The King Island Company Limited v Deery
[2005] NSWWCCPD 1
•6 January 2005
WORKERS COMPENSATION COMMISSION
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:The King Island Company Limited v Deery [2005] NSW WCC PD 1
APPELLANT: The King Island Company Limited
RESPONDENT: Peter Deery
INSURER:GIO Workers Compensation (NSW) Ltd
FILE NUMBER: WCC13149-2003
DATE OF ARBITRATOR’S DECISION: 15 December 2003
DATE OF APPEAL DECISION: 6 January 2005
SUBJECT MATTER OF DECISION: Facts based on misperceptions by Respondent Worker; misapplication of section 9A, and misdirection as to sections 11A and 40 of the Workers Compensation Act 1987.
PRESIDENTIAL MEMBER: Deputy President Gary Byron
HEARING:On the Papers
REPRESENTATION: Appellant: Rankin Nathan Lawyers
Respondent: Adams & Partners Lawyers
ORDERS MADE ON APPEAL: That part of the Arbitrator’s decision of 15 December 2003, awarding payments of weekly compensation under section 40 of the Workers Compensation Act 1987 is revoked. The matter is referred back to the Arbitrator concerned to calculate afresh the amounts awarded, in accordance with the steps in Mitchell v Central West Health Service (1997) 14 NSWCCR 527 at 529, to be set out in a written Statement of Reasons for Decision, in accordance with these reasons.
No order is made as to costs of the appeal.
BACKGROUND TO THE APPEAL
Peter Deery, the Respondent Worker in this appeal, was employed by The King Island Company Limited, the Appellant Employer, as factory manager at its premises, Premium Dairy Cheese, Pendle Hill, on and from November 2001. He had previously been employed by Allowrie Foods as a factory manager and by Melosi Foods in South Australia, as a technical manager, in the food production industry. Soon after the commencement of his employment with the Appellant Employer, Mr Deery heard rumours that the factory was to be sold. He said that he was assured by management that this was not so. Early in 2002 the Appellant Employer was taken over by National Foods. However, Mr Deery and the staff at Pendle Hill regarded this as a positive step. In April 2002 a high level of e-coli contamination was discovered and an amount of product containing the contamination was destroyed. Mr Deery had a previous experience with e-coli contamination, which involved a number of deaths, while employed in South Australia. Mr Deery claimed that he had initially sought, and been given assurances by the Appellant Employer that there were no bacterial issues in the factory at the time that he was employed. Around the time of the discovery of the contamination, rumours surfaced once more that the factory was to be sold. On making inquiries, Mr Deery was ultimately informed that the Ladu Family had purchased the factory and would be taking over in about three weeks time. He and the staff were told that a redundancy package may be made available to them. Mr Deery states that these and other developments caused him a good deal of stress and concern. On 16 May 2002 Mr Deery said that he was distraught but went to work. However, after conferring with his doctor by telephone Mr Deery did not return to work on or after 17 May 2002.
Following Mr Deery’s initial claim for compensation, the Insurer made weekly payments of benefits to him. However, by letter dated 29 May 2003, it formally denied liability for Mr Deery’s claim and informed him that payment for medical expenses would cease from the date of the letter and payment of weekly benefits would cease from 10 July 2003.
In his Application to Resolve a Dispute lodged in the Workers Compensation Commission on 7 August 2003, Mr Deery claims that he sustained a psychological injury in his workplace on 15 May 2002, resulting from “work overload, change of conditions, workplace disruption, food safety issues”, and that liability had been declined by the Insurer.
At the telephone conference held on 14 October 2003 the Arbitrator made consent orders for Mr Deery to amend his Application to Resolve a Dispute to include a claim for payment of weekly benefits from 10 July 2003 and continuing. On 17 November 2003 the Appellant Employer filed an amended Reply.
On 15 December 2003 the matter was determined by an Arbitrator who made the following orders:
“1. That the Respondent pay the Applicant weekly compensation at the rate of:
· $527.90 from 10 July 2003 to 1 October 2003 under s 40 of the Workers Compensation Act 1987
· $538.60 from 1 October 2003 under s 40 of the Workers Compensation Act 1987 such weekly payments to continue in accordance with the provisions of the Workers Compensation Act 1987.
2. That the Respondent pay the Applicant’s s 60 expenses upon production of accounts or receipts.
3. That the Respondent pay the Applicant’s costs as agreed or assessed.”
On 9 January 2004 the Appellant Employer lodged an appeal against the decision of the Arbitrator.
Directions were issued to, and complied with by, the parties in August 2004.
ISSUES ON APPEAL
The issues in dispute on appeal are:
·Whether facts accepted by the Arbitrator were based upon a “misperception of actual events, due to the irrational thinking of the worker leading to psychiatric illness”;
·Whether the Arbitrator failed to correctly apply section 9A of the Workers Compensation Act 1987 (the 1987 Act);
·Whether the Arbitrator misdirected herself on the law regarding section 11A of the 1987 Act, and
·Whether the Arbitrator misdirected herself on the law regarding section 40 of the 1987 Act.
LEAVE TO APPEAL
In this matter I am satisfied that:
●The appeal is filed within 28 days of the decision appealed against (section 352(4) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act)).
● The amount of compensation at issue on the appeal is at least $5,000 and is at least 20% of the amount awarded in the decision appealed against (section 352(2) of the 1998 Act).
● No new evidence is submitted in the appeal (section 352(6) of the 1998 Act).
Leave to appeal is granted.
ON THE PAPERS REVIEW
Section 354(6) of the 1998 Act provides:
(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.
The Appellant Employer submits that the appeal should not be determined on the papers as it “involves complex legal argument on Sections 9A and 11A of the 1987 Act and a considerable sum of money” and requires a careful examination of the material before the Arbitrator and in the transcript of evidence. It is further submitted that a failure to allow the parties a hearing would constitute procedural unfairness. The Respondent Worker submits that the matter should be dealt with on the papers. While the Appellant Employer submits that it wishes to have the opportunity to respond to the Respondent Worker’s submissions on appeal, those submissions amount to little if any more than a mere statement of rebuttal of the assertions put by the Appellant Employer in its appeal.
Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, including the evidence and a transcript of the proceedings before the Arbitrator, and taking into account the written submissions of the parties, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
EVIDENCE AND SUBMISSIONS
The Appellant Employer
The Appellant Employer submits that the Arbitrator erred when she accepted certain facts arising from the irrational thinking of the Respondent Worker leading to his psychiatric illness, “and as such is not compensable”.
The Appellant Employer refers to Townsend v Commissioner of Police NSWCC No 8061/89, (unreported) (Townsend) and Stewart v NSW Police Service (1998) 17 NSWCCR, 202 (Stewart), and submits that the Arbitrator failed to correctly apply section 9A of the 1987 Act.
In relation to section 11A of the 1987 Act, the Appellant Employer submits that “[a]t point 42, page 6 the Arbitrator accepted that the worker had approached the Human Resource Manager who confirmed that a take over approach had been made and some retrenchments might be required. The Appellant submits that the above facts represent a proposal within the meaning of section 11A(a) [sic] of the 1987 Act.”
The Appellant Employer submits that the Arbitrator misdirected herself as to the law in failing to exercise the necessary “five stage process” in assessing weekly payments under section 40 of the 1987 Act: Kraturn Pty Limited t/as Mac’s Fruit Centre v Quinn (1990) 6 NSWCCR 326.
The Respondent Worker
The Respondent Worker submits that the Arbitrator was correct in her decision in that:
“(a) the Arbitrator made a proper finding of fact in that the [Mr Deery’s] employment with the Respondent [Appellant Employer] substantially contributed to his injury;
(b) the Arbitrator made a proper finding of fact in that the cause of that psychological injury was not wholly or predominantly caused by any action as set out in Section 11A;
(c) the Arbitrator made a proper finding of fact in that she found there was no action taken or proposed to have been taken;
(d) the Arbitrator made a proper finding of fact in that [sic] as to her finding of [Mr Deery’s] employment, capabilities and incapacity.”
ROLE AND FUNCTION OF PRESIDENTIAL MEMBER ON APPEAL
A Presidential Member on appeal has a specific and limited role in the review of a decision of an Arbitrator. The review is not a rehearing. The Presidential member is not dealing with the matter de novo and is not arriving at a fresh decision based on all of the evidence available at a later time (Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Builders Licensing Board v Sperway Constructions (Sydney) Pty Ltd (1976) 135 CLR 616). The powers of the Presidential Member to revoke the decision pursuant to section 352(7) of the 1998 Act and to substitute a new decision in its place, are exercisable only where it is demonstrated that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172). Alternatively, the Presidential Member may remit the matter back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions made.
DISCUSSION AND FINDINGS
Respondent Worker’s Perception of Certain Events
The Appellant Employer submits that the Arbitrator erred when she accepted certain facts arising from the misperceptions and irrational thinking of the Respondent Worker leading to his psychiatric illness, “and as such is not compensable.”
In Stewart, cited by the Appellant Employer, it was held inter alia that a misperception of actual events, due to the irrational thinking of a worker leading to a psychiatric illness is not compensable. The unreported decision in Townsend was followed in this case.
The Appellant Employer points to three specific aspects of the Arbitrator’s decision, in support of its submissions. The first is:
“At point 36 page 5 of the Decision the Arbitrator accepted that the worker was confused due to staff disquiet with the rumoured takeover and among other things the worker’s perception that senior management was not keeping him adequately informed.”
However, the Arbitrator’s acceptance of what Mr Deery said must be read in context and in full, as set out at paragraphs 36-39 of her Statement of Reasons for Decision (Reasons). The two points cited by the Appellant Employer cannot be considered in isolation. The Arbitrator said at paragraph 36:
“In evidence he identified a number of factors which he said troubled him in the lead up to May 15, the day he left work: staff disquiet with the rumoured takeover; difficulties with implementing changes to work practices the Applicant considered unacceptable; concern that the Production Quality Supervisor, may have not had the necessary technical skills to address contamination issues; the outbreak of e-coli contamination at the factory; his perception that senior management was not keeping him adequately informed.”
The Arbitrator went on to say at paragraph 37 that there was not one factor that led to the deterioration in his mental health and that within a short period of time after taking over as manage of the factory he was faced with a number of problems that he considered to be serious. Clearly, these were work-related issues of direct concern to him as the factory manager. The general reference to Mr Deery’s confusion and not knowing “which way to turn”, made by the Arbitrator at paragraph 36, was not attributed or limited to any specific issue, but was an holistic observation about the aggregate of all of the related issues that were of concern to Mr Deery.
The second aspect raised by the Appellant Employer is:
“At point 37 the Arbitrator accepted that the worker was clearly troubled that he might preside over a repeat of a contamination crisis he had seen in a former position. In the worker’s eyes these problems were exacerbated by what he saw as the failure of management to keep him in the information loop.”
As the factory manager, Mr. Deery was an important part of the “management” that in his view, was failing to keep him in the information loop. According to the evidence, e-coli contamination is a very serious issue in the context of commercial food production and Mr Deery had had previous and considerable experience of this type of contamination and its potential consequences. Having regard to the evidence that was before the Arbitrator and that is before me, there is no doubt that Mr. Deery was in a good position to make judgments with regard to the contamination and its management, in this instance. In the absence of evidence to support the Appellant Employer’s submission that there were misperceptions on Mr Deery’s part, I do not accept its submissions in this regard. At best, Mr. Deery may be said to have had heightened or more acute perceptions, based on his knowledge and experience, and in light of this, a view of what he regarded as an inadequate response by “management”. Whether his opinion was correct or not, the fact that he arrived at a particular view based upon the situation with which he was confronted, with the benefit of his knowledge and previous experience, is to be expected.
The third aspect raised by the Appellant Employer is:
“At point 39 the Arbitrator was of the view that it may be that his retrenchment in 1995 meant he was especially vulnerable to rumours of possible retrenchments.”
While this is so, the Arbitrator’s comment must be read in full and taken in context. She said at paragraph 39:
“It may well be that the Applicant’s employment with the Respondent was not the sole factor which caused him to suffer what all experts, bar Dr Pusic, diagnosed as an Adjustment Disorder. It may be that his retrenchment in 1995 meant he was especially vulnerable to rumours of possible retrenchments and/or as Professor Ehrlich and Dr Strum believe, that his personality played some role. However the inescapable conclusion supported by the consensus of medical opinion, is that the Applicant’s employment played a substantial contributing role to the injury.”
In any event, a reading of the transcript of proceedings before the Arbitrator indicates that the prospect of retrenchment, potentially at least, was based on rumour and also to some extent, on a conversation that Mr Deery had with Mr Lloyd Filer. However, while the possibility of retrenchment was of understandable concern to Mr Deery and his workers, nothing was certain at that point, and the sale of the factory that could have led to retrenchments, had not been negotiated.
I am unable to conclude on the evidence that these aspects cited by the Appellant Employer, when considered properly and in context, “represent a misperception of actual events, due to the irrational thinking of the worker leading to psychiatric illness…”. Consequently, the principle set out in Stewart and put forward by the Appellant Employer, has no application in the instant case. In the circumstances, I find that the Arbitrator has made no error in this regard, and this ground of appeal must fail.
Section 9A of the 1987 Act
The Appellant Employer’s ground of appeal in this regard is limited to its submission that the Arbitrator failed to correctly apply section 9A of the 1987 Act “for the reasons and authorities referred to above in subparagraph (a).” I have already rejected these submissions made by the Appellant Employer, as discussed at paragraphs 20-30 above.
Employment need not be the only contributing factor to an injury (Mercer v ANZ Banking Group Ltd (2000) NSWCA 138). Most of the medical evidence raises the possibility that other factors may have played some part in Mr Deery’s condition. However, the same doctors are of the view that his employment was in fact, a substantial contributing factor to his injury. The Arbitrator’s finding that “the inescapable conclusion supported by the consensus of medical opinion, is that the Applicant’s employment played a substantial contributing role to the injury” is demonstrably available to her on the evidence. It is not necessary to repeat here, the particulars of the medical evidence upon which the Arbitrator relies, as these are found in her Reasons.
Finally, the Arbitrator states that in reaching her conclusions, she has taken into account all relevant factors, including those set out in section 9A(3) of the 1987 Act. A correct and adequate discussion of section 9A of the 1987 Act is found at paragraphs 32 to 39 of the Arbitrator’s Reasons.
The Appellant Employer raises no other objections to the Arbitrator’s treatment of section 9A of the 1987 Act. I find that the Arbitrator has not fallen into error on this issue. Accordingly, this ground of appeal fails.
Section 11A of the 1987 Act
The Appellant Employer submits that confirmation given to Mr Deery by the Human Resource Manager “that a take over approach had been made and some retrenchments might be required”, represents a “proposal” within the meaning of section 11A(1) of the 1987 Act.
This issue is canvassed at paragraphs 40-49 of the Arbitrator’s Reasons. The evidence regarding the dealings that were occurring is discussed at paragraphs 44 and 45. The Arbitrator goes on to say at paragraph 46:
“At the relevant time, that is at the onset of the Applicant’s injury, which the experts appear to agree was in or about May 2002, no action had been taken by or on behalf of the Respondent that could be said to fall within the scope of s 11A(1). To enliven the provision it must be established that the Respondent proposed to take action with respect to one of the seven types of action identified in s 11A(1). Whether this was the case here turns on the proper construction of the provision.”
The Arbitrator goes on to say that at May 2002 there was in fact no proposal or plan by the Respondent to retrench staff. She states, “It can be put no higher than there was a possibility the business might be sold and that retrenchments might follow. That Mr Filer told the Applicant that retrenchment might follow if the sale proceeded and distributed to staff a copy of the company’s standard retrenchment policy, does not in my view indicate that retrenchment/dismissal was proposed.”
On any reasonable construction of the evidence, it is clear that no action, reasonable or otherwise, had been taken, or was actually proposed, at the date of Mr Deery’s injury. It was clear that negotiations were underway but were far from concluded. At best, there were rumours confirmed by discussions of a possibility of what might occur. Speculation and hypothesis do not amount to an action that is taken or that is proposed to be taken, within the meaning of section 11A(1) of the 1987 Act. On the evidence before her, the Arbitrator was entitled to reach the conclusion that no proposal had been made. In the circumstances, the Arbitrator did not err and this ground of appeal must fail.
Section 40 of the 1987 Act
The Appellant Employer cites Kraturn Pty Ltd t/as Mac’s Fruit Centre v Quinn (1990) 6
NSWCCR 326 (Kraturn) in submitting that the Arbitrator misdirected herself on the law regarding section 40 of the 1987 Act. It is submitted by the Appellant Employer that the Arbitrator failed to exercise the five-step process set out in that case, in assessing the weekly payments in the instant matter. Kraturn has no application to section 40 of the 1987 Act being a case relating to the assessment of an amount of weekly payments under the Workers Compensation Act 1926, section 11(1), pursuant to an injury sustained by a worker on 18 June 1983.
The five steps which must be taken in making an award under section 40 of the 1987 Act are set out in Mitchell v Central West Health Service (1997) 14 NSWCCR 527 at 529 (Mitchell). They are:
“1.To determine the weekly amount the worker would probably have been earning if uninjured (section 40(2)(a)) …
2.To determine the average weekly amount that the worker is earning or would be able to earn in some suitable employment from time to time after the injury (section 40(2)(b)). Section 40(3) provides that the determination of this amount is subject to the following:
(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker;
(b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A…3.To subtract the figure derived from 2. from the figure derived from 1. (section 40(2))
4.To decide whether and to what extent the reduction calculated as above, bears such relation to the amount of that reduction as may appear proper in the circumstances of the case (section 40(1)) …
5. To make an award in the amount arrived at in Step 4.”
A discussion of the application of the five steps set out in Mitchell is found in the decision of Deputy President Fleming, Snow Confectionary Pty Ltd v Askin [2004] NSW WCC PD 56.
The Arbitrator states correctly at paragraph 61 of her Reasons, that it is common ground that the amount Mr Deery earned pre-injury, exceeds the statutory maximum. The statutory provisions which she took into account in calculating the weekly payments are set out in paragraph 61.
The Arbitrator’s findings in relation to capacity for work and suitable employment are clearly open to her, based upon the evidence before her. However, she has not shown in her Reasons how, or that, she has applied the Mitchell steps, including the monetary figures and the calculations used in arriving at the amounts awarded by her. For this reason, and notwithstanding the correctness of her underlying findings, it is not apparent that the Arbitrator has actually arrived at the award in accordance with all lawful requirements (YG & GG v Minister for Community Services [2002] NSWCA 247). This amounts to a failure of the Arbitrator to give adequate reasons for decision and is in breach of section 294(2) of the 1998 Act and Rule 73 of the Workers Compensation Commission Rules 2003. It is an error of law, as the decision in this regard is not properly made. In the circumstances, the Arbitrator is required to calculate the amounts of the award afresh, in accordance with the steps in Mitchell, in written Reasons. Otherwise, the decision of the Arbitrator is to stand, as no other error is found.
DECISION
That part of the Arbitrator’s decision awarding payments of weekly compensation under section 40 of the 1987 Act is revoked. The matter is remitted back to the Arbitrator concerned to calculate afresh the amounts awarded, in accordance with the steps in Mitchell v Central West Health Service (1997) 14 NSWCCR 527 at 529, to be set out in a written Statement of Reasons for Decision, in accordance with these reasons.
COSTS
The appeal has been partly successful. No order is made as to costs of the appeal.
Gary Byron
Deputy President
6 January 2004
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF GARY BYRON, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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