Toll Pty Ltd v Morrissey

[2007] NSWWCCPD 221

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
STATUS: This decision has been the subject of a remitter from the Court of Appeal see: Toll Pty Limited v Craig Morrissey [2008] NSWCA 197 and Toll Pty Ltd v Morrissey (No 2) [2008] NSWWCCPD 90
CITATION:		Toll Pty Ltd v Morrissey [2007] NSWWCCPD 221
APPELLANT:		Toll Pty Ltd
RESPONDENT:		Craig Anthony Morrissey
INSURER:		Toll Pty Ltd
FILE NUMBER:		WCC2123-04
DATE OF ARBITRATOR’S DECISION:		27 June 2007
DATE OF APPEAL DECISION:		7 November 2007
SUBJECT MATTER OF DECISION:		Refusal of request for issue of Direction for Production.
PRESIDENTIAL MEMBER:		Acting Deputy President Robin Handley
HEARING:		On the papers
REPRESENTATION:		Appellant:	Leigh Virtue & Associates
Respondent:	MJ Duffy & Sons, Solicitors
ORDERS MADE ON APPEAL:		The decision of the Arbitrator dated 27 June 2007 is confirmed.
The Appellant, Toll Pty Ltd, is to pay the costs of the Respondent, Mr Morrissey, in this appeal.

BACKGROUND TO THE APPEAL

1. On 25 July 2007, Toll Pty Ltd (‘Toll’) sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 27 June 2007. The Respondent to the appeal is Craig Morrissey. Toll is a workers compensation self-insurer.

1. Mr Morrissey was born on 10 January 1972 and is aged 35. He commenced employment as a truck driver at Toll’s Gilgandra depot in 2001. On 30 January 2003, he injured his back while changing a tyre on a semi-trailer when the wheel brace slipped and he fell to his knees. Mr Morrissey continuing working, but on experiencing increasing symptoms in his back, he consulted a general practitioner, Dr Karem Dabash, who referred him for a CT scan of his lumbar spine. This revealed a left posterior disc protrusion at L5/S1. Mr Morrissey was certified unfit for work from 17 February 2003 and, after treatment, he was certified as fit for suitable duties for four hours a day on five days a week from 15 April 2003. He returned to his pre-injury duties in December 2003 but was unable to cope because of his back injury. He was then given light work at the Gilgandra depot, but when this was no longer available, on 18 February 2005, he was sent home and, on 4 May 2005 his employment was terminated. Since then, Mr Morrissey has undertaken some truck driving on his own account.

1. On 25 March 2003, Mr Morrissey made a claim for workers compensation, and Toll paid his medical expenses and paid him weekly compensation. On 21 October 2005, Toll ceased payment of weekly compensation on the ground that Mr Morrissey had failed to provide sufficient information to enable it to make a proper assessment of his entitlement to compensation pursuant to section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’).

1. On 27 March 2007, the Commission registered Mr Morrissey’s ‘Application to Resolve a Dispute’ in respect of his claim for weekly compensation. On 2 May 2007, the Arbitrator conducted a teleconference with the parties. On 30 May 2007, conciliation having proved unsuccessful, he conducted an arbitration hearing. On 27 June 2007, the Arbitrator made a decision in the terms set out below.

THE DECISION UNDER REVIEW

1. The ‘Certificate of Determination’, dated 27 June 2007, records the Arbitrator’s orders as follows:

“1. That the Respondent pay the Applicant weekly payments of compensation at the maximum statutory rate for a worker with two dependent children from 21 October 2005 to date under s 40 of the Act.
2. Such weekly payments to continue in accordance with the provisions of the Act.
3. That the Respondent pay the Applicant’s costs as agreed or assessed.”

1. In the Statement of Reasons for his decision, the Arbitrator said there was no dispute as to Mr Morrissey’s incapacity for his pre-injury duties. The issues in dispute in respect of the claimed period of partial incapacity were, first, what is the weekly amount Mr Morrissey would probably have been earning but for the injury had he continued to be employed in the same or comparable employment and, second, what is the average weekly amount Mr Morrissey is earning or would be capable of earning in some suitable employment from time to time after the injury.

1. Applying the steps prescribed by the NSW Court of Appeal in Mitchell v Central West Area Health Service (1997) 14 NSWCCR 527 (‘Mitchell’), the Arbitrator found, at step 1, based on Mr Morrissey’s wage schedule, that Mr Morrissey’s pre-injury earnings were $1,200 per week. With regard to step 2, the Arbitrator explained that he had refused Toll’s request for the issue of a Direction for Production to Mr Morrissey requiring his company’s financial records and bank documents because leave for the issue of Directions for Production will only be issued in exceptional circumstances. The Arbitrator said:

“11. More material is now exchanged prior to an Application being filed, and applications for Directions for Production are made at the telephone conference before the arbitrator. It is only in exceptional circumstances that leave to issue Directions for Production will be given. Leave is not to conduct a ‘fishing expedition’. In general there must be a specific identified issue requiring specific identifiable documents before a relevant issue can be determined.

12. In this instance it was my view that in the absence of an issue as to Mr Morrissey’s credit, and given the materials already available as to the earnings post-injury, there was sufficient for that issue to be properly addressed. This is so specifically in respect of the earnings of the family company set up in October 2006. The documents headed ‘Wages for Craig Morrissey’, at ‘Appendix C’ to Mr Morrissey’s statement, dated 15 May 2007 from the company together with the statement provide sufficient to establish the earnings for the period. The delay for a Direction to be issued and returned was not therefore justified. The motor accident claim form was not canvassed until the formal conference and did not give rise at that time to the need for a Direction for Production to the applicant as it was dealt with in the light of the other evidence.

13. At the formal conference on 30 May 2007 the respondent sought to have the Motor Accident claim form from Mr Morrissey’s unrelated motor vehicle accident on 23 October 2006 admitted as evidence that he was earning more than the $601 per week from the company as shown in the wages schedule and the company’s wages sheet. At paragraph 43 of the claim form Mr Morrissey stated that his loss because of the truck accident was $700 per week. The claim form was completed on 24 November 2006.

14. Mr Morrissey says at paragraph 9 of his statement of 15 May 2007 that he wanted to be able to pay himself $700 per week from the company, but this could not be achieved, and the amount of $601 had to be settled for on average from 18 October 2006 to 24 April 2007. It is significant in all this that the company foundered in April 2007 due to lack of earnings from the truck driving activities because of Mr Morrissey’s physical restrictions. This is not consistent with an ongoing company profit from which Mr Morrissey benefited. In the 2006 tax year Mr Morrissey earned an average of $156 per week from his truck driving.

15. I do not accept the respondent’s submissions that the statement in the motor accident claim form of a loss of $700 per week reflects the actual earnings. I accept the submission for Mr Morrissey that this was an unrealised expectation at the time the statement was made. There is no other evidence to contradict the post injury earnings shown in the wages schedule and I find that Mr Morrissey’s capacity to earn in suitable employment is $601 per week.”

1. At Mitchell step 3, the Arbitrator deducted the amount of $601 determined at step 2, from the comparables figure of $1,200 determined at step 1, to give a loss of $599 per week, a figure greater than the maximum statutory rate for a worker with two dependent children. At step 4, he found nothing in the evidence or submissions to support the exercise of the discretion to adjust the figure at step 3. Pursuant to step 5, he therefore made an award of the maximum statutory rate for a worker with two dependent children from 21 October 2005.

ISSUES IN DISPUTE

1. Toll submits that the Arbitrator made an error of law by refusing to issue a Direction for Production requiring the production of financial records by Mr Morrissey and by the company C and J Morrissey Transport Pty Ltd (‘the company’). The parties’ submissions on this issue are discussed below.

ON THE PAPERS REVIEW

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

“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”

1. I have had regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submissions of the parties. Toll submits the matter should be the subject of an oral hearing, while Mr Morrissey’s solicitors submit the matter can be determined on the basis of the written material. Having considered these submissions and the other documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances. 

1. Neither party sought to adduce fresh evidence.

LEAVE

1. Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. With regard to section 352(2), I am satisfied that the amount of compensation at issue is at least $5,000 and constitutes 100% of the amount awarded in the decision appealed against. Accordingly, I am satisfied that the section 352 threshold has been met, and I grant leave to appeal.

SUBMISSIONS

1. As stated above, Toll submits the Arbitrator made an error of law by refusing to issue a Direction for Production requiring the production of financial records by Mr Morrissey and by the company. Toll contends that it had a right to know the income being earned by the company, which was derived from the work performed by Mr Morrissey. When a corporation is the vehicle by which a worker is being paid, and which is paid remuneration for the worker’s labour, an employer must be permitted to obtain the financial records of the corporation: see JC Ludowici & Son Ltd v Cutri (1992) 26 NSWLR 580, at 593 (per Kirby P). If as in this case the employer is denied that material, then it is also denied the opportunity to present evidence to establish an ability to earn exceeding the wage paid by the corporation to the worker.

1. Further, or in the alternative, Toll submits that if the employer is denied the opportunity to inspect that material, and to present appropriate evidence from the material, then it is also denied the opportunity to demonstrate that the worker’s actual earnings are twofold, namely, the wage that the corporation pays him and the amount by which the worker’s equity in the corporation is increased by dint of his labour.

1. Toll notes that Mr Morrissey’s further statement dated 15 May 2007, to which he attached wage slips from the time of his employment by Toll and a schedule of wages paid to him by the company, was not available at the time of the teleconference on 2 May 2007. That the Arbitrator should refer to this information at paragraph 12 of his Statement of Reasons as retrospective justification for his refusal of the issue of a Direction for Production is in itself implicit recognition of the employer’s assertion of the need for such information. By 2 May 2007, Toll was obviously aware of the existence of the company, and its request for the issue of a Direction for Production was in pursuance of a legitimate area of inquiry and not a fishing expedition. The absence of a challenge to Mr Morrissey’s credit at that stage was not a logical reason for the Arbitrator’s refusing the issue of a Direction for Production – the Direction for Production was the means of Toll seeking material which would enable it to either confirm or challenge the worker’s credit.

1. Mr Morrissey’s solicitors noted that Toll had failed to file a Wages Schedule. In the absence of it doing so, the Arbitrator was correct in accepting Mr Morrissey’s Wages Schedule. Mr Morrissey’s witness statement also set out what his earnings were and how they were derived. It was open to Toll to cross-examine Mr Morrissey on this evidence, but it declined the Arbitrator’s invitation to do so. Toll has failed to show any error in the Arbitrator’s reasoning in calculating Mr Morrissey’s loss of earnings. In seeking to overturn the Arbitrator’s decision, Toll must identify not only the error made by the Arbitrator, but also how the error affected his decision. Mr Morrissey’s solicitors submit that Toll has not exposed any errors in the Arbitrator’s reasoning, and that the decision should, therefore, be confirmed.

DISCUSSION AND FINDINGS

1. The role of the Presidential Member on appeal is to review the Arbitrator’s decision as a whole. The review is not a rehearing. In this case, Toll’s solicitors must demonstrate that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172; The King Island Company Limited v Deery [2005] NSWWCCPD 1) in order to enliven the Presidential Member’s power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act.

1. Pursuant to subrule 13.4(1) of the Workers Compensation Commission Rules 2006 (‘the 2006 Rules’), the Arbitrator has a discretion as to whether to order or refuse a request for the issue of a Direction for Production:

“the Arbitrator to whom proceedings are referred may, at any teleconference fixed in the proceedings, or, in a special case and for the avoidance of injustice, subsequently, order or refuse to order the issue of a direction for production”.

However, subrule 13.4(2) states that a Direction for Production must not be issued where the party requesting the Direction is otherwise entitled to be provided with the documents. Subrule 13.4(2) is not relevant in these proceedings.

1. The Commission’s Practice Direction No 7 states, along similar lines to subrule 13.4(1):

“Except in special circumstances for the avoidance of injustice, a request for a direction to produce should be made at any arbitral teleconference fixed in the proceedings.”

Thus, special circumstances are required where the request is not made at a teleconference, for example, where the request is made at an arbitration hearing.

1. Rule 15.5 provides, relevantly, that where the quantum of weekly compensation is or may be an issue, the applicant must include in the ‘Application to Resolve a Dispute’ a schedule containing full particulars of actual or probable earnings of the worker during the relevant period. Where a party wishes to dispute the accuracy of any matter in such a schedule, that party must lodge and serve a schedule of the party’s allegations of the earnings.

1. Mr Morrissey’s solicitors did not initially file and serve such a schedule. According to his solicitors, Mr Morrissey’s statement of 15 May 2007 and the Wages Schedule of the same date were filed in accordance with orders made by the Arbitrator on 2 May 2007. Toll did not file and serve any Schedule of Wages. It would have had access to wages information that would have enabled it to prepare a schedule of the wages earned by Mr Morrissey while he was in its employment and of the weekly amount he would probably have been earning if uninjured. However, without specific evidence of post-injury earnings, it was not in a position to prepare a schedule of post-injury wages, other than, after the service of Mr Morrissey’s statement of 15 May 2007 and Wages Schedule, to dispute the accuracy of that Schedule.

1. Toll submits that the Arbitrator made an error of law in the exercise of his discretion by refusing Toll’s request for the issue of a Direction for Production. I agree that at the time of the teleconference on 2 May 2007, in the absence of any specific evidence from Mr Morrissey as to his wages in the six months prior to the filing of his ‘Application to Resolve a Dispute’, it was legitimate for Toll to request the issue of a Direction for Production on both Mr Morrissey and the company. Contrary to what the Arbitrator’s said at paragraph 11 of his Statement of Reasons, exceptional circumstances were not required. The material likely to be produced in response to such a Direction would have enabled Toll to make a decision about whether to challenge Mr Morrissey’s credibility.

1. As it was, evidence akin to that which could have been derived from material that was likely to have been produced in response to a Direction for Production was attached to Mr Morrissey’s further statement of 15 May 2007 and contained in the Wages Schedule dated 15 May 2007 filed by his solicitors. It was this evidence on which the Arbitrator relied in finding that Mr Morrissey’s capacity to earn in post-injury employment was $601 per week (Statement of Reasons paragraphs 14 to 15).

1. At the time of the arbitration hearing on 30 May 2007, Toll was in possession of Mr Morrissey’s Wages Schedule and, despite being denied its request for the issue of a Direction for Production, it was open to Toll to cross-examine Mr Morrissey about his further statement of 15 May 2007 and the wages information filed. Toll’s representative chose not to accept the Arbitrator’s invitation to do so (transcript page 5), stating that he did not have the material to enable him to do it. I do not agree. In my view, the statement of 15 May 2007, with annexures, and the Wages Schedule of the same date provided sufficient information to enable him to do so.

1. Moreover, in my view, Mr Morrissey’s further statement and the Wages Schedule did provide adequate information to enable the Arbitrator to make a fair and informed decision on the issue in dispute.

1. Thus, while I am satisfied that the Arbitrator did make an error in the exercise of his discretion, I am not satisfied that this error would have affected the outcome in this matter. Aside from the Arbitrator’s handling of the request for the issue of the Direction for Production, in my view, the Arbitrator acted fairly and there was sufficient logically probative evidence to enable him to make the material findings of fact required to follow the five steps prescribed by the NSW Court of Appeal in Mitchell. I am not satisfied that I should exercise my power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act and I therefore confirm the Arbitrator’s decision.

DECISION

1. The decision of the Arbitrator dated 27 June 2007 is confirmed.

COSTS

1. The Appellant, Toll Pty Ltd, is to pay the costs of the Respondent, Mr Morrissey, in this appeal.

Robin Handley

Acting Deputy President  

7 November 2007

I, MARIE JOHNS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBIN HANDLEY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE