Workers Compensation Nominal Insurer v Demasi
[2017] NSWWCCPD 9
•29 March 2017
| WORKERS COMPENSATION COMMISSION | ||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | ||
| CITATION: | Workers Compensation Nominal Insurer v Demasi [2017] NSWWCCPD 9 | |
| APPELLANT: | Workers Compensation Nominal Insurer | |
| FIRST RESPONDENT: | Cosimo Demasi | |
| SECOND RESPONDENT: | Foundation Marketing Pty Ltd | |
| INSURER: | Workers Compensation Nominal Insurer | |
| FILE NUMBER: | A1-836/16 | |
| ARBITRATOR: | Mr G Capel | |
| DATE OF ARBITRATOR’S DECISION: | 26 July 2016 | |
| DATE OF APPEAL DECISION: | 29 March 2017 | |
| SUBJECT MATTER OF DECISION: | Appeal from reconsideration decision; ss 350 and 352 of the Workplace Injury Management and Workers Compensation Act 1998; fresh evidence; whether an undisclosed work capacity decision not in evidence in proceedings at first instance is binding on reconsideration | |
| PRESIDENTIAL MEMBER: | President Judge Keating | |
| HEARING: | On the papers | |
| REPRESENTATION: | Appellant: | Sparke Helmore Lawyers |
| First Respondent: | Carroll & O’Dea Lawyers | |
| Second Respondent: | Cater & Blumer | |
| ORDERS MADE ON APPEAL: | 1. The Arbitrator’s determination of 26 July 2016 is revoked. 2. The matter is remitted to the Arbitrator for redetermination in accordance with this decision. | |
INTRODUCTION
This appeal concerns a challenge to an Arbitrator’s decision to decline to exercise his discretion to reconsider his earlier decision, pursuant to s 350(3) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). The appellant had sought to amend the quantification of the worker’s entitlement to weekly compensation on the basis of a “Work Capacity Decision”. The work capacity decision was made prior to the arbitration hearing, however due to inadvertence, was not in evidence before the Arbitrator in the original proceedings.
In particular, the appellant submits that the Arbitrator’s decision with respect to weekly entitlements is inconsistent with the work capacity decision. It further submits that the Arbitrator had no jurisdiction to make an award inconsistent with the work capacity decision, pursuant to s 43(1)(d) of the Workers Compensation Act 1987 (the 1987 Act).
For the reasons that follow, the appellant succeeds on appeal.
BACKGROUND
From 11 November 2014, Cosimo Demasi, the first respondent, was employed by Foundation Marketing Pty Ltd, the second respondent. He worked at the Growers Markets and Paddy’s Markets at Flemington at varying hours from Monday to Saturday.
On 10 January 2015, Mr Demasi sustained an injury to his head, left hip and back when he slipped on squashed produce and landed on the concrete floor. He claimed that this occurred in the course of his employment with the second respondent.
As the second respondent did not maintain a policy of insurance as at 10 January 2015, the appellant, the Workers Compensation Nominal Insurer (the nominal insurer), was joined as a party to the proceedings before the Arbitrator. The appellant made some provisional payments of compensation until late May 2015.
On 20 May 2015, the appellant issued a notice pursuant to s 74 of the 1998 Act denying further liability for the claim. It specifically disputed liability for weekly payments of compensation pursuant to ss 33, 36, 37 and 38 of the 1987 Act. It referred to its acceptance of provisional liability, and stated that this decision will take effect for “all workers compensation benefits from 22 May 2015.”
The appellant did not dispute that the incident on 10 January 2015 occurred or that Mr Demasi was an employee of the second respondent. However, it disputed that Mr Demasi suffered any injury arising out of or in the course of employment. It claimed that at the time of the incident Mr Demasi was working for himself, and not the second respondent. It also disputed that Mr Demasi had any ongoing incapacity as a result of the injuries Mr Demasi “may have” sustained on 10 January 2015.
On 18 February 2016, Mr Demasi lodged with the Commission an Application to Resolve a Dispute (the Application). Mr Demasi claimed weekly benefits and medical expenses in respect of the injury sustained on 10 January 2015, which he described as “[h]ead, neck, back, groin, eye injury and secondary psychological injury”.
On 10 March 2016, the appellant lodged a reply to the Application, relying upon the s 74 notice.
On 6 May 2016, the matter proceeded to conciliation/arbitration proceedings before then Arbitrator Capel. Following which he reserved his decision. The second respondent did not participate in these proceedings.
On 16 May 2016, the Arbitrator issued a Certificate of Determination in favour of Mr Demasi. He found that Mr Demasi was a worker in the employ of the second respondent on 10 January 2015, at which time Mr Demasi sustained injury to his head, left hip, back, neck and groin arising out of or in the course of that employment. He declined to find that Mr Demasi developed a secondary psychological condition. He found that Mr Demasi requires medical treatment as a consequence of his injury and had no current work capacity from 14 February 2015 to 3 August 2015 but had capacity to do some work from 4 August 2015 to date. Accordingly, he entered an award for Mr Demasi for the payment of weekly compensation. The Certificate of Determination is in the following terms:
“The Commission determines:
1. The applicant was a worker in the employ of the first respondent on 10 January 2015.
2. The applicant sustained injury to his head, left hip, back, neck and groin arising out of or in the course of his employment with the first respondent on 10 January 2015.
3. The applicant did not develop a secondary psychological condition due to the injury on 10 January 2015.
4. The applicant’s employment was the main and a substantial contributing factor to his injury.
5. The applicant had no current work capacity from 14 February 2015 to 3 August 2015.
6. The applicant had the capacity to do some work from 4 August 2015 to date.
7. The applicant requires medical treatment as a consequence of his injury.
8. The first respondent did not maintain a policy of insurance as at the date of injury for the purposes of Part 4 Division 6 of the Workers Compensation Act 1987.
9. The second respondent is deemed to be the insurer of the second respondent as at the date of injury pursuant to section 142A of the Workers Compensation Act 1987.
The Commission orders:
10. Award for first and second respondents in respect of the allegation of a secondary psychological condition.
11. The second respondent to pay the applicant weekly compensation pursuant to section 36(1)(b) of the Workers Compensation Act 1987 as follows:
(a)$1,974 per week from 14 February 2015 to 31 March 2015, and
(b)$1,999.20 per week from 1 April 2015 to 15 May 2015.
12. The second respondent to pay the applicant weekly compensation pursuant to section 37(1)(b) of the Workers Compensation Act 1987 as follows:
(a)$1,999.20 per week from 16 May 2015 to 3 August 2015.
13. The second respondent to pay the applicant weekly compensation pursuant to section 37(2)(b) of the Workers Compensation Act 1987 as follows:
(a)$1,609.20 per week from 4 August 2015 to 30 September 2015;
(b)$1,626.10 per week from 1 October 2015 to 31 March 2016, and
(c)$1,652.80 per week as adjusted from 1 April 2016 to date and continuing.
14. The second respondent is to have credit for any weekly compensation already paid.
15. The second respondent to pay the applicant’s reasonably necessary medical expenses pursuant to section 60 of the Workers Compensation Act 1987.
16. The compensation above is to be paid from the Workers Compensation Insurance Fund established pursuant to section 154D of the Workers Compensation Act 1987.
17. The first respondent is to reimburse the second respondent the amounts paid out of the Workers Compensation Insurance Fund in respect of compensation payable by the second respondent.
18. No order as to costs
A brief statement is attached to this determination setting out the Commission’s reasons for the determination.”
On 15 June 2016, the appellant lodged an application pursuant to s 350 of the 1998 Act for a reconsideration of the Arbitrator’s decision of 6 May 2016. The application sought to amend the quantification of Mr Demasi’s entitlement to weekly compensation, on the basis of a “Work Capacity Decision” dated 9 March 2015 (extracted below at [26]-[28]) which was referred to in an email in evidence dated 10 March 2015 from WorkCover to Mr Demasi. That email was attached to the Application (at p 188), but it did not attach the letter of 9 March 2015.
On 26 July 2016, the Arbitrator declined to exercise his discretion pursuant to s 350 of the 1998 Act and reconsider his decision of 6 May 2016. On that same day, he issued a Certificate of Determination in the following terms:
“The Commission determines:
1. The second respondent’s application pursuant to section 350 of the Workplace Injury Management and Workers Compensation Act 1998 for reconsideration of the orders made in the Certificate of Determination dated 16 May 2016 is declined.
2. The findings and orders in the Certificate of Determination dated 16 May 2016 are confirmed.
A brief statement is attached to this determination setting out the Commission’s reasons for the determination.”
On 22 August 2016, the appellant lodged an appeal against the Arbitrator’s decision of 26 July 2016. In accordance with a Direction of the Registrar directing the appellant to rectify procedural deficiencies in the appeal application, on 8 September 2016 the appellant lodged an amended appeal application. The appeal is limited to the Arbitrator’s determination to decline to exercise his discretion pursuant to s 350(3) of the 1998 Act and Mr Demasi’s entitlement to weekly compensation.
On 22 September 2016, the legal representatives for the second respondent, Cater & Blumer, made an application to reconsider the decision of 16 May 2016 pursuant to s 350(3) of the 1998 Act. This was on the basis that it was not aware of the conciliation/arbitration proceedings and therefore was unable to participate in the proceedings before the Arbitrator. It submitted that Mr Demasi was not an employee of the second respondent but “a sole trader” and provided evidence in support. It further submitted that had that evidence been available to the Arbitrator “a different result would have eventuated.”
As a result of Cater & Blumer’s application, the appeal proceedings were stayed until the reconsideration application was determined.
On 23 November 2016, the Arbitrator declined to exercise his discretion to reconsider the decision of 16 May 2016. On that same day, the determination was amended to correct a typographical error. Nothing turns on that error.
Following the determination of 23 November 2016, the appeal proceedings were reinstated.
On 17 January 2017, Cater & Blumer advised the Commission in writing that it had instructions “not to file any submissions in relation to the matter save and except that our client supports and agrees with the submission made by the appellant.”
PRELIMINARY MATTERS
There is no issue that the threshold requirements of s 352(3) of the 1998 Act as to the quantum of compensation in issue on appeal have been satisfied.
The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with s 352(4) of the 1998 Act.
ON THE PAPERS
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.
EVIDENCE
Email of 10 March 2015 and letter of 9 March 2015
In evidence is an email from a WorkCover claims officer, Ms Simpson, to Mr Demasi, dated 10 March 2015. The email attached a “provisional acceptance letter”. The letter refers to a discussion had that day with Mr Demasi regarding the calculation of his pre-injury average weekly earnings. It identified that Mr Demasi had earned $9,250 in wages (for nine weeks) which had been calculated to be $1,027.77 gross per week. That gross figure was:
“based on your [presumably, Mr Demasi’s] hand written record of payments received on the following dates:
24/11/14-$1300
19/12/14-$1300
24/12/14-$2000
2/01/15-$2000
9/01/15-$2000
12/01/15-$650 (Paddy Markets work 9-10/01/15)”
On 9 March 2015, the appellant issued Mr Demasi a letter advising that following initial notification of the injury provisional liability was accepted and he would be paid weekly compensation and medical expenses. It advised that Mr Demasi would be paid weekly payments of compensation and medical expenses “up to an amount of $2000” for a period of twelve weeks.
It stated that attachment one of this letter “…includes a decision on your pre-injury average weekly earnings that will be used to calculate your weekly payments of compensation.” Under the heading “How your weekly payment was calculated” is the following:
“Your pre-injury average weekly earnings (PIAWE) has been calculated using this information.
Pre Injury Average Weekly Earnings (PIAWE)
Amount
(i) the actual earnings paid or payable to the worker in respect of that week.
$1027.77
(i) amounts paid or payable as piece rates or commissions in respect of that week,
(i) the monetary value of non-pecuniary benefits
Your pre injury average weekly earnings have been calculated as the amount of $1027.77. The decision I have made about the amount of your pre-injury average weekly earnings is a work capacity decision. Contact me on 1800 221 960 if you do not agree with this amount.
The entitlement payable is calculated using the process explained in sections 36, 37, 38 of the Workers Compensation Act 1987.”
The letter then explained that the amount payable by the insurer depended upon a list of factors. It then recorded:
“Requesting a review of a work capacity decision
If you do not agree with this decision you can request a review of the decision. To do this you must complete WorkCover Form ‘Work capacity – application for internal review by insurer’ and forward it to me with any further information you would like me to consider. A response will be provided to you within 30 days after your application for internal review has been made. Reference section 44(1)(a) of the Workers Compensation Act 1987.
Requesting an increase or reduction in the amount of weekly payments
Alternatively, you can apply in writing to me for an increase or reduction in the amount of the payments. You must specify in your application the reasons for applying and provide any supporting evidence with the application.
Within 28 days after receiving an application:
(a) you will be advised whether your application is approved or rejected; and
(b) you and your employer will be given written notice of the decision, including, where your application is rejected, a statement of the reasons for the decision.
This decision will also result in a work capacity decision. If you do not agree with this decision you can request a review of the decision by WorkCover Claims Operations using the procedure mentioned above at ‘Requesting a review of a work capacity decision’.”
Mr Demasi
In evidence are four statements by Mr Demasi dated 12 January 2015, 26 March 2015, 14 October 2015, and 13 April 2016. He states that prior to 9 November 2014 he was employed by JBN Produce and his salary was $1,650 net per week.
Mr Demasi states that he commenced working for the second respondent after having been approached by Mr Russell Vardanega, director of the second respondent, and another individual, to work for them in a new business. Mr Demasi states that he had a verbal agreement with Mr Vardanega that he would be a “permanent full time employee.” In respect of income, Mr Demasi states that “Russell told me that I was to be paid $2000.00 per week after tax.” In addition, he was to be paid for working a Saturday at their stand at Paddy’s Markets which “worked out at a payment, including the Saturday, of net $2,650 to me.”
Mr Demasi states that he did not have to supply Mr Vardanega with any invoice for payment and that he would be “paid by cash.” He also states that his wages have been underpaid to the sum of around $8,000.
He further states that “WorkCover made payments of weekly compensation…on the assumption that my pre-injury average weekly earnings were $1,027.77 gross per week.” He adds that he was advised this was “based on the handwritten records of payments received as follows:
·24 November 2014 - $1,300.00;
·19 December 2014 - $1,300.00;
·24 December 2014 - $2,000.00;
·2 January 2015 - $2,000.00;
·9 January 2015 - $2,00.00;
·12 January 2015 - $650.00”
Mr Demasi states that the above amounts total $9,250 over a nine week period and that WorkCover have incorrectly regarded this as “a gross amount, not a net amount”. He also states that when he commenced working for the second respondent he was given a loan of $10,000, which was to be “offset against my wages” until such time as the $10,000 was repaid. This was said to explain why his wages were not at the “full agreed rate”.
Mr Demasi states that from 4 August 2015 he has been employed by Universal Produce, working suitable duties for 15 hours per week at a rate of $300 per week. He was unclear how long Universal Produce would be able to provide him with suitable duties. (It appears that this work ceased sometime in September 2015, following which Centrelink Newstart payments recommenced.)
Financial records
In evidence is Mr Demasi’s 2015 tax return which identifies an income of $49,529 from the second respondent. However, the second respondent’s Profit and Loss statement for the year ending 30 June 2015 indicates wages of $16,100 attributed to Mr Demasi.
In evidence are Mr Demasi’s bank statements. There are several cheque deposits from 17 November 2014 to 13 February 2015, but nothing to suggest that Mr Demasi earned a regular income of $2,650 or $2,000 net per week from the second respondent.
THE RECONSIDERATION REQUEST
The appellant’s reconsideration application, in respect of the Certificate of Determination of 16 May 2016, relevantly said:
“We hereby attach Submissions on behalf of the second Respondent requesting, pursuant to s 350(3) of the Workplace Injury Management and Workers Compensation Act 1998, that the decision be reconsidered in respect of the issue of the applicant’s PIAWE.
We look forward to your early reply.” (emphasis included in original)
On 26 July 2016 the Arbitrator dismissed the application for reconsideration for the reasons that follow.
The Arbitrator identified the issue before him as whether [11], [12] and [13] of the Certificate of Determination dated 16 May 2016 should be reconsidered pursuant to s 350 of the 1998 Act.
The Arbitrator identified the documentary material before him which included a letter from the nominal insurer to Mr Demasi dated 9 March 2015.
The appellant’s submissions
The nominal insurer submitted that the decision of 16 May 2016 should be reconsidered on the basis of a work capacity decision made by the nominal insurer on 9 March 2015. According to that decision Mr Demasi’s PIAWE was $1,027.77 per week.
The nominal insurer further submitted that “unfortunately the work capacity decision was not included in the evidence before the Commission”. It submitted that the Arbitrator could not make an award inconsistent with the work capacity decision, in accordance with s 43(d) of the 1987 Act.
Mr Demasi’s submissions
Mr Demasi submitted that the nominal insurer is estopped from a reconsideration of the dispute. He submitted that the issues the nominal insurer seeks to ventilate should have been the subject of an appeal under s 352 rather than a reconsideration under s 350 of the 1998 Act.
The material the nominal insurer seeks to rely on was not in the proceedings before the Arbitrator depriving him of the opportunity to test or examine the material.
Mr Demasi submitted that the work capacity decision was not previously relied upon and no finding was made by the Arbitrator that a work capacity decision was made. He submitted that he had spoken to Ms Simpson, the author of the letter of 9 March 2015, and discussed with her the basis of the PIAWE calculation asserting that it was incorrect.
The purported reliance by the nominal insurer on the late evidence is “at face value in contravention of the rules of evidence and the principles of justice”. He submitted that the nominal insurer’s conduct constituted an abuse of process and is prejudicial to him.
THE ARBITRATOR’S REASONS
Fresh evidence
The Arbitrator stated that no proper explanation was provided for the nominal insurer’s failure to introduce the letter of 9 March 2015 in the initial proceedings before him. The only attempt to explain the omission was the comment that: “unfortunately such work capacity decision was not included in the papers before the Arbitrator”. The document had been in existence for more than 12 months at the time of the arbitration hearing.
There was however in evidence before the Arbitrator, an email between the nominal insurer and Mr Demasi dated 10 March 2015. That email confirmed discussions between Mr Demasi and the nominal insurer that had taken place the same day concerning his pre-injury average weekly earnings. The relevant portions of the email are extracted at [26]-[28] above. The figure of $1,027.77 per week was identified as Mr Demasi’s PIAWE based on information provided by Mr Demasi to the nominal insurer concerning his earnings between 24 November 2014 and 12 January 2015. There is a dispute as to whether the calculation arrived at represented Mr Demasi’s gross or net earnings during that period.
Returning to the alleged work capacity decision of 9 March 2015, the Arbitrator found on the reconsideration application (at [38]) that it was “arguable” that the letter constituted a work capacity decision within the meaning of s 43(1)(d) of the 1987 Act. The Arbitrator said:
“It would seem that [Mr Demasi] was not advised that a Work Capacity Decision was being investigated by the second respondent and it is unclear whether he was given the opportunity to provide further evidence, such as his tax returns, to justify payment of an amount in excess of $1,027.77.”
The Arbitrator held that his own determination regarding the PIAWE was more reliable and was based on evidence and was not calculated on after-tax figures. He also concluded that it was not open to him to determine whether the nominal insurer’s decision was a valid work capacity decision.
The Arbitrator formed the view that the nominal insurer should have lodged an appeal against his determination of 26 May 2016 seeking the Commission’s leave to rely upon the letter of 9 March 2015 as fresh evidence, rather than seek a reconsideration. There was a delay in excess of four weeks in bringing the reconsideration application. No explanation was provided for that delay.
The letter of 9 March 2015 was in the possession of the nominal insurer and could have been made available to its legal representatives with reasonable diligence. He said (at [41]):
“One could easily argue that the [nominal insurer] should not be permitted to raise this letter as a defence, when it should have been raised in the substantive proceedings on the basis of the principles in Anshun.”
The reference to Anshun is a reference to the decision in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589 (Anshun).
The Arbitrator noted (at [42]) that his decision was consistent with the alleged work capacity decision in that both he and the author of that document had proceeded on the basis that Mr Demasi had no current work capacity. The only point of distinction was the calculation of PIAWE.
The Arbitrator concluded that the work capacity decision referred only to the acceptance of provisional liability for a period of 12 weeks. He found that even if he was constrained from making a determination on Mr Demasi’s PIAWE inconsistent with the work capacity decision, it would only have been in respect of the 12 week period from 14 February 2015 to 8 May 2015 resulting in an overpayment of a little over $11,500.
The Arbitrator weighed the injustice to the parties noting that the nominal insurer would be prejudiced if the Arbitrator declined to reconsider his determination. Further he noted that Mr Demasi would suffer a financial penalty arising from matters, for which he could not have been held responsible, based on incorrect financial material.
The nominal insurer had ample opportunity to raise the work capacity decision as an issue in the matter. It did not identify this as a reason for the dispute in the s 74 notice nor in its s 287A notice issued on 25 November 2015. In addition, the Application did not raise this issue as a matter in dispute.
The Arbitrator concluded that the issue has arisen because the nominal insurer failed to provide its legal representatives with a copy of the work capacity decision. This prevented its legal representatives from relying on it. No reasons were given for the nominal insurer’s failure to include the work capacity decision in its Reply.
On the evidence before him and having regard to the dictates of s 354(3) of the 1998 Act to conduct the proceedings according to “equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms” the Arbitrator (at [48]) was “not convinced about the merits of the [nominal insurer’s] application”. In the interests of justice and having regard to the greater prejudice to Mr Demasi, he declined to reconsider the orders in [11]–[13] of the COD dated 16 May 2016.
GROUNDS OF APPEAL
The appellant alleges that the Arbitrator erred in law in failing to:
(a) reconsider the orders made on 16 May 2016;
(b) apply s 43(1)(d) of the 1987 Act, and
(c) apply s 44BB(1) and (2) of the 1987 Act in applying the principles outlined in Anshun.
Ground (a) – Did the Arbitrator err in law in failing to reconsider the orders made?
The appellant’s submissions
The appellant submits that notwithstanding its failure to produce in evidence the work capacity decision at the arbitration hearing on 6 May 2015, such work capacity decision went to the question of the Arbitrator’s jurisdiction. It is submitted that the Arbitrator had no jurisdiction to make an award inconsistent with the work capacity decision on Mr Demasi’s PIAWE.
The letter of 9 March 2015 calculated Mr Demasi’s PIAWE based on information provided by him to the appellant at the rate of $1,027.77 gross per week. This, the appellant submits, “constituted a Work Capacity Decision dated 10 [sic, 9] March 2015” and had been provided to Mr Demasi by the appellant on 10 March 2015.
Further the appellant submits that the letter of 9 March 2015 clearly stated that the appellant had determined PIAWE and had therefore conducted a work capacity decision in accordance with the legislation. Further it gave notice to Mr Demasi what was required if he sought to challenge the decision. There is no suggestion that a review as required by s 44BB of the 1987 Act was sought.
The Arbitrator conceded (at [38] of the reasons dated 26 July 2016) that it is arguable that “this letter [of 9 March 2015] constituted a Work Capacity Decision” having regard to s 43(1)(d) of the 1987 Act.
The appellant submits that there was no basis or grounds for the Arbitrator to determine that the work capacity decision was only operative for a period of 12 weeks. The Act does not limit a work capacity decision to such a period and the appellant submits that the decision of 9 March 2015 stands unless challenged by the worker as provided by s 44BB of the 1987 Act.
Mr Demasi’s submissions
The evidence on which the appellant seeks to rely is the letter dated 9 March 2015. It was submitted by the appellant that the Arbitrator ought to accept that document as an annexure to an email dated 10 March 2015 (contained at p 188 of the original ARD). There is no proof that that was the case.
The Arbitrator endorsed the principle that a mistake or oversight by a legal adviser will not give rise to a ground for reconsideration: Hurst v Goodyear Tyre & Rubber Co (Australia) Ltd [1953] WCR 29 (Hurst). Whether to admit the material for the purpose of the reconsideration is a discretionary matter: Maksoudian v J Robins & Sons Pty Ltd [1993] NSWCC 36; 9 NSWCCR 642 (Maksoudian).
The first consideration for the Commission is to consider whether the evidence is material, that “with reasonable diligence could have been put before the [Commission] at the time of the original proceedings”. Mr Demasi submits that the material was always in the possession of the nominal insurer (if it is accepted that it is an attachment to the email of 10 March 2015).
The appellant submits that whilst the alleged “fresh” evidence could not be said to satisfy even the first limb of the Maksoudian test, it also fails the second test which requires that it be of a nature that, had it been before the Commission in the original proceedings, it would more likely than not have affected the outcome of the proceedings. Mr Demasi does not accept that the letter of 9 March 2015 alone could have affected the outcome of the initial proceedings, but merely expanded upon the matters in dispute between the parties.
Mr Demasi rejects the assertion that the Arbitrator was required to accept the document as a work capacity decision if it was admitted into evidence.
The Commission has the power to determine whether a valid work capacity decision has been made and whether to so constrain its own jurisdiction as a consequence: Sabanayagam v St George Bank Ltd [2016] NSWCA 145 (Sabanayagam).
Before it can consider its jurisdiction the Commission must make a finding of fact regarding the existence of a purported work capacity decision. Mr Demasi does not accept that the letter of 9 March 2015 is in fact a work capacity decision. He submits that it is notification of an acceptance of provisional liability. Mr Demasi was invited to “query” the calculation in an email dated 10 March 2015 (which was in evidence before the Arbitrator).
Mr Demasi submits that had the evidence the subject of the fresh evidence application been submitted in the original proceedings, documents, records, memoranda, internal emails etc could have been called for “so as to test the strength of that purported decision”.
The appellant merely asserts that a work capacity decision has been made. The assertion is not proof of that fact (Sabanayagam) and the probative weight and value of the evidence posited by a single letter to Mr Demasi, in the face of a dispute as to the fact, cannot satisfy the second test in Maksoudian, namely that the letter would more likely than not change the outcome of the original decision.
The Arbitrator’s reasons for the exercise of his discretion disclose no error of law or discretion.
Consideration
Whilst this appeal proceeds pursuant to s 352 of the 1987 Act, the challenge to the Arbitrator’s decision concerns the exercise of his discretion to reconsider his decision of 16 May 2016. Section 350 of the 1998 Act provides:
“350 Decisions of Commission
(1) Except as otherwise provided by this Act, a decision of the Commission under the Workers Compensation Acts is final and binding on the parties and is not subject to appeal or review.
(2) A decision of or proceeding before the Commission is not:
(a) to be vitiated because of any informality or want of form, or
(b) liable to be challenged, appealed against, reviewed, quashed or called into question by any court.
(3) The Commission may reconsider any matter that has been dealt with by the Commission and rescind, alter or amend any decision previously made or given by the Commission.”
The appellant has not sought to introduce the letter of 9 March 2015 as fresh evidence on this appeal. It has proceeded on the assumption that the letter of 9 March 2015 was before the Arbitrator on the reconsideration application. Mr Demasi on the other hand has proceeded on the assumption that the letter of 9 March 2015 was not before the Arbitrator on the reconsideration application.
At [8] of the Arbitrator’s determination of 26 July 2016 he identified the documents in evidence before the Commission and taken into account in the making of the determination. Those documents included (at [8(f)]) “[l]etter from [nominal insurer] to [Mr Demasi] dated 9 March 2015”.
It seems evident that the Arbitrator considered the letter of 9 March 2015 to be before him on the reconsideration. He did not exclude it from the evidence and proceeded to weigh the merits of the application taking into account the evidence disclosed in the letter of 9 March 2015 and the circumstances in which it first came to light.
In Samuel v Sebel Furniture Ltd [2006] NSWWCCPD 141; 5 DDCR 482 (Samuel) Deputy President Roche considered the matters relevant to an application for reconsideration under s 350(3) of the 1998 Act. The Deputy President reviewed a number of authorities dealing with the principles to be applied in reconsideration applications. Deputy President Roche (at [58]) summarised the matters of relevance to reconsideration applications under s 350 of the 1998 Act having regard to the objectives of the legislation, which I respectfully adopt. Those matters are:
“1. the section gives the Commission a wide discretion to reconsider its previous decisions [(Hardaker v Wright & Bruce Pty Ltd [1962] SR (NSW) 244)];
2. whilst the word ‘decision’ is not defined in section 350, it is defined for the purposes of section 352 to include ‘an award, order, determination, ruling and direction’. In my view ‘decision’ in section 350(3) includes, but is not necessarily limited to, any award, order or determination of the Commission;
3. whilst the discretion is a wide one it must be exercised fairly with due regard to relevant considerations including the reason for and extent of any delay in bringing the application for reconsideration [(Schipp v Herfords Pty Ltd [1975] 1 NSWLR 413)];
4. one of the factors to be weighed in deciding whether to exercise the discretion in favour of the moving party is the public interest that litigation should not proceed indefinitely [Hilliger v Hilliger (1952) 52 SR (NSW) 105 (Hilliger)];
5. reconsideration may be allowed if new evidence that could not with reasonable diligence have been obtained at the first Arbitration is later obtained and that new evidence, if it had been put before an Arbitrator in the first hearing, would have been likely to lead to a different result (‘Maksoudian’);
6. given the broad power of ‘review’ in section 352 (which was not universally available in the Compensation Court of NSW) the reconsideration provision in section 350(3) will not usually be the preferred provision to be used to correct errors of fact, law or discretion made by Arbitrators;
7. depending on the facts of the particular case the principles enunciated by the High Court in [Anshun] may prevent a party from pursuing a claim or defence in later reconsideration proceedings if it unreasonably refrained from pursuing that claim or defence in the original proceedings (‘Anshun’);
8. a mistake or oversight by a legal adviser will not give rise to a ground for reconsideration (‘Hurst’), and
9. the Commission has a duty to do justice between the parties according to the substantial merits of the case (‘Hilliger’ and section 354(3) of the 1998 Act).”
The Arbitrator recognised that the letter of 9 March 2015 was arguably a letter that constituted a work capacity decision; however, he did not reach a concluded view as to whether the document was or was not a work capacity decision. He said (at [39]) that it was not a matter for him to determine whether the document constituted a valid work capacity decision.
The Arbitrator did not consider the jurisdictional issues that arise in the event that the letter of 9 March 2015 is a valid work capacity decision. Further, he did not consider the binding nature of such a decision on any final orders he may make.
Section 43 of the 1987 Act is in the following terms:
“43 Work capacity decisions by insurers
(1) The following decisions of an insurer (referred to in this Division as work capacity decisions) are final and binding on the parties and not subject to appeal or review except review under section 44BB or judicial review by the Supreme Court:
(a) a decision about a worker’s current work capacity,
(b) a decision about what constitutes suitable employment for a worker,
(c) a decision about the amount an injured worker is able to earn in suitable employment,
(d) a decision about the amount of an injured worker’s pre-injury average weekly earnings or current weekly earnings,
(e) a decision about whether a worker is, as a result of injury, unable without substantial risk of further injury to engage in employment of a certain kind because of the nature of that employment,
(f) any other decision of an insurer that affects a worker’s entitlement to weekly payments of compensation, including a decision to suspend, discontinue or reduce the amount of the weekly payments of compensation payable to a worker on the basis of any decision referred to in paragraphs (a)–(e).
(2) The following decisions are not work capacity decisions:
(a) a decision to dispute liability for weekly payments of compensation,
(b) a decision that can be the subject of a medical dispute under Part 7 of Chapter 7 of the 1998 Act.
(3) The Commission does not have jurisdiction to determine any dispute about a work capacity decision of an insurer and is not to make a decision in respect of a dispute before the Commission that is inconsistent with a work capacity decision of an insurer.”
Subsection (d) of s 43(1) clearly identifies that a decision about the amount of an injured worker’s pre-injury average weekly earnings is taken to be a work capacity decision. Pursuant to s 43(1) such a decision is final and binding.
The Commission had previously held that it has no jurisdiction to determine a dispute over an insurer’s work capacity decision: Rawson v Coastal Management Group Pty Ltd [2015] NSWWCCPD 3 (Rawson) at [67]–[72] and Lee v Bunnings Group Ltd [2013] NSWWCCPD 54 (Lee).
Contrary to the Arbitrator’s finding (at [38]) it is more than “arguable” that the letter constituted a work capacity decision. In my view it clearly was a work capacity decision. The letter describes at p 3 of 7 that Mr Demasi’s weekly entitlements were calculated in part upon his “pre-injury average weekly earnings (PIAWE)”. Those earnings were described as the actual earnings paid or payable to Mr Demasi calculated in the sum of $1,027.77. The author stated that the decision about the amount of the pre-injury average weekly earnings “is a work capacity decision”. Mr Demasi was invited to contact the author in the event that he disagreed with that sum.
Importantly, Mr Demasi was informed that in the event that he disagreed with the decision he was entitled to request a review. To do this he was informed it was necessary to complete a “WorkCover form ‘Work Capacity - Application for Internal Review by Insurer’”. Mr Demasi was provided with a copy of the relevant form and was invited to forward it with any further information he wished the insurer to consider. It is apparent that he did not do so notwithstanding his view that it was an erroneous calculation at least in so far as it was based on his net earnings rather than his gross earnings.
The making of the work capacity decision and the manner in which it was communicated to Mr Demasi was broadly consistent with the insurer’s obligations under the WorkCover Guidelines for work capacity issued on 4 October 2013 (the guidelines in force as at 9 March 2015).
Leaving aside the question of a lack of diligence in bringing the work capacity decision to the attention of the Commission, the letter of 9 March 2015 places the reconsideration application in a unique category of cases. The Arbitrator approached this question on the basis of the exercise of the discretion taking into account factors such as those described in Samuel. However once it is accepted that the letter of 9 March 2015 is a work capacity decision, which I do, it qualified the Arbitrator’s jurisdiction to deal with the assessment of Mr Demasi’s PIAWE. The Commission does not have jurisdiction to determine any dispute about the PIAWE (being a work capacity decision of an insurer) nor does it have jurisdiction to make a decision in respect of the PIAWE inconsistent with the work capacity decision of the insurer (s 43(3)).
The Arbitrator erred in finding (at [39]) that his assessment of the PIAWE was a more reliable assessment of Mr Demasi’s pre-injury average weekly earnings. For the reasons stated above, he had no jurisdiction to determine the dispute in relation to PIAWE other than to accept that the PIAWE was as stated in the work capacity decision, namely $1,027.77 per week. His finding that Mr Demasi’s PIAWE was in excess of the statutory maximum provided by s 34 of the 1987 Act was a finding that was inconsistent with the work capacity decision and was prohibited by s 43(3) of the 1987 Act. These findings are consistent with accepted authority in Rawson and Lee.
It goes without saying that the appellant failed to act diligently in bringing the work capacity decision to the attention of the Arbitrator in the proceedings at first instance. The explanation, or more correctly the lack of one, would under other circumstances be a telling factor militating against reconsideration. However, the evidence that has now been brought to the attention of the Commission is fundamental to the exercise of the Commission’s jurisdiction. Having admitted the letter of 9 March 2015 into evidence it was apparent that a work capacity decision had been made which affected the Commission’s jurisdiction. When that was drawn to the Arbitrator’s attention through the reconsideration application it should have been apparent that the terms of s 43 had not been applied correctly. In those circumstances the Arbitrator should have reconsidered his decision and corrected the error.
I would also add that Mr Demasi’s submissions with respect to the appellant’s lack of diligence in drawing the matter to the Commission’s attention are somewhat disingenuous. If the email of 10 March 2015 is to be taken at face value, a copy of the letter of 9 March 2015 was attached to the email. It is clear from the terms of the email that there was an attachment and the letter describes an enclosed “provisional acceptance letter”. Accepting that to be the case then Mr Demasi was also in possession of the letter of 9 March 2015 and he could and should have taken steps to draw it to the Commission’s attention. It is also reasonable to infer that as the letter of 9 March 2015 was addressed to Mr Demasi’s residential address that a hard copy was also posted to him. I note in Mr Demasi’s submissions he asserted that the appellant had failed to establish through a sworn statement or affidavit from the relevant officer that the letter of 9 March 2015 was indeed attached to the email dated 10 March 2015. I note, however, that he does not deny receiving it.
Further, I do not accept that the description of the relevant letter as a provisional acceptance of liability somehow renders the decision of no force or effect at the end of the provisional liability period. There is nothing in the legislation to indicate that a work capacity decision will only be binding for a limited period of time or will lapse at the end of a certain period. Once the work capacity decision had been made by the insurer it constrained the Commission’s jurisdiction to go behind it unless and until the decision is reviewed in accordance with s 44BB of the 1987 Act or it is set aside or varied following an application for judicial review.
I have not been directed to any reasoned argument or authority to support the proposition that the work capacity decision in respect of Mr Demasi’s pre-injury average weekly earnings was only binding on the Commission during the period that liability was provisionally accepted. Logically it is difficult to envisage that an assessment of a worker’s pre-injury average weekly earnings would vary depending on whether one was dealing with the provisional liability period or otherwise.
For the reasons given above I make the following findings:
(a) the letter from the nominal insurer to Mr Demasi dated 9 March 2015, was a Work Capacity Decision, and
(b) the insurer’s assessment of Mr Demasi’s PIAWE in the sum of $1,027.77 per week is binding on the Commission.
As unfortunate as it is in the circumstances of this case and having regard to the extensive procedural history, ground (a) must be upheld. As a consequence the Arbitrator’s determination of 26 July 2016 must be revoked. The matter is remitted to the Arbitrator for redetermination in accordance with the findings and orders in this decision. In the circumstances, it is unnecessary to deal with the remaining grounds of appeal.
ORDERS
The Arbitrator’s determination of 26 July 2016 is revoked.
The matter is remitted to the Arbitrator for redetermination in accordance with this decision.
Judge Keating
President
29 March 2017
5
0