FEDERAL COURT OF AUSTRALIA Australian Postal Corporation v Pascoe [2003] FCA 390 WORKERS COMPENSATION – Employees under Safety, Rehabilitation and Compensation Act 1988 (Cth) – suspension of rights to compensation and to institute proceedings – whether "reasonable excuse" for refusal to undertake rehabilitation program. Safety, Rehabilitation and Compensation Act 1988 (Cth), s 37(7) AUSTRALIAN POSTAL CORPORATION v GEORGE PASCOE N 1020 of 2002 WHITLAM J 30 APRIL 2003 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1020 of 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY SENIOR MEMBER M J SASSELLA BETWEEN: AUSTRALIAN POSTAL CORPORATION APPLICANT AND: GEORGE PASCOE RESPONDENT JUDGE: WHITLAM J DATE OF ORDER: 30 APRIL 2003 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal is allowed. 2. The decisions of the Administrative Appeals Tribunal in proceedings before it numbered N1999/1457, N2000/381 and N2001/831 are set aside and the cases are remitted to be heard and decided again by the Tribunal. 3. The respondent is to pay the applicant's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1020 of 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY SENIOR MEMBER M J SASSELLA BETWEEN: AUSTRALIAN POSTAL CORPORATION APPLICANT AND: GEORGE PASCOE RESPONDENT JUDGE: WHITLAM J DATE: 30 APRIL 2003 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an appeal from the decisions made by the Administrative Appeals Tribunal ("the Tribunal") on 30 August 2002 in three proceedings between George Pascoe and the Australian Postal Corporation ("Australia Post"). Each of those proceedings involved applications made by Mr Pascoe for review of decisions or alleged decisions under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Act"). 2 The first of those applications was assigned serial number N1997/1457 in the Tribunal. It sought review of a decision made on 8 September 1997 affirming a determination under s 24 of the Act, which disallowed Mr Pascoe's claim for lump sum compensation for permanent impairment in respect of a back injury. The second application, given serial number N2000/381 in the Tribunal, related to a "decision" made on 12 January 2000 by Australia Post purporting to "continue" a suspension of Mr Pascoe's entitlement to weekly payments of compensation because he failed to undertake a rehabilitation program provided under s 37 of the Act. The third application sought review of a decision made on 29 September 1999 that Mr Pascoe was not entitled to weekly payments of compensation under s 19 of the Act in respect of the period from 18 May 1999 to 24 September 1999. This application was not lodged until 20 June 2001 and was assigned serial number N2001/831 in the Tribunal. 3 The essential background to those proceedings (which were heard together) may be briefly sketched. Mr Pascoe commenced employment with Australia Post on or about 8 September 1980 as a postal transport officer. On or about 6 May 1992 he suffered a work-related injury, and Australia Post accepted liability in respect of that injury. Mr Pascoe was paid weekly compensation and medical expenses from July 1992 until about 29 April 1997, from which date Australia Post decided to terminate weekly compensation payments. Mr Pascoe sought a review of that decision by the Tribunal, and on 28 October 1998 the Tribunal made a decision in accordance with the agreement between the parties that Australia Post pay weekly compensation and treatment expenses to Mr Pascoe in respect of his back injury, including for the period from 29 April 1997. 4 On 1 December 1998 Mr Pascoe approached CRS Australia for occupational rehabilitation assistance. This led to the making on 31 March 1999 of a determination under s 37(1) of the Act that Mr Pascoe should undertake a rehabilitation program. The rehabilitation program was to commence on 6 April 1999. However, Mr Pascoe did not undertake that program. Instead he requested Australia Post to reconsider the determination, and on 6 May 1999 the determination was revoked. On 7 May 1999 a fresh determination under s 37(1) of the Act was made. It required Mr Pascoe to commence the program on 11 May 1999, but the determination was amended on 13 May 1999 so as to require him to commence the program on 17 May 1999. Mr Pascoe apparently attended on that day, but failed to attend from 18 May 1999. 5 Whilst the determination made on 7 May 1999 (as amended on 13 May 1999) does not appear to have been formally revoked, another determination under s 37(1) of the Act was made on 25 May 1999. This determination required Mr Pascoe to commence the specified rehabilitation program on 3 June 1999. He failed to undertake this program. Mr Pascoe did not request a reconsideration of this determination. 6 Section 37 of the Act relevantly provides: "37. (1) A rehabilitation authority may make a determination that an employee who has suffered an injury resulting in an incapacity for work or an impairment should undertake a rehabilitation program and, where the authority so determines, it may make arrangements with an approved program provider for the provision of a rehabilitation program for the employee. (2) … (3) In making a determination under subsection (1), a rehabilitation authority shall have regard to: (a) any written assessment given under subsection 36(8); (b) any reduction in the future liability to pay compensation if the program is undertaken; (c) the cost of the program; (d) any improvement in the employee's opportunity to be employed after completing the program; (e) the likely psychological effect on the employee of not providing the program; (f) the employee's attitude to the program; (g) the relative merits of any alternative and appropriate rehabilitation program; and (h) any other relevant matter. (4) … (5) … (6) … (7) Where an employee refuses or fails, without reasonable excuse, to undertake a rehabilitation program provided for the employee under this section, the employee's rights to compensation under this Act, and to institute or continue any proceedings under this Act in relation to compensation, are suspended until the employee begins to undertake the program. (8) Where an employee's right to compensation is suspended under subsection (7), compensation is not payable in respect of the period of the suspension." 7 The threshold question thus posed for the Tribunal by s 37(7) was whether Mr Pascoe had a reasonable excuse for failing to undertake the program provided for him on 3 June 1999. (He had not at any time thereafter sought to begin to undertake the program.) Otherwise Mr Pascoe had no right to continue application number N1997/1457 or to institute the other proceedings before the Tribunal. (Section 4(12) of the Act makes it clear that applications to the Tribunal are caught by the provisions of s 37(7).) 8 The Tribunal, in fact, dealt first of all with a submission by Mr Pascoe's counsel that the "return to work" program devised for his client was not a "rehabilitation program" within the meaning of the Act. That submission was rejected by the Tribunal for reasons given at [11]-[33] of its statement. 9 The Tribunal then turned to what I have described as the threshold question, stating (at [34]) that Mr Pascoe's refusal to commence the return to work program on 3 June 1999 would be the "focus" of its consideration. Its reasons for its conclusion on this topic are set out under the heading "Did Mr Pascoe have a reasonable excuse for failing or refusing to undertake the rehabilitation program?" The Tribunal found (at [85]) "on balance that Mr Pascoe had a reasonable excuse for his failure to undertake the rehabilitation program". 10 I do not propose to describe in detail the material to which the Tribunal referred in reaching that finding. An outline of its approach will suffice. The Tribunal began by referring (at [35]-[44]) in a discursive way to the evidence of Mr Pascoe's attitude to the program. (None of this evidence related to the "arrangements" made pursuant to the s 37(1) of the Act for the provision of the program, although the Tribunal did note that Mr Pascoe said he "had been ill since 19 May 1999".) The Tribunal next summarized the submissions of counsel for Australia Post on "the factual issues bearing upon the proposed rehabilitation program" (at [47]-[52]) and on the medical evidence relating to Mr Pascoe's abilities (at [46], [53]-[56]). The delegate who actually made the subject determination on 25 May 1999 was Fatima Yamani, a rehabilitation counsellor in the Work Environment Branch at Australia Post's New South Wales office. She gave evidence at the hearing, and the Tribunal described (at [57]-[58]) "Ms Yamani's evidence about the thought process behind the rehabilitation program". Reference was then made (at [59]-[68]) to the submissions made by Mr Pascoe's counsel. According to the Tribunal, the matters canvassed by counsel included the extent of his client's involvement in the assessment under s 36 of the Act of his capability of undertaking a rehabilitation program, the making of the determination on 7 May 1999, the obligations imposed by s 37(3) of the Act in making a determination, and the specific requirement of the program made on 25 May 1999 that his client should engage in mail sorting. 11 The Tribunal's reasons for its conclusion that Mr Pascoe had a "reasonable excuse" are set out at [69]-[85] of its statement. First, s 37(3) was considered, and the Tribunal noted that under s 37 the delegate exercised the power of the "rehabilitation authority" and CRS Australia was an "approved program provider". The Tribunal then addressed seriatim the matters spelt out in pars (a)-(g) of s 37(3). It referred specifically to parts of the medical evidence which, it said (at [81]), tended to suggest that "the full likely effects on Mr Pascoe from requiring him to do mail sorting indoors at the Letter Facility was not a matter given consideration by Ms Yamani." The Tribunal then found (at [82]) that, "especially given Dr Samad's comments", it would have been preferable for Ms Yamani to have given greater consideration to Mr Pascoe's attitude to mail sorting. (Dr Abdus Samad is a consultant psychiatrist. His comments were contained in a report dated 4 November 1997.) 12 The finding that Mr Pascoe had a reasonable excuse for his failure to undertake the rehabilitation program meant, the Tribunal said (at [85]), that "Mr Pascoe's rights to compensation and to institute or continue proceedings under the Act are not suspended". It then went on to consider his qualification for weekly incapacity payments in the period 18 May–24 September 1999 and the question of permanent impairment. Whilst the Tribunal set aside the decisions relating to those issues, it is sufficient for my purposes to set out the terms of a decision it made on the reasonable excuse question. They were: "The decision in application N2000/381 is set aside and the tribunal substitutes its own decision that Mr Pascoe had a reasonable excuse for failure to engage in the return to work program directed on 25 May 1999 and so his compensation rights were not suspended in accordance with s 37(7) of the Act." 13 The grounds of appeal are: "(a) The Tribunal had no jurisdiction or power to make a decision in the terms that it did in N2000/381. The question of whether section 37(7) operated to suspend Mr Pascoe's rights to compensation, or to institute or continue proceedings under the Act in relation to compensation, was not a mater for 'decision' under section 43 of the Administrative Appeals Tribunal Act 1975 in N2000/281 [sic]. It was only for the purposes of forming a view whether it could proceed to determine the applications for review that were before it that the Tribunal could consider whether section 37(7) operated to suspend Mr Pascoe's rights; (b) In reaching its finding that Mr Pascoe had a reasonable excuse for refusing or failing to undertake a rehabilitation program, and/or in reaching its finding that Mr Pascoe had no ability to earn, the Tribunal:- (i) did not appreciate the need to make findings of fact identifying the nature and extent of Mr Pascoe's medical (physical and psychiatric) restrictions sufficiently to determine his fitness for the duties that were provided for him; and/or (ii) failed to consider (as it was required to) whether Mr Pascoe was prevented from doing the said duties by actual physical or psychiatric restrictions, as opposed to his preference or desire not to undertake what was being provided for him. (c) The Tribunal, in reaching either or both of those findings, took into account and based its decision upon an irrelevant consideration, or one was that [sic] not authorised by the Act, namely that Mr Pascoe, did not want to do the duties that were offered to him; (d) The Tribunal decided the applications according to an incorrect understanding of section 37 and/or section 19 of the Act. (e) Given that the Tribunal erred in law finding that Mr Pascoe had a reasonable excuse for refusing or failing to undertake the rehabilitation program provided for him under section 37 of the Act, the Tribunal could not proceed to deal further with the applications for review and to decide as it did any or all of those applications;" 14 Counsel for Australia Post submit that the Tribunal did not have power to make a decision in the terms reproduced in [12] above. That is clearly correct. Counsel for Mr Pascoe allows that "there is no dispute … that the decision for the Tribunal to make in relation to s 37(7) was not a matter for substantive decision in itself". The Tribunal has plainly misunderstood the effect of the holding in Trajkovski v Telstra Corporation Ltd (1998) 81 FCR 459 at 468 that the Tribunal has the competence to consider the limits of its authority and the existence of its jurisdiction. It appears from the material in the appeal papers and from the Tribunal's statement that the application in proceeding number N2000/381 was incompetent because there was no "reviewable decision" within the meaning of s 60 of the Act. In any event, the decision of the Tribunal in that matter must be set aside. 15 That leaves the Tribunal's finding that it had jurisdiction. The correct construction of s 37(7) of the Act obviously raises a question of law. 16 Counsel for Australia Post draw attention to the suspension of rights under s 37 "until the employee begins to undertake the program". They submit that such a sanction does not suggest that a reasonable excuse could relate to the content of the program itself. It could not be a reasonable excuse to refuse or fail to undertake a program merely because the employee did not agree with some aspects of it or did not want to do the work. They submit that much of the Tribunal's reasoning was directed to matters that were not relevant to the establishment of a reasonable excuse for the purposes of s 37(7). That purpose is to permit a supervening physical or legal incapacity to be such an excuse. They instance, where there is a refusal to commence the program as here, such potential excuses as a transport strike or an unforseen physical or mental breakdown. In particular, counsel for Australia Post submit that Mr Pascoe's attitude could not supply a "reasonable excuse" in the statutory context because that is a factor merely to be taken into account in the making of a determination. They further point out that the Tribunal did not address the issues of Mr Pascoe's actual physical and mental capability. 17 Counsel for Mr Pascoe contends that s 37(3)(f) does not mean that an employee's attitude to the program cannot be relevant to the issue of "reasonable excuse" under s 37(7). He acknowledges that that factor weighed heavily in the Tribunal's assessment, but submits that the Tribunal's conclusion was also based on the evidence to which it referred relating to the psychological effect of the return to work program. The Tribunal was, he says, entitled to form its own view about those matters and it cannot be demonstrated that its conclusion rests on an error of law. 18 It is true that the Tribunal referred to the evidence of other medical practitioners besides Dr Samad. In my opinion, however, the use made of Dr Samad's stale opinion demonstrates that the Tribunal completely misunderstood the ambit and meaning of s 37(7). That provision suspends an employee's rights to compensation unless there is a "reasonable excuse". It is a draconian provision. Section 37(3) sets out the fundamental elements to be taken into account in making a determination that an employee should undertake a rehabilitation program, and once a determination is made the employee will have the rights of reconsideration and review provided for in Pt VI of the Act. The second half of s 37(1) authorizes the rehabilitation authority to make arrangements for the provision of the program. Objection may be taken to those arrangements if they do not accord with the terms of the determination, but dissatisfaction with such terms cannot furnish a reasonable excuse for a refusal or failure to undertake the program. In broad terms I accept the submissions on behalf of Australia Post. I am reluctant to speculate about what might constitute reasonable excuses. They are, in my view, most likely to concern things that occur, or at least come to attention, after the making of the relevant determination. To that extent counsel for Mr Pascoe may be correct in submitting that the factors set out in s 37(3) are not necessarily excluded, but it is much more likely that an excuse must relate to the employee's ability to undertake the program. 19 Here Mr Pascoe was to commence a rehabilitation program on 3 June 1999. The Tribunal observed on a different topic (at [13]) that CRS Australia had received a certificate from Dr Andrew Hollo on 3 June 1999 to the effect that Mr Pascoe was totally unfit for any work on that day. Yet when the Tribunal came to deal (at [77]) with Dr Hollo's subsequent reports on the issue of a reasonable excuse, it found (at [81]) that Dr Hollo "wrote in his certificates what Mr Pascoe asked him to say". Mr Pascoe's medical condition after 25 May 1999 may provide a reasonable excuse for his refusal to undertake the rehabilitation program determined on that day, but that is not a matter on which the Tribunal has made a finding. 20 The approach of the Tribunal to the issue of "reasonable excuse" under s 37(7) of the Act was fundamentally flawed. It was not concerned with whether a determination should be made under s 37(1). The Tribunal used the provisions of s 37(3), particularly pars (e) and (f), as a checklist for a purpose for which they were not intended . Its gaze should have been fixed firmly on the object of s 37(7), which had effect only where a determination was in force and a program provided. 21 The decisions of the Tribunal will, therefore, be set aside and the cases will be remitted to be heard and decided again by the Tribunal. Mr Pascoe must pay Australia Post's costs of the appeal. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam. Associate: Dated: 30 April 2003 Counsel for the applicant: Alan Robertson SC with GT Johnson Solicitors for the applicant: Forners Counsel for the respondent: L T Grey Solicitors for the respondent: Carroll & O'Dea Date of hearing: 10 December 2002 Date of judgment: 30 April 2003