Wagga Wagga City Council v Owers

Case •

[2009] NSWWCCPD 34

•

27 March 2009
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION: Wagga Wagga City Council v Owers [2009] NSWWCCPD 34
APPELLANT: Wagga Wagga City Council
RESPONDENT: Grahame Owers
INSURER: Allianz Australia Workers Compensation (NSW) Limited
FILE NUMBER: A1-6940/08
DATE OF ARBITRATOR’S DECISION: 16 December 2008
DATE OF APPEAL DECISION: 27 March 2009
SUBJECT MATTER OF DECISION: Nature of ‘review’ pursuant to section 352 of the Workplace Injury Management and Workers Compensation Act 1998 – respondent to appeal seeks to improve his position; section 40 of the Workers Compensation Act 1987 (‘the 1987 Act’) - application of the steps in Mitchell v Central West Area Health Service (1997) 14 NSWCCR 526; discretionary factors in section 40(1) of the 1987 Act.
PRESIDENTIAL MEMBER: Acting Deputy President Snell
HEARING: On the papers
REPRESENTATION:

Appellant:

 Sparke Helmore  
Respondent: Adams Leyland
ORDERS MADE ON APPEAL:

The decision of the Arbitrator, dated 16 December 2008, is revoked and the following decision is made in its place:

“1. There will be an award for the Applicant in respect of the claim for weekly compensation, pursuant to section 40 of the Workers Compensation Act 1987, as follows:

$280.86 per week from 1 July 1997 to 30 June 1998;

$283.60 per week from 1 July 1998 to 30 June 1999;

$286.37 per week from 1 July 1999 to 30 June 2000;

$289.17 per week from 1 July 2000 to 30 June 2001;

$291.99 per week from 1 July 2001 to 30 June 2002;

$294.84 per week from 1 July 2002 to 30 June 2003;

$297.72 per week from 1 July 2003 to 30 June 2004;

$300.63 per week from 1 July 2004 to 30 June 2005;

$303.56 per week from 1 July 2005 to 30 June 2006;

$306.52 per week from 1 July 2006 to 30 June 2007;

$309.52 per week from 1 July 2007 to 30 June 2008;

$312.54 per week from 1 July 2008 to date and continuing.

2. The Respondent is to pay the Applicant’s costs as agreed or assessed.”

The Appellant Employer is to pay the Respondent Worker’s costs of this appeal.

BACKGROUND TO THE APPEAL

  1. On 13 January 2009 Wagga Wagga City Council (‘the Appellant Employer’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 16 December 2008.

  1. The Respondent to the Appeal is Grahame Owers (‘the Respondent Worker’).

  1. The Respondent Worker is now fifty-three years of age. There are four dependant children claimed, although not all of these were dependant upon him during the whole course of the weekly claim. He was employed by the Appellant Employer from 9 March 1992, as a labourer and sewer attendant. He is right hand dominant. 

  1. There is a history of injury involving the right elbow in a motorcycle accident, the significance of which varies in different medical histories. It was treated initially at Deniliquin Hospital. Clinical notes from that hospital record an admission on 17 November 1977 after a motorcycle accident. The notes describe a “large deep wound” to the right elbow. He was discharged on 1 December 1977. An x-ray report dated 25 November 1977 relating to the right elbow states “The films have been taken with difficulty. One has the impression of a few cortical flakes of bone near the tip of the olecranon process”. Dr Hitchen’s history records the old motorcycle accident involved a compound olecranon fracture. Some other histories describe it as a “minor injury” (Dr Bodel) and have no history of bony injury. Cards from the practice of the Respondent Worker’s general medical practice record a consultation on a date that is difficult to decipher, but is probably in late 1993 or early 1994, at which the Respondent Worker complains of “Elbows problem 5-6/52” and the entry includes “Pain when knocks olecranon”.

  1. In his Application to Resolve a Dispute (‘the Application’) the Respondent Worker relied upon two injuries. The first was on 4 April 1995 when he allegedly injured his right arm pulling on sewer rods. The second was on 9 November 1995 when he allegedly injured his left arm lifting a manhole surround. It is apparent, from contemporaneous documents, that there is some misdescription of the injuries and their sequence, in the Application. They are long ago, and probably little turns upon the discrepancies.

  1. Notes from the Respondent Worker’s general practitioner at the time, record an attendance on 4 April 1995, with the history “Lifting 1 metre X 20cm-30cm thick concrete lid with one arm R – felt snap in R biceps”. His claim form dated 4 April 1995 states “Whilst lifting a sewer manhole surround I strained my right bicep muscle”. The medical notes confirm physiotherapy, and the prescription of Voltaren. The notes indicate complaints during April and May 1995, and on 29 May 1995 state “Normal duties last 4/7”, and that a medical certificate for a return to work, fit, was issued as from 29 May 1995.

  1. The general practitioner’s notes record the next consultation on 24 November 1995. There was a history of injury to the left biceps on 26 October 1995 when “4 blokes (were) lifting concrete lid”, and a further injury to that arm on 9 November 1995 when “pulling on rods cleaning sewer”. A claim form dated 27 November 1995 nominates two injuries to the left biceps, lifting a manhole surround, and pulling on sewer rods. It gives the date of injury as 9 November 1995, and the date of notice as 24 November 1995. Two report of injury forms, signed by the Respondent Worker and dated 27 November 1995, describe these same injuries to the left biceps on 26 October and 9 November 1995.

  1. The Respondent Worker came under the care of Dr Van der Rijt, orthopaedic surgeon of Wagga Wagga, who on 29 November 1995 reported a history of right biceps injury when lifting a concrete lid earlier in 1995, and the same thing happening to the left biceps on 26 October 1995. He recorded a further injury to the left arm on 9 November 1995 pulling on plumbing rods. Thus there is reasonable unanimity amongst the contemporaneous sources, although these are inconsistent with the pleading in the Application. Any such discrepancies have not led to significant dispute on the topic of ‘injury’.

  1. Dr Van der Rijt carried out repair of the left biceps in late 1995. He thought there may be a problem with muscle and wound healing, due to a history of steroid use associated with body building. By 19 February 1996 Dr Van der Rijt recorded the Respondent Worker had returned to moderately demanding work, although his left arm now felt stronger than his right. He thought the Respondent Worker could gradually return to normal activity, including weight lifting.

  1. The Respondent Worker’s statement dated 15 November 2007 indicates he was off work for three months before resuming on light duties. He states he ceased work in 1997 due to ongoing weakness in the arms and left shoulder pain. There is an issue regarding the reasons for cessation. Attached to the Reply is a resignation signed by the Respondent Worker that states:

“I Grahame Owers, Due To Financial and Domestic problems With Regret, Hereby Tender My Resignation Effective From The 20th May 1997.”

  1. The Respondent Worker deals with the resignation in a second statement dated 21 October 2008, in which he says that, although he resumed “normal heavy work” with the Appellant Employer after his injuries, there were aspects with which he could not cope, and he “essentially ‘bludged’ off the other workers”. He denies having financial problems at the time of his resignation. He concedes he signed the resignation, although it was not in his writing. He maintains his “main reason for leaving the Council” was inability to perform the heavy labouring work required. The statement does not offer any real explanation for why the resignation is worded as it is, or why the Respondent Worker signed the resignation, if it was inaccurate.

  1. The Respondent Worker thereafter left Wagga Wagga and lived in Urana, then Corowa, then Albury. There is a history of various jobs involving weed spraying, fruit picking, handyman, trades assistant and occasional plumbing work. The statements do not identify periods of employment, identities of employers, or earnings. A report of Dr Hitchen dated 25 July 2008 records also a history of work in “maintenance at the Visy factory and as a builders labourer”. At the time of the statement dated 15 November 2007 the Respondent Worker was “currently unemployed as I look after my two children”. The second statement particularises continuing employment at Murray Gardens Retirement Estate from 18 March 2008.

  1. By letter dated 10 May 2007 the Respondent Worker through his solicitors claimed weekly compensation from 28 May 1997 on a continuing basis, together with lump sums in respect of 10% loss of efficient use of the right arm, 15% loss of efficient use of the left arm, and pain and suffering.

  1. The Appellant Employer’s insurer issued a section 74 Notice dated 25 September 2008, denying liability for weekly payments of compensation. The matters in dispute were incapacity, causation, and the rate at which compensation should be paid (if there was an entitlement). Dependency was also placed in issue. The occurrence of injury was not.

  1. The Respondent Worker lodged an Application to Resolve a Dispute (‘the Application’) on 4 September 2008. The Appellant Employer lodged a Reply on 25 September 2008. It described the matters in dispute as being those in the section 74 notice, together with the exchange of offers attached to the Application.

  1. An undated Direction of the arbitrator makes certain procedural orders, and notes “it is acknowledged by the parties that the Applicant sustained a 10% loss of efficient use of the right arm at or above the elbow as a consequence of the injury on 4 April 1995”. The Direction referred the question of the loss of efficient use of the left arm at or above the elbow flowing from the injury on 9 November 1995 to an approved medical specialist (‘AMS’).

  1. The AMS issued a medical assessment certificate (‘MAC’) dated 18 November 2008. It certified the Respondent Worker to have 20% permanent loss of use of the left arm at or above the elbow, reduced by one tenth to 18% on account of pre-existing injury, abnormality or condition.

  1. An arbitration hearing was held on 24 November 2008. Both parties were legally represented. No oral evidence was adduced. The arbitrator reserved his decision.

  1. On 30 December 2008 the arbitrator made consent orders for payment of $13,500.00 pursuant to section 66 in respect of the 18% loss of use of the left arm at or above the elbow, and $9,500.00 pursuant to section 67. This agreement apparently flowed from the MAC dated 18 November 2008. 

THE DECISION UNDER REVIEW

  1. The ‘Certificate of Determination’, dated 16 December 2008 records the Arbitrator’s orders as follows:

“1. There will be an award for the Applicant in respect of the claim for weekly compensation as to the following:

a)    At the rate of $124.69 per week for the period 1 July 1997 to 30 June 2001.
b)   At the rate of $249.38 per week from 1 July 2001 to date and continuing.

2. The Respondent’s to pay the Applicant’s costs as agreed or assessed.”

  1. The Certificate of Determination was accompanied by eight pages of reasons (‘the reasons’).

ISSUES IN DISPUTE

  1. The grounds of appeal challenge the weekly award pursuant to section 40. It is said the arbitrator failed to properly apply section 40 in compliance with the Court of Appeal decision of Mitchell v Central West Area Health Service (1997) 14 NSWCCR 526 (‘Mitchell’). It is submitted there should not have been any award during the period from 1 July 1997 to 30 June 2001, as the true reason the Respondent Worker was not in employment during this period was that he was looking after his children. It is submitted the arbitrator’s discretion should have been exercised to reduce the award to nil during this period. It is submitted the upper limb of the section 40 equation was calculated at too high a figure, and the Respondent Worker’s ability to earn in some suitable employment (the lower limb of the equation) was too low, having regard to occupations for which he was fit.

  1. The Respondent Worker’s submissions not only seek to preserve the award entered in his favour, but argue the award should be increased. It is argued the figure for probable earnings if not for injury should be higher than that found by the arbitrator, and ability to earn should be lower. The Respondent Worker also argues the arbitrator should not have reduced the section 40 award in the exercise of his discretion.

  1. The Respondent Worker has not himself sought to appeal the arbitrator’s decision. However the basis on which he claims increase of the section 40 award is set out in his submissions on this appeal. The Appellant Employer has made submissions in reply, dated 25 February 2009. Those submissions assert the Respondent Worker’s claim, that the award should be increased, should be disregarded, as the Respondent Worker has not himself appealed. The submissions in reply also engage with the merits of the Respondent Worker’s argument on the point, saying his argument should be rejected as it refers to “an unsubstantiated annual CPI increase – rather than having reference to comparable earnings obtained from the respondent”.

  1. The matter is properly before me pursuant to section 352 of the 1998 Act. It is, in those circumstances, my function to review the arbitrator’s decision. The nature of that process is governed by recent decisions of the Court of Appeal, a number of which I referred to in Deadman v John A Gilbert Pty Limited t/as Kirklands Buslines [2008] NSWWCCPD 105 at [65] to [69]. In particular, it is helpful to quote the following passage from the judgment of Spigelman CJ in State Transit Authority of New South Wales v Chemler (2007) 5 DDCR 287, [2007] NSWCA 249:

“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.

29 That line of authority is also inconsistent with the kind of restriction on the powers of a Presidential member for which the Appellant contends. (See Mansini v Director General of Education (1990) 6 NSWCCR 1 at pp4-20; Watson v Hanimex Colour Services Pty Limited (1992) 8 NSWCCR 190 at 199-206; Boston Clothing Co v Margaronis (1992) 27 NSWLR 580 at 584-585; Litynski v Albion Steel Pty Limited (1994) 10 NSWCCR 287 at 295-297, c/f 298-300; Aluminium Louvres & Ceilings Pty Limited v Zheng [2006] NSWCA 34 at [38]; South Western Area Health Service v Edmonds [2007] NSWCA 16 at [133]-[134].)

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.”

  1. It has been observed that “proceedings in the Commission are not governed by formal pleadings”: Far West Area Health Service v Radford [2003] NSWWCCPD 10. It is necessary the Commission afford the parties procedural fairness: South Western Sydney Area Health Service v Edmonds (2007) 4 DDCR 421, [2007] NSWCA 16 at [90] to [92]. Procedures before the Commission are subject to the provisions of section 354 of the 1998 Act. They are to be conducted with as little formality and technicality as the proper consideration of the matter permits (section 354(1)), and the Commission is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (section 354(3)).

  1. Having regard to the above, the Respondent Worker’s argument, that the award in his favour should be increased, is properly before me, and forms part of the review process in which I am required to engage. This is consistent with the approach adopted by Roche DP in Ecowize North Pty Ltd v Ballard [2007] NSWWCCPD 179 (at [42]).

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. Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by both parties 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

  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.

  1. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. The compensation at issue on the appeal satisfies the threshold requirements in section 352(2). The Respondent Worker properly does not contend otherwise.

  1. I grant leave to appeal.

DISCUSSION AND FINDINGS

  1. The Appellant Employer has nominated eight grounds of appeal. These can be conveniently considered as follows:

(i)The arbitrator’s assessment of the section 40 entitlement did not properly apply the section, consistent with the Court of Appeal decision in Mitchell. He failed to properly arrive at “the weekly amount which the worker would probably have been earning as a worker but for the injury” (the upper limb of the equation in section 40(2)(a)). He failed to properly apply section 40(3) in determining the injured worker’s ability to earn in some suitable employment.

(ii)The arbitrator erred in the application of his discretion pursuant to section 40(1), having regard, amongst other things, to the Respondent Worker’s letter of resignation in May 1997. There should have been no award of weekly payments between 1 July 1997 and 30 June 2001.

(iii)The arbitrator failed to properly consider all of the evidence, particularly the Wages Schedule filed by the Appellant Employer.

(i) Application of the Section 40 Equation and Mitchell – Step 1 (the Upper Limb)

  1. Section 40 of the 1987 Act relevantly provides:

“40   Weekly payments during partial incapacity—general

(cf former ss 9, 11)

(1) Entitlement
The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings, but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.

(2) Calculation of reduction in earnings of worker—general
The reduction in the worker’s weekly earnings is (except as provided by this section) the difference between:

(a)  the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment (but not exceeding $1,000), and

(b)  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 (but not exceeding $1,000).

(3) Ability to earn in suitable employment
The determination of the amount that an injured worker would be able to earn in some suitable employment 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.”

  1. Calculation of the upper limb of the section 40 equation (section 40(2)(a)) involves assuming a worker would have continued in the same or some comparable employment; the exercise is a hypothetical one: Australian Wire Industries Pty Limited v Nicholson (1985) 1 NSWCCR 50; Singh v TAJ (Sydney) Pty Ltd (2006) 4 DDCR 557.

  1. The Appellant Employer specifically attacks the arbitrator’s calculation of the upper limb of the equation on two bases in its submissions. Firstly, it is submitted wage rates have changed over the period of the claim from 1997 to 2008. It is submitted “The arbitrator’s calculations make no reference to this reality and must therefore be so ‘proximate’ as to be wrong.” Secondly, it is submitted determination of the figure “has not been done with reference to either when the respondent (worker) first ceased work or at any time thereafter. For that reason the amounts awarded to be paid by way of weekly compensation have been grossly overstated.” It is also submitted “The Arbitrator has simply chosen a single point in time (recent time) and for this reason the Arbitrator’s figures are inflated.”

  1. The Respondent Worker last carried out duties with the Appellant Employer at the time of his resignation in May 1997. The weekly claim as pleaded commenced from 1 July 1997. Even if he had been avoiding some of his pre-injury duties (his contention) the Respondent Worker was, on either version of it, earning his normal pay during the year 1996/97, prior to his resignation. His group certificate for that year, issued by the Appellant Employer, showed gross earnings of $47,529.00. This exceeded his earnings for the years 1994/95 and 1995/96. The Respondent Worker’s statement dated 21 October 2008 indicates that he approached the Mayor after his return to work, seeking a position as a ganger or overseer. Although he was not given one of these jobs, he “was given a pay rise”. This may well explain the increase in his earnings that year.

  1. The Respondent Worker’s taxation return for 1996/97 showed a higher figure of $54,025 for total income. This was larger than the figure in his group certificate as it included a further figure of $6,496 by way of income, described as “ETPs – Taxable amt other than Ex. Comp.” The origin of this figure is unclear, it may represent moneys paid at the time of cessation, for accrued leave or otherwise, but that is conjecture. It could not be concluded it represented earnings of the Respondent Worker as a worker.

  1. A copy letter dated 4 February 2008, from the “OH & S Coordinator” of the Appellant Employer to the Respondent Worker’s solicitors, is attached to the Reply. It encloses copy group certificates for the years ended 30 June 1995, 1996 and 1997, and states “We cannot identify any comparative earners.” A copy letter dated 5 February 2008 from the same author to the Appellant Employer’s insurer is attached to the Reply. It refers to difficulties in identifying comparative earners, as a new wage system came into operation in 1999. That letter says “You will see that I have not given them any comparative earners…” It refers to one employee going back to when the Respondent Worker worked there, although says “I am uncertain as to his suitability as a comparative earner as there were overtime factors and my recollection is that Owers didn’t work overtime.” The Appellant Employer did not place reliance on the earnings of that “comparative earner”. Thus little material was available from the Appellant Employer going to the upper limb of the equation. There was an internal document from the Appellant Employer dated 23 June 1997, indicating a sum of $3,547.56 was to be paid to the Respondent Worker by way of long service leave.

  1. The approach adopted by the arbitrator was to take the gross earnings in the group certificate for 1996/97, deduct the sum of $3,547.56 from that, and divide this figure by the number of weeks worked during 1996/97. The arbitrator calculated this figure at $952.38 per week, a figure with which my calculations are generally consistent. He then took this figure as representing the probable earnings as a worker but for injury, during the whole period of the weekly claim, from 1 July 1997 to date. On the face of it, this approach appears favourable to the Appellant Employer, reflecting no movement in wage rates since 1997.

  1. The Appellant Employer relied upon a Wages Schedule that described “Comparable/probable earnings” varying from $685.46 per week for 1997/98, to $963.94 per week for 2007/08, before reducing to $852.30 for 1 July 2008 to 24 November 2008. The source of these figures is not apparent from the document. The Wages Schedule does not identify the rates as deriving from an award. The Appellant Employer submitted, on the arbitration hearing, that looking at “what his wages were over the years”, the Appellant Employer’s schedule “more accurately reflect this man’s earnings” (T8.55).

  1. The Respondent Worker relied upon a Wages Schedule, alleging “Comparable/probable earnings” of $1,018.88 for 1997/98, increasing to $1,369.29 for the last period, from June 2008. The figure of $1,018.88 is arrived at by taking the Respondent Worker’s total income for 1996/97, from his taxation return, and dividing it by 52. Although this involves bringing into calculation a sum of $6,496.00 that does not necessarily represent earnings, the Respondent Worker submitted it was a fair approach, as it divided the figure by 52, notwithstanding the Respondent Worker had resigned effective 20 May 2007, about six weeks before the end of the financial year (T25.45-26.35). The Respondent Worker had then increased that figure by 3% per annum to reflect movements in wage rates.

  1. On this appeal, the Respondent Worker sought to put forward a higher figure. He took the total income in the taxation return for 1996/97, reduced that figure by $3,547.56, and divided the resulting figure by 46 (the weeks worked before 20 May 1997). This produced a figure for 1996/97 calculated at $1,097.34 per week, which was then increased by 3% per annum thereafter.

  1. The Appellant Employer makes no convincing submission as to why the figures in its Wages Schedule should be accepted. The Respondent Worker has validly submitted that acceptance of that Wages Schedule would involve acceptance that the Respondent Worker would probably have been earning substantially less from 1 July 1997, than he earned during 1996/97 (a reduction of between 25% and 30%). There is no explanation offered by the Appellant Employer for why such a decrease would have occurred. The Appellant Employer has not relied upon source material going to the earnings of comparable employees, to justify its figures. The Appellant Employer, in its submissions in reply, submits the safer course would be to have reference to comparable earnings obtained from the Appellant Employer. The difficulty with this is that that Appellant Employer did not supply such material (see [39] above). 

  1. The approach adopted by the arbitrator, in determining the Respondent Worker’s earnings during his employment for 1996/97, was in my view unobjectionable. The course advocated by the Respondent Worker involves a greater degree of speculation. That approach involves assuming the whole of the second sum in the taxation return ($6,496.00) represented earnings from the Appellant Employer, when it was unclear what that sum related to. Arguably the arbitrator’s approach may have been unfair to the Respondent Worker, in that the long service leave payment of $3,547.56 may have been included in the figure of $6,496.00, and therefore inappropriately deducted from the figure in the group certificate. However this is not known. A worker carries the onus of establishing his entitlement pursuant to section 40: J & H Timbers Pty Ltd v Nelson (1972) 126 CLR 625 (‘J & H Timbers’). The approach adopted by the arbitrator was one with which I agree, in determining the Respondent Worker’s earnings during the period he worked between 1 July 1996 and 20 May 1997.  

  1. This leaves the question of how one determines the probable earnings, if not for injury, thereafter. It is in my view appropriate to adopt the arbitrator’s weekly figure of $952.38, as representing the probable earnings for the year 1997/98.

  1. The Respondent Worker submits probable earnings should be increased by 3% per annum thereafter. There is no particular evidentiary basis for adopting such an approach in this case.

    When submitting on this at the arbitration hearing, the Respondent Worker’s solicitor referred to the Commission’s specialist knowledge in respect of the labour market and workplace conditions (see Akawa Australia Pty Ltd v Cassells (1995) 25 NSWCCR 385; J & H Timbers).

  2. A similar issue arose in Goktas v Goodyear Australia Pty Ltd [2007] NSWWCCPD 1, a matter where the most recent information on actual earnings dated back to 1990, comparable figures were unavailable, and it was necessary to determine probable weekly earnings if not for injury on an ongoing basis up to 1997. Roche DP at [49] said:

“Whilst the Commission is a specialist tribunal it must not ‘speculate without limitation’ when it comes to assessing probable earnings. No evidence was called as the movement in wage rates for millmen or labourers in NSW from 1990 to 2006. I am not prepared to allow a 3% annual increase as submitted by the Appellant Worker. However, as a specialist tribunal the Commission is aware that general wage rates have increased in that period. Doing the best I can, given the lack of evidence, but having regard to the figures set out in the Employer’s Notice of Injury form, I believe that an adjustment of 1% per annum on the figure of $594.19 from 1990 is appropriate.”

  1. In the absence of an appropriate evidentiary basis to adopt some other figure, I propose adopting the same approach as was taken by Roche DP, and increasing the figure for probable earnings by 1% per annum. This produces the following figures for the upper limb of the equation (section 40(2)(a)):

1997/98  $952.38
1998/99  $961.90
1999/2000  $971.52
2000/01  $981.24
2001/02  $991.05
2002/03  $1,000.96
2003/04  $1,010.97
2004/05  $1,021.08
2005/06  $1,031.29
2006/07  $1,041.60
2007/08  $1,052.02
2008/09  $1,062.54

Application of the Section 40 Equation and Mitchell – Step 2 (the Lower Limb)

  1. The Appellant Employer’s submissions contend the Respondent Worker resigned in May 2007 for personal reasons. It is argued there was “no reasonable factual or evidentiary basis for concluding that the Respondent (Worker) ceased work for the period from 1997 to 2001 for any other reason than to look after his children”. It is submitted that “though agreed to be carrying an impairment by dint of his injuries, (he) was not disadvantaged in the workforce as a result”, between 1 July 1997 and 30 June 2001.

  1. The Appellant Employer is conceding some physical impairment, but arguing there is no incapacity in the relevant sense. The concession of some physical impairment is appropriate, given the lump sums voluntarily paid in respect of permanent loss of use of the arms.

  1. The concept of partial incapacity was described in the joint judgment of the High Court in Arnotts Snack Products Pty Ltd v Yacob (1985) 155 CLR 171:

“It follows that the concept of partial incapacity for work is that of reduced physical capacity, by reason of physical disability, for actually doing work in the labour market in which the employee was working, or might reasonably be expected to work.”

  1. See also Holden v Toll Chadwick Transport Ltd (1987) 8 NSWLR 222 and Ric Developments t/as Lane Cove Poolmart v Muir [2008] NSWCA 155. It is necessary to draw a distinction between the issues of partial incapacity, and whether the Respondent Worker would have been unlikely to be working at the relevant time in any event, due to his domestic responsibilities. The latter is appropriately dealt with as a discretionary matter (step 4 of the steps in Mitchell), but is not necessarily inconsistent with the existence of partial incapacity.

  1. The arbitrator after considering the evidence, including that relevant to the resignation, dealt with incapacity in this fashion:

“Without speculating as to what might have motivated the Applicant for not indicating that it was the physical incapacity that was precluding him from carrying out his full duties, it does appear clear that he has on the face of it an impairment in respect of both left and right arms and that the work he was required to perform was physical to heavy physical type work. It goes without saying, I therefore feel, that there was and is a continuing incapacity on the part of the Applicant to perform the tasks which were required of him by the Respondent.”

  1. Whatever the evidence may have been about the Respondent Worker’s reasons for resigning, there was evidence to support the contention there was incapacity in the relevant sense, from 1 July 1997. At the time of the last of Dr Van der Rijt’s reports, 19 February 1996, he recorded the left arm (which had been repaired) felt stronger than the dominant right arm (which had not). That doctor suggested a gradual return to normal activity, with which strength would improve. Clearly full recovery had not occurred by that time.

  1. The rehabilitation company Combrook reported on the Respondent Worker on 21 February 1996. By then the Respondent Worker had “made a full return to work”. The report records the Respondent Worker “is taking care not to lift any weights at work that may aggravate the injury. He is making use of a small crane to lift cement lids which he would normally have attempted to lift previously.” It records ‘treating doctor contact’: “Grahame has been given clearance for full duties but he has been cautioned about the amount of weight that he is to lift both at work and at the gym.” The ‘rehabilitation action’ recorded the Respondent Worker was to continue at work “taking care with the amount of weight that he lifts”, “continue his range of movement exercises”, and recommence gym activities “to be undertaken with extreme caution”. Combrook closed its file at that point.

  1. Lenard Kennedy, manager of sewerage works with the Appellant Employer at the relevant time, told an investigator “There would have been some heavy work…there was certainly some heavy lifting involved on a day to day basis”. Tony Powell, a supervisor with the Appellant Employer in 1997, said of the Respondent Worker’s normal duties “He was a sewer attendant so he had to clear blockages in the sewer mains, carrying out pipe repairs or replacing broken pipes. Not unlike plumbing jobs where they repair or replace damaged or broken sewerage pipes.”

  1. David Johns, who was and remained a labourer and sewer attendant with the Appellant Employer, told the investigator:

“I said,            Are there any thoughts you have concerning Grahame Owers.

He said,No. As I said before I can’t whinge about his work. He used to work good, and ever since he had that minor he just went backwards.

I said,             What’s a minor.

He said,A minor. When he had the accident on his arm. It’s called a minor or I call it a minor.

I said,             What do you mean.

He said,Well I recon (sic) it was more of a put on than an injury. Because there were 4 or 5 blokes holding this manhole surround and he was just one of the 4 or 5. We all had equal weight, so it would not have been that heavy.

I said,So are you suggesting that the injury suffered by Grahame may not have been as serious as first made out.

He said,          That’s it, yes.
I said,             Have you spoken to anyone else about those thoughts.
He said,          No I haven’t.
I said,             But you believe that.
He said,          In my mind I do. Yes.
I said,             What do you think the manhole surround would weigh.

He said,Probably 250 to 300 kilos. But there were 4 or 5 fully grown men lifting the surround at the same time. Or taking it off the truck and supporting it to the ground. As simple as that. How come no one else hurt themselves is all I think.”

  1. On Mr Johns’ estimates, each man was supporting somewhere between 50 and 75 kilograms. Thus his ponderings about the mechanics of injury are probably of no great moment. It is significant he describes the Respondent Worker as working well until his arm injury, after which he just went backwards.

  1. Lastly, there are the statements of the Respondent Worker himself. In each he says the reason he resigned was due to the condition of his arms. His description in the second statement of ‘bludging’ off the other workers, when back at work post-injury, is essentially consistent with the observations of Mr Johns on that topic. The reasons proffered in the resignation would suggest there may well have also been other motivations for the cessation of work on 20 May 1997. This is not, of course, inconsistent with the existence of incapacity at that time.

  1. Thus there was a factual or evidentiary basis for accepting the Respondent Worker had a reduced physical capacity to do his work, which was physically arduous, with the Appellant Employer. Given the nature of the injury, the heavy nature of the work, the subsequent payments of lump sum compensation for permanent loss of use of the arms, and the proper concession by the Appellant Employer that the Respondent Worker carried an impairment by dint of his injuries, the appropriate finding is that there was a partial incapacity in the relevant sense, from 1 July 1997. I agree with the arbitrator’s finding on this point.

  1. Dr Nicholls (reporting to the Appellant Employer’s insurer) on 21 August 2007 said “Because of the very heavy nature of plumbing and sewerage work, in particular carrying repairs and relief of chokes, requiring considerable physical strength in the arms I believe Mr Owers would be regarded as permanently unfit to return to this type of work on a full-time basis. However any less arduous duties such as maintenance work, general farming work and lighter labouring work should be well within his capabilities.”

  1. The Wages Schedules agree there were no earnings during the period 1 July 1997 to 30 June 2001. Thus it is necessary to assess ability to earn in some suitable employment over that period. The Appellant Employer’s submissions argue the arbitrator failed to incorporate earnings from appropriate occupations into his findings on ‘ability to earn’. Whilst I do not necessarily accept the arbitrator fell into this error, in reviewing the decision I have concluded an approach a little different to that of the arbitrator is appropriate, in assessing the lower end of the section 40 equation (section 40(2)(b)). In conducting such assessment, it is necessary to have regard to section 40(3) of the 1987 Act, including the matters set out in section 43A.

  1. The Appellant Employer relied on a report of Mr Bass, a psychologist and human resources practitioner, dated 25 August 2008. A curriculum vitae in that report revealed the Respondent Worker was educated to age fourteen at Deniliquin High School. He worked over the years as a labourer, machine operator, drainer, grave digger, leading hand, weed sprayer, and maintenance supervisor. The history describes the Respondent Worker looking after his two children on a full time basis for five or six years after leaving the Appellant Employer, and then finding casual work as a weed sprayer and labourer after moving to Tumut in 2001. It records he eventually found permanent work as a maintenance supervisor in Tumut Nursing Home. He did this for three and a half years, before moving to his current address near Albury. Since 2008 he has worked as a caretaker/maintenance supervisor in a retirement village there.

  1. On testing by Mr Bass for clerical aptitude, the Respondent Worker tested at the tenth percentile, the “top of the Poor range”. Mr Bass suggested a number of possible job options. The majority of these appear to involve skills and experience the Respondent Worker does not have (for example camping ground manager, customer order clerk, security officer), or to involve physical requirements and skills that may well be too much on a full-time basis (for example handyperson).

  1. The arbitrator assessed ability to earn on the basis work as a caretaker would be suitable, the average earnings for which (at the time of Mr Bass’ report) were $703.10. The suitability of such work is also established to some considerable extent, by the Respondent Worker’s ultimate fulfilling of the roles of maintenance supervisor in the Tumut Nursing Home, and caretaker/maintenance supervisor in a retirement village in the Albury region.

  1. Mr Bass’ suggestion of work in the category “General Light Labourers and Related Workers” on its face sounds suitable. However when one goes to the examples of this nominated by Mr Bass, experience beyond that of the Respondent Worker appears necessary (for example bicycle repairer, studio hand, swimming pool serviceperson). The occupation of “Process Worker” nominated by Mr Bass may well be suitable, however jobs of this nature can vary greatly in their physical demands. Some such positions would be suitable, others would not. Average weekly earnings for male process workers were $848.80 according to Mr Bass’ report.

  1. Applying the decision of Burke J in Mangion v Visy Board Pty Ltd (1992) 8 NSWCCR 175, expressly adopted by Handley JA in Cowra Shire Council v Quinn (1996) 13 NSWCCR 175, I am required to adopt a “weighted average”, having regard to availability of work in the accessible labour market. I agree with the arbitrator that there is no reason, on the medical evidence, why the Respondent Worker could not carry out work on a full-time basis. Weighting the average more towards the figure for work as a caretaker, having regard to the fact that some available positions as process worker would be unsuitable, and therefore less frequently available, I assess the Respondent Worker’s ability to earn in some suitable employment at $750.00, as at the time of Mr Bass’ report. How this translates to a relevant figure for the period 1 July 1997 to 30 June 2001 will be dealt with below.

  1. Taxation returns are attached to the Application, showing various earnings for the years 2001/02 onwards. In a frequently applied passage, Jordan CJ in Aitken v Goodyear Tyre & Rubber Co (Aust) Ltd (1945) 62 WN (NSW) 233 said:

    “As to the phrase ‘is earning’, it has been held that if the partially incapacitated worker is earning something his actual earnings must prima facie be taken as the basis, and the rate of compensation provided for by s 9 reduced by a calculation based upon the excess of his pre-injury average weekly earnings above what he is actually earning: Blakemore v Delta Mill (1919) Ltd. If, however, it is proved that his actual earnings are not a proper test, because there is some reason unconnected with his earning power which makes them lower than they should be, the other alternative, ‘what he is able to earn’, must be adopted. This is so where it is shown that he is deliberately taking lower-paid work than he could get or is idling and on this account receiving less than he could be reasonably expected to obtain, or where his actual earnings have been compulsorily reduced by something unconnected with his injury or general earning power.”

  2. In JC Ludowici & Son Ltd v Cutri (1992) 26 NSWLR 580 Kirby P said:

“Parliament included the reference to what the worker “is earning” for a purpose. The phrase cannot be ignored. The earnings are not mere evidence of what the worker is “able to earn”. In fact, if the worker is “earning” that will normally be the end of the inquiry. It is only if, for some reason, that amount, where it exists, or existed, is suggested to be an under-estimate or a false measure of the worker’s ability to earn that the alternative inquiry will be embarked upon.”

  1. Accordingly it would be appropriate to regard the Respondent Worker’s average actual earnings as the lower end of the section 40 equation, from 2001/02 onwards, unless this represented “an under-estimate or false measure” of his ability to earn during that period. The evidence is relatively scant regarding just what work was carried out by the Respondent Worker from 2001/02 onwards. There are general indications (see [12] above). The Wages Schedules of the parties average the actual earnings differently, but on any view of it the average actual earnings are sufficiently low they must reflect either part-time work, or intermittent employment, or both. The evidence reflects reasons why the Respondent Worker would potentially have carried out work on such a basis, additional to his reduced physical capacity in the labour market.

  1. The resignation in May 1997 is consistent with reasons, other than physical incapacity, representing a factor in the exercise by the Respondent Worker of his working capacity. Dr Frawley, in his report dated 30 August 2004 recorded “He has moved down to Albury in order to look after his two children. His (separated) partner lives in Wangaratta. He has custody of both children.” On 4 May 2007 Dr Bodel recorded “He states that essentially at the moment he is a house parent.” In his statement dated 15 November 2007 the Respondent Worker said “I am currently unemployed as I look after my two children.”

  1. The Respondent Worker’s statement of 21 October 2008 says he has been working since 18 March 2008 at Murray Gardens Retirement Estate. It does not say for what hours. It says he believes he is currently working at the limit of his capacity for employment. Mr Bass records this work is as a caretaker/maintenance supervisor. The Respondent Worker’s Wages Schedule states the earnings from this work average $439.70, a figure inconsistent with full-time employment. As dealt with above, I do not, on the medical evidence, see any reason why the Respondent Worker could not carry out suitable work on a full-time basis.

  1. The above is consistent with the Respondent Worker’s actual earnings representing an under-estimate or false measure of his ability to earn. It is accordingly appropriate, even during those periods from 1 July 2001 when the Respondent Worker has been working, to assess his ability to earn in some suitable employment (section 40(2)(b)). The measure I apply is that set out at [65] to [68] above.

  1. The weekly figure I have assessed as representing the Respondent Worker’s ability to earn in some suitable employment, $750.00, is based upon Mr Bass’ description of wage rates as at 25 August 2008 (the date of his report). The weekly claim spans many years, and this figure will require some adjustment to reflect movement in wage rates. The Respondent Worker’s submissions argue the figure selected as representing ability to earn, as at August 2008, should be reduced for periods in the past, on the assumption wage rates have increased across the board by 3% per annum, from 1 July 1997 to August 2008. As with the probable earnings if not for injury, there is no evidentiary basis for selection of the figure of 3% per annum increase in wage rates. Consistent with the approach I have taken in finding figures pursuant to section 40(2)(a), I will reduce the figure I have found pursuant to section 40(2)(b) by 1% per annum. The figure I have determined as at August 2008 will represent the figure from then to the current date This yields the following figures representing ability to earn in some suitable employment:

1997/98  $671.52
1998/99  $678.30
1999/2000  $685.15
2000/01  $692.07
2001/02  $699.06
2002/03  $706.12
2003/04  $713.25
2004/05  $720.45
2005/06  $727.73
2006/07  $735.08
2007/08  $742.50
2008/09  $750.00

Application of the Section 40 Equation and Mitchell – Step 3

  1. The difference between probable earnings if not for injury (section 40(2)(a)), and ability to earn in some suitable employment (section 40(2)(b)) for the various financial years is as follows:

1997/98  $280.86
1998/99  $283.60
1999/2000  $286.37
2000/01  $289.17
2001/02  $291.99
2002/03  $294.84
2003/04  $297.72
2004/05  $300.63
2005/06  $303.56
2006/07  $306.52
2007/08  $309.52
2008/09  $312.54

Application of the Section 40 Equation and Mitchell – Step 4 (Discretionary Factors)

  1. Step 4 requires that I “decide whether and to what extent the reduction calculated as above bears ‘such relation as to the amount of that reduction as may appear proper in the circumstances of the case’ (section 40(1))”.

  1. The arbitrator reduced the arithmetical difference he had calculated by one half, during the period 1 July 1997 to 30 June 2001, on the basis the evidence was not “suggestive of any dedicated attempt to find employment over that period”. He did not reduce the arithmetical difference thereafter. The Appellant Employer argues on this appeal that the arithmetical difference should be reduced to nil for discretionary factors. It is not totally clear whether this submission is restricted to the period from 1 July 1997 to 30 June 2001, or is put on a more general basis.

  1. The Appellant Employer’s submission in this regard is inconsistent with the decision of the Court of Appeal in Kesen v Luke Singer Pty Ltd (1989) 18 NSWLR 566. In that case the trial judge entered no award at all during a period when the worker was overseas visiting a sick relative. This was held to constitute an error of law:

“The subsection requires that if partial incapacity is found a weekly payment is to be made. It must not exceed the figure found by step (3) and it may be reduced below that figure to a figure which bears a proper relation to the step (3) figure. Zero bears no relation to the step (3) figure, or any real number.”

  1. The question remains, whether a reduction of the arithmetical difference is required. In Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50 McHugh JA, dealing with the discretionary element, said:

“In my opinion, the result of this case indicates that his Honour has erred in the exercise of his discretion. To give the worker the whole of the difference between the first and second step on the basis that he would have continued to work after 65 when he had said the opposite does not seem a proper exercise of discretion. Compensation for lost earnings as a result of work injuries remains the primary purpose of the statute. Money which was not likely to be earned cannot be regarded as lost earnings for that purpose.”

  1. In Mitchell it was observed “The discretion is a broad one and it is proper to refrain from endeavouring to define its outer limits.”

  1. There are cases in which compensation payable to female workers, who would not have been working for a period due to childbirth, feeding and caring for infants, has been reduced for discretionary reasons. In Hurst v Illawarra Area Health Service (2000) 21 NSWCCR 82 Neilson J did so, in circumstances where a worker took maternity leave, to give birth, breast feed, and nurse a child during its early months. She had always intended to take maternity leave in the circumstances, regardless of injury. In Wrigley Co Pty Ltd v Holland (2002) 23 NSWCCR 463 a worker stopped work when pregnant, gave birth, then engaged in full-time activity at home, and was not in a position to look for regular work. The trial judge was held to have erred in failing to exercise his discretion when the circumstances, “on any view, required a substantial deduction”.

  1. It is difficult to identify any rationale for treating a male worker who engages in full time care of an infant in any different fashion to a female worker.

  1. The Respondent Worker has referred to a decision of Candy ADP in State Forests of NSW v Whittaker [2007] NSWWCCPD 149. In that matter an employer submitted there should be a discretionary reduction of the arithmetical difference, on the basis the worker “spent his time looking after his children rather than seeking work”. The Acting Deputy President declined to reduce the difference on a discretionary basis, citing the following passage from Mitchell:

“The discretion is a broad one and it is proper to refrain from endeavouring to define its outer limits. Nevertheless it may be possible to identify a situation where a discretion has miscarried because of a reference to an extraneous factor: see R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49. In our view this can be done here, not only because the reasoning discloses a punitive element, but because self-induced diminution of earning capacity lies squarely within the exercise to be carried out at what we have identified as the second stage. The matters to which Egan A-CCJ referred go directly to the ‘workers ability to earn in the general labour market reasonably accessible to the worker’ and are therefore required (by section 40(3)(a)) to be taken into account in the section 40(2)(b) exercise. In consequence, there can be no justification for taking them into account in the additional discretionary phase.”

  1. If the Respondent Worker had withdrawn himself from the workforce, to mind his children, such that he had no intention of working, this would justify exercise of my discretion to reduce the arithmetical difference. It would render the loss during any such period “money which was not likely to be earned” in the language of McHugh JA quoted above at [80]. Passages relevant to whether this was the position adopted by the Respondent Worker, are to be found essentially in medical histories, together with sections of the Respondent Worker’s statement (see [72] above). The Respondent Worker did not give evidence, and was not cross-examined. The transcript does not indicate any such application was made by either party.

  1. Histories such as are quoted at [72] above do not necessarily indicate the Respondent Worker had removed himself from the workforce. A person may move so as to look after children, without withdrawing from the workforce. A person may regard him or her self as a house parent, in circumstances where he or she has responsibility to look after children, and is not otherwise working, without having withdrawn from the workforce. The passage from the statement dated 15 November 2007 “I am currently unemployed as I look after my two children” would more suggest a withdrawal from the workforce. However this is at odds with passages from the Respondent Worker’s statement dated 21 October 2008. He there refers to trying “to get whatever work” he could, and receiving Centrelink benefits when “between jobs”. Perhaps the best indication that the Respondent Worker had not withdrawn himself from the workforce, as at November 2007, is that he found regular employment at the Murray Gardens Retirement Estate, commencing on 18 March 2008, which has continued to the present.

  1. It is true the Respondent Worker was not in any employment between 1 July 1997 and 30 June 2001. It was for this period the arbitrator halved the arithmetical difference, on the basis he was “not satisfied the evidence on balance is suggestive of any dedicated attempt to find employment particularly between 1 July 1997 and 30 June 2001”. Reduction on the discretionary basis, for this reason, in my view amounts to error of the kind referred to in the passage from Mitchell quoted at [84] above. Reduction on the basis the Respondent Worker had withdrawn from the workforce during this period, to mind his children, would in my view be appropriate, if the evidence supported that conclusion. However there is not evidence that would lead me to the conclusion the Respondent Worker had withdrawn from the workforce over that period.

  1. It follows from the above that I am of the view discretionary factors do not require that I reduce the arithmetical difference I have found at step 3.

DECISION

  1. Step 5 of the steps in Mitchell requires that I make an award in the amounts arrived at. These are the amounts set out at [76] above.

  1. The decision of the arbitrator dated 16 December 2008 is revoked and the following decision is made in its place:

“1. There will be an award for the Applicant in respect of the claim for weekly compensation, pursuant to section 40 of the Workers Compensation Act 1987, as follows:

$280.86 per week from 1 July 1997 to 30 June 1998;
           $283.60 per week from 1 July 1998 to 30 June 1999;
           $286.37 per week from 1 July 1999 to 30 June 2000;
           $289.17 per week from 1 July 2000 to 30 June 2001;
           $291.99 per week from 1 July 2001 to 30 June 2002;
           $294.84 per week from 1 July 2002 to 30 June 2003;
           $297.72 per week from 1 July 2003 to 30 June 2004;
           $300.63 per week from 1 July 2004 to 30 June 2005;
           $303.56 per week from 1 July 2005 to 30 June 2006;
           $306.52 per week from 1 July 2006 to 30 June 2007;
           $309.52 per week from 1 July 2007 to 30 June 2008;
           $312.54 per week from 1 July 2008 to date and continuing.

2. The Respondent is to pay the Applicant’s costs as agreed or assessed.”

COSTS

  1. The Appellant Employer is to pay the costs of the Respondent Worker of this appeal.

Michael Snell

Acting Deputy President  

27 March 2009

I, TUYET WALLIS, 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.

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Cases Citing This Decision

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Narasell Pty Ltd as Trustee for Heath Newton Family Trust v Evers [2009] NSWWCCPD 135
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State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249
State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249