeal and the remitter proceedings before the Commission.

BACKGROUND TO THIS RECONSIDERATION OF THE APPEAL

1. On 8 September 2006, the Court of Appeal remitted this matter to the Workers Compensation Commission (‘the Commission’) for redetermination.

1. Mr Chemler succeeded before an Arbitrator in his claim for weekly compensation and medical, hospital or related expenses. Mr Chemler claimed that he had suffered racial vilification and harassment in his workplace because he is Jewish and because of his lack of English. While the Arbitrator accepted that Mr Chemler did not invent his concerns, he found that Mr Chemler only sought treatment for his psychological injury after he had been disciplined, and the Arbitrator accepted that it was the discipline that caused Mr Chemler to be emotionally distressed and that caused his psychological injury.

1. The State Transit Authority of NSW (‘the STA’) failed in its appeal to a Presidential member (myself) against the Arbitrator’s decision – see State Transit Authority of NSW v Chemler [2005] NSWWCCPD 82 – but then succeeded in its appeal to the Court of Appeal – see State Transit Authority of New South Wales v Chemler [2006] NSWCA 249. The proceedings before the Court of Appeal focused on my analysis of the Arbitrator’s decision in relation to sections 9A and 11A of the Workers Compensation Act 1987 (‘the 1987 Act’).

1. The facts of the case were summarised in the Court of Appeal decision by Santow JA (with whom Handley and McColl JJA agreed) at paragraphs 5 to 11. His Honour found that contrary to what was implied in my reasoning, the Arbitrator did address section 11A during the course of his ex tempore reasons. The Arbitrator stated:

“I accept what the respondent says, that he only sought that treatment after he had been disciplined and that it’s the discipline that caused Mr Chemler to be emotionally distressed and to cause him his psychological injury, and certainly in terms of the timing of those events there was discipline and Mr Chemler did shortly after that discipline first start seeing Dr Fischer, who was his treating general practitioner.”

1. Justice Santow said (at paragraphs 20 to 21) there was nothing to indicate that the Arbitrator only meant to find that discipline was a “contributory cause of the psychological injury, falling short of the predominant or sole cause”, and pointed out that neither I nor the Arbitrator addressed the question whether the racial or anti-Semitic harassment caused Mr Chemler’s poor work performance which attracted the discipline leading to his psychological injury. His Honour commented that my statement that, “it could reasonably be argued that the disciplinary action taken by the STA was a symptom of how Mr Chemler was being treated at work”, was intrinsically ambiguous.

1. Justice Santow also commented (at paragraph 22) that my approval of the Arbitrator’s reasoning that Mr Chemler’s illness was substantially contributed to by conditions that occurred at work is no more than a determination that section 9A was satisfied and does not mean that section 11A does not apply. His Honour concluded (at paragraph 23) that my reasoning did not recognise the essential causal distinction between section 9A and section 11A. Nor did I correctly identify the Arbitrator’s true finding, quoted above, which, if correct, would lead to the opposite conclusion to that reached by the Arbitrator. Thus, my reasoning process revealed an error of law.

1. Accordingly, my task on this remitter is to revisit the cause of Mr Chemler’s psychological injury and consider the application of section 11A of the 1987 Act.

ON THE PAPERS REVIEW

1. Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) states:

“(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 had regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submissions of the parties that the remitter can be dealt with ‘on the papers’, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.

ISSUES ON THE REMITTER

1. Both the STA and Mr Chemler’s solicitors addressed two principal issues in their submissions: first, whether Mr Chemler’s injury was wholly or predominantly caused by the STA’s disciplinary process and, second, whether the disciplinary process as a whole was “reasonable action” within the meaning of section 11A of the 1987 Act.

1. Section 11A(1) states:

“(1) No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers”.

1. At this stage in the proceedings, there appears to be no dispute that Mr Chemler suffers from a psychological injury, nor that his employment was a substantial contributing factor to his injury (section 9A).

SUBMISSIONS AND DISCUSSION

Was the injury wholly or predominantly caused by the STA’s disciplinary process?

1. With regard to the first issue, whether Mr Chemler’s injury was wholly or predominantly caused by the STA’s disciplinary process, the STA submits this was decided by the Arbitrator, quoted in paragraph 4 above. The Arbitrator’s finding was not challenged on appeal, and it was a finding that was accepted and relied upon by the Court of Appeal.

1. Mr Chemler’s solicitors submit that “the substantial and contributing factor” to Mr Chemler’s injury was not the disciplinary process. Rather it was “the harassment and victimisation”, to which he was exposed in the workplace over an extended period of time based on his religion and ethnic background. They contend the medical reports expressed the opinion that it was Mr Chemler’s perception of harassment and victimisation which caused the injury. Thus, it was the nature and conditions of his employment which was the substantial contributing factor to his injury.

1. The STA responds that section 11A does not require the disciplinary action to be “the substantial and contributing factor”. Section 11A only requires the disciplinary process to be a predominant cause. Secondly, the STA submits it is not open to Mr Chemler’s solicitors to request a reformulation of the facts: “The Arbitrator found (and the Deputy President and Court of Appeal confirmed) that the injury was wholly or predominantly caused by the disciplinary action.”

1. The STA are correct in stating that the first issue is whether, to the extent that employment contributed to the injury, that contribution to “the injury was wholly or predominantly caused” by reasonable disciplinary action: Department of Education & Training v Sinclair [2005] NSWCA 465, at paragraph 58 (per Spigelman CJ, with whom Hodgson and Ryson JJA agreed). In my view, the ordinary meaning of the words “predominantly caused” in this context is that of mainly or principally caused: see, for example, The Macquarie Concise Dictionary and The Concise Oxford Dictionary.

1. The STA has referred to the Arbitrator’s finding on this issue, in the course of his ex tempore reasons, quoted at paragraph 4 above. I note Justice Santow’s comment, at paragraph 20:

“The fundamental problem is that once the Arbitrator accepts the factual premise of s11A, he has actually addressed the s11A question. The Arbitrator has moreover addressed it adversely to Mr Chemler though he does not use the precise causal terminology of s11A ... There is nothing to indicate that the Arbitrator only meant to find that it was a contributory cause of the psychological injury, falling short of a predominant or sole cause.”

1. The orders made by the Court of Appeal included setting aside my decision and, in lieu thereof, ordering that the decision of the Arbitrator be set aside and the matter remitted to the Commission for rehearing. Thus, it is open for me to redetermine this first issue, which involves a finding of fact.

1. In my earlier decision, at paragraphs 27 to 37, I reviewed the evidence:

“27. The Arbitrator decided not to take oral evidence at the hearing, but chose to rely on written statements from Mr Chemler and from the STA’s witnesses, and on the medical reports, with the benefit of submissions for the parties.

28. In his statement dated 5 December 2003, Mr Chemler said that from when he transferred to the STA’s Waverley depot in October 1995, he experienced various forms of harassment and victimisation as a result of which he felt bullied. He was upset and depressed and started having bad headaches. Mr Chemler went to see his doctor who diagnosed him as suffering from hypertension and prescribed medication. Mr Chemler said what he “felt was constant victimisation” continued, including various forms of “ragging”. However, there were also incidents when his work was criticised, in part, it would seem, because of communication problems. In late December 2002, according to Mr Chemler as a result of a misunderstanding, he was disciplined for leaving a job unfinished and demoted from a level 4 to a level 3 tradesman for three months. In early January 2003, he became increasingly upset and anxious and consulted his general practitioner, Dr SR Fischer who issued a medical certificate stating Mr Chemler was not fit for work. She recommended rest and counselling. Mr Chemler subsequently returned to work but, in early June 2003, the maintenance manager criticised his work, Mr Chemler felt intimidated and traumatised, and did not work after 6 June 2003.

29. Dr Fischer provided a report dated 10 October 2003. She said she first saw Mr Chemler on 8 January 2003 when “he was extremely distressed, depressed and tearful”. Mr Chemler returned to work in late January 2003 and, at first, seemed to be coping. However, when Dr Fischer saw Mr Chemler on 6 June 2003, he said “he was again being harassed”, and was extremely distressed by anti-semitic slogans in the workplace. Dr Fischer referred Mr Chemler to a clinical psychologist, Mr Tom Jones, for counselling. On advice from Mr Jones, Dr Fischer subsequently prescribed anti-depressant medication. In Dr Fischer’s most recent report dated 9 May 2004, she said Mr Chemler’s “mood remains low and he is very unhappy … I feel his depression and inability to return to the workplace are a direct result of his treatment in the workplace”.

30. In a report dated 20 August 2003, Mr Jones diagnosed “adjustment disorder with anxiety and low mood, in partial remission”. He said Mr Chemler would be able to return to work when he is “confident that he will not be subjected to discriminatory disciplinary procedures, or subjected to anti-semitic harassment”. Mr Jones said, in his opinion, Mr Chemler’s employment “was a substantial contributing factor in [sic] causation of his psychological injuries”. In his most recent report dated 7 May 2004, Mr Jones diagnosed “chronic adjustment disorder, with symptoms of both anxiety and low mood”. Mr Jones said “it is my firm clinical opinion that he himself strongly believes that he has been subject to discriminatory practices”. In his opinion, “his continuing incapacity to return to State Transit to work in any capacity results directly from events which have occurred in the workplace”.

31. The STA commissioned a report from SC Hall & Co, Insurance Investigators and Assessors, dated 4 August 2003. Included with the report are statements from staff at the STA’s Waverley depot. The report confirmed the presence of a sign at the workplace, a piece of sheet metal attached to the wall of the body repairers’ room bearing the words “Out Jewish”, and “Home Sweet Home Dave Barbon and Keith Abrahams $ Jewish Boys (The “O.T.” Kings) Money Money Money isn’t funny in a Jewish World”. Photographs of the sign appear in the filed papers. The report stated the sign had been there for several years and was taken down “in mid July 2003 when the matter was brought to the attention of management at the Waverley depot”. The report concluded there was no evidence of any discrimination, harassment or vilification against Mr Chemler because of his Jewish background, or that the sign ever referred to Mr Chemler:

“Indeed all of the evidence is to the effect that the sign referred to David Darbon and Keith Abrahams who were keen workers of overtime. The evidence was all to the effect that the sign in question had been a running joke among Workshop staff about Mr Darbon and Mr Abrahams being regular and enthusiastic workers of overtime. All of the evidence is to the effect that the sign never referred to Mr Chemler.”

32. The STA referred Mr Chemler to Dr Eva Lowy, Clinical and Organisational Psychologist, for assessment. In a report dated 9 July 2003, Dr Lowy diagnosed Mr Chemler as suffering from “a mild Adjustment Disorder with Mixed Anxiety and Depressed Mood, especially when ruminating about the workplace”. She considered employment a substantial contributing factor to the injury. She said, in her opinion:

“the substantial cause of Mr Chemler’s lingering distress is the perceived instances of harassment and intimidation consistent with Mr Chemler’s perceptions of workplace discrimination and racism. As Mr Chemler is the only worker of Jewish faith in the workplace he has taken these comments to be personally directed at him.”

Dr Lowy suggested that it would be appropriate for a rehabilitation provider to contact Mr Chemler to facilitate a return to work at another workplace.

33. The STA also provided a copy of the Notice of Punishment dated 17 December 2002 detailing Mr Chemler’s misconduct, that is, essentially, alleged poor workmanship. There are also reports and letters concerning various other incidents that constitute the history of Mr Chemler’s employment at the Waverley depot. Other documents filed indicate Mr Chemler lodged an appeal with the Transport Appeals Board dated 8 January 2003 against his demotion, for three months, from a level 4 to a level 3 tradesman.

34. The documents filed include a letter dated 6 June 2003 from David Yates, Acting Maintenance Manager Waverley Depot, to Mr Chemler, alleging poor workmanship in carrying out repairs to the window of a bus. Mr Chemler said he refused to sign this letter to acknowledge receipt. On 7 August 2003, Mr Chemler lodged a complaint alleging racial hatred, discrimination, harassment, bullying, intimidation and victimisation because of race, Jewish origin and religious beliefs, in the Human Rights and Equal Opportunity Commission. This complaint was the subject of a Deed of Settlement between Mr Chelmer and the STA dated 2 March 2004.

35. The STA filed reports from Dr Robert Lewin, Consultant Psychiatrist, dated 23 March 2004 and 20 May 2004, and a letter from Dr Lewin to the STA dated 16 June 2004. In his initial report of 23 March 2004, Dr Lewin, who had examined Mr Chemler on 19 March 2004, recorded the history given to him by Mr Chemler. Dr Lewin diagnosed an “Adjustment Disorder with Mixed Emotional Features (of anxiety and depression)”. He said:

“the psychiatric condition was directly caused by the impact of this sign [the “Out Jewish” sign] which was correctly perceived to be as an insult and a provocation in the strongest terms. This measure was designed to hurt and there is no doubt that it did so.”

Dr Lewin suggested a return to work at a different workplace and that a rehabilitation consultant be employed for this purpose.

36. Dr Lewin’s report of 20 May 2004 is a response to a letter from the STA’s solicitors that, apparently, drew Dr Lewin’s attention to the complaints of poor workmanship made against Mr Chemler. Dr Lewin noted this represented a different version of events to that reported to him by Mr Chemler although “[t]his may well just be a difference of emphasis”. Dr Lewin reconsidered his conclusions about causation expressed in the earlier report but did not appear to change them, instead discussing the likely impact of such a sign on a child of a holocaust survivor.

37. Dr Lewin’s letter to the STA dated 16 June 2004 concerns Mr Chemler’s proposed return to work at the STA’s Randwick depot. Dr Lewin said a graded return to work was appropriate and suggested further counselling with Mr Jones.”

1. At paragraphs 40 to 41, I said:

“40. ... In my view, it is clear from all the medical evidence that Mr Chemler perceived he was being subjected to harassment and victimisation, and it was this perception that caused his psychological injury. This is consistent with the opinions of Drs Lewin and Fischer, and psychologists Dr Lowy and Mr Jones. The fact there are inconsistencies between Mr Chemler’s evidence and that of the STA’s witnesses is not in itself surprising because Mr Chemler’s evidence is a reflection of his perception of events.

41. The evidence indicates Mr Chemler perceived the events surrounding his being disciplined in December 2002 and June 2003 for alleged poor workmanship, as being part of the harassment and victimisation. Similarly, he perceived the “Out Jewish” sign as an overt display of discrimination, the sign being clear tangible evidence to which he could point. It was therefore natural that he should focus on this both in terms of his perceptions and in seeking to prove discrimination. Equally, it was natural for others, when told by Mr Chemler of the sign, to use it as important evidence of how Mr Chemler was being treated in the workplace. The fact that the sign may not have been directed at Mr Chemler and that it was not intended as a racial slight, does not alter the fact of Mr Chemler’s perception when seen in the context of other incidents over the course of several years that he perceived to constitute harassment or victimisation.”

1. At paragraph 42, I discussed the Arbitrator’s reference to the STA’s witness statements:

“the Arbitrator referred to evidence from other people in the workplace conflicting with that of Mr Chemler, and accepted (arbitration hearing transcript page 57):

‘what the respondent’s witnesses say, that nobody said to Mr Chemler directly anything that was intended to be by way of racial vilification. However, there is no doubt that in this workplace, racial slurs and comments were made, particularly in relation to the Jewish religion, and the respondent’s witnesses accept that. They say it was a joke, and I accept that that was not a joke as far as Mr Chemler was concerned. I accept that these jokes occurred in the workplace going back at least until 2001.’”

1. In discussing the STA’s third ground of appeal, that “the Arbitrator gave improper weight to some pieces of evidence that were, in the circumstances, extraneous or irrelevant”, I said, at paragraph 43:

“I am not satisfied that the Arbitrator placed too much weight on the presence of the “Out Jewish” sign. It would not be unreasonable to conclude that Mr Chemler perceived the sign as a clear manifestation of the discriminatory way in which he was treated in the workplace, and for others to focus on the sign as evidence of the way in which he was treated. Certainly, Dr Lewin considered Mr Chemler perceived the sign to be an “insult and a provocation in the strongest terms” and did not retract this opinion in his later report after his attention had been drawn to contradictory evidence.”

1. I acknowledge, as Justice Santow pointed out, that the Arbitrator said (arbitration hearing transcript page 59): “I accept what the respondent says, that he only sought that treatment after he had been disciplined and that it’s the discipline that caused Mr Chemler to be emotionally distressed and to cause him his psychological injury”. However, as I stated in my earlier decision at paragraph 46, the Arbitrator did not adequately set out his reasoning process.

1. In my view, the evidence referred to above supports a finding that while the disciplinary action taken by the STA undoubtedly contributed to Mr Chemler’s psychological injury, the injury was not “wholly or predominantly caused” by the disciplinary action in the sense of being the sole or principal or main cause. The medical evidence and that of Mr Chemler supports a finding that Mr Chemler had perceived he was being subjected to harassment and victimisation over a period of some years – since transferring to the STA’s Waverly depot in October 1995, and this perception, which arose from his employment situation, was a significant cause of his psychological injury. It is difficult to separate out the effect of disciplinary action from other action that Mr Chemler perceived to be victimisation, harassment or discriminatory. However, in my view the evidence does not support a finding that the injury was wholly or predominantly caused by the disciplinary action. Thus, section 11A of the 1987 Act does not apply.

1. Having determined that Mr Chemler’s psychological injury was not wholly or predominantly caused by the disciplinary action, it is unnecessary to consider the second issue, whether the disciplinary process as a whole was reasonable action.

1. My conclusion is that the Arbitrator made an error of fact in his decision. However, notwithstanding this, I am not satisfied that a rehearing would lead to a different outcome. In my original decision, I found no other error of fact or law that would affect the outcome. The Court of Appeal, in setting aside my decision, also set aside the decision of the Arbitrator. In my view, the appropriate decision on this remittal is for me to make a new decision in similar terms to those of the Certificate of Determination issued by the Commission dated 10 August 2004.

DECISION

1. 1. The Appellant, the State Transit Authority of NSW, is pay the Respondent, Mr Chemler, weekly compensation at the rate of $843.30 from 7 June 2003 to 6 December 2003 pursuant to section 36 of the Workers Compensation Act 1987.

2. The Appellant is to pay the Respondent weekly compensation at the rate of $460.50 from 7 December 2003 to 31 March 2004, and at the rate of $468.90 from 1 April 2004 to 27 June 2004 pursuant to section 37 of the 1987 Act.

3. The Appellant is to pay the Respondent weekly compensation at the rate of $468.30 from 28 June 2004 pursuant to section 40 of the 1987 Act, such weekly payments to continue in accordance with the provisions of the Act.

4. The Appellant is to have credit for any payments of weekly benefits made in the periods above.

5. The Appellant is to pay the Respondent’s expenses not already paid by the Appellant under section 60 of the 1987 Act up to the sum of $5,637.00 on production of accounts or receipts.

COSTS

1. The Appellant, the State Transit Authority of NSW, is to pay the Respondent, Mr Chemler’s costs of the proceedings before the Arbitrator as agreed or assessed and the costs of the appeal and remitter proceedings before the Commission.

Robin Handley

Acting Deputy President  

4 December 2006

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