Ferndale Partnership v Widdison

[2006] NSWWCCPD 261

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:Ferndale Partnership v Widdison & Anor [2006] NSWWCCPD 261

APPELLANT:  Ferndale Partnership

FIRST RESPONDENT:  Brad Widdison

SECOND RESPONDENT:  Peter and Margaret Vaughan

APPELLANT’S INSURER:  QBE Workers’ Compensation (NSW) Ltd

SECOND RESPONDENT’S INSURER:            CGU Workers Compensation (NSW) Ltd

FILE NUMBER:  WCC 13640-05

DATE OF ARBITRATOR’S DECISION:          12 December 2005

DATE OF APPEAL DECISION:  6 October 2006

SUBJECT MATTER OF DECISION: Apportionment of liability, sections 22(1) and 22A(1) of the Workers Compensation Act 1987

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant: In-House Legal Department, QBE Workers’ Compensation (NSW) Ltd

First Respondent: Firths, Compensation Lawyers

Second Respondent: not represented in the appeal.

ORDERS MADE ON APPEAL:  The Arbitrator’s decision dated 12 December 2005 is revoked and the following decision is substituted:

“1. Pursuant to section 22 of the Workers Compensation Act 1987 (‘the 1987 Act’), liability to pay weekly compensation to Mr Widdison under section 40 of the 1987 Act for the period from 29 January 2004 is to be apportioned as to three quarters to the Ferndale Partnership, and as to one quarter to Peter and Margaret Vaughan.

2. The weekly compensation payable to Mr Widdison pursuant to section 40 of the 1987 Act is as follows:
(a) $460.50 per week for the period 29 January 2004 to 31 March 2004;
(b) $468.90 per week for the period 1 April 2004 to 10 August 2004;
(c) $383.80 per week for the period 11 August 2004 to 30 September 2004;
(d) $390.80 per week for the period 1 October 2004 to 31 March 2005;
(e) $397.00 per week for the period 1 April 2005 to 30 September 2005;
(f) $405.10 per week for the period 1 October 2005 to date;
and thereafter the payment of weekly benefits to continue in accordance with the provisions of the 1987 Act.

3. The Ferndale Partnership and Peter and Margaret Vaughan are to pay Mr Widdison’s costs, as agreed or assessed, in equal shares.”

The Appellant, the Ferndale Partnership, and the Second Respondent, Peter and Margaret Vaughan, are to pay Mr Widdison’s costs in this appeal in equal shares.

BACKGROUND TO THE APPEAL

1. On 5 January 2006, the Ferndale Partnership (‘Ferndale’) sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 12 December 2005. The First Respondent in the appeal is Brad Widdison; the Second Respondent is Peter and Margaret Vaughan. Ferndale’s workers compensation insurer is QBE Workers’ Compensation (NSW) Ltd (‘QBE’). The Vaughan’s workers compensation insurer is CGU Workers Compensation (NSW) Ltd (‘CGU’).

1. Mr Widdison was born on 7 July 1973 and is aged 33. Relevantly, there appears to be no dispute that his de facto spouse was dependant on him during the period from 29 January 2004 until she returned to work on 10 August 2004, and that his daughter, Jade, who was born on 24 October 2003, is dependant on him.

1. Mr Widdison injured his left leg in a motor vehicle accident on the way to work on 18 January 2001. At the time, he was employed as a shearer by Ferndale. Mr Widdison was off work for six weeks after the accident and then worked intermittently on light duties. He received weekly compensation from QBE until 1 January 2002, when QBE declined further liability on the ground that Mr Widdison was fit for pre-injury duties.

1. Mr Widdison worked for various employers until 13 May 2003 without claiming weekly compensation. On 14 May 2003, he commenced employment as a shearer for Margaret and Peter Vaughan. He worked for four hours and then suffered a further injury to his left leg as a result of a fall after being hit by a running sheep. CGU accepted liability and paid weekly compensation until 29 January 2004, when further liability was declined on the ground that Mr Widdison had recovered from the exacerbation of his earlier injury. Mr Widdison obtained some intermittent casual employment in 2004 and 2005. From 15 November 2004 to 7 February 2005, he was employed as sales representative and delivery driver for Garian Western Distribution (‘Garian’), a smallgoods distribution company. From 22 August 2005 and continuing at the time of the hearing, he was employed casually by Red Lea Chickens Pty Ltd (‘Red Lea’), vaccinating chickens, cleaning and washing down sheds etc, earning $14.60 per hour and averaging gross earnings of $500 per week.

1. Mr Widdison claimed (1) weekly compensation of $890.90 from 28 May 2004 to date and continuing, (2) medical, hospital or related expenses, and (3) compensation for permanent impairment and pain and suffering. On 15 August 2005, the Commission registered Mr Widdison’s ‘Application to Resolve a Dispute’.

1. On 25 October 2005, the Arbitrator conducted a teleconference with the parties. On 18 November 2005, conciliation having proved unsuccessful, she conducted an arbitration hearing. On 12 December 2005, she made her decision in the terms set out below.

THE DECISION UNDER REVIEW

1. The Certificate of Determination, dated 12 December 2005, records the Arbitrator’s orders as follows:

“1. The First Respondent, Ferndale Partnership, to pay to the Applicant weekly benefits pursuant to s40 of the Workers Compensation Act 1987, as follows:

(a) $460.50 per week for the period 29 January 2004 to 31 March 2004;
(b) $468.90 per week for the period 1 April 2004 to 10 August 2004;
(c) $383.80 per week for the period 11 August 2004 to 30 September 2004;
(d) $390.80 per week for the period 1 October 2004 to 31 March 2005;
(e) $397.00 per week for the period 1 April 2005 to 30 September 2005;
(f) $405.10 per week for the period 1 October 2005 to date;

and thereafter the payment of weekly benefits to continue in accordance with the provisions of the Workers Compensation Act 1987.
2. The First Respondent is to pay the costs of the Applicant as agreed or assessed.
3. A telephone conference, in respect of the s66 and s67 claims, to be scheduled on Tuesday 20 December 2005 @ 9.30am.”

1. In her ‘Statement of Reasons for Decision’, the Arbitrator said Mr Widdison is “an impressive young man who has used his best endeavours to remain in the shearing industry and I accept him as a witness of truth” (paragraph 29). She found that he was never fit to perform full shearing duties following the motor vehicle accident on 18 January 2001; thereafter, he was partially incapacitated for work as a shearer and only able to perform restricted shearing duties until 14 May 2003. However, as from 14 May 2003, Mr Widdison has not been able to perform any shearing duties (paragraph 33).

1. The Arbitrator found Mr Widdison’s inability to perform restricted shearing duties since 14 May 2003 (paragraph 34):

“has not impacted, to any real extent, on his ability to earn in suitable employment. That is to say his earnings prior to 14 May 2003 are comparable to his current earnings in suitable employment.”

1. The Arbitrator therefore found Mr Widdison has been partially incapacitated for work as a shearer from 29 January 2004 to date and continuing as a result of the motor vehicle accident, and any incapacity or impairment arising from the injury on 14 May 2003 has not affected his ability to earn in the general labour market reasonably accessible to him. She found his earning capacity but for the first injury to be $1,624 per week and his earnings in suitable employment post injury to be $500 per week. She exercised her discretion under section 40(1) of the Workers Compensation Act 1987 (‘the 1987 Act’) to reduce the loss of earning capacity of $1,124 per week to $1,000 per week because the figure of $1,624 was determined in “an arbitrary manner” (paragraph 39). Mr Widdison was therefore entitled to the statutory rate of weekly compensation, except for the period in March 2004 when he worked for eight days earning $130 per day. The Arbitrator noted there was no real dispute in respect of any current expenses for medical, hospital or related expenses.

ISSUE IN DISPUTE

1. The issue in dispute in the appeal is whether liability should be apportioned between the two employers. QBE submits the Arbitrator (1) erred in law by failing to apportion liability between the two employers, and (2) erred in law and/or fact by finding that the second injury has not affected Mr Widdison’s ability to earn in suitable employment in the labour market reasonably accessible to him. The parties’ submissions are discussed below.

ON THE PAPERS REVIEW

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

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

1. I have had regard to Practice Directions Numbers 1 and 6, the documents before me, and the submission by Mr Widdison’s solicitors that the matter can be decided ‘on the papers’. QBE submits there should be an oral hearing to enable a close analysis of the evidence, for competing submissions to be put including as to apportionment of liability between the two employers, and because the weekly compensation at issue is significant. Having considered the issue, 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. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. With regard to section 352(2), I am satisfied that the weekly compensation at issue exceeds $5,000 and is more than 20% of the amount awarded in the decision appealed against. I therefore grant leave to appeal.

FRESH EVIDENCE

1. Fresh evidence on appeal is governed by section 352(6) of the 1998 Act, which provides as follows:

“(6)     Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”

1. Practice Direction No 6 sets out the process for seeking leave of the Commission to give ‘new evidence’ on appeal. It provides as follows:

“New Evidence

Where a party seeks leave to give new evidence in relation to the decision appealed against, that party must serve a copy of the new evidence on the other parties to the dispute when serving the Application or Opposition.

In general, the Commission will allow new evidence to be introduced only where it can be demonstrated that the new evidence could not reasonably have been obtained by the party and tendered in proceedings before the Arbitrator and that failure to allow the new evidence would cause a substantial injustice in the circumstances of the individual case.”

1. Practice Direction No 6 also provides that if new evidence is sought to be relied upon, the Application or Opposition to the Appeal must contain:

   “ -a schedule of the new evidence,
     -a copy of the new evidence,
     -a brief outline of the new evidence and the reasons why it was not given in the
      proceedings before the Arbitrator, and
     -submissions why the new evidence should be admitted.”

1. Mr Widdison’s solicitors seek leave to introduce new evidence, namely the Medical Assessment Certificate (‘MAC’) of the Approved Medical Specialist, Dr AD Meachin, Orthopaedic Surgeon, dated 13 April 2006. Mr Widdison’s solicitors submit this Certificate, which was issued following Dr Meachin’s examination of Mr Widdison on 21 March 2006 (for the purpose of assessing the permanent loss of efficient use of his left leg), after the Certificate of Determination was issued, is relevant to the issue of apportionment and supports the decision made by the Arbitrator.

1. In my view, the MAC is relevant to the issues in dispute and should be admitted. Failure to allow the new evidence could cause substantial injustice to Mr Widdison. I therefore grant leave to introduce the MAC as new evidence.

SUBMISSIONS

1. CGU has not filed any submissions in the appeal nor sought to be represented. QBE submits the Arbitrator, having found, first, that Mr Widdison was incapacitated by the first injury from performing full and unrestricted duties as a shearer and, second, that he was restricted from performing any shearing duties, restricted or otherwise after the second injury, concluded that Mr Widdison’s incapacity was caused by two injuries. Having so found, the Arbitrator was required, pursuant to section 22 of the 1987 Act, to apportion liability between the two employers, and erred in law by failing to do so. QBE also submits the Arbitrator’s finding that the second injury has not affected Mr Widdison’s ability to earn in suitable employment, is an error of fact and law, being inconsistent with her finding that, after the second injury, Mr Widdison was unable to work in any capacity as a shearer and was unemployed for lengthy periods after CGU ceased paying weekly compensation on 29 January 2004. Moreover, Mr Widdison’s present employment is of a casual nature.

1. With regard to Mr Widdison’s earnings since the first injury, QBE submits that at paragraph 32 of her Statement of Reasons, the Arbitrator mistakenly referred to Mr Widdison’s earnings from Red Lea in 2004: Mr Widdison did not commence casual employment with Red Lea until 22 August 2005. He was unemployed for 16½ months out of the total period of 20 months prior to this. QBE submits the Arbitrator did not make an appropriate comparison between the first and second injuries and his actual earnings subsequent to the second injury.

1. QBE submits that the Arbitrator’s errors of law and/or fact have materially affected the outcome. As a result of the failure to apportion liability, QBE was held liable for all payments of weekly compensation whereas it should have been liable for no more that 50% of such payments.

1. QBE made further written submissions in relation to apportionment of liability on 20 June 2006. It submits that because Mr Widdison’s incapacity from 29 January 2004 was the result of more than one injury, the Arbitrator should have apportioned liability pursuant to section 22 having determined whether each injury caused or materially contributed to the incapacity (Clarke JA, obiter, in Sutherland Shire Council v Baltica General Insurance Co Ltd (1996) 39 NSWLR 87 (‘Baltica’)).

1. Mr Widdison’s solicitors submit that to be entitled to weekly compensation, the worker’s physical incapacity must produce an economic incapacity: Commonwealth v Murature (1978) 141 CLR 296 (‘Murature’) at 300-301 (Jacobs J). The Arbitrator found, on the evidence available to her, that Mr Widdison did not suffer any incapacity which resulted in economic loss as a result of the injury in the course of his employment with the Vaughans. Further, the Arbitrator found that Mr Widdison suffered the incapacity, which resulted in full economic loss, as a result of the injury arising out of his employment with Ferndale. Thus, on those findings, there was no incapacity to apportion to the Vaughans.

EVIDENCE

1. The evidence before the Arbitrator comprised a statement by Mr Widdison dated 18 May 2005 together with medical evidence and evidence of earnings. Mr Widdison also gave oral evidence at the hearing. There is also the new evidence I have agreed to admit, namely the MAC of Dr Meachin dated 13 April 2006. Dr Meachin summarised the injuries and diagnoses as follows:

“In my opinion this man sustained a chondral injury and an injury to the left posterior cruciate ligament in the first incident on 18/01/01 and a torn medial meniscus and a further chrondral injury in the second incident on 14/5/03.”

1. Dr Meachin noted Mr Widdison’s evidence that before the first injury he could shear about 130 to 180 sheep a day, and that following “this injury he could only manage about 80 to 100. He was having some difficulty shearing and he eventually ceased this work following the second injury sustained on 14/05/03”. (Mr Widdison said in oral evidence that before the first injury he averaged 130 sheep a day, but on a good day he could shear 160 to 170 sheep (transcript page 5).) Dr Meachin assessed Mr Widdison’s first injury (18 January 2001) under the Table of Disabilities as a 15% loss of efficient use of the left leg at or above the knee. He also assessed a 3% whole person impairment, apportioning ¾ of the impairment to the first injury (18 January 2001) and ¼ to the second injury (14 May 2003).

DISCUSSION AND FINDINGS

1. The only issue in dispute is whether liability should be apportioned between the two employers. There appears to have been no dispute before the Arbitrator that Mr Widdison is unable to return to his pre-injury work as a shearer. The period for which the payment of weekly compensation is in dispute is that from 29 January 2004, when CGU declined further liability.

1. Section 22(1) of the 1987 Act provides relevantly that where the incapacity of a worker “results from more than one injury to the worker, liability to pay compensation under this Act is to be apportioned in such manner as the Commission determines”. Section 22A(1)(a) provides that in the case of apportionment of liability between employers, the apportionment is “to be on the basis of the relative length of the worker’s employment with each employer ... or on such other basis as the Commission considers just and equitable in the special circumstances of the case”.

1. The issue of causation is a question of fact to be determined on the basis of the evidence: Kooragang Cement Pty Ltd v Bates (1994) 10 NSWCCR 796, at 810 (Kirby P). The Arbitrator found (at paragraph 33) that Mr Widdison was partially incapacitated for work as a shearer after the first injury on 18 January 2001: he was only able to perform restricted shearing duties. However, after the second injury on 14 May 2003, he was unable to perform any shearing duties. In my view, there was evidence to support these findings, which were properly made. It follows from these findings that the second injury added to the degree of Mr Widdison’s residual incapacity. The Arbitrator was, therefore, required to apportion liability between the two employers in accordance with section 22(1). Her failure to do so was an error of law.

1. Section 33 of the 1987 Act states:

“If total or partial incapacity for work results from an injury, the compensation payable by the employer under this Act to the injured worker shall include a weekly payment during the incapacity.”

However, as Mr Widdison’s solicitors have noted, Jacobs J, in Muratore, stated that physical incapacity for work is only relevant where it produces an economic incapacity. (See also the NSW Court of Appeal decision in Blayney Abbattoirs Pty Ltd v McConnell & Ors (1998) 16 NSWCCR 205.)

1. With regard to Mr Widdison’s earnings, his tax returns for the tax years ending 30 June 2001, 2002 and 2003 show his gross earnings (and taxable income) for these years as being $29,894 ($24,445), $28,607 ($21,957) and $30,161 ($19,834) respectively. Apparently, figures for the 2004 and 2005 tax years were not available. The Arbitrator found Mr Widdison’s taxable earnings in the 2003 year to be less than $500 per week (paragraph 32). She found this figure to be “within the range of his earnings with Garian and Red Lea in 2004”. In my view, the use of Mr Widdison’s earnings determined for the purpose of his tax returns in calculating his earnings in suitable employment post-injury, needs to be treated with care because in each of the 2001, 2002 and 2003 tax years he received weekly compensation. His annual income for tax purposes does not, therefore, reflect his ability to earn in suitable employment.

1. The Arbitrator found that but for the injuries, Mr Widdison would have had the capacity to shear an average of 160 sheep a week, equating to an earning rate of $1,624 per week (paragraph 37). The Arbitrator did not, however, properly calculate his earnings in suitable employment in the period immediately before the second injury on 14 May 2003. Mr Widdison’s evidence was that between 2 January 2002 and 13 May 2003 he limited his shearing to about 80 sheep a day, worked on small sheep where possible, and was unable to perform any crutching duties (paragraph 16(f)). Based on the rate per sheep at the time of the arbitration hearing ($2.03), this works out at $812 per week.

1. With regard to Mr Widdison’s earnings in 2004, the Arbitrator clearly made a factual error: Mr Widdison’s employment with Garian – from 15 November 2004 to 7 February 2005 – occurred in the tax year ending 30 June 2005, and his employment with Red Lea – from 22 August 2005 and continuing at the date of the arbitration hearing – commenced in the tax year ending 30 June 2006. Moreover, as QBE point out, Mr Widdison was unemployed for 16½ months of the 20 months between 29 January 2004 and 22 August 2005. With regard to 2005, Mr Widdison’s evidence was that his earnings with Red Lea averaged $500 per week. This is clearly substantially less than what, on my estimation, he was earning at the time of the second injury. Thus, in the period from 31 January 2004, he suffered a greater economic incapacity in respect of which he is entitled to weekly compensation.

1. In my view, the Arbitrator’s decision must be revoked because of the errors of law and fact made. In determining the appropriate decision to substitute, I have the benefit of new evidence, namely the MAC Certificate issued by Dr Meachin, dated 13 April 2006. Dr Meachin apportioned Mr Widdison’s permanent impairment post 14 May 2003 as ¾ due to the injury sustained on 18 January 2001 and ¼ due to the injury sustained on 14 May 2003. In my view, given the Arbitrator’s findings as to Mr Widdison’s physical incapacity both before and after the second injury, it is both just and equitable and appropriate to apportion liability for weekly compensation between the two employers on the same basis for the period from 29 January 2004, pursuant to sections 22(1) and 22A(1)(a) of the 1987 Act.

1. With regard to the economic incapacity suffered by Mr Widdison, I note the Arbitrator’s determination of the weekly benefits to be paid was made in accordance with section 40 of the 1987 Act and the steps prescribed by the NSW Court of Appeal in Mitchell v Central West Health Service (1997) 14 NSWCCR 526, and included the following findings at paragraph 38:

“• In accordance with s 40(2)(a) the weekly amount Mr Widdison would have earned but for the injury to be $1,624.00 per week.
• In accordance with s 40(2)(b) Mr Widdison is earning or would be able to earn in suitable employment the sum of $500.00 per week.”

I also note the Arbitrator’s exercise of the section 40(1) discretion (at paragraph 39) to reduce the loss of earning capacity figure to $1,000.00 because the figure of $1,624.00 was determined in an arbitrary manner. This has not been challenged and, even if it was, the reduction does not affect the outcome since Mr Widdison’s entitlement to weekly compensation is subject to the statutory maximum.

1. The net result, in my view, is that it is appropriate to substitute the decision set out below which, at clause 2, adopts the Arbitrator’s section 40 calculations.

DECISION

1. The Arbitrator’s decision dated 12 December 2005 is revoked and the following decision is substituted:

“1. Pursuant to section 22 of the Workers Compensation Act 1987 (‘the 1987 Act’), liability to pay weekly compensation to Mr Widdison under this Act for the period from 29 January 2004 is to be apportioned as to three quarters to the Ferndale Partnership, and as to one quarter to Peter and Margaret Vaughan.
2. The weekly compensation payable to Mr Widdison pursuant to section 40 of the 1987 Act is as follows:

(a) $460.50 per week for the period 29 January 2004 to 31 March 2004;
(b) $468.90 per week for the period 1 April 2004 to 10 August 2004;
(c) $383.80 per week for the period 11 August 2004 to 30 September 2004;
(d) $390.80 per week for the period 1 October 2004 to 31 March 2005;
(e) $397.00 per week for the period 1 April 2005 to 30 September 2005;
(f) $405.10 per week for the period 1 October 2005 to date;

and thereafter the payment of weekly benefits to continue in accordance with the provisions of the 1987 Act.
3. The Ferndale Partnership and Peter and Margaret Vaughan are to pay Mr Widdison’s costs in equal shares as agreed or assessed.”

COSTS

1. In my view, it is appropriate that the two employers, both of whom have disputed liability to pay compensation to Mr Widdison, should share equally in paying his costs.

Robin Handley

Acting Deputy President  

6 October 2006

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

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