Temelkov v Kemblawarra Portuguese Sports & Social Club Ltd - [2008] NSWWCCPD 96

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:			Temelkov v Kemblawarra Portuguese Sports & Social Club Ltd [2008] NSWWCCPD 96
APPELLANT:			Alex Temelkov
RESPONDENT:			Kemblawarra Portuguese Sports & Social Club Ltd
INSURER:			Employers Mutual Indemnity (Workers Compensation) Limited
FILE NUMBER:			WCC8260-07
DATE OF ARBITRATOR’S DECISION:			29 January 2008
DATE OF APPEAL HEARING:		21 August 2008
DATE OF APPEAL DECISION:			4 September 2008
SUBJECT MATTER OF DECISION:			Psychological injury; section 11A Workers Compensation Act 1987; causation; whether psychological injury was wholly or predominantly caused by action taken with respect to the dismissal of, or the provision of employment benefits to, the worker; whether the action taken by the employer was reasonable; effect of a failure to comply with a Notice for Production under Part 12 Rule 12 of the Workers Compensation Commission Rules 2006.
PRESIDENTIAL MEMBER:			Deputy President Bill Roche
HEARING:			Oral
REPRESENTATION:			Appellant:	Mr Beauchamp, instructed by Carroll & O’Dea
Respondent:	Mr Flett, instructed by Edwards Michael
ORDERS MADE ON APPEAL:			Paragraphs one and two of the Arbitrator’s decision dated 29 January 2008 are revoked and the following orders made: “1. The matter is remitted to a different Arbitrator for determination of the Applicant Worker’s entitlement to weekly compensation and for such ancillary orders, such as the payment of medical expenses, as may be necessary. 2. The Respondent Employer is to pay the Applicant Worker’s costs of the first arbitration as agreed or assessed. The matter is certified complex and the parties are each entitled to an additional allowance for costs of 15%.”
The Respondent Employer is to pay the Appellant Worker’s costs of the appeal. Costs of the second arbitration are at the discretion of the second Arbitrator.

INTRODUCTION

This matter concerns a claim for compensation for psychological injury allegedly sustained by Alex Temelkov in the course of his employment with the Kemblawarra Portuguese Sports & Social Club Ltd (‘the Club’). The principle issue on appeal is whether the Arbitrator’s finding, that Mr Temelkov sustained a psychological injury as a result of the nature and conditions of his employment, was inconsistent with his ultimate finding that the injury was wholly or predominantly caused by reasonable action taken by or on behalf of the Club with respect to dismissal of workers or the provision of employment benefits to workers.

BACKGROUND

Mr Temelkov started work as a part-time doorman/security officer for the Club in 1994. His duties were not clearly defined but essentially entailed crowd control, viewing identification cards, enforcing new memberships and restricting persons entering restricted areas. He also undertook other duties and, he states, he actively engaged in recruiting new members. He also claims to have secured for the Club the purchase of a block of land at a price well below the asking price. He enjoyed his work and was well liked by Club members.

In November 2005, the Club appointed a new General Manager, Mr Ron Taylor. Mr Temelkov claims he had trouble with Mr Taylor from the outset. He alleges that Mr Taylor would yell at him and tell him that he earned too much money. Mr Temelkov claims that he felt intimidated by Mr Taylor.

In a letter dated 29 December 2005, Mr Taylor formalised Mr Temelkov’s hours, duties and wage. Mr Temelkov’s hours were reduced, but his wage stayed the same. This caused Mr Temelkov some anxiety and resulted in him seeking medical attention and being certified unfit for two days.

An incident occurred in November 2006, when Mr Taylor spoke to Mr Temelkov in offensive terms. The exact circumstances of this incident are disputed and are considered in detail below.

Mr Temelkov continued his usual duties until, in the early hours of 4 March 2007, the Club supervisor handed him a letter dated 3 March 2007 informing him that, because of the Club’s financial circumstances, his employment would be terminated and he would be re-employed on a much lower wage. On receipt of this letter, Mr Temelkov felt upset and agitated. He attended on his General Practitioner on 6 March 2007 and has not returned to work since.

Mr Temelkov submitted a claim for compensation on 30 March 2007.

By notice dated 15 May 2007, the Club’s insurer, Employer’s Mutual Indemnity (Workers Compensation) Limited, disputed liability to pay compensation on the grounds that any psychological injury suffered by Mr Temelkov was caused by reasonable action taken or proposed to be taken by the Club with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers, and that employment was not a substantial contributing factor to any injury. The insurer also disputed injury, incapacity and Mr Temelkov’s entitlement to medical and hospital expenses.

By an Application to Resolve a Dispute (‘the Application’) filed in the Commission on 30 October 2007, Mr Temelkov sought weekly compensation from 15 May 2007 to date and continuing in the sum of $1,114.00 per week together with medical expenses on the grounds that he suffered a “psychological injury” as a result of “continued harassment by management of the Respondent”.

A Commission Arbitrator heard the matter in conciliation and arbitration on 14 January 2008 and, in a reserved decision delivered on 29 January 2008, made an award in favour of the Club.

By an appeal filed on 25 February 2008, Mr Temelkov seeks leave to appeal the Arbitrator’s decision.

LEAVE TO APPEAL

Monetary Threshold

Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’).

There is no issue that the thresholds in section 352(2) are satisfied.

Time

The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act.

I grant leave to appeal.

ISSUES IN DISPUTE

The issues in dispute in the appeal are whether the Arbitrator erred in:

(a)finding that the psychological injury was wholly or predominantly caused by reasonable action taken by the Club with respect to the dismissal of workers or provision of employment benefits to workers;

(b)failing to take a number of aspects of the evidence into account and failing to give proper weight to the parts of the evidence he did consider;

(c)placing this case amongst the category of cases to which section 11A of the Workers Compensation Act 1987 (‘the 1987 Act’) may apply;

(d)considering the impact of the 3 March 2007 incident in accordance with Manly Pacific International Hotel Pty Limited v Doyle (1999) 19 NSWCCR 181, by dealing with the incident in isolation and not in the context of the previously found injury, and

(e)failing to deal with competing credit issues from various witnesses in the case.

NATURE OF A REVIEW

The Court of Appeal considered the nature of a ‘review’ under section 352 of the 1998 Act in Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34; (2006) 4 DDCR 358 (‘Zheng’), where Bryson JA said at [38]:

“A review is a different process to an appeal and the matters which may be considered and the manner in which they may be considered are somewhat wider. See Boston Clothing Co Pty Ltd v. Margaronis (1992) 27 NSWLR 580 at 584 (Kirby P). An attack, on review or otherwise, on an Arbitrator's discretionary decision in controlling procedure may be based on the test stated in House v. R (1936) 55 CLR 499 at 504 - 505; but that is not the only basis on which the Presidential member may act. The powers of a Presidential member on review are somewhat wider and extend to power to reopen consideration of a matter of which an Arbitrator has disposed; the manner in which the powers of the Presidential member are to be exercised is itself the subject of discretion of the Presidential member.”

McColl JA approved this passage in South Western Sydney Area Health Service v Edmonds (2007) 4 DDCR 421; [2007] NSWCA 16 at [134] (‘Edmonds’). To describe the relative weight and relevance of the expert evidence as “a discretionary decision which could only be disturbed on House v The King principles” was described by McColl JA as “an over-generalisation” (at [133]). Thus, on review, a Presidential member is not bound by an Arbitrator’s discretionary decision, but can reach his or her own conclusion.

The nature of a review was further considered by the Court of Appeal in State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249; (2007) 5 DDCR 287 (‘Chemler’) where Spigelman CJ said at [28] and [30]:

“28. The concept of a review on the merits is wider than the concept of an appeal in a judicial context. There is a well established line of authority on the use of the terminology of ‘review’ instead of ‘appeal’ with respect to the workers compensation system in this State which establishes the breadth of a review on the merits.
…
30. A Presidential member exercising a power to review a decision must decide whether the original decision is wrong or, as it is often put in the context of administrative appeals on merits, must decide what is the true and correct view. If s/he does so decide then s/he should substitute his or her own views, unless it is an appropriate case to remit. The power to remit is not constrained in the manner for which the Appellant contends.”

I intend to apply the above principles in the matter before me.

THE EVIDENCE AND ALLEGATIONS

Mr Temelkov was born in Macedonia in 1959 and came to Australia in 1973. He completed his schooling at the age of 17 and then worked for the Steelworks in Port Kembla for 3½ years. He then became a professional boxer, winning the national championship in 1980 and travelling extensively until his retirement in 1987. He then worked as a truck driver and in various security jobs until he started work with the Club in 1994. When he initially started with the Club he worked only two nights per week and retained another security job at the Warrawong Markets. From March 1995, he worked full time with the Club. His precise classification as at 1995 is unclear, but his duties essentially involved “security work” and work as a doorman. He also performed additional duties, such as escorting women to their cars and removing rubbish. For a period his hours remained fairly loosely regulated (if regulated at all) but it seems he worked from about 7.00pm until any time after 2.30am.

Mr Temelkov’s case is that from the date of Mr Taylor’s appointment in November 2005, Mr Taylor harassed him and was provocative, hoping he would leave. Mr Temelkov also claims that he felt intimidated by Mr Taylor, who would yell at him and tell him he was being paid too much.

In respect of Mr Taylor allegedly harassing Mr Temelkov and being provocative, the evidence relied on is in Mr Temelkov’s statement of 23 April 2007, the histories taken in the medical reports of Dr Gertler and Dr Sen, and in the medical certificate of Dr Jasim dated 7 March 2007. At paragraph 20 of his statement of 23 April 2007, Mr Temelkov said:

“20.Since he [Mr Taylor] has been at the Club I have had trouble with him. I have had a number of meetings with Ron and in these meetings he is always yelling at me, confusing me and telling me that I was being paid too much money.”

He then referred to the December 2005 letter, which reduced his hours and formalised his duties, but left his wages unchanged. Mr Temelkov said of this letter:

“22.I was not sure what was going on. My heart started racing and I was upset so I went to my doctor, Dr Sen. Dr Sen sent me to a heart specialist in Wollongong and I was checked out but all was well there.”

He added at paragraphs 23, 25 and 31:

“23.I have always had problems with Ron since he has been there and as mentioned, he would yell. There were meetings where he was confusing me and I felt intimidated.

…
25.I also know that he told one Committee Member that he hated me and I do not know why.

…
31.As mentioned, I have always felt intimidated by Ron Taylor. When I have been in his office he has had a baseball bat next to him. I know that he hates me for some reason but I have done nothing wrong.”

In December 2005, Mr Temelkov was handed a document dated 29 December 2005 outlining his conditions of employment and duties. The document stated that he was employed as a Permanent Full-time Level 3 Doorman under the Club Employees State Award (NSW). It also recorded and formalised, for the first time, Mr Temelkov’s shifts (reduced from six to five per week), his hours (6:00pm until 2:00am on Tuesday to Friday and 6:30pm until 3:00am on Saturday) and his wage ($1,114.00 per week, which included an over award payment of $379.48 per week). Point nine of the letter reads “WAGES – NOT TO BE REDUCED” (emphasis included in original).
Upon receiving this document, Mr Temelkov claims that he became upset and his “heart started racing”. He attended Dr Sen, General Practitioner, who certified him unfit for work from 28 December 2005 to 29 December 2005 due to anxiety. Mr Temelkov claims he was also referred to a heart specialist who did not detect any abnormalities. After having two days off, he continued his normal duties without complaint or time off.

The November 2006 incident is the subject of conflicting evidence. Mr Temelkov relies on statements from several Club members and Mr Taylor relies on a statement from Mr Germano, the Club President.

As a result of this incident, Mr Temelkov allegedly wrote to the Club’s “Committee” on or about 11 November 2006. The letter refers to an “extremely serious incident” involving the General Manager (Mr Taylor) at the Club at “about 12.30am on Sunday 11 November 2006”. Whilst 11 November 2006 was a Saturday, I do not think anything turns on that error. The letter refers to Mr Taylor being rude and swearing in a loud voice near the poker machine area. A number of patrons complained to Mr Temelkov who at first took no action. The complaints continued and Mr Temelkov then approached Mr Taylor and said there had been complaints about his swearing to which Mr Taylor replied, “Fuck off”. Mr Temelkov requested the committee to take action to prevent such an incident happening again, as it made his job hard. He also complained about Mr Taylor yelling at him at meetings and requested that Mr Taylor stop lying at meetings. He stated that he was most offended by Mr Taylor’s actions and that those actions had prevented him from sleeping and were in his mind all the time.

It is unclear if this letter ever reached the Board. Mr Taylor states that no report was made to the Board concerning the incident of November 2006 and Mr Germano is silent on whether the Board ever received or considered Mr Temelkov’s letter.

Mr Temelkov relies on statements from several witnesses, whose evidence deals with this incident and with other incidents where Mr Taylor used bad language. Mr Morias states that he was present at the Club in the company of Mr Taylor and Mr Germano on 11 November 2006, when he heard Mr Taylor swearing. Mr Temelkov walked over to their table and said to Mr Taylor “There has been a complaint about your swearing. Can you keep it down?” In response, Mr Taylor said, “Fuck off”. Mr Temelkov looked shocked, but merely walked away without responding. Mr Morias said to Mr Germano that Mr Taylor’s statement was not called for and Mr Germano responded by saying “Oh, he only told him to piss off”. Mr Morias also referred to conversations he has had with other members who have made complaints about Mr Taylor swearing, being abrupt and not holding his temper.

Barbara Vaughan states that she has known Mr Temelkov for 20 years and that he was very popular with the patrons and always a gentleman. On 11 November 2006, she was at the Club playing a poker machine when she noticed three men, one of whom was Mr Taylor, sitting at a table. She heard Mr Taylor swearing loudly and asked Mr Temelkov if he could ask Mr Taylor to stop swearing. Acting on her request, Mr Temelkov approached Mr Taylor and she heard him say to Mr Temelkov, “Fuck off”. She added that she could see Mr Temelkov was upset by these words. She thought that Mr Taylor sounded as though he was drunk.

Dealing with a separate incident in November 2006, Robert Mace states that he was at the Club on Melbourne Cup day in 2006 with his wife, Mary, and Frank Schilder. He states that Mr Taylor was also sitting at his table. Mr Mace heard Mr Taylor using offensive language. This prompted his wife to say to Mr Taylor “If Alex [Mr Temelkov] was here, he would say, ‘language please’”. Mr Taylor allegedly replied by lifting his right hand and extending his middle finger and saying, “Fuck Alex”. According to Mr Mace, Mr Taylor said nothing else and left the table about 30 minutes later. He added that it was known among Club members that Mr Taylor did not like Mr Temelkov. There had been several instances when he had been present when Mr Temelkov asked Mr Taylor to stop swearing.

Mrs Mace corroborates her husband’s evidence about the Melbourne Cup day incident and adds that she started a petition to help Mr Temelkov get his job back. She also said that she did not like to speak to Mr Taylor because he was often intoxicated and used bad language.

Mr Zurak’s statement is difficult to follow and generally unhelpful. On a date he cannot recall, he was at the Club when a person, identified to him only as “the committee man”, said to Mr Temelkov, “Fuck off Alex”.

Neil Foreman, a retired police officer who has also worked in the security industry, has known Mr Temelkov for 30 years. He was not present during the November 2006 incident, but Mr Temelkov telephoned him the next day “quite distressed with the confrontation and concerned with the behaviour of the manager”. He stated that the Club was in an area where undesirable people would attend and Mr Temelkov “did a great job of cleaning the place up”. He found Mr Temelkov to be a conscientious worker who turned the Club into a family club. People felt safe whenever Mr Temelkov was working there.

Mr Taylor’s version of the November 2006 incident, substantially corroborated by Mr Germano, is that in the course of their private conversation, he noticed Mr Temelkov standing behind him, apparently listening to the conversation. He turned and said to Mr Temelkov, “Piss off”.

Mr Temelkov remained at work performing his normal duties until 4 March 2007. There is no evidence that he sought any medical treatment in this period.

In the early hours of 4 March 2007, at the end of Mr Temelkov’s shift, the Club supervisor handed Mr Temelkov the letter of 3 March 2007. The letter states:

“Dear Mr Temelkov
Position of Doorman
I advise that the Board has considered the current rates of pay being paid to you in your position of Doorman at the Club.
Currently, you receive a wage of $1,114 per week in accordance with an agreement entered into between you and the Club on 1 July 2005.
I advise that the Club is no longer in a financial position to pay this rate of pay to you, which represents an amount of approximately $380 in excess of the rates of pay payable under the Club Employees’ (State) Award. Accordingly, I advise that your current position as Doorman, in accordance with that agreement, will be terminated with five weeks notice.

Therefore, your current employment under this agreement will terminate on the 7^th April 2007.
The Club is prepared to offer you the permanent full-time position of Level 3 Doorman, under the Award and that you would be paid in accordance with the Award. The rate of pay that you would receive would be as follows:
-     Monday to Friday - $15.9050 per hour
-     Saturday - $23.8642 per hour
-     Sunday - $27.8416 per hour
-     Public holidays - $39.7737 per hour

Could you please advise me, no later than Friday, 9^th March 2007 whether you accept the offer of employment in the position of permanent full-time Level 3 Doorman at the rates of pay as outlined above. If you do not wish to accept this position your employment with the Club will cease on the 7^th April 2007.
PS It is not in your interests to circulate this letter to members of the club. Your immediate contact should be your Union if you have any questions. Advise them I will only be too pleased to respond to their questions.
Yours sincerely
Ron Taylor
General Manager”

Mr Temelkov claims that after receiving this letter his heart started racing again and he was agitated and upset, as the letter indicated that his employment would be terminated if he did not accept the new terms. Mr Temelkov contacted Mr Germano who said he had “nothing to do with employing the workers in the Club or what they are paid” (Statement of Mr Germano, 16 April 2007).

Mr Temelkov saw Dr Haider Jasim, General Practitioner, on 6 March 2007. Dr Jasim diagnosed Mr Temelkov as having post traumatic stress disorder (PTSD), certified him to be unfit for work and referred him to Lubica Vracar, Psychologist, of Warrawaong Accident & Medical Centre. Ms Vracar confirmed the diagnosis of PTSD and provided counselling.

Ms Vracar’s evidence is in her report dated 28 October 2007. She records that Mr Temelkov has been attending psychological counselling with her since March 2007. She recorded the following history:

“Mr Temelkov reported as per initial report that states the incident that occurred on 03/03/2007 [at] 2:30am and was [the] cause for [his] psychological disorder. Mr Temelkov reported that he had been employed with Kemblawarra Portuguese Club over 13 years prior to this incident in a full time capacity. Mr Temelkov reported that he performed multiple tasks in addition to his major role [as a] security person, (tasks such as clearing tables, attending to poker machine duties, driving patrons home if [the] situation required).
Mr Temelkov reported that he enjoyed his work until two years ago prior to [the] above incident, [when] management changed and [the] manager in charge was treating him badly including verbal abuse [and] threatening him. Mr Temelkov reported becoming anxious and worried, and on several occasions when he tried to discuss issues with the manager that manager would verbally abuse him. Mr Temelkov reported that at times he would become extremely angry, but was unable to act on [the] anger as he has [a] wife and four young children to think about it. Thus when he received [the] letter [of] 03/03/07, he become [sic] numb, unable to perform his duties and had to leave work. Mr Temelkov reported that he drove very slowly that night/morning as he was disorientated and unable [to] concentrate.
Mr Temelkov reported chronic insomnia, poor concentration, high anxiety, chronic fatigue, feeling sad and irritable, experiencing difficulties at interacting with his wife and four children, and thinking of how bad he was treated in his employment.”

Ms Vracar administered the “DASS 42” and Mr Temelkov’s score fell in the extremely severe range for depression, anxiety and stress. She concluded that the work incident on 3 March 2007 “caused Mr Temelkov psychological distress”.

Mr Temelkov completed a claim form on 30 March 2007, in which he referred to the November 2006 incident and to “repeated incident[s]” relating to Mr Taylor that are not identified.

Dr Robert Gertler, Psychiatrist, examined Mr Temelkov at the request of Carroll and O’Dea on 23 May 2007. In his first report, dated 24 May 2007, Dr Gertler recorded that Mr Temelkov had enjoyed good emotional health and that his employment with the Club “progressed satisfactorily until late 2005 when a new manager was appointed”. Mr Temelkov believed that “the new manager was harassing him and was being provocative, hoping that he might leave”, at times being verbally abusive towards him.

According to Dr Gertler, Mr Temelkov “developed an adjustment disorder with mixed emotional features on the basis of his experiences in the workplace, in particular the experience in early March” (report 24 May 2007, page three). He considered that Mr Temelkov’s condition was related to the incident in November 2006 following which he developed symptoms of anxiety, gradually worsening until the incident in March 2007 when he received the letter outlining his new employment conditions leading to “emotional decompensation” (report 22 August 2007). In his last report of 18 September 2007, Dr Gertler stated that he felt Mr Temelkov was suffering partial incapacity and that his psychiatric condition was improving with the benefit of appropriate treatment.

Mr Temelkov’s evidence also includes a petition addressed to the Club’s Board of Directors and signed by 269 Club members. The petition reads:

“We the members and patrons of the Portuguese Sport and Social Club are dissatisfied by the way the Manager of the Portuguese Sport and Social Club has been treating a long term employee of the Club Mr Alex Temelkov and the condition [sic] that have been imposed upon him for his future employment. Mr Temelkov over the years has contributed to the club and the well being and safety of the members and patrons and he should be treated fair [sic] and his employment continued.
We request that the Board maintain Mr Temelkov under his current condition [sic] and review the power of the Manager of the Club.”

It is not known when the petition was circularised or presented to the Club.

Mr Temelkov signed a further statement on 3 October 2007. In this statement he added that when he started at the Club he was active in recruiting new members, secured the purchase of an adjoining block of land for $200,000 less than the asking price and provided security around the premises, including escorting women or aged members to their cars to ensure their safety. He also worked unpaid shifts and performed extra duties such as removing rubbish and collecting glasses.

In addition, he claimed:

·     as at 4 March 2007 there was no need to cut his wage and the work he did is now performed by a doorman and contractor security officers “at about $30 per hour”;
·     the Club owns land valued at $1.3 million;
·     after the incident on 4 March 2007, 300 members resigned from the Club causing a liquidity crisis;
·     at the meeting to discuss the sale of the land, Mr Taylor was, as was often the case, affected by alcohol and fell off his chair and an ambulance took him to hospital;
·     Mr Taylor has been dismissed from the Club and may be facing criminal charges, and
·     the injury has totally changed his life and he is irritable and unable to concentrate.

The Club relies on statements from Mr Taylor and Mr Germano together with reports from Greg Fathers, Consulting Psychologist, and Dr Kaplan, Forensic Psychiatrist.

When Mr Taylor arrived at the Club in November 2005, he could find no clear indication of Mr Temelkov’s classification or award, as the records were “in a shambles” (Mr Taylor’s statement 23 April 2007, paragraph three). In an attempt to formalise the terms of Mr Temelkov’s employment, Mr Taylor had several meetings with Mr Temelkov in December 2005, but could not get him to understand what he was attempting to do. He thought Mr Temelkov seemed paranoid and noted that he (Mr Temelkov) said he would take the Club to court. He denied ever yelling at those meetings but said that Mr Temelkov threatened that the Board would get rid of him. He reminded Mr Temelkov that he was his manager and that he “would do what he was told” (Mr Taylor’s statement 23 April 2007, paragraph five). He felt that Mr Temelkov was always on edge, extremely nervous, agitated and paranoid. Mr Temelkov did not like authority and was resentful of Mr Taylor.

On 29 December 2005, Mr Taylor drafted a document intended to clarify Mr Temelkov’s terms of employment (see [26] above).

Mr Taylor could not get Mr Temelkov to understand that he would be better off under this agreement: his wage was unchanged, but he was to work only five shifts per week instead of six. To vary the award it is necessary to sign a Voluntary Exemption Agreement, but Mr Temelkov refused to sign the Agreement.

Mr Taylor did not believe Mr Temelkov performed his duties properly. Whilst he denied hating him, he said he got very annoyed with him and all he wanted was for Mr Temelkov to do what he was supposed to do and what he was employed to do.

According to Mr Taylor, the Club was suffering financially and he had to take “some drastic measures” and cut costs in all areas, including the bar, management and office catering (Mr Taylor’s statement 23 April 2007, paragraph 13). As Mr Temelkov was the only employee being paid above the Award, it was decided that he should be “brought back into line with the Award”. It was for this reason that Mr Temelkov prepared the letter of 3 March 2007. He states that “in real terms” Mr Temelkov would have been $268.57 per week worse off.

Mr Taylor added that what he did was “legal and responsible in the circumstances” and was part of “our overall cost cutting measures and our restructuring”. He felt Mr Temelkov was “grossly overpaid for the position he held” (Mr Taylor’s statement 23 April 2007, paragraph 15).

In respect of the November 2006 incident, Mr Taylor states that incident report forms and complaint forms are readily available, but Mr Temelkov did not complete any form and made no report to the Board.

Mr Germano was Club President from 1991 to 1997 and again from 2004 to at least the date of his statement on 24 April 2007. His version of the November 2006 incident substantially corroborates Mr Taylor’s evidence, namely, it appeared that Mr Temelkov was listening to their conversation and Mr Taylor said, “Alex, piss off please”. Mr Temelkov then walked away, but came back and tried to say there had been a complaint about swearing. Mr Germano says that no one was “anywhere near us”, but concedes that some people were playing poker machines and that Mr Taylor “may have used the ‘f’ word but it was just in general conversation between the 2 of us and there was no-one in the immediate vicinity” (Mr Germano’s statement 24 April 2007, paragraph three).

Mr Germano confirms that the Club has suffered financially in recent times and that it was decided that cost cuts were needed. As Mr Temelkov was paid well over the Award, he was offered a new position “due to restructuring and he was not happy” (Mr Germano’s statement 24 April 2007, paragraph five). He agrees that Mr Temelkov telephoned him complaining about the offer. Mr Germano responded that he had nothing to do with employing the workers in the Club or what they were paid. He advised Mr Temelkov that if he felt he was being treated unfairly, he should seek advice about his rights and act upon that advice.

In response to the matters raised in Mr Temelkov’s statement of 3 October 2007, Mr Germano signed a further statement on 12 October 2007. He confirmed that the Club owns an adjoining property worth in excess of $1 million but, despite the Club’s financial troubles, the Board voted not to sell the land, believing it to be more economically viable to retain it and to make cost cuts across other areas, such as revising rosters and making cuts in the bar and kitchen. He confirmed that, as Mr Temelkov was the only employee paid above the Award, “a decision was made to reduce his salary to the Award rate” (Mr Germano’s statement 12 October 2007, paragraph four).

Mr Germano firmly denies Mr Temelkov’s claim that over 300 members resigned since the incident on 4 March 2007, stating that no members have resigned. He claims that the Club has signed nearly 50 new members every month. In respect of Mr Taylor’s health, he says that Mr Taylor suffered a “medical episode/panic attack” at a Board meeting on 24 July 2007, but he was not affected by alcohol. Mr Taylor was not dismissed, but ceased employment on 24 July 2007 for personal reasons. Mr Germano has no knowledge of any criminal charges or criminal investigations involving Mr Taylor.

Dr Robert Kaplan reported Mr Temelkov to be a poor historian who had a “superficial” mood. He “did not appear depressed or anxious, and there were no symptoms of PTSD”. Dr Kaplan stated:

“Although Mr Temelkov is preoccupied with the dispute at work, he does not have significant anxiety or depression. There is no basis for diagnosing PTSD. He was not involved in an incident that would be considered a traumatic event and is not experiencing typical symptoms such as nightmares or flashbacks. I have considered whether Mr Temelkov could have a mild adjustment disorder, but there is no evidence to support this…
…Mr Temelkov does not have a psychiatric disorder or injury from work.”

Mr Greg Fathers reported that Mr Temelkov was vague in discussing his history and was of the opinion that there is no clinical, psychological diagnosis to be made. “There is no evidence that he has an adjustment disorder, or that he is unduly suffering from elevated anxiousness or depressed mood.”

THE ARBITRATOR’S REASONS

The Arbitrator found:

(a)that Mr Temelkov suffered a psychological injury, being an adjustment disorder with anxiety and depression, arising out of or in the course of his employment from November 2005 to 4 March 2007 and that, “as the primary cause of the injury arose in the context of his employment conditions and relations with his manager, such employment was a substantial contributing factor to such injury, within the meanings of sections 4 and 9A” of the 1987 Act (Reasons, paragraphs 24 and 27);

(b)that whilst Mr Temelkov claims he had trouble with Mr Taylor from the time of his appointment in November 2005, he “cites only three particular incidents”, namely:

(i)when Mr Temelkov was handed the conditions of employment document of 29 December 2005. Mr Temelkov claims he was upset as he felt his work had been reduced. However, whilst his working days were reduced from six to five days, his rate of pay was to remain the same. The Arbitrator believed the documentation and presentation of his conditions of employment constituted reasonable action by the Club (Reasons, paragraph 30.1);
(ii)the incident in November 2006. The Arbitrator did not consider this incident to be particularly significant in the development of the psychological injury, “at worst, it was just another event that gave rise to the Applicant’s perceived concerns about his job” (Reasons, paragraph 30.2), and
(iii)the letter of 3 March 2007. Dr Gertler described the receipt of this letter as “the final straw” resulting in Mr Temelkov’s emotional decompensation. Mr Temelkov was the only employee to receive a termination/re-hiring letter but he was also the only employee being paid above the award rate. The Arbitrator accepted that Mr Temelkov was therefore not singled out. Whilst the way he was handed the document could have been better handled, there is no evidence that the manner of communication of the document caused the psychological injury (Manly Pacific International Hotel Pty Ltd v Doyle (1999) 19 NSWCCR 181 at 183 (‘Doyle’)), rather it was the contents of the document (Reasons, paragraph 31).

(c)on the balance of probabilities, the Arbitrator was satisfied that:

“…the issue of the December 2005 conditions of employment document which was the starting point of the injury, and the letter of 3 March 2007, which was the ‘final straw’ causing manifestation of the psychological injury, were reasonable and that the Applicant’s psychological 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,…retrenchment or dismissal of workers or provision of employment benefits to workers’ within the meaning of section 11A(1) of the 1987 Act” (emphasis included in original) (Reasons, paragraph 32);

(d)as a result, the Arbitrator made an award for the Club.

SUBMISSIONS

Mr Temelkov sumbits:

(a)the Arbitrator’s finding, that he suffered a psychological injury that arose out of or in the course of his employment with the Club and to which his employment was a substantial contributing factor, was inconsistent with his finding that such injury was wholly or predominantly caused by reasonable action taken by the Club with respect to dismissal of workers or provision of employment benefits to workers;

(b)the Arbitrator did not evaluate the evidence to “balance the competing credit issues”;

(c)to determine the reasonableness of the action taken by the Club, it was necessary to consider the content of the actions taken. Mr Temelkov had been a long term employee and should have been approached in a manner reflective of that fact;

(d)the incident of 3 March 2007 should not have been construed in isolation. Matters such as those set out in paragraphs 18 to 20 of the Arbitrator’s Reasons should have been determined. Issues such as whether Mr Taylor maintained a system of “violent and aggressive managing”, such as the threat of using a baseball bat on Mr Temelkov, and the degrading of Mr Temelkov by actions and words should have been determined;

(e)a Notice to Produce documents Mr Taylor’s personnel file was issued on the Club, but production was refused on the ground of confidentiality. The Arbitrator should have drawn “appropriate inferences about such failure to produce”;

(f)the letter of 3 March 2007 was not a provision of employment benefits but “rather the non-provision of employment benefits wrapped in the threat of cessation of employment for non-acceptance”. Therefore it is arguable whether section 11A has any relevance;

(g)even if the letter of 3 March 2007 can be construed as coming within section 11A, the actions taken by the Respondent could not be seen to be reasonable because:

(i)Mr Temelkov was a long term employee who carried out functions for the Club well in excess of his job description;
(ii)Mr Temelkov’s wages were effectively reduced by half;
(iii)a large number of club members considered the action unfair or unreasonable, and
(iv)accepting Mr Temelkov’s evidence, including the medical and lay supporting evidence, the letter of 3 March 2007 was “the ultimate act in an orchestrated unfair campaign waged by Mr Taylor and Mr Germano”.

The Club submits:

(a)there is no inconsistency in the Arbitrator’s decision. The Arbitrator found that the Appellant’s psychological injury was caused or predominantly caused by the three events (listed above at paragraph [65(b)]). The Arbitrator’s findings did not exclude the circumstances outlined by Mr Temelkov of aggressive or abusive behaviour by the Club, but these were not seen by the Arbitrator to be the cause or predominant cause of the injury. It is clear that the Arbitrator accepted Dr Gertler’s diagnosis that Mr Temelkov sustained an adjustment disorder with anxiety and depression attributed “to the November 2006 incident, with his emotional condition gradually worsening until he ‘decompensated’ upon receipt of the 3 March letter”;

(b)the Arbitrator reached his conclusions following a proper weighing of all the relevant evidence. It is unclear what evidence Mr Temelkov claims the Arbitrator did not take into account;

(c)the Arbitrator has not erred in fact nor in law in his application of section 11A. It was open to the Arbitrator to find that the contents of the letter of 3 March 2007 constituted a “dismissal” or related to the provision of employment benefits. In the alternative, the contents could be seen as a “demotion” for the purposes of section 11A;

(d)section 11A is concerned with whether the action taken by the employer with respect to dismissal or provision of employment benefits is reasonable, not whether the dismissal or provision of employment benefits was reasonable (Doyle);

(e)the Arbitrator was entitled to deal with the impact of the 3 March 2007 incident in isolation, as it was these circumstances that he found were causally related to the psychological injury, and

(f)the Arbitrator’s findings should not be disturbed unless Mr Temelkov has discharged the onus of proof of establishing that the decision was “clearly incorrect”. It is not “the Appeal Panel’s” [sic, Presidential member’s] role to “look behind the findings of fact made by the Arbitrator and substitute its own findings” (Warren v Coombes (1979) 142 CLR 53; [1979] HCA 9).

On 30 June 2008, I issued a Direction to the parties seeking further submissions “identifying the grounds of appeal” on which Mr Temelkov relied and further submissions in support of those grounds together with submissions dealing with all issues raised under section 11A of the 1987 Act.

In response to that Direction, Mr Temelkov filed further submissions on 14 July 2008. Those submissions may be summarised as follows:

(a)Mr Temelkov’s statement of 3 October 2007 asserts that if the Club acted reasonably there would have been no need to cut his wage as he was carrying out duties subsequently performed by a doorman and contractor security officers at about $30 per hour;

(b)the resignation of over 300 members after his dismissal led to a liquidity crisis;

(c)these matters did not form part of the Arbitrator’s determination;

(d)Mr Temelkov has previously set out “various examples of unfair, intimidatory or unreasonable conduct by Mr Taylor and others in management” (Appellant’s Supplementary Submissions, dated 14 July 2008, paragraph six);

(e)the 269 members who signed the petition regarded the Club’s actions as “unfair”;

(f)the Arbitrator’s finding that the injury arose “in the context of his employment conditions and relations with his manager” (Reasons, paragraph 27) cannot sit with the finding at paragraph 31 of his Reasons that it “was the contents [of the letter of 3 March 2007] that caused the injury, and it is most likely that the Applicant would have had the same ‘emotional deconstruction’ if the club’s decision had been communicated verbally at a specially convened meeting”;

(g)two identical acts may result in one being regarded as reasonable in the context of the case and the other as unreasonable. Reasonable action should be given a broad construction (Dunn v Firth [2003] NSWCA 280 (‘Dunn’));

(h)the Arbitrator having found “relations with his manager” to be causative of Mr Temelkov’s injury, failed to determine the credit issues between Mr Temelkov and Mr Taylor. Such a failure meant that whether the actions constituting “relations with his manager” were reasonable under section 11A were also unresolved, and

(i)the injurious relations with Mr Taylor between November 2005 and March 2007 included many incidents and an atmosphere of fear and apprehension which have no relationship to the provisions of section 11A.

On 29 July 2007, the Club filed submissions in response to the Direction. It submits:

(a)the letter from O’Donnell Hennessy and Co dated 16 July 2007 expressed grave concerns in respect of the solvency position of the Club, a matter they had been talking to the Club about for “some months”;

(b)against the background of the Club’s financial problems, it approached Mr Temelkov regarding a reduction in his wage. He was approached, as he was the only person being paid in excess of the Award, rather than for any other reason. The Club acted reasonably in all the circumstances in its negotiations with Mr Temelkov;

(c)the Arbitrator accepted that, as Mr Temelkov was the only employee on above Award payments, he had not been singled out;

(d)the Arbitrator considered, at paragraphs 29 to 32 of his Reasons, the incidents cited as contributing to Mr Temelkov’s psychiatric condition and found that the Club’s actions with respect to those incidents were reasonable within the meaning of section 11A;

(e)the views of the members who signed the petition are irrelevant, and

(f)the Arbitrator’s findings are consistent. Though the contents of the letter of 3 March 2007 may have caused Mr Temelkov’s injury, the injury arose out of the context of his employment conditions and relations with his manager. The contents of the letter would have affected Mr Temelkov regardless of whether the contents were communicated by letter or in person.

DISCUSSION AND FINDINGS

The Legislation and Authorities

Section 11A(1) of the 1987 Act provides:

“11A No compensation for psychological injury caused by reasonable actions of employer

(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.”

In a claim for compensation for psychological injury, the Commission has to decide (consistent with Doyle, at [4]) whether (i) the whole or predominant cause of the psychological injury was the employer’s action or proposed action with respect to, in this case, the worker’s dismissal/employment benefits, and, (ii) if so, whether the action or proposed action with respect to the dismissal/employment benefits was reasonable.

In Doyle, Fitzgerald JA (Mason P concurring) held (at [6]):

“The worker is entitled to be compensated for psychological injury caused or predominantly caused by the communication of a decision or proposal to transfer him or her where the decision or proposal or the manner in which the decision or proposal is communicated were unreasonable.”

Doyle is also authority that section 11A applies to action taken with respect to a single worker (per Davies A-JA at [32] citing section 8(c) of the Interpretation Act 1987, Fitzgerald JA and Mason P concurring).

In Jeffery v Lintipal Pty Ltd [2008] NSWCA 138 the Court of Appeal briefly considered the above passage from Doyle, and Basten JA stated, at [33]:

“33 Whether questions of onus of proof have any significant bearing on the conduct of proceedings in the Commission need not be considered for present purposes; nevertheless, it is unwise to take such statements out of context, the statute not requiring that the action be demonstrated to be ‘unreasonable’ in order for the claimant to succeed, but rather providing that compensation will not be payable if the action were ‘reasonable’. It is clear from the surrounding paragraphs in the judgment in Doyle that his Honour was not seeking to depart from the statutory language.”

Davies A-JA held (at [27]) in Doyle:

“The criterion of s 11A(1) par (b) is ‘reasonable action taken ... by or on behalf of the employer’. The words ‘with respect to’ are of a wide application. Transfer demotion, promotion, etc. may be the subject of the action or proposed action taken by or on behalf of the employer or matters with respect to which that action or proposed action is connected or may themselves constitute the action or a part of the action. However, the provision does not speak of an injury caused by the transfer, demotion, promotion, etc. of a worker but an injury caused by the action taken or proposed to be taken by or on behalf of the employer with the respect to such a matter.”

Injury and Causation

The first questions to be decided are: what was Mr Temelkov’s injury and what caused it?

On the basis of Dr Gertler’s evidence, the Arbitrator determined, and it has not been challenged on appeal, that Mr Temelkov suffered a psychological injury consisting of an adjustment disorder with mixed emotional features (anxiety and depression) (Reasons, paragraph 24 and 33). I agree with that finding and, for the reasons given by the Arbitrator at paragraph 24 of his decision, make the same finding on appeal.

The leading authority on causation in workers compensation claims is Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452 (‘Kooragang’) where it was observed that causation is a question of fact to be determined on the evidence in each case. That case concerned the question of whether the death of a worker had “resulted from” the relevant work injury. The present matter concerns whether “the injury was wholly or predominantly caused by reasonable action”. Acting Deputy President Handley considered the phrase “predominantly caused” in Ponnan v George Weston Foods Ltd [2007] NSWWCCPD 92 and applied the dictionary meaning (at [24]) of “mainly or principally caused”. I agree with that definition and intend to apply it in the present matter.

On the question of the cause of Mr Temelkov’s injury, the Arbitrator did not regard the incident of November 2006 as giving rise to any symptoms that required medical attention, but regarded it as “merely one further situation that may have given rise to his [Mr Temelkov’s] perception that his employment was at risk” (Reasons, paragraph 25).

At paragraph 26 of his Reasons, the Arbitrator considered it “likely that the seeds of the adjustment disorder” were to be found in the earlier actions of Mr Taylor, in “bringing some order to a chaotic administration that he inherited”. He then referred to the letter of 29 December 2005 and Mr Temelkov’s attendance on Dr Sen on 28 December 2005 with anxiety, palpitations and insomnia as a result of his work having been cut down for no reason. No issue is taken with the fact that the December 2005 letter appears to be dated one day after his attendance on the General Practitioner. It is clear from Dr Sen’s report that Mr Temelkov’s complaints related to the content of that letter, regardless of when it was dated. As a result of Mr Temelkov’s complaint of palpitations, Dr Sen referred him for an ECG, which was normal. However, on 19 January 2006, Mr Temelkov again attended on Dr Sen and complained of having problems with the manager at work. Dr Sen recorded that Mr Temelkov’s manager was “always shouting at him”. The Arbitrator noted this evidence and said, “The relationship between the two men both before and after that time was said by each to be not very good. These facts accord with the Applicant’s claim in the Application that the injury occurred between November 2005 and March 2007”.

The Arbitrator then said at paragraph 27 of his Reasons:

“I am satisfied on the balance of probabilities that the Applicant suffered a psychological injury arising out or in the course of his employment with the Respondent from November 2005 to 4 March 2007 and that, as the primary cause of the injury arose in the context of his employment conditions and relations with his manager, such employment was a substantial contributing factor to such injury, within the meaning of sections 4 and 9A.”

The Arbitrator’s findings at paragraphs 26 and 27 of his Reasons, and his express reference to “the Application”, which alleged injury as a result of “continued harassment by management”, suggest that he found that Mr Temelkov’s psychological injury was caused by the employment activities from November 2005 to March 2007. If that was his finding on causation, then, it is argued, it was inconsistent for him to then consider section 11A because that section could only apply to two incidents: December 2005 and March 2007.

On the other hand, it may be that the Arbitrator felt that the only incidents relevant to the causation issue were the incidents in December 2005, November 2006 and March 2007. This interpretation is borne out by his reference, at paragraph 30 of his Reasons, to Mr Temelkov only citing “three particular incidents”.

Given the way Mr Temelkov presented and argued his case, and given the history taken by Dr Gertler of Mr Temelkov believing that the new manager was “harassing him and was being provocative, hoping he might leave”, I believe the better view is that the Arbitrator’s findings are inconsistent. Mr Temelkov did not restrict his case to the “three particular incidents” referred to by the Arbitrator at paragraph 30 of his Reasons. The Arbitrator therefore erred in considering those incidents in the way he did. Whilst it is true that the “three particular incidents” were significant, they were not the only matters upon which Mr Temelkov relied in support of his claim. Mr Temelkov’s allegations were much broader than that and encompassed a general allegation of harassment over the period November 2005 until March 2007.
In determining the cause of Mr Temelkov’s injury, and whether section 11A had any application, the Arbitrator had to consider all the evidence and issues presented, not just the “three particular incidents”. The Arbitrator did not do that and this failure requires that the matter be re-determined. Whilst there are significant credit issues in this case, the Arbitrator heard no oral evidence and made no credit findings and, in these circumstances, I believe I am in as good a position to re-determine the matter as an Arbitrator and that is the course I propose to adopt. Neither party has submitted that a different approach should be followed.

Mr Temelkov alleges that his injury resulted from the following:

(a)Mr Taylor harassing him and being provocative by, for example, changing the roster without warning and making changes to superannuation;

(b)Mr Taylor yelling at him, confusing him and telling him he was being paid too much and making him feel intimidated;

(c)Mr Taylor being verbally abusive;

(d)the December 2005 letter;

(e)the incident in November 2006 when Mr Taylor used offensive language, and

(f)the March 2007 letter.

In respect of Mr Taylor allegedly harassing Mr Temelkov and being provocative, I have not found Mr Temelkov’s statements particularly helpful. It is not to the point to say, as was submitted at the hearing on appeal, that the Club prepared the statement of 23 April 2007. Mr Temelkov’s solicitor witnessed it and attached it to Mr Temelkov’s Application in support of his claim, intending that it would become evidence in the case. If it was inadequate or deficient, it was open to his solicitor to prepare a further statement outlining his client’s claim. Mr Temelkov signed a further statement on 3 October 2007, but whether a solicitor prepared that statement is not known.

The allegations that Mr Taylor changed the roster without warning and made changes to the superannuation do not appear in Mr Temelkov’s statements, but are referred to in Dr Gertler’s report of 24 May 2007. I find those allegations to be without foundation and I do not accept them. The allegation about the changes to the roster may relate, though it is by no means certain, to the changes introduced in December 2005. If that is so, the changes were well documented and notice was given to Mr Temelkov and I reject his assertion, made through Dr Gertler’s history, that that was an example of the new manager harassing him. There is no basis for the allegation that Mr Temelkov’s superannuation was changed, either without warning or otherwise. He was paid the standard 9% superannuation. The dollar amount of the superannuation would have varied if Mr Temelkov’s wage had been altered in March 2007, but Mr Temelkov stopped work before that change took effect.

In respect of the allegation that Mr Taylor yelled at Mr Temelkov, this assertion does appear in Mr Temelkov’s statement of 23 April 2007 (paragraph 20) and is supported by Dr Sen’s history in his report of 22 March 2006 and Dr Gertler’s report. It also appears in Mr Temelkov’s letter of 11 November 2006. Whilst Mr Taylor denies yelling at Mr Temelkov, he concedes that he got “very annoyed with him” (Mr Taylor’s statement 23 April 2007, paragraph 12). Given Mr Taylor’s conduct in the November 2006 incident, I accept that he most likely did raise his voice at meetings with Mr Temelkov, but precisely how often and in what circumstances is impossible to determine with any precision. Mr Taylor refers to having had several meetings with Mr Temelkov in December 2005 about the new contract of employment and it is more probable than not that it was at these meetings that he raised his voice. The impact this may have had on Mr Temelkov is unclear and is discussed below.

In respect of the allegation that Mr Taylor confused Mr Temelkov and told him he was paid too much, Mr Taylor’s evidence is that he “could not seem to get him to understand” what he was trying to do (Mr Taylor’s statement 23 April 2007, paragraph five). This suggests that Mr Temelkov was confused about the changes Mr Taylor introduced, and that there was an element of frustration on the part of both men. Mr Taylor also states in his evidence that he believed Mr Temelkov was “grossly overpaid”. I think it is therefore highly likely that Mr Taylor made his view known to Mr Temelkov at some stage. I do not, however, accept that either matter amounts to harassment or provocation. However, Mr Temelkov probably was confused about the fact that in December 2005 he was offered the same money, but only had to work five shifts instead of six.

In respect of Mr Taylor being verbally abusive, I accept that an incident occurred at the Club on or about 11 November 2006, when Mr Taylor verbally abused Mr Temelkov. Mr Taylor’s evidence, even though supported by Mr Germano, is unconvincing and is contradicted by two independent witnesses, Mr Morias and Barbara Vaughan. Neither Mr Morias nor Barbara Vaughan has any interest in the current dispute, and both have clear recollections that are consistent with Mr Temelkov’s version of this incident. I accept, contrary to Mr Germano’s evidence, that Mr Morias was present during the relevant exchange. For these reasons, I accept Mr Temelkov’s version and reject Mr Taylor’s version of this incident.

In addition to the incident on or about 11 November 2006, it is clear that a separate incident occurred at the Club involving Mr Taylor on Melbourne Cup day in November 2006. Whilst Mr Temelkov was not present during that incident, the incident reflects unfavourably on Mr Taylor. Again, independent witnesses, Mr and Mrs Mace, observed the incident and provided statements. I accept their evidence, that Mr Taylor used offensive language, and made an offensive gesture, when he mentioned Mr Temelkov’s name. Such conduct is certainly not determinative of the issues before me, but it tends to support Mr Temelkov’s allegation that Mr Taylor used abusive language and that he had an antagonistic attitude towards him.

These incidents also raise an issue as to Mr Taylor’s credit. The findings I have made reflect poorly on him, and on the Club for failing to reprimand him for his conduct on 11 November 2006, which took place in the presence of the Club President. The independent evidence, which I accept, establishes that Mr Taylor said much more than he concedes. On any view of the evidence, Mr Taylor’s conduct was offensive and grossly inappropriate.

However, I am not satisfied that Mr Taylor kept a baseball bat next to him, as Mr Temelkov claims. There is no description of the bat, Mr Taylor denies ever having such a bat and he had no reason to have a bat in his office. The submission made on appeal that Mr Taylor threatened to use a baseball bat on Mr Temelkov (see [66(d)] above) is completely without foundation. At its highest, the evidence is merely that Mr Taylor had a baseball bat next to him in his office. The submission that Mr Taylor threatened to use it should not have been made and did not advance Mr Temelkov’s case.

In summary, I find that Mr Taylor did, on occasions, raise his voice in conversations with Mr Temelkov and was verbally abusive towards him. I also accept that Mr Temelkov was confused by the changes introduced in December 2005. Save for these matters, I do not accept there is any substance to the allegations that either the Club management or Mr Taylor harassed Mr Temelkov, or changed his roster or his superannuation, in order to be provocative, hoping that Mr Temelkov would leave. I do accept, however, that there were changes in Mr Temelkov’s roster in December 2005 and that those changes made Mr Temelkov anxious. Those changes were perfectly proper and were introduced to formalise Mr Temelkov’s employment contract. They did that without any detriment to Mr Temelkov and were not provocative or motivated by a desire that he would leave.

Much has been made of the petition referred to at [47] above. It is not known if any of the petitioners were aware of the facts that resulted in Mr Temelkov ceasing work. Whilst the petition states that the petitioners were “dissatisfied by the way the Manager…has been treating” Mr Temelkov, no basis for their dissatisfaction is provided. At best, the petition merely establishes that Mr Temelkov was a conscientious, respected and well-liked employee. I find the petition of limited assistance in determining the issues before me. It would have been far more helpful to Mr Temelkov’s case if a proper statement had been taken from him and other witnesses dealing with the allegation of harassment.

Dr Gertler took a history of the new manager harassing Mr Temelkov, being provocative and being verbally abusive towards him. I am satisfied that there were episodes of Mr Taylor raising his voice with Mr Temelkov and being verbally abusive, though precisely how often these episodes occurred is unclear. Certainly the incident on 11 November 2006 was significant, though Dr Gertler’s history that Mr Temelkov became increasingly anxious and distressed by his work situation after that incident is not borne out by Mr Temelkov’s statements, which are silent as to his condition between November 2006 and March 2007. Though Neil Foreman observed Mr Temelkov to be “quite distressed” by the November 2006 incident, he gives no evidence about Mr Temelkov’s condition between November 2006 and March 2007.

After referring to the 11 November 2006 incident, Dr Gertler recorded:

“Mr Temelkov became increasingly anxious and distressed by his work situation. He saw his general practitioner and was prescribed sleeping tablets. In March of this year he was presented with a letter whilst at the Club, which stated that his salary was being re-assessed. As a result Mr Temelkov found that his hourly rate was significantly reduced. He became extremely distressed when reading the letter and tremulous. His legs were ‘shaking’. He went home but was unable to sleep. The following day he saw his general practitioner and was commenced on an antidepressant, as well as sleeping tablets. He has not returned to work since and his emotional state has settled, partly because of the medication but also because he has been seeing a psychologist for the past two months on a regular basis.”

It is not clear when Dr Gertler thought that Mr Temelkov saw his General Practitioner and was prescribed sleeping tablets. If this is a reference to the period between November 2006 and March 2007, the evidence from Dr Jasim in his report of 6 May 2007 does not support this part of Dr Gertler’s history. Dr Jasim recorded that his diagnosis was based on a “few consultations when this incident happened at work”. The reference to “this incident” can only be seen as a reference to the receipt of the letter of 3 March 2007. Neither Dr Jasim nor Mr Temelkov gave evidence that Mr Temelkov became increasingly anxious and distressed by his work situation between November 2006 and March 2007. Dr Jasim’s initial WorkCover medical certificate, dated 7 March 2007, refers to “Ongoing argument/threat by Club President/Handed cut wages letter/Post traumatic stress disorder/Work Related”. There is no evidence of an “ongoing argument” or “threat” by either Mr Taylor or the Club President.

There is no evidence of any events occurring between November 2006 and March 2007 that might have caused or contributed to Mr Temelkov’s injury. Because of the inadequate state of the evidence, I am left to speculate as to whether this part of Dr Gertler’s history is correct. The evidence implies that Mr Temelkov performed his normal duties without restriction until March 2007. This does not necessarily mean that Mr Temelkov had no symptoms in that period, but where his statement is silent on this issue and his General Practitioner’s report is unsupportive of Dr Gertler’s history, I am unable to accept that that part of the history is accurate.

Whilst that part of Dr Gertler’s history is inaccurate, the doctor’s opinion is based on a history of Mr Temelkov developing significant symptoms after receipt of the letter of 3 March 2007. That part of the history is correct. Dr Gertler concluded, at page three of his report of 24 May 2007:

“In answer to your second question, Mr Temelkov has in my opinion, developed an adjustment disorder with mixed emotional features on the basis of his experiences in the workplace, in particular the experience in early March when he was handed a letter stating that his conditions of pay had been substantially altered, such that he was to receive a much lower salary.
He has been anxious and somewhat depressed since that time. He has been on psychotropic medication and has also had counselling, both of which appear to have helped to control his symptomatology. Nevertheless he does have ongoing symptoms of both anxiety and depression which affect his quality of life.
…
…Mr Temelkov’s current condition is in my opinion, related both to the incident of 11 November 2006 but more so to the incident in early March when he received the letter at work.”

Therefore, notwithstanding the inaccuracy in part of Dr Gertler’s history, considering his report as a whole, I am satisfied that his history provides a “fair climate” for the acceptance of his conclusion (see Brady v Commissioner of Police (2003) 25 NSWCCR 58 at 76 and Paric v John Holland Constructions Pty Ltd [1984] 2 NSWLR 505 at 509-510).

The Club’s medical evidence is unhelpful on the causation issue, as neither of its experts believes Mr Temelkov has sustained an injury. For the reasons given by the Arbitrator, not challenged on appeal, I do not accept their conclusions. This leaves the evidence of Dr Gertler and Ms Vracar.

Ms Vracar’s history is that the new manager treated him badly, was verbally abusive and threatening. In what way Mr Taylor was “threatening” is not properly identified in the evidence, but I accept that Mr Taylor was verbally abusive to Mr Temelkov in November 2006. She recorded that at times Mr Temelkov became extremely angry, but was unable to act on the anger because he has a wife and four children. When he received the letter of 3 March 2007, he became numb, unable to perform his duties and had to leave work. He suffered chronic insomnia, poor concentration, high anxiety, chronic fatigue, feeling sad and irritable, and had difficulty interacting with his wife and children. Tests revealed Mr Temelkov was in the “extremely severe range” for depression, anxiety and stress. Ms Vracar concluded:

“Thus it is likely that [the] work incident on 03/03/07 caused Mr Temelkov psychological distress and symptoms that indicate that he is experiencing Post Traumatic Stress Disorder (PTSD).”

Ms Vracar’s opinion is consistent with a conclusion that Mr Temelkov’s injury was wholly or predominantly caused by the “work incident on 3 March 2007”. This conclusion is also consistent with the fact that Mr Temelkov performed his normal duties without complaint, time off or treatment until March 2007.

Dr Gertler’s opinion on causation is not so clear-cut. In his report of 24 May 2007 he placed considerable weight on the impact of the March 2007 letter. In his report of 22 August 2007, he stated:

“As stated in my report, Mr Temelkov began to develop symptoms of anxiety as a result of his experiences at work following an incident in November 2006. Those symptoms persisted and appear to have gradually worsened, although did not lead to an emotional decompensation until he received the letter in March 2007, which informed him that his salary was to be reassessed.

The receipt of the letter was in my opinion the ‘final straw’ which led to his emotional decompensation.”

Dr Gertler’s opinion on causation is not expressed in the terms in the legislation, thus making the resolution of this issue more difficult. He stated that Mr Temelkov’s adjustment disorder developed “on the basis of his experiences in the workplace, in particular the experience in early March” (emphasis added). In his report of 22 August 2007, he added that the receipt of the March 2007 letter was the “final straw”.

Whilst I do not accept Dr Kaplan’s opinion on diagnosis, his history is of some relevance. He recorded that Mr Temelkov listed his dispute with the Club President and manager “as a secondary issue” (report 10 April 2007, page six). From the history Dr Kaplan took, Mr Temelkov’s symptoms developed when he learnt in March 2007 that he was to receive a lower wage. This tends to support the view that Mr Temelkov’s injury was wholly or predominantly caused by the March 2007 incident.

The letter of December 2005 and Mr Taylor’s conduct at about that time prompted Mr Temelkov to see Dr Sen in late 2005 and early 2006. There is no evidence, however, that those events led to any more than temporary anxiety resulting in two days off work, as certified by Dr Sen. I do not accept that the events of December 2005 or early 2006 caused Mr Temelkov’s psychological injury. If I am wrong in this conclusion, I have no hesitation in finding that the Club’s actions with respect to the provision of employment benefits to Mr Temelkov in December 2005 were reasonable.

Nor do I accept that Mr Temelkov’s complaint to Dr Sen of anxiety in June 2004 has played any relevant role in the cause of his current injury.

Having regard to all the evidence, I find that whilst Mr Temelkov may have found Mr Taylor’s conduct and language upsetting, it is more probable than not that his psychological injury was wholly or predominantly caused by “the experience in early March” (per Dr Gertler’s evidence) or the “work incident on 3 March 2007” (per Ms Vracar’s evidence). That “experience” or “incident” directly related to the action taken or proposed to be taken by the Club with respect to “retrenchment or dismissal” or the “provision of employment benefits” and included the terms of the letter of 3 March 2007 and the manner in which the Club’s decision or proposal was communicated to Mr Temelkov. It was upon receipt of that letter that Mr Temelkov developed physical symptoms such as increased heart rate, insomnia and trembling. Though it is not determinative of the causation issue under section 11A, that is also when he became unfit for work.

As the letter related directly to the continuation of Mr Temelkov’s employment and as there are no non-employment factors relevant to Mr Temelkov’s condition, I find that his employment was a substantial contributing factor to his injury.

Having found that the “experience in early March” or the “work incident on 3 March 2007” was the whole or predominant cause of Mr Temelkov’s injury, it is necessary to determine whether the action taken or proposed to be taken by the Club was “reasonable”.

Was the Action Reasonable?

The Court of Appeal considered the meaning of the words “reasonable action” in section 11A in Commissioner of Police v Minahan [2003] NSWCA 239, where Foster A-JA (with Sheller JA agreeing) cited with approval the following passage from Irwin v Director-General of School Education (Matter No. 14068/97, unreported, 18 June 1998) where Judge Geraghty said:

“The question of reasonableness is one of fact, weighing all the relevant factors. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of ‘reasonableness’ is objective, and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.”

Foster A-JA also approved the following passage from Ivanisevic v Laudet Pty Limited (unreported, 24 November 1998), where Judge Truss said, “…when considering the concept of reasonable action the Court is required to have regard not only to the end result but to the manner in which it was effected”.

Neilson CCJ considered the question of reasonableness in Pirie v Franklins Ltd (2001) NSWCCR 346 and held that the employer carries the onus of establishing that the terms of section 11A have been met. In that case a senior employee developed a psychiatric injury after he was suddenly retrenched without prior notice or warning. His Honour held (at [50]) that he was not concerned with whether the retrenchment per se was justified, but he was entitled to have regard to “the antecedent relationship of the parties to gauge the reasonableness of the process actually adopted”. In determining that the retrenchment process was unreasonable, his Honour considered the following factors to be relevant:

(a)Franklins did not consult with the worker prior to the retrenchment;
(b)having regard to the worker’s seniority, the period of notice given (four weeks) was inadequate;
(c)the absence of counselling services, and
(d)the absence of assistance in finding alternative employment.

The Club relies on the evidence of Mr Taylor, Mr Germano and the evidence in the financial records tendered. Mr Taylor’s evidence on this issue is in paragraph 13 of his statement of 23 April 2007. He said:

“In recent times the Club has been suffering financially and I have had to take some drastic measures and have been cost cutting. We have cut costs in all areas, including the bar, management and office catering. As Alex was the only employee being paid above the Award, it was decided that he should be brought back into line with the Award. On 3 March 2007 I wrote a letter to him which was left in a sealed envelope to be given to him when he arrived for work. This letter explained that the Club was no longer in a financial position to pay him at that rate which in effect was $380 approximately above the Award. This letter stated that his position was that of Level 3 Doorman and wages would be $845.43 per week made up as follows: $779.11 gross, $12.50 allowances, $53.80 penalties.”

Mr Germano substantially corroborates this evidence.

The financial records confirm that the Club was not profitable in 2005 or 2006. The treasurer’s report, dated 19 March 2007 (based on an “Accountants Compilation Report”, dated 12 March 2007), confirms that the Club ran at an operating loss of $21,302 in 2005 and $161,053 in 2006. The President’s report of the same date highlighted that 2006 was a year of significant change for the Club with a lot of capital expenditure being incurred to bring the Club “into the 21^st century”. The treasurer’s report also attributed the loss to capital expenditures, with $368,943 being spent on replacing poker machines alone. Whilst he referred to wages having increased by 6%, he made no mention of the need to cut costs in 2007. He concluded by saying, “This year [2007] will be a tough year but if we stick to budget we should see an improvement in the result for the year.”

Counsel for the Club referred to a document headed “Schedule 1”, included in the financial records tendered. This document is not signed or dated, but it is assumed that it was prepared between 27 May 2007 and 2 July 2007. It refers to it having been “evident at the end of 2006” that the Club was in a loss position and deteriorating. As a result, the management suggested selling the excess block of land adjacent to the Club. It is not known when the management suggested selling the block of land, but the motion to sell did not go to the members until a meeting held on 27 May 2007, when an overwhelming majority defeated it. The document listed the other steps taken to improve the Club’s financial position. They were “revise rosters, increase prices, add more cost effective poker machine promotions, increase happy hours for workers etc etc”. None of the financial records tendered suggested that costs had been or were going to be cut in the areas identified by Mr Taylor, namely, “bar, management and office catering”.

The Club also relies on a report it received from O’Donnell Hennessy & Co, Chartered Accountants, dated 16 July 2007. The report expressed “grave concern in respect of the solvency position of the Club”. The author of the report, K S Taylor, added:

“As you are aware, I have been talking to you for some months now, in respect of the Club’s current cash position. I have verbally expressed my concern to you that if trading and profitability of the club did not substantially improve, the club would face a solvency crisis in the immediate future.” (emphasis added)

Exactly when K S Taylor spoke to the Club’s management is not known.

Given that the treasurer’s report was not prepared until 19 March 2007, it is unclear exactly when Mr Taylor became aware that the Club’s financial position had declined significantly throughout 2006. Though the letter of 3 March 2007 states that the Board “considered” Mr Temelkov’s wage, it is not known when that meeting took place or what was discussed. Apart from Mr Taylor’s general assertions, it is not known what other cost cuts were implemented in the first few months of 2007. The steps listed in the document headed “Schedule 1” to improve the Club’s financial position (see [121] above) are not consistent with the steps listed by Mr Taylor in his statement. In these circumstances, and given the reservations I have earlier expressed about Mr Taylor’s credit, I have real doubts about the accuracy of Mr Taylor’s claim that costs were cut “in all areas”. For the same reasons I have doubts about whether the stated reason for the letter of 3 March 2007 (the Club not being in a financial position to pay $1,114 per week to Mr Temelkov) was valid at that time.

In considering whether the action taken or proposed to be taken by the Club was reasonable within the meaning of section 11A, I have had regard to the following matters:

(a)the Club took action to dismiss a long-term employee of good standing without giving him any prior notice that his position was under review. Had the Club given some notice of its concerns, it would have given Mr Temelkov time to consider his position, seek advice, or propose an alternative;

(b)the letter of 3 March 2007 was expressed in blunt and uncompromising language. It said, for example, “your position as Doorman…will be terminated with five weeks notice”. That kind of language was, given the history between Mr Taylor and Mr Temelkov, unreasonable and inappropriate;

(c)the supervisor gave the letter to Mr Temelkov after he completed his Saturday night shift. At the very least, one would have thought that an employee with Mr Temelkov’s history and dedication would have been given the courtesy of a face to face meeting with management so that he could discuss other options;

(d)the letter was not simply a reduction in wages; it was a termination of employment with an offer of re-employment at a much lower wage. It gave Mr Temelkov no alternatives, no offer of assistance (such as counselling) and no opportunity to be heard or to negotiate. I reject the Club’s submission that it acted reasonably in all the circumstances in its “negotiations” with Mr Temelkov. So far as the March 2007 letter was concerned, there were no negotiations, merely a final decision terminating his employment without warning;

(e)the fact that Mr Temelkov reacted as he did to the December 2005 letter put the Club on notice that he was sensitive to, and concerned about, his conditions of employment. The Club knew, or ought to have known, that Mr Temelkov would be concerned about the contents of the letter of 3 March 2007. In these circumstances, some sensitivity and foresight should have been exercised in handling the matter, and

(f)further, for the reasons stated at [124] above, I am not satisfied that the stated reason for termination of Mr Temelkov’s employment and the offer of re-employment at a substantially lower wage, namely, that the Club was no longer in a financial position to pay $1,114 per week, was a genuinely held view as at 3 March 2007. Whilst it is not for me to determine if the Club’s decision to terminate Mr Temelkov was justified, if the stated reason for the action taken is not accepted, that is relevant to the reasonableness of the process with respect to the dismissal/employment conditions.

Having regard to the whole of the evidence, I am not satisfied that the “action taken or proposed to be taken” by the Club in March 2007 with respect to “retrenchment or dismissal… or provision of employment benefits” to Mr Temelkov was “reasonable”.

Incapacity

The evidence on incapacity is now one year out of date and, in any event, is totally inadequate for me to conduct a meaningful section 40 assessment consistent with the principles in Mitchell v Central West Area Health Service (1997) 14 NSWCA 526. It is therefore necessary for that part of the claim to be remitted to an Arbitrator for further evidence to be tendered and submissions.

I should make three observations about the claim for weekly compensation. First, the weight of the accepted expert evidence establishes that Mr Temelkov is only partially incapacitated for work (Dr Gertler 18 September 2007). Second, under the terms of the letter of 29 December 2005, the Club employed Mr Temelkov as a permanent full-time level 3 doorman under the Club Employees State Award. He was not “on salary” as was submitted at the arbitration. Under that award his current weekly wage rate under section 42 is (subject to any necessary adjustments) $667.62 per week, not $1,114.00 per week. Third, the assessment of Mr Temelkov’s entitlement under section 40 may require an application of the discretion under section 40(1) because, whilst the calculation of probable earnings assumes that the pre-injury employment would have continued, the fact that it would not have continued, or would not have continued at the same wage rate, must be considered in determining whether the quantum of any award is “proper in the circumstances of the case” (see Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50).

OTHER MATTERS

Mr Temelkov submits that an adverse inference should be drawn against the Club because of its failure to produce Mr Taylor’s file in answer to a “Notice to Produce”. I assume, though it is by no means clear, as the relevant notice is not in evidence, he is referring to a Notice for Production under Part 12 Rule 12 of the Workers Compensation Commission Rules 2006 (‘the Rules’) and Practice Direction No. 8 issued on 1 November 2006. The Club does not dispute that a notice was served, as it apparently produced certain documents in answer to it. Whether it was described as a Notice to Produce or a Notice for Production does not matter for the present purposes, but may be important for other purposes. The Club does not argue that the file was not produced because of a defect in the form, or that it misunderstood the nature of the notice. It argues that the file was the subject of a confidentiality agreement and it was therefore not prepared to produce it. That is not a valid reason for not complying with a validly served Notice for Production.

If a party objects to producing a document in response to a Notice for Production, the party must file a Notice of Objection under the Rules. Where a party has failed to comply with a Notice for Production the requesting party may request that the Registrar refer the matter to the WorkCover Authority of NSW for consideration as to prosecution for an offence under section 290(2) of the 1998 Act and the Commission may make such determination as to costs as it thinks fit.

The failure to produce a document or call a witness may, in the appropriate case, give raise to an adverse inference under the principle in Jones v Dunkel (1959) 101 CLR 298 (‘Jones v Dunkel’). The principle in that case is summarised in Cross on Evidence, seventh Australian edition 2004, at [1215], as follows:

“First, that unexplained failure by a party to give evidence, to call witnesses, or to tender documents or other evidence or produce particular material to an expert witness may, not must, in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party’s case:…

The significance to be attributed to the fact that a witness did not give evidence will in the end depend upon whether, in the circumstances, it is to be inferred that the reason why the witness was not called was because the party expected to call him feared to do so. But there will be circumstances in which it has been recognised that such an inference is not available or, if available, is of little significance. The party may not be in a position to call the witness.”

It must, however, be borne in mind that Jones v Dunkel “licences, but does not compel, the drawing of inferences when a witness is not called” (per Campbell JA in Howell v Macquarie University [2008] NSWCA 26 at [98]). In the present matter, it is not suggested that the file is privileged. The explanation offered by counsel was not a valid reason for not producing the relevant file and would never have been accepted in a court. It is not acceptable in the Commission. The relevant documents should have been produced. If there was a genuine concern about issues of confidentiality, a restricted access order could have been made. The Club’s approach prevented that being explored. In these circumstances, and given the nature of the dispute in this matter, I conclude that documents in Mr Taylor’s file would not have advanced the Club’s case. However, for the reasons given above, and given the nature of my ultimate findings and conclusions, I have not based my decision on the Club’s failure to produce Mr Taylor’s file.

CONCLUSION

Having conducted a detailed review on the merits, Mr Temelkov is entitled to succeed with his claim on the ground that he suffered a psychological injury in the course of and arising out of his employment and to which his employment was a substantial contributing factor. The Club has failed in its defence under section 11A on the grounds that it has not established that its actions with respect to the dismissal of, or the provision of employment benefits to, Mr Temelkov were reasonable.

DECISION

Paragraphs one and two of the Arbitrator’s decision dated 29 January 2008 are revoked and the following order made:

“1.The matter is remitted to a different Arbitrator for determination of the Applicant Worker’s entitlement to weekly compensation and for such ancillary orders, such as the payment of medical expenses, as may be necessary.

2. The Respondent Employer is to pay the Applicant Worker’s costs of the first arbitration as agreed or assessed. The matter is certified as complex and it is determined that each party is entitled to an additional allowance for costs of 15%.”

COSTS

The Respondent Employer is to pay the Appellant Worker’s costs of the appeal. Costs of the second arbitration are at the discretion of the second Arbitrator.

Bill Roche
Deputy President

4 September 2008

I, TUYET WALLIS, 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