Woolworths Ltd v Meake - [2011] NSWWCCPD 13

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:		Woolworths Ltd v Meake [2011] NSWWCCPD 13
APPELLANT:		Woolworths Ltd t/as Dick Smith Electronics
RESPONDENT:		Jocelyn Meake
INSURER:		Woolworths Ltd t/as Dick Smith Electronics
FILE NUMBER:		A1-373/10
ARBITRATOR:	Mr G Brown
DATE OF ARBITRATOR’S DECISION:		11 November 2010
DATE OF APPEAL DECISION:		8 March 2011
SUBJECT MATTER OF DECISION:		Failure to notify issues in dispute; sections 74 and 289A of the Workplace Injury Management and Workers Compensation Act 1998
PRESIDENTIAL MEMBER:		President Judge Keating
HEARING:		On the papers
REPRESENTATION:		Appellant:	Bartier Perry
Respondent:	Cameron Gillingham Boyd
ORDERS MADE ON APPEAL:		1. The Arbitrator’s determination of 11 November 2010 is confirmed. 2. The appellant employer is to pay the respondent worker’s costs of the appeal.

BACKGROUND TO THE APPEAL

Jocelyn Meake (the respondent worker) was employed by Woolworths Ltd t/as Dick Smith Electronics (the appellant) as a distribution clerk in the service centre at Chullora.
On 17 August 2004, Ms Meake slipped on a piece of plastic bubble wrap that had been left on the floor, as a result of which she injured her right ankle.
Ms Meake was totally incapacitated for two months and then returned to work on restricted hours and duties, eventually upgrading to six hours per day, five days per week on restricted duties.
Ms Meake alleged that, as a result of favouring the right ankle, she began to suffer symptoms in her left ankle, knees and back.
In 2005, a dispute was referred to the Commission concerning Ms Meake’s fitness for work and the reasonable necessity for certain operative treatment recommended by her treating specialist. After referral for a general medical assessment by an Approved Medical Specialist, Dr Pillemer, the parties resolved the dispute between themselves and the application was discontinued by consent.
On 15 May 2007, Ms Meake’s employment was terminated as a result of an alleged theft from her employer. Ms Meake denied having stolen from her employer. She claimed that a third party had stolen an item from her employer and placed it in her car. She refused to identify the person concerned and refused to provide a statement to the police.
Notwithstanding efforts to secure alternative employment, Ms Meake has not worked since May 2007. She alleges she remains partially incapacitated and claimed weekly compensation payments.
In a notice dated 10 October 2007 issued under s 74 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act), Woolworths notified Ms Meake that payments of compensation would cease on 10 October 2007 in accordance with the provisions of s 54 of the Workers Compensation Act 1987 (the 1987 Act). Liability was disputed for the following reasons:
“• Your workplace aggravation has ceased
•Your employment is no longer considered to be a substantial contributing factor [sic]
•Your back symptoms are pre-existing or degenerative in nature and are not considered to be related to your ankle injury.”
In response to a demand from Ms Meake’s solicitors, Woolworths issued a review notice under s 74 of the 1998 Act. It confirmed the dispute in relation to liability in accordance with the s 74 notice dated 10 October 2007. It added:
“The opinion of Dr Barrett is strong and remains preferred, in particular in light of the radiological findings which show significant pre-existing changes.”
The notice confirmed that Dr Barrett had assessed Ms Meake as fit for her pre-injury duties. The relevant provisions of the 1987 Act relied upon were ss 4, 9A and 33.
On 30 April 2008, Ms Meake’s solicitors made a demand on her behalf for lump sum compensation under s 66 of the 1987 Act in the sum of $32,500 in respect of 22 per cent whole person impairment. The assessment comprised impairments in both ankles and both knees. Ms Meake also claimed $30,000 compensation for pain and suffering under s 67.
In a letter dated 14 May 2008 to Ms Meake’s solicitors, Woolworths confirmed the liability dispute in accordance with the notices of 10 October 2007 and 12 December 2007. It denied liability for the lump sum claims, relying on Dr Barrett’s assessment of zero per cent whole person impairment.
On 19 January 2010, Ms Meake lodged an Application to Resolve a Dispute in the Commission. She claimed weekly compensation from 15 May 2007 to date and continuing, lump sum compensation in accordance with her earlier demand, and medical expenses. She alleged injury to both ankles, both knees and her back as a result of the incident on 17 August 2004.
On 9 February 2010, Woolworths lodged a Reply to the Application to Resolve a Dispute. It confirmed Woolworths’ denial of liability in accordance with the s 74 notices previously issued.
On 1 March 2010, the matter proceeded to a conciliation and arbitration before Arbitrator Minus. In a reserved decision issued on 1 April 2010, Arbitrator Minus determined that Ms Meake suffered injuries to both ankles, both knees and her back as a result of the injury on 17 August 2004. He referred the matter to the Registrar for referral to an Approved Medical Specialist (AMS) for an assessment of the worker’s whole person impairment.
On 18 June 2010, Dr Pillemer, AMS, issued a Medical Assessment Certificate. He certified that Ms Meake suffered a 13 per cent whole person impairment, which included impairments to the lumbar spine and the lower extremities.
On 23 July 2010, at a telephone conference before Arbitrator McManamey, the parties were unable to resolve their differences and the matter was set down for a conciliation and arbitration hearing on 13 August 2010, which was subsequently adjourned to 13 September 2010.
On 13 September 2010, the matter proceeded for arbitration before Arbitrator Brown. The Arbitrator noted that the parties had reached agreement in relation to the disputed lump sum claims and the matter proceeded as a dispute in relation to the claim for weekly compensation payments and medical expenses. No oral evidence was called. The legal representatives of both parties made submissions.
In a reserved decision issued on 11 November 2010, Arbitrator Brown determined the weekly payments claim in favour of Ms Meake and entered consent orders in relation to the lump sum claims.
At the arbitration hearing before Arbitrator Brown, in addition to the matters referred to in the s 74 notices, Woolworths sought to rely on the provisions of s 40(2A) of the 1987 Act. It alleged that, having regard to the circumstances of the termination of Ms Meake’s employment, she had unreasonably rejected suitable employment, and that there was effectively no difference between the current weekly wage rate in her pre-injury employment and the current weekly wage rate in suitable employment after the injury.
The parties agreed that Ms Meake’s ability to earn had she remained uninjured were the earnings specified in the Storemen and Packers, General (State) Award in the relevant period. However, there was no evidence led by either party of the “current weekly wage rate” as defined in s 42 of the 1987 Act for the worker in suitable employment after the injury (as required by s 40 (2A)).
In his decision, the Arbitrator rejected Woolworths’ reliance on s 40(2A), noting that it had not been identified as an issue in the s 74 notices, or at the teleconferences. He noted that no application had been made under s 289A of the 1998 Act to have the previously unnotified matter dealt with by the Commission. Woolworths now seeks leave to challenge the Arbitrator’s determination, alleging that he was in error in rejecting the s 40(2A) submissions and the significance of the circumstances of the termination of Ms Meake’s employment in exercising the discretion under s 40(1) of the 1987 Act.

THE DECISION UNDER REVIEW

The Certificate of Determination issued by the Commission on 11 November 2010 is in the following terms:
“1. Respondent to pay the Applicant weekly payments of compensation under s40 of the Workers Compensation Act 1987 (‘the Act’) as follows:
a.For the period 15 May 2007 – 11 October 2007 the sum of $316.20 per week
b.For the period 12 October 2007 – 11 October 2008 the sum of $338.00 per week
c.For the period 12 October 2008 – 11 October 2009 the sum of $355.40 per week
d.For the period 12 October 2009 to date and continuing the sum of $357.34 per week.
2. By consent: The Respondent to pay the Applicant lump sum compensation under s66 of the Act the sum of $17,000 in respect to a 13 per cent whole person impairment (‘WPI’) as assessed in Medical Assessment Certificate dated 18 June 2010 for injury 17 August 2004 and the sum of $15,000 for pain and suffering pursuant to s67 of the Act.
3. By consent: Respondent to pay the Applicant’s reasonable hospital and related medical expenses pursuant to s60 of the Act upon production of accounts and or receipts and or Medicare charge.
4. That the Respondent pay the Applicant’s costs as agreed or assessed. The matter is certified as complex with 30 per cent uplift applicable to the parties’ costs pursuant to Schedule 6 Table 4 Item 4.”

LEAVE

Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of s 352 of the 1998 Act.

Monetary threshold

It is not disputed that the monetary thresholds in s 352(3) of the 1998 Act are satisfied.

Time

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

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.”
Having regard to Practice Directions Nos 1 and 6, the documents that are before me, and the submissions by the 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.

THE EVIDENCE

Ms Meake provided a signed statement of evidence dated 2 December 2009. She is 30 years of age. Prior to her employment with the appellant, she worked briefly as a check-out operator for Woolworths in Campsie. Thereafter, she qualified as a nail artist and worked part-time in that capacity for 18 months. In 1998, she worked as a receptionist in a private medical practice. She has worked in numerous telemarketing positions and for one year as a secretary in a smash repair business. She commenced working for Woolworths in June 2003 as a distribution clerk. Her duties included “picking and packing”, computer operations and other administrative work. It required her to stand all day and, from time to time, required her to lift weights of up to 25 kg.
She stated that, on 17 August 2004, whilst carrying stock, she slipped on a piece of plastic bubble wrap that had been left on the floor and injured her right ankle. She was off work for two months and then returned to work on restricted hours and duties.
Pursuant to a return to work plan she resumed working 38 hours per week over five days on restricted duties. She stated that her work restrictions included avoiding lifting of more than 5 kg, travelling for more than 30 minutes, avoidance of walking or standing for lengthy periods, and an inability to wear safety boots.
Ms Meake stated at [65]:
“In May 2007 my employment was terminated. I was accused of stealing and I was charged by the police. I was not prepared to provide a statement to the police saying who had put the stolen item in my car. The person who did steal the item has assisted me in paying the fine.”
No other evidence was led by either party concerning the circumstances surrounding the termination of Ms Meake’s employment. She went on to state (at [66]) that, since her employment was terminated, she has been looking for work as a secretary or administrative assistant, but has not been able to find another position. She said that, when applying for work, she is usually given a questionnaire which includes questions about her compensation history. She said, “As soon as they see I’ve been on compensation, they are not interested in employing me”.
She stated that, as a result of her current disabilities, she would not be able to do work she previously did with Woolworths, although it is unclear whether that is a reference to her pre-or post-injury duties. She would not be able to work as a check-out operator because of the prolonged standing, and the bending, carrying, lifting and twisting that that work involves. She stated that she could not work as a nail artist, as she would not be able to sit for the prolonged periods that that job requires. Her back aches when she sits for prolonged periods. She felt that she could no longer pursue telemarketing or secretarial work because of the prolonged sitting required. She did not regard herself as fit for process work because of an inability to wear safety boots, which is often a requirement in such work. She has rejected waitressing work because of the physical demands of that job, particularly the extended periods of standing and walking.

Medical evidence

The Arbitrator’s conclusions and findings with respect to the medical evidence are not challenged on appeal. The Arbitrator’s analysis of the medical evidence is comprehensively referred to in the reasons for decision from [48]–[60].
The Arbitrator concluded that the evidence of Dr Barrett relied upon by Woolworths was against the weight of the medical evidence. Dr Barrett concluded that Ms Meake was fit for her pre-injury employment as a distribution clerk. He considered her to be fit for work for 38 hours a week in that capacity without restriction.
Dr Maniam was the worker’s treating orthopaedic specialist. He treated her over an extended period of time. In his report of 11 November 2005, he opined that, as a result of her injuries, Ms Meake would be unfit for work involving prolonged walking, standing or climbing, and recommended a sedentary position. In his report of 12 September 2007, he noted that there were continuing complaints of symptoms in the right ankle, with secondary effects of the injury affecting her lumbar spine, left ankle and left knee. He noted the worker’s complaints of limitations with:
(a)     walking tolerance – 20 minutes
(b)     standing tolerance – 15 minutes
(c)     squatting – is able to do with pain
(d)     driving induces pain
(e)     prolonged sitting – tolerance up to 15 minutes.
He stated that there had been deterioration in her symptoms, possibly due to lack of treatment and gradual increment in her body weight. He stated that he did not feel that she was capable of returning to the workforce. He further added that he felt, as a result of her condition, she required assistance with certain domestic activities, including vacuuming, scrubbing and shopping.
Dr Dixon is an orthopaedic surgeon to whom Ms Meake was referred for an opinion by her solicitors. He prepared a report dated 30 September 2009. Details of his examination and findings are referred to in the Statement of Reasons at [59]. He stated that he felt Ms Meake was restricted in carrying out work in the open labour market. Any such work would involve her avoiding lifting and carrying objects of more than 2 kg, and avoiding prolonged standing and sitting. He opined that any job would require a capacity for her to both sit and stand, and move about.
Ms Meake was referred to Dr Pillemer, an Approved Medical Specialist, on two occasions. Dr Pillemer provided a Medical Assessment Certificate dated 2 February 2006 in response to a referral to provide an opinion in relation to proposed treatment and the worker’s ability to perform her pre-injury, full-time duties. He opined that, at that point, Ms Meake was not fit for her pre-injury duties. He felt that she was fit for restricted duties on a part-time basis, six hours a day, five days a week. When re-examined on 17 June 2010 for the purpose of providing an assessment of her whole person impairment, Dr Pillemer assessed a 13 per cent impairment as a result of the injuries sustained on 17 August 2004.

Woolworths’ letter of 9 July 2007

Woolworths relied on a letter dated 9 July 2007 addressed to Ms Meake. The terms of the letter are critical to the appellant’s grounds of appeal, and I set it out in full.
“Dear Jocelyn
We have been advised that your employment was terminated from 15 May 2007. This letter advises you of how your termination affects your entitlements to Workers Compensation benefits.
Liability
At the time of your termination you had an accepted workers compensation claim with Woolworths Limited, for an injury to your right ankle which was reported to have occurred on 17/08/2004.
Rehabilitation
Your rehabilitation in regards to a return to work at Woolworths Limited has ceased effective 15 May 2007.
Payment of weekly benefits
Prior to your termination, you were to fit to work full hours on suitable duties and Woolworths Limited was willing to provide you with suitable duties. We therefore advise you that your entitlements to any ongoing weekly benefits in relation to your workers compensation claim have ceased.
Questions
If you have any questions or concerns please do not hesitate to call me on (02) 9892 0562.
Yours sincerely
Lyndsay Sloan
Case Specialist”

THE ARBITRATOR’S FINDINGS AND REASONS

Section 40(2A) of the 1987 Act provides that, if a worker has “unreasonably rejected suitable employment”, the reduction in the worker’s weekly earnings is the difference between the current weekly wage rate for the worker’s pre-injury employment and the current weekly wage rate for some suitable employment for the worker from time to time after the injury. The provision provides for a different, and more limited, mechanism for qualifying the entitlement to compensation during periods of partial incapacity for those workers who are found to have unreasonably rejected suitable employment.
The Arbitrator noted that Woolworths had not identified Ms Meake’s alleged unreasonable rejection of suitable employment as an issue in the proceedings. It was not referred to in any of the correspondence from Woolworths, its insurers or lawyers to Ms Meake prior to or after the commencement of the proceedings. There was no reference to it in either of the dispute notices. The Arbitrator further noted that the matter had not been raised at the teleconference, nor had there been any application under s 289A(4) for leave to raise the issue as a further matter in dispute at any stage prior to or during the conciliation and arbitration hearing. The first time the application of 40(2A) to the circumstances of this case was raised was during the employer’s submissions.
The Arbitrator noted that a notice under s 54 of the 1987 Act and under s 74 of the 1998 Act must comply with the requirements of cl 15 of the Workers Compensation Regulation 2003. (The Workers Compensation Regulation 2003 has subsequently been repealed. The terms of cl 13 are now found in cl 14 of the Workers Compensation Regulation 2010, which commenced on 1 February 2011.)
The Arbitrator noted that a notice under s 74 of the 1998 Act must relevantly include a statement of the reasons why the insurer disputes liability and of the issues relevant to the decision. Further, he noted that the WorkCover Guidelines for Claiming Compensation Benefits (2009) (Guidelines) describes certain matters that are to be included in a s 54 notice. The Guidelines relevantly provide that the notice must precisely identify, in plain language in the body of the document, the issues in dispute and, in respect of each issue, the insurer’s reasons for disputing the issue. The notice is to identify the sections and, if necessary, the sub-sections of the legislation upon which the insurer relies, and that are relevant to the issues in dispute. The Arbitrator set out in full at [25] all of the requirements of a s 54 notice.

At [26], the Arbitrator noted that the s 74 notice dated 10 October 2007 and the review notice dated 12 December 2007 made no reference to s 40(2A), nor the allegation that the applicant unreasonably rejected suitable employment.
At [27], the Arbitrator concluded that, to the extent that the dispute notice dated 10 October 2007 or the s 287A review notice dated 12 December 2007 purported to operate to give notice to Ms Meake that Woolworths disputed liability for the ongoing payment of weekly compensation pursuant to s 40(2A) of the 1987 Act, the notices were defective. He noted that no application had been made pursuant to s 289A(4) of the 1998 Act for leave to raise Ms Meake’s alleged unreasonable rejection of suitable employment as an additional issue in dispute at the teleconference or at the hearing.
The Arbitrator stated that, had an application under s 289(4) of the 1998 Act been made, he would have been unlikely, in the interests of justice, to accede to such an application at such a late stage, having regard to Woolworths’ conduct in failing to raise the matter in the dispute notices or to attach the letter of 9 July 2007 to either of its notices. He noted that s 40(2A) is a disentitling provision in beneficial legislation, and the employer bore the onus of establishing that the worker had unreasonably rejected suitable employment. He concluded that, having regard to the evidence that had been admitted in the proceedings, had the issue been properly raised and ventilated, he would not have been satisfied that Woolworths had discharged that onus. He concluded by adding that, had the issue been raised in the dispute notices, Ms Meake may have presented additional evidence pertaining to that issue, either from herself or third parties.
The Arbitrator then went on from [29]–[92] to consider the issues relevant to an assessment of Ms Meake’s entitlement under s 40 of the 1987 Act, applying the five-step process discussed in Mitchell v Central West Health Service (1997) 14 NSWCCR 526 (Mitchell), taking into account in considerable detail the factors referred to in s 43A of the 1987 Act in his consideration of the worker’s capacity for “suitable employment”.
The weekly amount the worker would probably have been earning uninjured was agreed between the parties in the amounts specified in paragraph 5.2 of the Application. The Arbitrator assessed the amount Ms Meake was capable of earning in suitable employment by reaching an average weekly earning rate for clerical work pursuant to the Clerical and Administrative Employees (State) Award AN120664 and the minimum wage published in the Annual Wage Review 2009–10 by Fair Work Australia. The Arbitrator concluded that it was likely that, during the period that compensation was claimed, the worker had effectively an ability to work at about 50 per cent of the time, being an average of 2.5 days per week. The Arbitrator’s calculations and findings are set out at [86]–[90]. Those findings are not challenged.
At [91], the Arbitrator considered whether he should, in the exercise of his discretion, reduce the amounts arrived at in step three of the Mitchell formulation. He concluded that the respondent had the onus of establishing that matters existed such that, in the circumstances, it was proper to apply a reduction. He stated that, having regard to the circumstances of the matter, he was not satisfied that there were any factors present to justify exercising his discretion to apply a reduction to the amounts arrived at in step three.

THE LEGISLATION

Section 74 of the 1998 Act states:
“(1)If an insurer disputes liability in respect of a claim or any aspect of a claim, the insurer must give notice of the dispute to the claimant.
(2)The notice must contain the following:
(a)a statement of the reason the insurer disputes liability and of the issues relevant to the decision,
(a1)a statement to the effect that the worker can request a review of the claim by the insurer,
(b)unless paragraph (c) applies, a statement to the effect that the worker can refer the dispute for determination by the Commission,
(c)if the insurer has referred or proposes to refer the dispute for determination by the Commission, a statement to that effect specifying the date of referral or proposed referral,
(c1)a statement to the effect that the matters that may be referred to the Commission are limited to matters notified in the notice, or in a notice after a further review or in correspondence prior to any such referral concerning an offer of settlement or in a request for a further review,
(d)a statement to the effect that the worker can also seek advice or assistance from the worker’s trade union organisation or from a lawyer,
(e)such other information as the regulations may prescribe or, subject to the regulations, as the Authority may from time to time approve and notify to insurers and self-insurers.
(2A)In the case of a claim for compensation under this Act, a statement of reasons in a notice under this section is to indicate the provision of the workers compensation legislation on which the insurer relies to dispute liability.
(2B) A notice under this section must be expressed in plain language.
(3)The regulations may make provision for the form of and for other information to be included in or to accompany a notice under this section.
The regulations may require an insurer to give a copy of a notice under this section to the claimant’s employer.
(3A)The regulations may create offences in connection with any failure to comply with this section.
Note. A dispute as to liability to commence weekly payments within the requisite period after a claim for compensation is made must be notified in accordance with this section (See section 93 and the offence arising under section 94).
(4)Notice is not required to be given under this section with respect to a dispute if notice has been given under section 54 of the 1987 Act with respect to the dispute and that notice contained the statements and information that a notice under this section is required to contain.
(5)Before giving a notice under this section, an insurer must carry out an internal review of the decision to dispute liability in respect of the claim or an aspect of the claim.”
Section 289A of the 1998 Act states:
“(1)A dispute cannot be referred for determination by the Commission unless it concerns only matters previously notified as disputed.
(2) A matter is taken to have been previously notified as disputed if:
(a)it was notified in a notice of dispute under this Act or the 1987 Act after a claim was made or a claim was reviewed, or
(b)it concerns matters, raised in writing between the parties before the dispute is referred to the Registrar for determination by the Commission, concerning an offer of settlement of a claim for lump sum compensation.
(3)The Commission may not hear or otherwise deal with any dispute if this section provides that the dispute cannot be referred for determination by the Commission. However, the Commission may hear or otherwise deal with a matter subsequently arising out of such a dispute.
(4)Despite subsection (3), a dispute relating to previously unnotified matters may be heard or otherwise dealt with by the Commission if the Commission is of the opinion that it is in the interests of justice to do so.
WorkCover Guidelines for the Claiming of Compensation Benefits prescribe that notices issued pursuant to s 54 of the 1987 Act and s 74 of the 1998 Act must contain certain information. The relevant text from the Guidelines is set out in the Arbitrator’s decision at [25]. Relevantly, the notices must:
(a)     precisely identify, in plain language, in the body of the document, the issue(s) in dispute AND, in respect of each issue, the insurer’s reasons for disputing liability
(b)     identify the sections and, if necessary, the sub-sections of the legislation on which the insurer relies that are relevant to the issues in dispute
(c)     have attached to it any documents, medical reports, investigators’ reports, etc relevant to the claim.

SUBMISSIONS AND DISCUSSION

The appellant challenges the Arbitrator’s decision on three grounds:
1. The Arbitrator was in error in rejecting the evidence relating to the respondent’s employment.
2. The appellant submits that the significance of the termination of Ms Meake’s employment was known to her in July 2007
3. Alternatively, a proper consideration of that evidence would have led to a different outcome by reference to s 40(2A) of the 1987 Act.

Ground one

The appellant challenges the Arbitrator’s decision refusing to allow it to argue that Ms Meake entitlement to weekly compensation, if any, should be assessed under the restricted terms of s 40(2A) of the 1987 Act, having regard to the circumstances surrounding the termination of her employment.
Woolworths submits that its letter to Ms Meake of 9 July 2007 referred to at [42] was sufficient to ground an argument that any weekly compensation benefits should be assessed under s 40(2A).
Woolworths submits that Ms Meake’s employment was terminated when she was accused of stealing from Woolworths, charged by the police, and fined.
Woolworths further submits that “a proper treatment of this evidence would have equated the respondent’s ability to earn in suitable employment with her earnings but for the injury – step three of the Mitchell test”. Woolworths also submitted “that the fourth step of the Mitchell test, the exercise of the discretion, is also applicable”. In support of the submission, the appellant relies on Morgan v Commissioner for Railways [1972] WCR 33 (Morgan).
Ms Meake submits that the letter of 9 July 2007 (referred to at [42]) did not set out any grounds upon which or the reasons upon which the termination was said to have occurred. She submits that, on the appellant’s case, the reason for her termination is unknown.
Ms Meake submits that the only evidence concerning her termination is to be found in her statement at [65]. She submits that that evidence only establishes two matters. First, that she believed that her employment was terminated probably as a result of the accusation of stealing and, secondly, that she denied the allegation.
Ms Meake further submits that, not only was there no mention of the s 40(2A) issue in either of the s 74 notices or correspondence from Woolworths, there was no evidence challenging her denial of the alleged theft in Woolworths’ reply. Ms Meake referred to the Arbitrator’s notation at [11] that there was no application made to examine or cross-examine her.
It is submitted that, if the s 40(2A) issue had been flagged prior to the hearing, either in the s 74 notice or in correspondence, the reply or at the telephone conference, Ms Meake could have, and would have, applied for leave to adduce further evidence on the issue, not only going to her innocence, but also other matters upon which Woolworths bore the onus of proof under s 40(2A).
Accordingly, it is submitted that the first ground of appeal, namely, that the Arbitrator erred in not allowing Woolworths to rely upon the circumstances surrounding the termination of Ms Meake’s employment to found a claim under s 40(2A), cannot be sustained. It is submitted that it would be unfair in the extreme to have allowed such an issue to have been raised in circumstances where Ms Meake was not in a position to meet the allegation: St Andrews Village Ballina Ltd v Mazzer [2010] NSWWCCPD 99 (Mazzer); Mateus v Zodune Pty Ltd t/as Tempo Cleaning Services [2007] NSWWCCPD 227; 6 DDCR 488 (Mateus).
In Mateus, the worker suffered from Buerger’s disease, a condition that predisposed him to develop thrombosis with or without trauma. The thrombosis could lead to gangrene. The worker suffered a frank injury when his fingers were caught between two pieces of equipment. The injury led to the development of gangrene and the partial amputation of the tip of one of his fingers. The s 74 notice disputed that the worker’s employment was a substantial contributing factor to the injury within the meaning of s 9A. In its Reply, it denied that Mr Mateus suffered an injury and it sought leave to rely on the injury issue. The Arbitrator, in the exercise of the discretion, granted leave, partially on the basis that Mr Mateus was on notice of the injury through the investigator’s report which was attached to the s 74 notice.
On appeal, Deputy President Roche held that injury had not been put in issue, although ultimately he granted the employer leave to dispute the issue “in the interests of justice” He stated [45]:
“A s 74 notice must state in plain language in the body of the document the reasons the insurer disputes liability and the issues relevant to that decision. An obscure reference to a document attached to the notice, but dealing with a different issue to that identified in the notice, is not sufficient. The Arbitrator was therefore correct in determining that the issue of injury was a ‘previously unnotified’ matter and that leave was required before it could be disputed.”
Mateus can be distinguished from the instant case for several reasons. Firstly, although not mentioned in the s 74 notice, the employer had acted promptly to raise the injury issue in the Reply. Secondly, it was raised as an issue at the telephone conference before the conciliation and arbitration hearing and thirdly, the respondent made a successful application for leave to raise the previously unnotified matter under s 289A. In the instant case, the unnotified matter was not referred to in the Reply. There was no mention of it at the telephone conference and no application had been made under s 289A.
In Mazzer, the worker resigned her employment as a result of alleged harassment by another staff member whilst she was still working on light duties. In respect of the dispute over her claim for weekly compensation, the insurer issued a s 74 notice in which it relied on allegations that she had not injured her right shoulder as alleged, she was not incapacitated, and hospital and medical treatment were not reasonably necessary. The Reply confirmed the matters in dispute were those listed within the s 74 notice. Neither the Reply nor the s 74 notice made any reference to the worker’s resignation. In an appeal from the Arbitrator’s award of weekly compensation, Deputy President Roche refused a belated application that was made part way through the appeal under s 289A(4) for the employer to be given leave to argue a previously unnotified matter. In refusing the application, Deputy President Roche noted:
(a) no proper explanation was offered as to why the employer failed to identify s 40(2A) as an issue in dispute in its s 74 notice;
(b) the worker would be irreparably prejudiced if the proposed amendment were allowed after the conclusion of the arbitration and after submissions commenced on appeal;
(c) reliance on s 40(2A) is not merely dependent upon proving that a worker had resigned whilst performing suitable duties. The provision required a determination of whether the worker had “unreasonably rejected suitable employment”. The question of reasonableness of a worker’s conduct depends on his or her knowledge at the relevant time, having regard to all the circumstances (Fazlic v Milingimbi Community Inc [1982] HCA 3; 150 CLR 345).
In determining that Woolworths should not be permitted to rely upon the worker’s termination of employment as a ground for arguing the reduction in her entitlement to compensation by virtue of the provisions of s 42(2A) or s 40(1), in my view, the Arbitrator reached the correct conclusion. My reasons are as follows: first, the s 74 notice must give the worker notice in clear and unambiguous language of the issues that are genuinely in dispute and the reasons for the dispute. Woolworths did not do that. The case that Ms Meake came to the Commission to meet was one that put in issue her fitness for employment. Woolworths based its case on medical evidence that any aggravation of the worker’s condition caused by her injury had ceased, any symptoms that she was suffering from were pre-existing or degenerative in nature, and not related to her injury on 17 August 2004. In the review notice, Woolworths pleaded that Ms Meake was fit for her pre-injury duties. Neither of the s 74 notices made any reference to the circumstances of the termination of her employment or any reference to reliance on the provisions of s 40(2A).
Woolworths offered no explanation either at the arbitration hearing or on appeal for its failure to refer to the allegation of unreasonable refusal of employment by Ms Meake as an issue in dispute in either of the s 74 notices.
Unlike Mateus and Mazzer, no application was made before the Arbitrator to exercise his discretion under s 289A(4) of the 1987 Act for leave to pursue a previously unnotified issue.
The letter dated 9 July 2007 was not attached to either of the s 74 notices. That being the case, Ms Meake was entitled to assume that the circumstances of the termination of her employment were not in issue in the proceedings.
To have allowed Woolworths to argue that the s 40(2A) issue would have resulted in irreparable prejudice to Ms Meake for the reasons referred to in her submissions, namely, that, had the issues been properly ventilated in the s 74 notice or at least at the telephone conference, she could have, and would have, applied for leave to adduce further evidence on the issue of her denial of the allegations of dishonesty.
Woolworths relied on Morgan in support of a submission that the circumstances of the worker’s termination of employment should be treated as a discretionary factor in the exercise or the discretion under s 40(1). Morgan was determined under the 1926 Act and is a case which is concerned with the exercise of judicial discretion in determining the worker’s ability to earn under s 11(1)(a) of the 1926 Act. In the Court of Appeal, Sugerman P noted (at page 36) that the amount a partially incapacitated worker “is able to earn” should be construed as “including a continuing ability to earn in a job which the injured worker had, and could have retained, but for his own folly, irresponsibility, or misconduct in throwing it up, or leading to his dismissal from it”.
The Arbitrator rejected the argument, stating that the employer carried the onus of establishing those matters said to justify a reduction in the amounts found at step three of the Mitchell formula. He concluded that, in the circumstance, there were no factors present to justify the exercise of the discretion.
Whilst it was uncontested that the worker had been charged with a dishonesty offence against her employer, and convicted, she maintains her innocence of any dishonesty. She stated that the offence was committed by a third party and, although she knew who that person was, she was not prepared at the time her employment was terminated to provide information to enable the person to be identified.
For the reasons previously given, the worker was entitled to assume that matters pertaining to the termination of her employment were not in issue in these proceedings. The issues identified were limited to her fitness for employment and causation issues. The employer led no evidence concerning the circumstances of the worker’s termination of employment. Therefore, I conclude that the arbitrator was correct to find that the employer had failed to discharge the onus of establishing that there were any relevant matters to justify a reduction in the amounts found at step three of the Mitchell formula.
Woolworths made no attempt to particularise its intended reliance on the circumstances of the worker’s termination of employment as a discretionary issue in the s 74 notices, correspondence, during the telephone conference or at any point prior to submissions, even though much of the case it presented at arbitration turned on it. Because of that approach, the worker was significantly prejudiced. The same prejudice would have been occasioned if the employer had been permitted to rely on those unnotified issues to justify a diminution of the worker’s benefits under s 40(1) as it was under s 40(2A).

It follows from the foregoing that ground one fails.

Ground two

Woolworths submits that the significance of the termination of the respondent’s employment was known to her in July 2007. It relies on the letter it forwarded to Ms Meake on 9 July 2007 (referred to at [42]. It also relies on Ms Meake’s signed statement dated 2 December 2007 (Application to Resolve a Dispute 127–138) in which, at [65] (Application to Resolve a Dispute 135), she addressed the circumstances surrounding the termination of her employment. Woolworths submits that this is evidence that Ms Meake and her lawyers were cognisant of the issue and its significance. For the reasons given above and for these additional reasons, I reject that submission. While Ms Meake was aware of the circumstances in which her employment ceased, she was clearly not cognisant of the fact that they would be argued against her in the proceedings before the Arbitrator. The issues that Woolworths pleaded concerned only her fitness for employment. It based its argument on the evidence of Dr Barrett. It was never part of their pleading that Ms Meake’s entitlements to weekly benefits, if any, should be compromised by reason of the circumstances of the termination of her employment. That issue was raised for the first time during submissions before the Arbitrator at the second arbitration.
Moreover, the assertion in the letter of 9 July 2007 that Ms Meake’s entitlement to compensation had “ceased” was factually and legally incorrect. Ms Meake’s rights were yet to be determined.
The relevant correspondence was not attached to either of the s 74 notices. In those circumstances, Ms Meake was entitled to assume that, in the absence of any reference to s 40(2A) or s 40(1) in the s 74 notice, the matters referred to in that sub-section were not in issue.
Even if the 9 July 2007 letter had been attached to the s 74 notices, it would not have overcome Woolworths’ failure to rely on the circumstances of the worker’s employment in the s 74 notice itself or its failure to make any application for leave to raise it as an additional issue. As I have said, the s 74 notice must state in plain language in the body of that document the reason for the insurer disputing liability and the issues relevant to that decision. Attaching a document to the s 74 notice dealing with a different issue to that identified in the notice is not sufficient compliance (Mateus at [45]).

Ground three

The third ground of appeal is an alternative submission that, had the s 40(2A) issue been properly put before the Arbitrator, “a proper consideration of that evidence would have led to a different outcome”. Woolworths contended that the Arbitrator was in error in his “alternative finding” that Woolworths would not have discharged the onus of proving that Ms Meake had unreasonably rejected suitable employment. It contended that an analysis of the Arbitrator’s Reasons at [24] did not disclose a proper consideration of the matter to enable that finding to stand. It offered no other reasoned argument or authority in support of this ground.
The Arbitrator made no formal findings in relation to the applicability of s 40(2A). Had the matter been properly before him, at [27] of the Reasons, the Arbitrator expressed a tentative view by stating:
“I would in any case have likely been of the view that, had the issue been one that had been properly raised and ventilated, I would not have been satisfied that the respondent would have discharged the onus.”
The comments are merely obiter and, in view of my findings in relation to ground one, it is unnecessary for me to consider this ground of appeal.

CONCLUSION

Due to the appellant’s failure to identify the circumstances of the worker’s termination of employment as an issue in dispute in the s 74 notice and review notice, and in the absence of any application for leave to raise it as an additional issue pursuant to s 289A(4), the Arbitrator was correct to conclude that Woolworths was not entitled to rely on the s 40(2A) defence or to rely on those circumstances in the assessment of her entitlement under s 40.

DECISION

For the reasons given in this decision, the Arbitrator’s determination of 11 November 2010 is confirmed.

COSTS

The appellant employer is to pay the respondent worker’s costs of the appeal.

Judge Keating

President
8 March 2011

I, MELANIE CURTIN, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF JUDGE KEATING, PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE