Sturzenegger v Cosmos Building Services t/as Vastrans Pty Ltd - [2011] NSWWCCPD 64

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:			Sturzenegger v Cosmos Building Services t/as Vastrans Pty Ltd [2011] NSWWCCPD 64
APPELLANT:			Hans Sturzenegger
RESPONDENT:			Cosmos Building Services t/as Vastrans Pty Ltd
INSURER:			GIO General Ltd
FILE NUMBER:			A1-5424/10
ARBITRATOR:	Mr R Caddies
DATE OF ARBITRATOR’S DECISION:			5 May 2011
DATE OF APPEAL HEARING:		21 October 2011
DATE OF APPEAL DECISION:			8 November 2011
SUBJECT MATTER OF DECISION:			Reasons; failure to determine issue in dispute
PRESIDENTIAL MEMBER:			Deputy President Bill Roche
HEARING:			Oral
REPRESENTATION:			Appellant:	Mr B McManamey, instructed by Ian Collins Solicitor
Respondent:	Mr M Best, instructed by Turkslegal
ORDERS MADE ON APPEAL:			The Arbitrator’s decision dated 5 May 2011 is revoked and the matter is remitted to a different Arbitrator for all issues to be determined or re-determined. The respondent employer is to pay the appellant worker’s costs of the appeal, as agreed or assessed.

BACKGROUND

This matter has a long and most unsatisfactory history. Mr Sturzenegger became an apprentice carpenter in Switzerland 1972. In 1974, he had surgery on his right knee. He came to Australia in 1982 and ultimately worked as a working director with the respondent employer, Cosmos Building Services t/as Vastrans Pty Ltd (Vastrans), doing office fit-outs as a carpenter.
The evidence of his duties is set out in a short letter Mr Sturzenegger wrote to his solicitor on 8 September 2008. As his solicitor had not bothered to prepare a proper statement of evidence, the letter provides an inadequate summary of Mr Sturzenegger’s duties with Vastrans and his work history. His work as a carpenter involved carrying plasterboard up and down stairs, kneeling to fit skirting boards, and climbing up and down ladders. He worked six days per week and it was not uncommon for him to work a 12-hour day. He did not say when he performed these duties or whether he had any symptoms while doing them.
On 11 April 2000, Mr Sturzenegger fell from a van and suffered a serious fracture to his left wrist that caused nerve damage and required surgery and pinning. Because of that injury, he developed carpal tunnel syndrome in his right wrist, which also required surgery. The insurer for Vastrans, GIO Workers Compensation (GIO), accepted liability, but, from March 2006, Cambridge Integrated Services NSW Ltd t/as Xchanging (Cambridge) managed the claim as a scheme agent for the WorkCover Authority of NSW. Cambridge continues to pay Mr Sturzenegger weekly compensation for his wrist injury at the maximum statutory rate for a worker with a dependent spouse.
Because of his wrist injury, Mr Sturzenegger stopped working as a carpenter but returned to suitable duties “pottering around as a ship builder with restricted hours”. Whether that work was with Vastrans is disputed. At the end of October 2006, he developed a Baker’s cyst behind his right knee. At some stage, his left knee also started giving him “trouble”, but not as severe as the right. He had surgery to his right knee on 18 January 2007. Mr Sturzenegger said in his letter of 8 September 2008 that he believed the condition of his knees had “a lot to do with the sort of work [he] was involved with for over 29 years”.
In a letter dated 23 June 2008, Mr Sturzenegger’s solicitors, Higgins and Higgins, claimed lump sum compensation under the Table of Disabilities in respect of the condition of his knees. They also claimed weekly compensation of $500 per week from 1 June 2006 and hospital and medical expenses. The injury was alleged to have been sustained “on 2001 to date & continuing due to the nature & conditions & disease of his employment during the course of his employment” with Vastrans. That letter was meaningless.
Cambridge denied the claim and advised that it was not the relevant insurer. Mr Sturzenegger commenced proceedings in the Commission in 2008 claiming compensation in respect of his knees, but discontinued those proceedings on 22 January 2009.
In a letter dated 4 February 2009, Higgins and Higgins made another claim against Cambridge in exactly the same unsatisfactory terms as the letter of 23 June 2008. Cambridge denied the claim in a s 74 notice dated 27 March 2009. Among other things, it disputed that it was on risk at the time of the alleged injuries and disputed whether Mr Sturzenegger had received an injury to which his employment was a substantial contributing factor.
Mr Sturzenegger again commenced proceedings in the Commission in respect of his knees in 2009. Those proceedings were discontinued on 10 November 2009.
In an Application to Resolve a Dispute (the Application) filed with the Commission on 6 July 2010, Mr Sturzenegger claimed weekly compensation from 1 June 2006 to date and continuing and lump sum compensation under the Table of Disabilities in respect of an alleged loss of efficient use of his legs at or above the knee as a result of the condition of his knees. The date of injury, initially pleaded as “2001 to date & continuing”, was amended at the arbitration to be “11.4.00 – deemed”. The injury was said to have occurred as follows:
“Deterioration of Knees due to the nature and condition & disease of his employment.”
This “pleading” was completely meaningless. The Commission has repeatedly held that such “pleadings” are objectionable and it is unacceptable that the profession continues to plead claims in this way. Pleadings should precisely identify the alleged cause of injury.
Cambridge’s solicitors filed a Reply advising that it was not the relevant insurer. GIO’s solicitors filed a Reply putting all matters in issue, including whether Mr Sturzenegger had received an injury, and advised that it only insured Vastrans from 7 January 2000 to 7 January 2006. At a teleconference on 4 August 2010, the Arbitrator excused Cambridge from any further participation in the proceedings.
The Commission listed the matter for conciliation and arbitration on 4 February 2011. Because of urgent family matters that required the Arbitrator’s attention, the arbitration proceedings were particularly brief. Mr Sturzenegger’s solicitor, Mr Collins, identified the issues to be “disease and the date of injury, as far as I can gather; disease within the meaning of the Act” (T3.5). Mr Collins said the worker’s argument would be that his duties changed on 11 April 2000, the date on which he fractured his wrist, and that, after that date, he was “either at hospital or whatever and then on very light sort of duties” (T3.33).
At T4.1, the following exchange took place:
“MR BEST: Ah, well, if there’s no harm in amending it that’s – I would – the, the concern I have Mr Arbitrator is this, that the, the part 4 injury details—
ARBITRATOR: Mm.
MR BEST: —has a, a date of injury being 2001—
ARBITRATOR: Mm.
MR BEST: —to date and continuing.
MR COLLINS: Oh well, I think you’re right. We probably should formally amend it, just so that we’re clear.
ARBITRATOR: Is there any question then about the legal effect of a deeming other than the date when the work ceased, in terms of when the claim for – a claim for – when incapacity arose or a claim for compensation made? Is that—
MR COLLINS: I don’t think so.
ARBITRATOR: —going to be different date?
MR COLLINS: Well, the injury itself might arise at a different date.”
The Arbitrator amended the Application (at T5.22) to delete the words “and continuing” and substitute “11 April 2000 – deemed” as the date of injury.
The Arbitrator said (at T5.31):
“ARBITRATOR: Well, it seems to me that I would be greatly assisted by written submissions in this matter. I was giving a great deal of thought to the – last night to the issue of deemed date and I would be greatly assisted by Counsel in that regard. So how long do you need for that?”

The Arbitrator set a timetable for written submissions on the issue of the deemed date of injury and adjourned the matter.
In his written submissions filed on 22 February 2011, Mr Collins said:
(a)     Mr Sturzenegger had given evidence of heavy work with Vastrans involving wear and tear on his knees to 11 April 2000;
(b)     as a result of his wrist injury in April 2000, Mr Sturzenegger had been “effectively unemployed although notionally self employed but performing no duties of a strenuous nature and certainly no duties aggravating his knees”;
(c)     from 2004, the “medical evidence reports the Applicant suffering and receiving treatment in relation to arthritis in his knees” and all doctors agree with that diagnosis;
(d)     Mr Sturzenegger “is incapacitated as a result of this condition and has had surgery to both knees in 2006–2007”;
(e)     Mr Sturzenegger was clearly “incapacitated” in and from 7 January 2007, being the date of his surgery on both knees prior to formal notice on 23 June 2008;
(f)      the weight of the medical evidence was that Mr Sturzenegger’s employment with Vastrans was a “substantial contributing factor” to that “disease”;
(g)     on the above facts, “section 16(a)(i) [sic] would ‘deem’ the date of injury 7^th January 2007 being the first clear date of incapacity arising from this injury”, and
(h)     the “insurer liable however in relation to that injury however is the insurer as at 11^th April 2000 by reason of the application of Section 16(2A) being the last insurer relevant for ‘employment the nature of which was a contributing factor’ and insurance is payable by that insurer pursuant to the formula contained in that section”.
Mr Collins added that the direction was for the parties to make brief submissions on the above issue and, should the Commission require further submissions on this or other issues, he requested the opportunity to do so in person. The submissions by Mr Collins as to the deemed date of injury were inconsistent with the amended “pleadings”.
Counsel for Vastrans, Mr Best, submitted that “the following facts should be found”:
(a)     that Mr Sturzenegger “was and is a working director” of the respondent;
(b)     initially, Mr Sturzenegger was engaged in office fit-outs/building installation work and after 11 April 2000 he continued working as a shipbuilder;
(c)     on 11 April 2000, Mr Sturzenegger injured his head and left wrist and thereafter worked restricted hours as a shipbuilder;
(d)     the incapacity for work that arose on 11 April 2000 was in respect of injuries to the head and left wrist and is not the subject of the present claim;
(e)     Mr Sturzenegger first experienced a sudden onset of knee symptoms in September 2006 prior to consulting Dr Mayne on 25 September 2006, probably the right knee first (in September 2006) and the left knee second (in October 2006);
(f)      Mr Sturzenegger was first incapacitated by his right knee on 18 January 2007, when he was hospitalised and had surgery to his right knee;
(g)     Mr Sturzenegger claimed compensation on 23 June 2008, and
(h)     the respondent was insured by GIO until 7 January 2006 and thereafter the respondent was uninsured.
On the question of “diagnosis and work relationship”, Mr Best referred to the medical evidence that Mr Sturzenegger has arthritis in his knees and to the evidence from Dr Collins that asserted a work nexus when he said the “patient’s condition is consistent with the history” and the “cause of his loss of capacity arises from his occupational injuries”. The history Dr Collins took was of at least 10 years “fitting out work in the city [where] he would have to travel up and down fire escapes bearing plasterboard sheets”.
Mr Best then submitted that, given Mr Sturzenegger’s medical and lay evidence, the resolution of the factual contest lay in the determination of the relevant “deemed date of injury”. On this issue, he submitted:
(a)     Mr Sturzenegger was first incapacitated on 18 January 2007, when he had surgery on his right knee, and that is the deemed date of injury (GIO Workers Compensation Ltd v GIO General Ltd (1995) 12 NSWCCR 187 (GIO v GIO); Alto Ford Pty Ltd v Antaw [1999] NSWCA 234; 18 NSWCCR 246; Stone v Stannard Brothers Launch Services Pty Ltd [2004] NSWCA 277; 1 DDCR 701 (Stone));
(b)     there was no factual or statutory basis for determining 11 April 2000 as the deemed date of injury;
(c) section 16(2A) speaks of contributions between “particular employers” in disease cases. As Mr Sturzenegger was only employed by one employer, the subsection has no application in the present matter;
(d)     the date of claim for lump sum compensation was 23 June 2008 and that is the deemed date of injury in respect of the claim for lump sum compensation (Stone);
(e)     as GIO ceased to insure Vastrans on 7 January 2006, it has no liability, and
(f)      a finding should be made that Mr Sturzenegger suffered no injury between 7 January 2000 and 7 January 2006.
The Arbitrator found that Mr Sturzenegger had suffered an aggravation of a disease as a result of his work as a carpenter with Vastrans up to 11 April 2000 and that he “suffered no further duties aggravating his knees after that date”. He accepted Mr Best’s submissions and determined that, in respect of the claim for weekly compensation, the deemed date of injury was 18 January 2007 and, in respect of the claim for lump sum compensation, the deemed date of injury was 23 June 2008. He gave the applicant liberty to apply should he seek any further orders and excused GIO from further participation in the proceedings.
The Commission issued a Certificate of Determination on 5 May 2011 in the following terms:
“The Commission determines:
1.    I find that the applicant suffered injury arising out of or in the course of his employment with the respondent being an aggravation acceleration exacerbation and deterioration of a disease namely chronic degenerative arthritis of the knees affecting particularly medial compartments and the patella-femoral joints.
2.    I find the applicant’s injury, for the purposes of his weekly payments claim under the 1987 Act is deemed to have happened at the time of his incapacity namely, 18 January 2007.
3.    I find the applicant’s injury, for the purposes of his lump sum compensation under section 66 and 67 under the 1987 Act is deemed to have happened on the date of claim for such losses, namely, on 23 June 2008
4.    I grant the applicant liberty to apply should the applicant seek further orders.
5.    I excuse the GIO General Limited as Agent for the NSW WorkCover Scheme from further participation in the proceedings.
6.    I make no order as to costs as between the applicant and the respondent in the interests of GIO General Limted as Agent for the NSWWorkCover Scheme otherwise I grant liberty to apply.”
Mr Sturzenegger has appealed the Arbitrator’s decision.

THE ARBITRATOR’S REASONS

The Arbitrator said that Mr Sturzenegger worked as a working director for the respondent since he had emigrated from Switzerland in 1982. His work required him to carry plasterboard and sheets of glass up and down stairs and ladders, kneel a lot, install skirtings, climb up and down ladders, attach plasterboard and fitting trims, ceiling tiles and grids, from about 1982 until about April 2000. He fell in April 2000 and injured his left wrist, suffering nerve palsy and ligament damage. From that date, he had been unable to carry out fitting work for the respondent.
The Arbitrator said that Mr Sturzenegger continued “being an employee of the respondent company and continues to this date”. Since the accident date (11 April 2000), Mr Sturzenegger has “carried out work of a light nature carrying on minor boat (not ship) building work”. He “suffered no further duties aggravating his knees with the respondent from the accident date”.
Mr Sturzenegger’s claim was that he suffered injuries to both knees in the nature of a disease to which s 15 of the 1987 Act applied, or alternatively, aggravation, acceleration, exacerbation and deterioration of a disease within the meaning of s 16 of the 1987 Act. He first experienced knee symptoms in September 2006 and first became incapacitated for work as a result of his knee condition on 18 January 2007, the date of surgery. That was the deemed date of injury for the purposes of s 16(a)(1).
The Arbitrator identified the issues in dispute to be:
(a) What is the deemed date of injury for the purposes of s 15 or s 16 of the 1987 Act?
(b) What is the deemed date of injury for the purposes of insurance?
After setting out most of Mr Sturzenegger’s letter of 8 September 2008, the Arbitrator said that Mr Sturzenegger “first developed relevant knee symptoms in September 2006”. He accepted that the condition was asymptomatic prior to that date.
Mr Sturzenegger saw Dr Liaw, orthopaedic surgeon, on 8 November 2006. X-rays revealed severe medial compartment arthritis in the right knee with complete loss of joint space. X-rays of the left knee revealed slight medial joint space narrowing with chondrocalcinosis of both menisci. Dr Liaw performed a right knee arthroscopy and a partial medial meniscectomy on 18 January 2007. Mr Sturzenegger saw Dr Liaw again in November 2007 for his left knee and had surgery on that knee on 20 December 2007.
Dr Collins, orthopaedic surgeon, saw Mr Sturzenegger on 22 April 2008 for medicolegal purposes. He took a history that the worker was “pottering around at the moment and he is building a boat”. With respect to his work as a carpenter, he recorded that Mr Sturzenegger did fitting-out work where he had to travel up and down fire escapes bearing plasterboard sheets for at least 10 years. Dr Collins stated that Mr Sturzenegger had chronic degenerative arthritis of the knees affecting the medial compartments and the patellofemoral joints. He concluded that Mr Sturzenegger’s condition was “consistent with the history”. Mr Sturzenegger was not fit for his pre-injury occupation and “the cause of his loss of capacity arose from the occupational injuries”.
After referring to a medicolegal report from Dr O’Keefe dated 6 March 2009, the Arbitrator said (at [21]):
“As the respondent’s counsel, Mr Best, submits, Dr O’Keefe’s report if read entirely, also allows such work nexus but only by inference. I have no difficulty in drawing that inference in relation to Mr Sturzenneger’s condition in each leg. I am of the view that any assessment to the contrary is not persuasive given the work history and the views of these doctors.”
On the issue of the deemed date of injury, the Arbitrator said there was no doubt that Mr Sturzenegger’s knee problems relate to his work as a carpenter up to the accident on 11 April 2000. This was explicitly confirmed by Dr Collins and accorded with the views of Dr O’Keefe by “necessary implication”. He concluded that the condition was one of “aggravation, acceleration, exacerbation or deterioration of a disease” and that s 16 of the 1987 Act was the appropriate section. The date of incapacity in respect of weekly compensation was 18 January 2007, the date when Mr Sturzenegger was admitted to hospital for surgery on his right knee. The deemed date of injury for the claim for lump sum compensation was the date of claim, 23 June 2008.
On the issue of deemed date of injury for the purposes of insurance, the Arbitrator said that this was a more vexed question because Mr Sturzenegger’s company was “virtually not trading but technically the worker was still on the books of the company as an employee and, even at the date of hearing, he was still employed by it” ([27]).
The Arbitrator referred (at [28]) to the submission by Mr Collins that s 16(2A) “prescribes a mechanism whereby a particular insurer is liable and that it should relate it back to the accident date, 11 April 2000”. The Arbitrator said that s 16(2A) had to be read in the context of s 16(2), which refers to the liability of employers in the 12 months preceding the worker’s death or incapacity, and said (at [29]):
“I am unable to see how the liability of an insurer in this case can be determined by reference to sub-section (2A) where there is only one employer involved in the preceding 12 months. I do not think the provision applies. Even if it did, I do not see how I could relate it back to 11 April 2000.”

He added (at [30]) that the difficulty was that there was no insurer on risk as at 18 January 2007, “presumably because the worker had concluded that his work was so light that there was no need to maintain workers compensation insurance”. He said (at [31]) that it was not open to him to “relate the matter back to the last day he worked in arduous employment consistent with his injury that is on 11 April 2000”. He said he had to “look at the date of onset of incapacity in view of the provisions of section 16 to determine the deemed date of injury”. That provision was relevant “for insurance purposes being the deemed date of injury”.
The Arbitrator concluded (at [32]):
“Had the worker ceased employment, then I would have been required to look at section 18 for insurance purposes, however, I do not consider that that section relates, even for insurance purposes, back to the last day he worked in the relevant injurious duties. Rather, I must look to the date he ceased to be employed by the employer: section 16 is quite clear. When one has regard to section 151AB of the 1987 Act, had the Legislature intended it to relate back to the last date he worked in injurious work, the sort of terminology used in section 151AB (although used in an entirely different context) would have been required.”
Under “Summary”, the Arbitrator listed his findings as follows:
“1. I find that the applicant suffered injury arising out of or in the course of his employment with the respondent being an aggravation, acceleration, exacerbation and deterioration of a disease namely chronic degenerative arthritis of the knees affecting particularly medial compartments and the patella-femoral joints.
2.    I find the applicant’s injury, for the purposes of his weekly payments claim under the 1987 Act is deemed to have happened at the time of his incapacity namely, 18 January 2007.
3.    I find the applicant’s injury, for the purposes of his lump sum compensation under section 66 and 67 under the 1987 Act is deemed to have happened on the date of claim for such losses, namely, on 23 June 2008.
4.    I grant the applicant liberty to apply should the applicant seek further orders.
5.    I excuse the GIO General Limited as Agent for the NSW WorkCover Scheme from further participation in the proceedings.
6.    I make no order as to costs as between the applicant and the respondent in the interests of GIO General Limited as Agent for the NSW WorkCover Scheme otherwise I grant liberty to apply.”

INITIAL SUBMISSIONS ON APPEAL

In the appeal lodged on 31 May 2011, Mr Collins identified the issues in dispute to be whether the Arbitrator erred in finding a deemed date of injury of 18 January 2007 in respect of the claim for weekly compensation and 23 June 2008 in respect of the claim for lump sum compensation. He said that the “primary issue between the parties relates to the deemed date of injur[y] in relation to ‘disease’ in respect of the Applicant’s left and right legs”.
Mr Collins made two submissions on appeal. The first, as he submitted to the Arbitrator, was that s 16(2A) “deems the insurer liable to be the last insurer relevant at the date when ‘employment the nature of which was a contributing factor’ ie the insurer as at 11 April 2000 being GIO General Limited”.
Second, Mr Collins submitted that:
“It is not the intention or the correct interpretation of the WC Act, 1987 to deem [sic] date of injur[y] on an employer or insurer that does not contribute to an ‘injury’ being a ‘disease’ is the requirement of a contribution n [sic] being one of ‘aggravation, acceleration, exacerbation or deterioration’. It is not a relevant factor that the injur[y] already manifest and for which the worker is receiving treatment subsequently requiring surgery (and no issue on capacity at surgery) to ‘deem’ injury to post date its diagnosis to when the worker in real terms is no longer working. This defeats thew [sic] whole intention of the legislation in terms of ‘disease’ claims.”
These submissions were misconceived.
In a Notice of Opposition filed on 12 July 2011, Mr Best sought to uphold the Arbitrator’s decision on the basis of the authorities of GIO Workers Compensation Ltd v GIO General Ltd (1995) 12 NSWCCR 187 and P & O Berkley Challenge Pty Ltd v Alfonzo [2000] NSWCA 214; 49 NSWLR 481.
Mr Best also raised a “point of contention” that, if the submissions by Mr Collins (that the deemed date of injury was 11 April 2000) were upheld, the decision would still be confirmed because the Arbitrator erred in finding that Mr Sturzenegger’s employment after 11 April 2000 did not aggravate his knee condition. Mr Best referred to Mr Sturzenegger’s letter of 8 September 2008, which referred to him having been self-employed and having developed in October 2006 a larger Baker’s cyst behind his right knee and having surgery in January 2007. He also referred to Dr Allan’s report of 28 August 2007, which referred to Mr Sturzenegger working two hours per day as a “self-employed person” because of his wrist injury and to him also having osteoarthritis in his knees.
Mr Best referred to the evidence from Dr Collins and Dr O’Keefe, and said that the evidence was unanimous that, as at 11 April 2000, Mr Sturzenegger had no symptoms in his knees. He said it was clear that, although Mr Sturzenegger reduced his hours of work because of his arm injury on 11 April 2000, he continued to perform physical duties as a shipbuilder or boatbuilder between April 2000 and at least September 2006, and probably until January 2007, when he was first hospitalised because of his knees. It was not until at least September 2006 that Mr Sturzenegger first experienced any dysfunction in his knees and it is undisputed that, at that time, he was continuing to perform physical duties boatbuilding. This evidence did not permit the Arbitrator to conclude that Mr Sturzenegger’s work after April 2000 played no role in the aggravation of his knee condition.
Mr Best said that, given the agreed facts, namely that, as at April 2000, Mr Sturzenegger was asymptomatic in his knees, that he continued to perform physical duties, albeit on a reduced basis, and that, as at September 2006, Mr Sturzenegger first suffered the onset of knee symptoms, his work up to January 2007 (or September 2006) must have played a role in causing an aggravation so as to satisfy the requirements of s 16. A disease is aggravated (etc) if work has the effect of making the symptoms graver or more serious in its effects upon the patient (Federal Broom Co Pty Ltd v Semlitch [1964] HCA 34; 110 CLR 626 at 637 and 639). He submitted that the only conclusion was that Mr Sturzenegger’s employment with the respondent until 16 January 2007 (or, at least September 2006) was a substantial contributing factor to the aggravation of the bilateral degenerative osteoarthritis present in his knees.
Mr Collins filed no submissions in response.

TELECONFERENCE 23 AUGUST 2011

As the submissions filed by Mr Collins were misconceived, they did not enable me to determine the matter “on the papers” (a course both parties had consented to), and I listed the matter for teleconference on 23 August 2011. On that day, Mr McManamey, of counsel, represented Mr Sturzenegger, Mr Bell, solicitor, represented GIO, and Ms Bellemore, solicitor, represented Cambridge.
As Mr McManamey indicated there was no reason why Cambridge was joined as a party to the appeal, they were excused, I directed the appellant to file an Election to Discontinue proceedings against Cambridge on or before 30 August 2011, and set a timetable for further submissions. Mr McManamey filed submissions on 5 September 2011 and Mr Bell filed submissions in response on 20 September 2011. Though the timetable allowed for them, Mr McManamey filed no submissions in reply.

FURTHER SUBMISSIONS ON APPEAL

Mr McManamey submitted the Arbitrator found that:
(a) the condition in Mr Sturzenegger’s knees was one of aggravation, acceleration or deterioration of a disease and that s 16 of the Workers Compensation Act 1987 (the 1987 Act) applied;
(b) Mr Sturzenegger’s knee problems related to his work as a carpenter up to the accident date of 11 April 2000, and
(c) the deemed date of injury with respect to the weekly payments claim was 18 January 2007, being the date Mr Sturzenegger was admitted to hospital for a right knee arthroscopy and that, for the purposes of the claim for lump sum compensation, the deemed date of injury was the date of claim on 23 June 2008.
Mr McManamey has not challenged these findings. He submitted that the primary issue before the Arbitrator related to the question of insurance. GIO insured the respondent from 7 January 2000 to 7 January 2006, but the respondent was uninsured after that date. The issue was whether GIO’s policy indemnified the respondent in respect of the injuries found by the Arbitrator. The Arbitrator expressed the issue as “[w]hat is the deemed date of injury for the purposes of insurance?”. The issue of insurance is the subject of the appeal.
Mr McManamey sought leave to rely on the following grounds of appeal, namely, that the Arbitrator erred when he:
(a)     found Mr Sturzenegger continued to be an employee of the respondent after 7 January 2006;
(b)     declined to consider the application of s 18 of the 1987 Act;
(c)     failed to order GIO to indemnify the respondent in respect of the injuries found;
(d)     excused GIO from further participation in the proceedings, and
(e)     failed to consider the terms of the statutory workers compensation policy.
In support of the first ground, Mr McManamey submitted:
(a)     the matter did not proceed before the Arbitrator as a full hearing. Because the Arbitrator became unavailable, the matter proceeded with each party making written submissions in respect of a single discrete issue. As a result, the parties did not submit on all issues. Mr Collins noted in his submissions that the Arbitrator’s direction was for the parties to make brief submissions on one issue. Mr Collins requested the opportunity to make submissions in person on any other matter;
(b)     the Arbitrator proceeded on the assumption that Mr Sturzenegger continued to be employed by the respondent to the date of his decision. That was not agreed between the parties and was not a matter that was specifically addressed in the written submissions. Mr Collins made no submission in respect of employment after January 2006. In submissions for the respondent, Mr Best asserted that “the Applicant was and is a ‘working director’ of the Respondent”, referring to Mr Sturzenegger’s letter of 8 September 2008. The letter in fact says nothing about Mr Sturzenegger’s employment with the respondent. It said that, after the 11 April 2000 fall, Mr Sturzenegger received treatment and had “been ‘pottering’ around as a ship builder with restricted hours since, being self-employed”;
(c)     to properly determine the matter, the Arbitrator had to determine whether Mr Sturzenegger continued to be employed after January 2006, the date when the GIO policy expired;
(d)     if he had properly considered the evidence, the Arbitrator would have concluded that Mr Sturzenegger ceased to be employed by the respondent at the time he failed to renew the GIO workers compensation policy. Tax returns disclosed that no director’s fees were paid after the financial year ending 30 June 2006. The director’s fees paid for that financial year were only $5,250, which should be compared with the fees paid for the previous financial year of $15,000. The drop in director’s fees indicated that Mr Sturzenegger was only a working director for part of the year (ending 30 June 2006);
(e)     in April 2008, Mr Sturzenegger told Dr Collins that he was no longer working in his business. He was pottering around and was building a boat. In October 2007, Occupational Services Pty Ltd recorded a history that, on returning to work (after the April 2000 injury), Mr Sturzenegger managed to only work 4–5 hours per day and then received assistance in job-seeking. Mr Sturzenegger became depressed at not obtaining employment and decided to self-employ himself on a long-term project building a 40-foot catamaran over two years. In the same report, he described his employment with the respondent as internal fit-outs and domestic building services. There was no mention of boatbuilding as being an activity carried out as part of his employment or as part of the respondent’s business. Occupational Services recommended that Mr Sturzenegger be provided with information with regard to job-searching techniques and assistance, and development of a resume. This would not have been done if Mr Sturzenegger continued to be employed at that time;
(f)      on 28 August 2007, Dr Allan, general practitioner, wrote that Mr Sturzenegger was “currently working 2h per day as a self-employed person”, and
(g)     the Arbitrator has not made a decision about Mr Sturzenegger’s employment status after January 2006, but proceeded on an erroneous assumption of an agreed fact. In these circumstances, there is no decision to be revoked or new decision to be made in its place. The appropriate course is to remit the matter to another Arbitrator for determination in accordance with the directions of the Commission.
As I have determined that the matter must be remitted for re-determination, it is not necessary to set out Mr McManamey’s submissions in support of the remaining grounds.
With regard to the first ground of the amended appeal, Mr Bell filed written submissions on 20 September 2011, in which he made the following points:
(a)     the application for leave to amend the appeal was baseless and should be rejected because Mr Sturzenegger had every opportunity to make submissions during the arbitration proceedings and in the notice of appeal;
(b)     the issue regarding the “status of [Mr Sturzenegger’s] employment” was never raised by Mr Sturzenegger in any of the pleadings. This was because, until the arbitration, the allegation of injury was “2001 to date and continuing”. When that was amended at the arbitration to be “11 April 2000 – deemed”, Mr Sturzenegger did not raise the issue regarding his “status” and Mr Collins did not raise it in any subsequent submissions. The Arbitrator therefore did not turn his mind to it when dealing with the issues for determination. Therefore, it cannot be said that the decision is affected by any error;
(c)     what the appellant is now trying to do is seek a review of the decision so that the Presidential member can review the decision on its merits. This is not allowed under the amendments to the 1987 Act, and
(d)     if the appellant is allowed to argue the “employment status” of Mr Sturzenegger, the evidence is clear that he was employed beyond GIO’s period of risk. He relied on Mr Sturzenegger’s letter of 8 September 2008 and his letter of 17 December 2007 to Cambridge where he suggested that the return to work program cease because he was “employed by Vastrans P/L and working in accordance to my medical certificate”. The tax returns do not necessarily mean that Mr Sturzenegger only worked for part of the year and is contrary to the signed evidence in his letters. In the report from Occupational Services of October 2007, it is recorded that Mr Sturzenegger “advised that he is not motivated to search for new job as he currently has one, however the nature of this work limits him to 2 hours per day due to the physical demands of the job”.
Mr Bell referred to the following evidence to support his submission that Mr Sturzenegger’s employment with the respondent continued to aggravate his knees after April 2000:
(a)     the history recorded by Occupational Services that Mr Sturzenegger’s project involved building a 40-foot catamaran over a two-year period;
(b)     the fact that, in October 2004, Mr Sturzenegger advised that he “put his back out when concreting and suffered from neck pain subsequently”, which contradicted his contention that from 11 April 2000 he performed no duties of a strenuous nature, and
(c)     the report from Occupational Services, which recorded that the nature of his work (on the boat) limited him to two hours per day “due to the physical demands of the job”, which indicated that the work was strenuous and that he could not do any more than two hours per day because the job was just too physical.
Mr Bell repeated the point made by Mr Best in the submissions attached to the Notice of Opposition, namely that, as Mr Sturzenegger’s knee symptoms did not commence until after GIO’s period of risk, the inference from the evidence was that Mr Sturzenegger’s duties at the date of onset of his symptoms were sufficient to have caused an aggravation of the disease which manifested in symptoms.
With respect to Mr McManamey’s submission about s 18, Mr Bell submitted that the section did not apply to GIO because GIO was not the relevant insurer at the deemed date of injury as determined by the Arbitrator. With regard to the remaining grounds in the amended appeal, Mr Bell submitted that he relied on the submissions originally filed with the Notice of Opposition on 12 July 2011, summarised at [41]–[45] above.

DISCUSSIONS AND FINDINGS

As the respondent has objected to Mr McManamey arguing the issues raised in his submissions, it is appropriate to deal with that question first. Though he did not expressly say so, I have assumed that Mr McManamey has abandoned the original grounds of appeal and submissions prepared by Mr Collins.
Whealy JA (Beazley and Sackville JJA agreeing) considered the principles governing new issues on appeal in Harmer v Hare [2011] NSWCA 229. His Honour noted (at [150]) that a party is normally bound by the conduct of his or her case at first instance (University of Wollongong v Metwally (No 2) (1985) 60 ALR 68, at 71). However, a point may be raised for the first time on appeal where the point could not possibly have been met by evidence led at the trial below (Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, at 438; Coulton v Holcombe (1986) 162 CLR 1, at 6–7), or where it is in the interests of justice and would not cause prejudice to the respondent (Water Board v Moustakas (1988) 180 CLR 491, at 498).
The respondent in the present matter submitted that the Arbitrator dealt with the issues presented by Mr Collins and, in the absence of an explanation, Mr McManamey should not be allowed to argue new issues on appeal. Mr McManamey submitted that leave should be granted because of the reasons stated at the teleconference on 23 August 2011, there is no prejudice to the respondent, the s 18 issue requires no further evidence, and it will allow all issues to be determined.
At the teleconference on 23 August 2011, I said that I had not found the submissions filed by Mr Collins to be of any assistance. Mr McManamey said that he was not surprised and sought leave for an extension of time to file fresh submissions. Mr Bell submitted that the best course was for the appeal to be dismissed and for a new appeal to be filed. While the Commission has power to dismiss proceedings in the circumstances listed in s 354(7A) of the 1998 Act, as none of those circumstances apply in the present matter, I did not accede to Mr Bell’s request, but instead set a timetable for both sides to make further submissions.
Mr Best has pointed to no prejudice the respondent would suffer if Mr McManamey is allowed to rely on his submissions and the points raised in them. He submitted that the Arbitrator determined the case on the issues Mr Collins presented and, in these circumstances, there is no error.
While I agree that the new issues raised by Mr McManamey are relevant to the proper determination of the matter, the issues before the Arbitrator were identified by Mr Collins to be “disease and the date of injury” (T3.5). However, exactly what he meant by that statement is unclear. It is the employer, or, more usually its insurer, who identifies the issues in dispute. The respondent’s Reply filed in the interests of GIO put all matters in issue; in particular, it disputed whether Mr Sturzenegger had received an injury “as alleged or at all during GIO’s period of risk” and whether he was a “worker” under the legislation. It did not abandon those issues. This required the Arbitrator to consider not just Mr Sturzenegger’s employment, but also the nature of his duties and whether, as a result of those duties, Mr Sturzenegger suffered an injury.

On the employment issue, Mr Collins submitted that, as a result of the wrist injury, Mr Sturzenegger had been “effectively unemployed although notionally self employed but performing no duties of a strenuous nature and certainly no duties aggravating his knees”. Without referring to the evidence, that submission was of limited assistance.
Mr Best submitted to the Arbitrator that certain “facts should be found”. Those “facts” included, among other things, that Mr Sturzenegger “was and is a working director” of the respondent.
Contrary to the respondent’s submissions on appeal, there were no agreed facts before the Arbitrator. If matters were discussed at a teleconference before the Arbitrator in December 2010, as Mr Best submitted at the oral hearing of the appeal, they were not the subject of any formal agreement noted by the Arbitrator. As there is no transcript (or agreement) about what was said at that teleconference, it is not appropriate for me to base my decision on the discussions at that time.
Mr Best took the Arbitrator to Mr Sturzenegger’s letter of 8 September 2008, in which he said that, since his fall in April 2000, he had received treatment for his wrist and had been “pottering” around as a shipbuilder “with restricted hours since, being self employed”. Exactly what that meant is unclear. Nevertheless, it is clear that the employment issue was before the Arbitrator. This issue goes to the heart of the case, namely, when Vastrans employed Mr Sturzenegger, what his duties were while he was employed and how, if at all, he received an injury in the course of or arising out of his employment. In these circumstances, whether the Arbitrator properly determined that issue is a matter the appellant is entitled to argue on appeal.
The Arbitrator’s decision proceeded on the assumption that Vastrans employed Mr Sturzenegger as a working director up to the date of his decision. Under “Background”, the Arbitrator said, without referring to the evidence or submissions, that Mr Sturzenegger “continued to be an employee of the respondent company and continues to this date”. This was the only statement he made about Mr Sturzenegger’s employment. In these circumstances, he failed to give reasons for this conclusion and appears to have proceeded on the basis that it was an agreed fact. It wasn’t. It was an issue to be determined and the Arbitrator’s failure to deal with it is an error that has affected the decision.
At the oral hearing of the appeal, Mr Best pointed to evidence that supports the Arbitrator’s finding on employment. However, given the state of the evidence, I am not in a position to re-determine the employment issue. As there are several other issues that must be re-determined, the better course is for the matter to be re-determined at another arbitration before a different Arbitrator. When I raised this possibility with Mr McManamey, he conceded that, if the matter is remitted for a further hearing, it would be on the basis that all issues (including the essential issues of injury and employment) be remitted for determination or re-determination.
Mr Best argued in his “point of contention” that the Arbitrator’s conclusion could be upheld on the alternative basis that, contrary to Arbitrator’s findings, Mr Sturzenegger suffered an aggravation injury to his knees under s 4(b)(ii) of the 1987 Act as a result of the work he did building a boat after April 2000 and not as a result of his work as a carpenter up to April 2000.
There are several difficulties with the “point of contention”. First, neither the Act nor the Commission’s rules make any provision for a “point of contention”. Second, the matter raised in the “point of contention” does not merely seek to uphold the Arbitrator’s decision on an alternative basis to that relied on by the Arbitrator, which is permissible in submissions in a Notice of Opposition, but seeks to challenge one of the Arbitrator’s factual findings. If the respondent wished to challenge the Arbitrator’s factual findings, it should have filed an appeal. Third, the “point of contention” raises a matter that was not argued before the Arbitrator and is a matter that could have been met with evidence from Mr Sturzenegger. It is therefore not appropriate to give leave to the respondent to argue on appeal the issue in the “point of contention”. Last, as all matters must be re-determined in any event, the respondent is at liberty to raise this issue (and other issues properly identified in the s 74 notice) at the next arbitration.
The other issues argued by Mr McManamey are closely related to the employment and injury issues. In the circumstances, I believe that the better approach is that all matters should be re-determined at a new arbitration. This allows both parties to prepare and present their respective cases and for the issues to be properly argued on the evidence tendered.

CONCLUSION

While I have concluded that the Arbitrator erred in assuming that Mr Sturzenegger was employed by the respondent up to the date of his decision, I accept that the arbitration was conducted in an abbreviated way and that, had there been a full oral hearing, a number of the problems identified on appeal may have been addressed differently. In the end, the Arbitrator’s determination must be revoked and all issues determined or re-determined by a different Arbitrator.

DECISION

The Arbitrator’s decision dated 5 May 2011 is revoked and the matter is remitted to a different Arbitrator for all issues to be determined or re-determined.

COSTS

The respondent employer is to pay the appellant worker’s costs of the appeal, as agreed or assessed.

Bill Roche

Deputy President
8 November 2011

I, MARGOT UNDERCLIFFE, 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