Toll Pty Ltd v Morrissey (No 3)
[2009] NSWWCCPD 85
•29 July 2009
| WORKERS COMPENSATION COMMISSION | ||||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | ||||||
| CITATION: | Toll Pty Ltd v Morrissey (No 3) [2009] NSWWCCPD 85 | |||||
| APPELLANT: | Toll Pty Ltd | |||||
| RESPONDENT: | Craig Anthony Morrissey | |||||
| INSURER: | Self insurer | |||||
FILE NUMBER: ARBITRATOR: | A1-2123/07 Mr C Messenger | |||||
| DATE OF ARBITRATOR’S DECISION: | 9 February 2009 | |||||
| DATE OF APPEAL DECISION: | 29 July 2009 | |||||
| SUBJECT MATTER OF DECISION: | Discretionary admission of unserved DVD – Rule 10.3(3); assessment under section 40 of the Workers Compensation Act 1987 – application of JC Ludowici & Son Limited v Cutri (1992) 26 NSWLR 580. | |||||
| PRESIDENTIAL MEMBER: | Acting Deputy President Michael Snell | |||||
| HEARING: | On the papers | |||||
| REPRESENTATION: | Appellant: | Leigh Virtue & Associates | ||||
| Respondent: | M.J. Duffy & Son | |||||
| ORDERS MADE ON APPEAL: | The decision of the Arbitrator dated 9 February 2009 is revoked and the matter is remitted to another Arbitrator for determination afresh in accordance with these reasons. | |||||
| The Respondent Worker’s costs of obtaining and serving a statement dated 24 June 2009 are to form part of his costs on the further arbitration. Otherwise no order as to costs of the appeal. | ||||||
BACKGROUND TO THE APPEAL
On 9 March 2009 Toll Pty Ltd (‘the Appellant Employer’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 9 February 2009.
The Respondent to the Appeal is Craig Anthony Morrissey (‘the Respondent Worker’).
The Respondent Worker is now 37 years of age, and claims two dependant children. He commenced working for the Appellant Employer as a truck driver in 2001. He alleges injury to his back and left leg on 30 January 2003, while changing a tyre in the course of that employment. A wheel brace he was using to tighten nuts slipped, and he fell to his knees. His work thereafter, with the Appellant Employer, is set out in the decision of Handley ADP in Toll Pty Ltd v Morrissey [2007] NSWWCCPD 221 (‘Morrissey’) at [2]. There were periods on and off work, and periods of lighter duties. The Respondent Worker ceased carrying out duties for the Appellant Employer on 18 February 2005, and his employment was terminated on 4 May 2005.
The Respondent Worker and his wife had, from before his injury on 30 January 2003, owned a Kenworth prime mover, that he said he used to do “some harvest work for grain growers in the Gilgandra area”. He said that, from when light duties with the Appellant Employer were no longer available for him in February 2005, he began looking for truck driving work using this truck. From 18 October 2006 he and his wife incorporated a company, C & J Morrissey Transport Pty Limited (‘the company’). He states he could not “do enough truck driving to earn enough money to keep the company going”, and the truck and a trailer were sold in April 2007.
The Respondent Worker’s statement dated 20 November 2008 indicates the company continued operating after the Kenworth prime mover was sold, “mostly as a load manager”, with such truck driving work as was offered to the company being sub-contracted out. That statement says the company “recently” purchased a rigid 12 tonne truck, borrowing $50,000.00 for the purchase and restoration of the vehicle. It is stated this truck was bought for sub-contractors to use, although the Respondent Worker “occasionally” drove it.
In addition to his activities through the company, the Respondent Worker was employed by Gilgandra Bus Service from 15 June 2007 to 12 February 2008, driving a school bus. He initially drove the bus for 10 hours per week, and from August 2007 was driving it for 20 hours per week.
The Respondent Worker also commenced casual truck driving for RFL Employment Services Qld (‘Ruttleys’) from July 2007. The hours were variable, and could involve return trips from Gilgandra to Roma, that were seven hours each way. Other trips were shorter. He was still carrying out that employment at the time of the arbitration hearing on 18 December 2008. In his statement dated 20 November 2008, the Respondent Worker stated that that job was too hard on his back, and he had given notice he would be finishing up “after Christmas 2008”.
On 10 October 2008 the Respondent Worker described to Dr Wallace (who examined him at the request of his own solicitors) that he also did “farming at home on his 100 acre property running cattle and sheep”. That is a loss making activity according to his income taxation returns. The Respondent Worker’s statement says “we have always kept a few cattle, sheep and goats on it”.
A business names extract relied upon by the Appellant Employer indicates the Respondent Worker and his wife are the registered proprietors of a business named, ‘Rock Cake Bakery’, the business operating at Gilgandra. The start date for their proprietorship of the name was 10 September 2008. The Appellant Employer also relied on an investigation report of Huxley Hill Group dated 25 September 2008. It described having observed the Respondent Worker driving a truck and unloading scrap metal from it with a shovel, and serving in the Rock Cake Bakery, on 1 and 2 September 2008 respectively.
The Respondent Worker submitted a claim form dated 25 March 2003, and the Appellant Employer accepted liability to pay weekly compensation and medical expenses, up to 21 October 2005. At that point the Appellant Employer advised it was suspending payments of weekly compensation, as the Respondent Worker had not provided sufficient information going to his actual earnings since his termination, for the Appellant Employer to determine the entitlement pursuant to section 40 of the Workers Compensation Act, 1987 (‘the 1987 Act’). The Application to Resolve a Dispute claims weekly payments from 21 October 2005, together with medical and related expenses pursuant to section 60 of the 1987 Act.
The Respondent Worker made a claim for lump sum compensation, and was examined by an Approved Medical Specialist (‘AMS’), Dr Meachin on 23 February 2006. Dr Meachin certified the Respondent Worker suffered from 11 per cent whole person impairment. A consent award in the sum of $14,000.00 (for 11 per cent whole person impairment pursuant to section 66) and $10,000.00 (pursuant to section 67) was entered in the Respondent Worker’s favour on 26 April 2006.
The matter has an extended procedural history in the Commission. It was initially determined by an arbitrator, favourably for the Respondent Worker, in a decision dated 27 June 2007. That decision was the subject of an unsuccessful appeal to Handley ADP, determined on 7 November 2007 (Morrissey). That decision was the subject of appeal by the Appellant Employer to the Court of Appeal, which upheld the appeal, and returned the matter to the Commission for re-determination (Toll Pty Ltd v Morrissey [2008] NSWCA 197). The matter then came before his Honour the President Judge Keating, who remitted it to a different arbitrator for determination in accordance with the decision of the Court of Appeal (Toll Pty Ltd v Morrissey (No 2) [2008] NSWWCCPD 90). That order led to the matter being determined by a second arbitrator on 9 February 2009, which is the decision that now comes before me on appeal pursuant to section 352 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’).
The arbitrator’s reasons of 9 February 2009 at [7] record the agreement of the parties that the issues in dispute were quantification of the upper and lower limbs of the section 40 equation (section 40(2)(a) and (b)), together with dependency. The parties additionally addressed the arbitrator on whether discretionary factors applied to reduce the arithmetical difference between the upper and lower limbs of the section 40 equation. Dependency is no longer an issue on this appeal, there being no challenge to the arbitrator’s finding the Respondent Worker’s two children are dependent on him.
There had been an issue regarding the level of income generated by the company, and the appropriateness of making orders for the production of relevant financial records. This had been crucial in the first Presidential appeal, and the resulting appeal to the Court of Appeal. Subsequently the matter was listed for arbitration on 26 November 2008. A Direction for Production of financial records of the company had been “served outside the time frame which the direction had scheduled”, and consequently “close to a thousand pages” were produced to the Appellant Employer’s solicitors in the two days prior to 26 November 2008. The arbitration hearing commenced on 26 November 2008, but was adjourned for further hearing on 18 December 2008, having regard to the bulk of the recently produced documents. It was indicated, on 26 November 2008, that the Appellant Employer would seek to use a DVD of the Respondent Worker’s activities (‘the DVD’). A copy of an investigation report dealing with the observations had previously been served, but the DVD itself had not. The Respondent Worker executed a statement dated 17 December 2008 dealing in part with activities described in the investigation report.
The arbitration hearing resumed on 18 December 2008. Both parties were represented by counsel. Counsel for the Appellant Employer sought to cross-examine the Respondent Worker whilst showing the DVD to him. This course was opposed, and the arbitrator declined to permit use of the DVD. The application to cross-examine was not pursued on any other basis, and no oral evidence was adduced. The arbitrator dealt with some objections to the use of late documents (including the DVD), and heard addresses. Towards the conclusion of the hearing, counsel for the Appellant Employer indicated he had received some additional documentary material, and had a telephone conversation with two employees of the Appellant Employer. On this basis he said he had been led “to the view that there is further evidence that would be probative and relevant to the issue of probable earnings”. He sought that the hearing be adjourned to permit him to confer with the relevant employees, so as to put on appropriately drafted statements, and “annex any further supporting material that might be relevant to the conclusions they’ve drawn”. This application was opposed, and refused (T20 - 21).
THE DECISION UNDER REVIEW
The ‘Certificate of Determination’, dated 9 February 2009 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 dependant children from 21 October 2005 to date under Section 40 of the Workers Compensation Act, 1987.
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.”
The Certificate of Determination was accompanied by a 13 page Statement of Reasons (‘the reasons’)
ISSUES IN DISPUTE
The Appellant Employer raises the following grounds of appeal:
(i) The arbitrator erred in failing to permit the Appellant Employer to use the DVD. Alternatively the arbitrator erred in failing to accept the description in the observation report of activities carried out by the Respondent Worker, in circumstances where he had declined to permit use of the best evidence of such activities (the DVD).
(ii) The arbitrator erred in failing to accede to the Appellant Employer’s adjournment application on 18 December 2008. The Appellant Employer has not sought leave to adduce, as fresh evidence on this appeal, any further material that may represent the potential further evidence that led to this adjournment application.
(iii) The arbitrator erred in determining the Respondent Worker’s probable earnings if not for injury (section 40(2)(a)) at $1,200.00 per week. The evidence and the arbitrator’s reasoning, it is submitted, do not support this conclusion.
(iv) The arbitrator erred in calculating the lower limb of the section 40 equation (section 40(2)(b)) at $500.00 per week. This figure is lower than the Respondent Worker’s actual earnings at various times, and lower than the actual earnings at the time of the arbitration hearing. The approach is inconsistent with Aitken v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20 and JC Ludowici & Son Ltd v Cutri (1992) 26 NSWLR 580.
(v) The arbitrator erred in failing to apply his discretion pursuant to section 40 to award less than the arithmetical difference he had found, given the “unsatisfactory state” of the evidence going to actual earnings, and the distribution of income from the company.
The Respondent Worker raises objection to the form of the Appellant Employer’s appeal, particularly as regards the argument going to the rejection of the DVD. The Respondent Worker submits the Appellant Employer cannot rely on the DVD in the appeal. Alternatively it is submitted that, in reviewing the arbitrator’s decision on this point, I should come to the same conclusion as the arbitrator regarding admissibility of the DVD. The Respondent Worker seeks to uphold the arbitrator’s decision on the other grounds raised by the Appellant Employer.
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 Respondent Worker submits this appeal can be determined on the papers. The Appellant Employer submits “this is a category of case which would justify an Oral Hearing”. It does not actually say why.
Having regard to Practice Directions No.s 1 and 6, the documents that are before me, and the submission by the Respondent Worker that the appeal can proceed to be determined on the basis of these 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.
LEAVE
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.
The arrears alone of the weekly award exceed the sum of $5,000.00 prescribed in section 352(2)(a) of the 1998 Act, and the whole of the award is appealed against. The threshold provisions in section 352 are clearly satisfied, and the Respondent Worker properly does not suggest otherwise.
I grant leave to appeal.
FRESH EVIDENCE
‘Fresh evidence’ on appeal is governed by section 352(6) of the 1998 Act, which provides as follows:
“(6) Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”
Practice Direction No.6 sets out the process for seeking leave of the Commission to give ‘new evidence’ on appeal. It provides as follows:
“FRESH EVIDENCE AND/OR ADDITIONAL EVIDENCE
Each application to introduce fresh evidence or additional evidence on appeal will be considered on its own facts and circumstances and in the context of the Commission’s obligation to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (see section 354 of the 1998 Act).
In the exercise of its discretion to admit fresh evidence or further evidence on appeal the Commission will have regard to, and the parties should make submissions on, whether:
·it can be demonstrated that the evidence could not with reasonable diligence have been obtained by the party and tendered in proceedings before the Arbitrator;
·the evidence is credible;
·there is a high degree of probability that there would have been a different decision if the evidence had been admitted at the arbitration, and/or
·it is just to admit the evidence in all the circumstances of the individual case.
Parties should be aware that a review under section 352 of the 1998 Act is not a rehearing or hearing de novo. The original arbitration should not be treated as a preliminary hearing and all relevant evidence should be called at that time.”
Practice Direction No.6 also provides that if fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against is relied upon, parties must include:
·a schedule of the fresh or additional evidence;
·a copy of the fresh or additional evidence;
·a brief outline of the fresh or additional evidence and the reasons why it was not given in proceedings before the Arbitrator, and
·submissions on why the fresh or additional evidence should be admitted, or rejected as the case may be.
Where a party seeks leave to rely on fresh or additional evidence in relation to the decision appealed against, that party must serve a copy of the fresh or additional evidence on the other parties to the dispute when serving the Application or Notice of Opposition.
The Appellant Employer has attached the DVD to the Application to Appeal, describing it as part of a “Schedule of New Evidence”. The DVD can hardly be described as fresh evidence, it having been available, and an attempt to use it having failed, at the arbitration hearing. However it is evidence in addition to that received in the decision appealed against, and thus leave is required for its use pursuant to section 352(6). I will deal with the appropriateness of granting that leave, in dealing with the substantive arguments below.
DISCUSSION AND FINDINGS
The Review Process
I reviewed a number of decisions of the Court of Appeal dealing with the nature of a review pursuant to section 352, in Deadman v John A Gilbert Pty Limited t/as Kirklands Buslines [2008] NSWWCCPD 105, at [65] to [69]. There has been a further recent significant decision on this point, Sapina v Coles Myer Limited [2009] NSWCA 71. The joint judgment of Allsop P and Hoeben J (with which Beazley JA agreed) reviewed a number of the authorities going to the nature of review by a Presidential member pursuant to s 352. Their Honours described the process in the following fashion (at [57] – [58]):
“57… Subsections s 352 (1) and (5) of the WIM Act make clear that the “appeal” is to be by way of review of the decision. The notion of “review of a decision” had been clearly held in the context of the former legislation and the WIM Act to be wider that an appeal strictly so-called and encompassing a reconsideration beyond correction of error. The decision under appeal is not to be ignored, but the task of the Presidential member is, as Spigelman CJ said in Chemler, “to decide whether the original decision is wrong [that is to] decide what is the true and correct view.” This requires the Presidential member to decide for himself or herself these matters. That does not mean that there must be a de novo hearing in each case. Cases such as Watson, Boston Clothing, Litynski and AGL v Samuels made plain that this was not so under s 36 and the terms of ss 3, 352 (7) and 354 make clear that no such broad ranging factual enquiry afresh is necessarily required. The terms of the WIM Act, ss 3 and 354 and the width of the powers in s 352 (7) make clear that the Presidential member has a wide choice available as to how he or she undertakes the task of deciding for himself or herself what is the true and correct decision. As Allsop P said in Cook v Midpart, error (or lack of it) by the Arbitrator will or may be relevant to the task of the Presidential member, but it does not define the task. There is, however, an important difference in the nature of the tasks of (a) coming to the view that an Arbitrator’s view was reasonable and (b) deciding for oneself that the view of the Arbitrator is the true and correct one. In a field where evaluation of injury and evidence of incapacity can lead to different views, both or all which could be reasonably held, it is important that the parties have available to them the skill and judgment of the Presidential member reaching his or her own view on the questions involved in the decision.
58. Just as error of the Arbitrator may be relevant, so might be the advantages of the Arbitrator in seeing witnesses. Nothing we have said, and none of the cases to which we have referred, necessarily requires the Presidential member to rehear the case or to recall all the witnesses. The approach of the Presidential member as to how he or she goes about reaching his or her own decision will be a matter for him or her within the confines and freedoms of s 354.”
My task in reviewing the arbitrator’s decision should be approached in a fashion consistent with the above principles.
Exclusion of the DVD
The arbitrator gave reasons for rejecting the tender of the DVD, at [10(a)] of his reasons. He referred to the need to consider fairness and justice between the parties. He said “Evidence in the Commission is required to be introduced as early as possible so that the parties, in particular the Applicant, is (sic) not disadvantaged. The introduction of video evidence only at the Hearing without any attempts to serve the Applicant nor any reasonable excuse provided for its non service is unacceptable according to the principles of fairness.” He summarised his reasons, referring to the following matters:
(i) The DVD itself had not been served prior to the arbitration hearing of 18 December 2008. This failure was unexplained.
(ii) There was not a signed statement from the investigator, Mr Michalak, who observed the Respondent Worker.
(iii) The investigator’s report (‘the investigation report’) dated 25 September 2008, detailing the observation material, was not signed.
(iv) The investigation report referred to a “Summary of Agent’s Notes” as an enclosure. That document was not attached to the investigation report, served, or otherwise put into evidence.
The Appellant Employer in its submissions challenges the rejection of the DVD. It raises the following points:
(i) It must have been clear, from when the investigation report was served on the Respondent Worker’s solicitors on 21 November 2008, that the Appellant Employer would seek to rely on the DVD. Any doubt on this topic must have been dispelled when the arbitration hearing was initially listed on 26 November 2008, and the Appellant Employer’s counsel enquired of the arbitrator what facilities were available to watch the DVD, at the arbitration venue in Orange.
(ii) The Respondent Worker’s statement dated 20 November 2008 at [8], and the history recorded by Dr Wallace in his report dated 28 October 2008 of the Respondent Worker’s current activities, rendered the observation material relevant.
(iii) There would not have been any prejudice to the Respondent Worker in permitting use of the DVD in the circumstances.
(iv) The approach adopted by the arbitrator, in accepting the tender of the investigation report, but rejecting the DVD, “placed him in a difficult position, so far as the Assessment of Evidence was concerned”. The contents of the investigation report were inconsistent with aspects of the Respondent Worker’s history. The arbitrator was left seeking to resolve this inconsistency in the absence of the best evidence of the activities observed, the DVD.
The Respondent Worker’s submits on this point that “there has been no appeal in relation to the Arbitrator’s rejection of the late evidence application by the Appellant”. This appears to follow from an earlier submission by the Respondent Worker that “The Appellant does not properly identify the grounds of appeal”, the material set out rather being “submissions”. On this basis it is submitted the appeal should be decided solely on the basis of the material that was before the arbitrator. The Respondent Worker submits the refusal to admit the DVD was “dealt with quite cogently by the Arbitrator”. The submissions say “the Appellant cannot rely on the DVD in this appeal”. Alternatively, if the discretion is re-exercised, it is submitted I should come to the same conclusion as the arbitrator regarding admission of the DVD.
The section of the Application for Leave to Appeal headed “Grounds of Appeal” sets out a number of headings, each of which is followed by submissions. The submissions I have summarised at [35] above appear under the heading “Failure to Admit Video Evidence”. It is quite clear, from the submissions, that the Appellant Employer is challenging the arbitrator’s refusal, on a discretionary basis, to admit the DVD. Having regard to section 354 of the 1998 Act, I do not accept that failure by the Appellant Employer to enumerate grounds of appeal, separate to its submissions, militates against me considering the substantive matters raised in its appeal. Specifically, it dos not preclude me from reviewing the arbitrator’s exercise of his discretionary power in respect of admission of the DVD.
Rule 10.3(1) of the Workers Compensation Commission Rules 2006 (‘the Rules’) provides that a party must relevantly lodge and serve with its Reply “all information and documents on which the party proposes to rely and that are in the possession or control of the party”. Rule 10.3(2) prevents a party introducing evidence that has not been lodged and served as required by subrule (1). There is a discretionary power to permit evidence that would otherwise be excluded by subrule (2), in Rule 10.3(3):
“The Commission may, if it is satisfied that it is necessary to do so in the interests of justice, allow a party to introduce evidence that the party would otherwise be prevented from introducing because of the operation of subrule (2).”
Rule 14.1 is also of relevance. It relevantly provides:
“14.1Tapes, films, photographs, etc
This rule applies to:
(a) videotapes, and
(b) audiotapes, and
(c) films or photographs, and
(d) x-ray film, and
(e) the results of specialised medical investigations, including computerised tomography, medical ultrasound and magnetic resonance imaging scans, and
(f) any documents produced or received by electronic means,
on which a party proposes to rely in any proceedings.
Where a document to which this rule applies constitutes surveillance material, any investigator’s report concerning the material:
(a) must clearly and unambiguously identify the material, and
(b) is, for the purposes of subrule (3), deemed to be part of the document.
A document to which this rule applies is, subject to this rule, a document for the purposes of rule 10.3.”
In reviewing the arbitrator’s discretionary decision on this point, it is unnecessary that I find error, although I should give respect and weight to his conclusion: Tan v National Australia Bank Ltd [2008] NSWCA 198 at [11]. I may “reopen consideration of a matter of which an arbitrator has disposed: Aluminium Louvres & Ceilings Pty Ltd v Xue Qin Zheng [2006] NSWCA 34 at [38].
Plainly the DVD could not have been attached to the Reply, as it post dated it. The DVD would fall within the class of documents referred to in Rule 14.1(1). It can probably be characterised as a film. In any event, it was produced by electronic means. Subrule (2) makes it plain that the Rule deals with surveillance material, and associated investigation reports. The investigation report dated 25 September 2008 identified the surveillance in a fashion that, in my view, clearly satisfied the requirements of Rule 14.1(2)(a). Pursuant to Rule 14.1(2)(b), that investigation report was deemed to be part of the surveillance material, for the purposes of the Appellant Employer’s application pursuant to Rule 10.3(3). The Respondent Worker, at the arbitration hearing, did not oppose admission of the investigation report, only the DVD (transcript of 18 December 2008 at T5.5 and T5.35). Thus the opposition was effectively to the admission of part of a document, the balance of the document being admitted by consent.
The reasons given by the arbitrator for excluding the DVD (set out at [34] above) do not, on balance, justify that conclusion, in my view. The absence of a signed statement by the operative who conducted the observations is of no particular significance. The investigation report sets out clearly enough the substance of the observations, in a fashion consistent with Rule 14.1(2)(a). The fact that the investigation report was unsigned similarly is of little weight in my view. It is not relevant to a consideration of the interests of justice, in exercising the discretion pursuant to Rule 10.3(3). The absence of the “Summary of Agent’s Notes” I would also regard as largely irrelevant to the application. That document had not been served, the Appellant Employer did not seek to tender it, and there is no indication the Respondent Worker sought to compel its tender in the interests of fairness, if the other material relevant to the surveillance was used.
This leaves the issue of the failure to serve the DVD prior to 18 December 2008. Both at the arbitration hearing of 18 December 2008, and in submissions on this appeal, the Appellant Employer submitted the surveillance material became relevant after service by the Respondent Worker of his further statement dated 20 November 2008, and Dr Wallace’s report dated 28 October 2008. It is submitted the activities in the investigation report included activities inconsistent with the statement, which stated the Respondent Worker’s duties for Rutley’s did not involve any loading, unloading or lifting, and also with a history taken by Dr Wallace to similar effect. Submissions by the Appellant Employer’s counsel, at the arbitration hearing on 26 November 2008, indicated the investigation report dated 25 September 2008 had been served prior to that date. Counsel for the Respondent Worker stated it had been served on 23 November 2008. The investigation report was attached to an Application to Admit Late Documents dated 2 December 2008.
Even if the above explains the failure to serve the investigation report until 23 November 2008, it does not deal with the non-service of the DVD itself. The Respondent Worker did not resist tender of the investigation report, but rather the DVD. In Nelson Bay Pest Service Pty Limited v Morrison [2007] NSWWCCPD 135 (‘Morrison’) I considered the need for a party, seeking to rely on a document served late (or not at all), to explain delay. I concluded an unexplained failure to serve a document prior to an arbitration hearing “was a significant factor militating against the discretion being exercised” (at [42]). However the situation in the current appeal is somewhat different to that in Morrison.
In the current appeal, notice of the substance of the observation material, and the Appellant Employer’s intention to rely on it, had been effectively given from when the investigation report was served. Whilst it clearly would have been preferable for the DVD itself to be served at the same time as the investigation report, the Appellant Employer’s intended use of the observation material, including the DVD, must have been apparent from 23 November 2008. This gave the Respondent Worker an opportunity to respond to the observation material, which he did. His statement dated 17 December 2008 specifically deals in part with the observation material.
Another significant factor in the current appeal is that part of the observation material (the investigation report) was in evidence in any event. The evidence before the arbitrator included the investigator’s description of what the observations showed, and material from the Respondent Worker dealing with what the observations showed, but not the DVD itself, which depicted the observations. This ultimately caused some difficulty when the arbitrator came to consider the Respondent Worker’s ability to earn (the lower limb of the section 40 equation). The arbitrator referred to the investigation report, which described the Respondent Worker as engaging in “strenuous unloading” of metal. The arbitrator said “This ‘strenuous activity’ is by inference denied by the Applicant.” He then said the investigation report was unsigned, did not have attached to it a summary of the agent’s notes or “a copy of the Video evidence”, and observed:
“The photographic schedule which is attached to the letters is of poor quality and consists of a total of four photographs. The photographs do not depict any strenuous activity by the Applicant. They further do not depict the shovelling of metal from the rear of a truck.
In view of the quality of the evidence I place little weight on the Investigation Report when assessing the Applicant’s ability to earn.”
In my view this was a plainly unsatisfactory way of dealing with the perceived conflict of evidence between the Respondent Worker’s statements, and the observation material. Effectively, the evidence of the Respondent Worker has been preferred on this aspect, because the observation material did not include a convincing depiction of anything objectively inconsistent with the Respondent Worker’s statements. Yet the tender of that part of the observation material that could have more satisfactorily assisted in resolving the conflict of evidence had been rejected. It is significant that the arbitrator specifically referred to the absence of “the Video evidence” as a factor in minimising the significance of the investigation report. Part of the observation material having been tendered, the more satisfactory approach would have been to admit such evidence in its entirety, so it could be considered on its merits.
In P & N Beverages Australia Pty Ltd v Hammoud [2008] NSWWCCPD 102 Roche DP reviewed a decision in which an arbitrator had refused an employer leave to rely on an investigation report and DVD that were served late. The Deputy President at [47] and [48] said:
“47. Once it is determined that the documents are relevant to an issue in dispute, the questions to be considered are whether any prejudice will be occasioned to the other party if the documents are admitted and, if so, whether that prejudice can reasonably be accommodated.
48. Whilst QBE’s conduct in the preparation of this matter has been unsatisfactory, the Arbitrator was required to consider the relevance of the evidence, the prejudice to each side and the interests of justice. There was a real prejudice to P & N if the documents were excluded. Any possible prejudice to Mr Hammoud could have been accommodated by allowing him time to gather evidence in response and then setting the date for the arbitration accordingly. That course would have been simple, reasonable, fair to both parties, and would not have resulted in an unreasonable delay in the resolution of the dispute.”
The DVD was plainly relevant, and there has been no submission to the contrary. At the arbitration hearing on 18 December 2008 counsel for the Respondent Worker submitted use of the DVD would occasion prejudice. He submitted the Respondent Worker’s statement (dated 17 December 2008) was prepared “in answer to the written material”, and “He hasn’t seen the DVD, he doesn’t know what it contains and, therefore, can’t answer it.” The arbitrator did not place reliance on prejudice as a reason for rejecting the tender of the DVD.
Any prejudice would not have been significant, and could in my view have been easily cured. The Respondent Worker, having been made aware of the substance of the observation material when the investigation report was served, had put on a statement dealing with what he was doing when the DVD was exposed. The investigation report stated the DVD played for one hour and twelve minutes. It would not have been a difficult matter to give the Respondent Worker and his legal advisors an opportunity to see it. He could then have been given an opportunity to give some oral evidence to supplement his most recent statement, if he wished. The interests of justice would have favoured this course, rather than rejecting part of the observation material, with the result that there was an unsatisfactory evidentiary foundation for the arbitrator’s consideration of the significance (or lack of it) of the Respondent Worker’s activities on 1 and 2 September 2008.
The factors that favour admission of the DVD in all of the circumstances are:
(i) Although it had not been served, its substance had been disclosed when the investigation report was served on 23 November 2008.
(ii) It was relevant evidence.
(iii) Its exclusion would cause prejudice to the Appellant Employer, which sought to make use of it.
(iv) The interests of justice additionally favoured its use, to clarify that part of the observation material (the investigation report) that was already in evidence.
(v) There was little prejudice to the Respondent Worker, and such prejudice as there was could be relatively easily cured.
The factor that militates against allowing the tender of the DVD is that it had not been served prior to 18 December 2008, and there is not a satisfactory explanation of this failure. Although this is a significant factor, on balance the interests of justice favoured allowing the introduction of the DVD into evidence.
As the DVD is evidence in addition to that received by the arbitrator, its use on this appeal requires leave pursuant to section 352(6) of the 1998 Act. In Haider v JP Morgan Holdings Australia Limited t/as JP Morgan Operations Australia Limited (2007) 4 DDCR 634, [2007] NSWCA 158 (‘Haider’) Basten JA dealt with the discretionary power to admit evidence pursuant to section 352(6). That power is not fettered by Practice Direction No. 6 (see Haider at [41]). At [44] Basten JA said:
“Assuming for present purposes that the evidence was material and probative, the statutory obligations and powers imposed and conferred on the Tribunal suggest that the material should have been considered in order to address the substantial merits of the case.”
Clearly the DVD is material and probative evidence. The reasons I have given above, going to the discretion pursuant to Rule 10.3(3), also support the conclusion leave should be granted for the DVD to be admitted into evidence on this appeal, pursuant to section 352(6) of the 1998 Act.
Having reviewed the matter on its merits, I have concluded the arbitrator’s decision to reject the tender of the DVD was in error (State Transit Authority of New South Wales v Fritzi Chemler (2007) 5 DDCR 287, [2007] NSWCA 249 at [28]). I have viewed the DVD for the purposes of dealing with this appeal. The error was of such a nature that it could have affected the result, and it follows that the appeal should be allowed (Stead v State Government Insurance Commission (1986) 161 CLR 141, Toll Pty Limited v Morrissey [2008] NSWCA 197). For reasons that appear below, I have ultimately concluded the appropriate course is to remit the matter to a different arbitrator for determination afresh. This being so, the conclusion I have reached regarding use of the DVD is sufficient to dispose of the appeal. It is, however, appropriate that I deal briefly with one of the other issues raised in this appeal.
The Respondent Worker’s Actual Earnings
The reasons at [12(c)] note that the Respondent Worker’s actual earnings, from 1 July 2008 to the last date on which the arbitration was heard, 18 December 2008, were $746.31 per week. This figure is taken from the Respondent Worker’s most up to date Wages Schedule, and represents his earnings with ‘Ruttleys’. The Respondent Worker’s most recent statement (at that time) was dated 20 November 2008, and indicated he found this driving job too hard on his back, and had given notice he would “finish up after Christmas 2008”. Thus he was still in this employment at the time the arbitration hearing concluded. In determining the lower limb of the section 40 equation, the arbitrator said there was “no evidence to suggest that he is continuing to work for this company”. Noting the Respondent Worker’s expressed intention to discontinue the job after Christmas 2008, the arbitrator said the income was “for a period of only 2½ months”, and “must be discounted as it is not a true indicator of his ability to earn”. He then assessed the Respondent Worker’s ability to earn in some suitable employment at $500.00 per week throughout the period of the claim, including the period after 1 July 2008, when the Respondent Worker had been earning $746.31. The section 40 entitlement was calculated on this basis.
The Appellant Employer argues there is a misstatement of the evidence, in that this period of employment was for a little less than six months at the time the arbitration hearing concluded, rather than “only 2½ months”. This complaint is justified. Additionally, the Appellant Employer submits the arbitrator has fallen into the same error as the trial judge in JC Ludowici & Son Limited v Cutri (1992) 26 NSWLR 580 (‘Ludowici’). This submission also is justified.
In Ludowici the trial judge found the actual earnings of an injured worker resulted from her carrying out work, in her injured state, that was not suitable for her. He assessed the section 40 award on the basis of his estimation of the worker’s ability to earn, a figure lower than the actual earnings. On appeal Kirby P (as his Honour then was) at 593A said:
“In my view, the preferable construction is that which has been repeatedly stated in the decisions of this Court. It is that where the worker is earning, the average weekly amount produced thereby is normally to be taken as the par (b) component of the equation. It is only otherwise where the decision-maker concludes that the worker is able to earn more than that sum in some suitable employment. Then, but then only, is a notional sum taken into account.”
It follows that the approach taken by the arbitrator in determining the section 40 award, subsequent to 1 July 2008, was in my view erroneous. Where the Respondent Worker was in receipt of actual earnings, the lower limb of the section 40 equation could not be a figure lower than such actual earnings.
Disposition of This Appeal
Given the procedural history of this matter, I initially was of the view that, if reasonably possible, I should substitute a decision of my own for that of the arbitrator, should the appeal succeed. Given the effluxion of time since the arbitration hearing concluded, and the indication in the Respondent Worker’s statement dated 20 November 2008 that his employment situation may well change after Christmas 2008, I listed the matter for a teleconference on 10 June 2009. I then gave the Respondent Worker leave to put on such further evidence and supplementary submissions as he wished, going to the DVD (should it be admitted on the appeal), and to update the evidence going to the Respondent Worker’s employment situation.
At the teleconference on 10 June 2009 counsel for the Appellant Employer indicated that, if there had been a change in the Respondent Worker’s “employment circumstances”, the Appellant Employer would want to undertake some investigation and/or seek the issue of Directions for Production.
A further statement of the Respondent Worker dated 24 June 2009 was lodged and served. That statement indicated the Respondent Worker last carried out any duties for Ruttleys on 22 December 2008, and since then had received only some holiday pay from that company. He stated he had declined an offer of employment to drive from Gilgandra to Melbourne return as he would “not be able to drive for that long”. He said he occasionally helped out at the Rock Cake Bakery although had not done paid work there. He said the family company had continued to trade, and he occasionally drove for it. He said he continued to look for work within his “medical restrictions”.
The matter was listed for a further teleconference on 8 July 2009 to consider the further progress of the appeal, in light of the additional statement of the Respondent Worker. Counsel for the Appellant Employer indicated the additional statement raised matters that “would set us on a further factual enquiry”. He indicated this could well result in the Appellant Employer making application to cross-examine the Respondent Worker, and to “adduce additional evidence”. The Appellant Employer submitted that, given the additional factual preparation it envisaged, the matter (if the appeal succeeded) should be remitted for determination by a different arbitrator. The Respondent Worker’s solicitor submitted I should re-determine the matter, if the appeal succeeded. The view I expressed at that time was that the preferable course was that I remit the matter to another arbitrator, if the appeal succeeded. I also gave the parties 14 days in which to make further submissions, going to the DVD, if they wished. The Appellant Employer lodged some further short submissions on this aspect, dated 14 July 2009.
Whether I re-determine the matter, or remit it to a different arbitrator for determination, is a matter within my discretion, having regard to the overriding objectives of the legislation: Chubb Security Australia Pty Limited v Trevarrow (2004) 5 DDCR 1, [2004] NSWCA 344. It will now be necessary that the Appellant Employer be given a reasonable opportunity to investigate the reasons for the cessation of the Respondent Worker’s employment with Ruttleys, and the Respondent Worker’s work (employed or self-employed) since that cessation. Either party may seek to put on further evidence going to this issue, it will depend on the result of investigations that have not yet been conducted, and the contents of documents produced in response to Directions for Production not yet issued. Depending on what any further investigations may produce, it may be application is made for the Respondent Worker to give oral evidence or be cross-examined. In these circumstances, in my view it is appropriate that I remit the matter to a different arbitrator for determination, rather than dealing with what will be fresh factual issues, as part of what is essentially a review process on appeal.
DECISION
The decision of the arbitrator dated 9 February 2009 is revoked, and the matter is remitted to another arbitrator for determination afresh in accordance with these reasons.
COSTS
The Respondent Worker’s statement dated 24 June 2009 will be necessary for the further conduct of the matter before a different arbitrator. His costs in respect of obtaining and serving that document should form part of his costs in respect of the further arbitration. Otherwise I make no order as to costs of the appeal.
Michael Snell
Acting Deputy President
29 July 2009
I, MARIE JOHNS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF MICHAEL SNELL, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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