UNITED DAIRIES v FELLETTI SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MEAGHER and HANDLEY JJA 25 November and 2 December 1991, 3 April 1992 [1992] NSWCA 259 WORKERS' COMPENSATION — error of law — procedural unfairness whether error of law requiring setting aside of award — Held: In the circumstances, not. WORKERS' COMPENSATION redemption — approval — 2 employers removed from proceedings remaining employer challenges award — effect of transitional provisions 1987 Act. WORKERS' COMPENSATION — worker injures back in three successive injuries — Workers' Compensation Act 1926 applies to injuries 1 and 2 — Workers Compensation Act 1987 applies to injury 3 — transitional provisions to the 1987 Act — worker redeems entitlements under 1926 Act as between himself and employers 1 and 2 — Judge of the Compensation Court (Judge Thompson) approves redemption and enters award accordingly — worker continues proceedings against third employer only in respect of injury 3 — judge of the Compensation Court (Judge Herkes) awards continuing compensation on the basis of continuing partial incapacity argued that by reason of transitional provisions worker had chosen between inconsistent rights or represented that his incapacity was solely attributable to injuries 1 and 2 in order to secure award under s15 of the 1926 Act — held: No such representation or choice of rights arose in the facts attack on the jurisdiction of Judge Thompson to enter his award rejected — possible limited effect of redemption (confined to 1926 Act) referred to. EVIDENCE — admission of medical report — announcement that medical witness would be called — subsequently case settled as between parties in whose cases the report was tendered later use of the report against remaining party — appeal from Compensation Court (Judge Herkes) — argued that report wrongly admitted and used in breach of requirements of procedural fairness — held: Having regard to the failure of counsel to request the trial judge to have the medical witness called or to seek an adjournment for that purpose any complaint about the use made of the report should not secure the intervention of the Court of Appeal on a discretionary evidentiary ruling. Workers Compensation Act 1926, s15. Workers Compensation Act 1987. Kirby P This is an appeal from an award of compensation entered by Judge Herkes in the Compensation Court of New South Wales against United Dairies Ltd (the appellant) in favour of Mr Wayne Felletti (the worker). A worker suffers injuries with three employers The worker was injured successively in the course of his employment with Bukpitt and Cavanagh Pty Ltd (the first employer) and Wyong Group Apprentices Ltd (the second employer). On each occasion, he injured his back. He underwent a surgical operation after the first injury. After the second injury, a disc lesion at the level adjacent to the disc injured in the first injury was found. The worker claimed, and was at first paid, full weekly compensation for the periods of incapacity which followed the two injuries with the first and second 2 UNREPORTED JUDGMENTS employers. For part of their alleged liability, however, the employers denied the worker's claim. He thereupon commenced proceedings in the Compensation Court against them. The worker meanwhile commenced employment with the third employer, the present appellant. His work with the appellant was somewhat lighter than that which he had done with the first two employers. Whilst working for the appellant, the worker had a supervening injury whilst playing touch football. However, this appears to have caused no significant continuing incapacity. Then, without a further frank injury, the worker began to suffer the onset of painful back symptoms. He thereupon ceased work with the appellant. He claimed against the appellant but was denied compensation benefits pursuant to the Workers Compensation Act, 1987. He commenced proceedings in the Compensation Court against the appellant. Those proceedings were later consolidated with the outstanding proceedings in which he had claimed unpaid weekly compensation from the first and second employers. All of these proceedings ultimately came on for trial before Judges Herkes. By consent of all parties, they were heard together. However, whilst the trial was proceeding, settlement negotiations resulted in a proposed compromise of the claims against the first and second employers. The compromise involved the redemption of the worker's claims for compensation against those employers. In accordance with the practice of the Compensation Court, the proposal for settlement was referred by Judge Herkes to another judge of the Compensation Court, in this case Judge Thompson. Under s15 of the Workers' Compensation Act 1926, the approval of the Compensation Court was required for the redemption of compensation entitlements under that Act. Counsel for the appellant was present when the proposed settlement was announced to Judge Herkes and the matter assigned to Judge Thompson. He elected to take no part at all in the redemption proceedings. Those proceedings followed the usual course. Medical reports were tendered before Judge Thompson. His Honour read these and then announced that he had approved the settlement. In accordance with established authority concerning the meaning of s15 of the Workers' Compensation Act, 1926 this approval did not result in an order that compensation be paid by way of redemption or the award which followed. It merely approved the redemption achieved by agreement between the parties. The rights and duties of the worker and of the first and second employers in respect of the redemption, as between each other, are thus contained in the agreement between them. They are derived from that agreement - not from the Workers' Compensation Act 1926 nor from the award or approval of the redemption. See Gosper v Christopherson (1986) 160 CLR 423, 427, affirming the opinion of Mahoney JA in John While and Sons Pty Ltd v Changleng 1985 2 NSWLR 163, 166f (CA). The worker returned to Judge Herkes to continue his proceedings against the appellant. The appellant, upon the basis of the history given by the worker and the substance of the medical reports, undoubtedly considered that it was in a strong position on the facts to rebuff the claim for compensation against it. The worker had undoubtedly injured his back with the first two employers. The injuries had been severe enough to warrant spinal operation. Discograms had revealed disc lesions at adjoining levels of the spine. The worker had managed without complaint and for a considerable period to do the work provided by the appellant. In evidence, the worker himself had described that work as "light" and within his capacities. There was no history of a further frank injury, in the sense URJ UNITED DAIRIES v FELLETTI (Kirby P) 3 of an incident of trauma. Therefore, the appellant undoubtedly considered that, at the most, it was facing a very short period of liability to pay weekly compensation, consequent upon an aggravation of the more substantial injuries received whilst the worker was employed by the first and second employers. The appeal against the award is limited to points of law In the result, however, Judge Herkes entered a continuing award against the appellant. That award required the appellant to pay the worker two periods of compensation between 27 January 1988 and 3 August 1988 on the basis of total incapacity and thereafter continuing compensation of $64 per week upon the basis of partial incapacity caused by injury arising in its employ. That injury was described by his Honour as an "aggravation of his back injury as a result of his employment with" the appellant between 4 September 1987 and December 1988. The appellant has appealed to this Court. The appeal is, by common agreement, confined to a point of law or the wrongful admission or rejection of evidence. The amended provisions of s32 of the Compensation Court Act 1984, permitting this Court to review factual findings made in the Compensation Court, were not in force at the time the proceedings were commenced. The established authority of this Court lays down a stringent requirement for the meaning of a point of law in this context. Even a perverse finding on the facts has been held to be outside a point of law, facts being reserved by the Compensation Court Act, as it formerly provided, exclusively to the decision of the judges of the Compensation Court. See Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139, 156 (CA). All of the parties before this Court approached the appeal upon this footing. When the appeal was first called, the only parties to the proceedings were the appellant and the worker. Against the contingency that the disturbance of the award of Judge Herkes could, directly or indirectly, affect the rights of the first and second employers, the Court directed that notice be given to those employers so that they could, if they so desired, be heard in the proceedings. Some of the arguments raised attacked the award entered by Judge Thompson. It therefore seemed appropriate to the Court that those who might wish to defend that award, and the settlement of entitlements made pursuant to it, should have the opportunity to address this Court before it made any orders in the appeal. The first and second employers were therefore joined in the proceedings. They were heard. No separate appeal was mounted against the award entered by Judge Thompson approving of the settlement pursuant to s15 of the 1926 Act. This was doubtless because the worker and the employers, parties to that award, were content with it. The worker had actually been paid in full pursuant to the agreement which the award sanctioned. Before this Court, the first and second employers sought to defend the settlement by which their respective liabilities to the worker were purportedly redeemed. Although the first and second employers were (as the Court was informed) indemnified by different insurers for their respective liabilities under the Workers' Compensation Act 1926, they made common cause in the Compensation Court and in this Court and were represented by the same counsel. In fact, the worker supported most of the arguments put on behalf of those employers. He sought to retain his settlement with them and to defend the award he had won against the appellant. The suggestion of procedural unfairness fails 4 UNREPORTED JUDGMENTS The appellant's first attack on that award arose from what was said to be the procedural unfairness of the way in which Judge Herkes had used medical reports of Dr D Bornstein dated 4 March 1988 and 29 September 1989. Dr Bornstein's reports were important for the appellant because, virtually alone, the first of them contained evidence by way of opinion implicating the appellant in the aetiology of the continuing incapacitating symptoms of which the worker complained. Dr Bornstein in his report of 29 September 1989 stated emphatically: "He may well require spinal fusion between L4 and the sacrum in due course even in the presence of a successful disc excision at the L4-5 level... He is genuine in his complaint but his current problem is not related to the one suffered previously for which I saw and reported on him in 1988." This report of Dr Bornstein had not been served upon the appellant as the Rules of the Compensation Court require. Accordingly, in normal circumstances, the report could not have been tendered against the appellant, against its opposition. Nevertheless, at a time before the compromise between the worker and the first and second employers was announced, counsel then appearing for the first and second employers tendered Dr Bornstein's report in the case between his clients and the worker. He gave an affirmative answer to Judge Herkes's enquiry concerning the intention to call Dr Bornstein to give oral evidence so that he could be cross examined. Such a facility would have been the normal entitlement of the appellant, given the failure to serve Dr Bornstein's report as the Rules required. The appellant expected to have the facility of cross examination because of the answer given to Judge Herkes that Dr Bornstein would be called. However, upon the withdrawal of the first and second employers following the successful redemption of the worker's claims against them, the appellant's counsel urged that Judge Herkes should not rely upon the report of Dr Bornstein. His Honour refused to exclude it. It is this refusal, and the use of the report in the case between the worker and the appellant, that occasions the appellant's complaint in this Court about procedural unfairness. A breach of the rules requiring the observance of procedural fairness in the course of proceedings in the Compensation Court may constitute an error of law, empowering this Court to intervene upon that basis. See Escobar v Spindaleri (1986) 7 NSWLR 51, 57, 60 (CA). Ordinarily, the Court would not disturb a decision such as that of Judge Herkes to permit the worker to rely on Dr Bornstein's report, already tendered. Such a decision, being in the nature of a discretionary ruling on evidence, is not one which would usually attract the intervention of the Court unless it occasioned a substantial injustice. Even allowing for the significance of Dr Bornstein's opinion, as sustaining the view ultimately arrived at by Judge Herkes, his Honour's conclusions that the report should remain before him in the circumstances described and that no relevant injustice was done to the appellant in what had occurred would not normally invite this Court's disturbance of the award which followed. However, there is a further reason in this case why the Court should not intervene. It is that counsel appearing for the appellant did not ask Judge Herkes to require the worker to call Dr Bornstein. Nor did he seek an adjournment so that arrangements could be made for Dr Bornstein to attend. In such circumstances, although it is true that counsel for the appellant protested at the loss of the opportunity of cross examination of Dr Bornstein, I would interpret what occurred as a decision to allow the hearing to continue. This should not appear to be a remarkable decision on counsel's part. Many proceedings in the Compensation Court are dealt with on medical reports alone. Over the years, a URJ UNITED DAIRIES v FELLETTI (Kirby P) 5 judge of Judge Herkes's experience would necessarily acquire very considerable knowledge of specialised medical matters. The lines of prospective cross examination of Dr Bornstein would have been clear enough. The prospects of a Damascus Road conversion on the part of Dr Bornstein, under cross-examination for the appellant and of a recantation of his views, would seem unlikely. In all of the circumstances, I do not believe that the use of Dr Bornstein's report without the facility of cross-examination requires the intervention of this Court to disturb the award of Judge Herkes. I would reject this first argument suggested to give rise to a relevant point of law or a wrongful admission of evidence. Effect of transitional provisions of 1987 legislation The second main attack on the continuing award against the appellant was based upon the chance happening of a change in the compensation law between the injuries sustained with the first and second employers and the worker's injury as found with the appellant. Between those times, the 1926 Act was repealed and the Workers Compensation Act 1987 came into force. Necessarily, the 1987 Act had to deal with transitional cases. A particular provision was made in Schedule 6 for such cases involving the redemption of claims pursuant to the former provisions of s15 of the 1926 Act. Put generally, the original intention of the 1987 Act was to do away with the redemption of weekly and other compensation entitlements. Such redemptions were said to have become a substantial burden on insurers, and thus on industry. It was explained to Parliament and elsewhere that such redemptions and common law judgments) would be abolished and other more generous workers' compensation entitlements provided. This legislative scheme was itself further amended in 1989 following the change of Government. However, for present purposes it is enough to point out that the transitional provisions must be understood in the context of an overall legislative scheme, accepted by Parliament at the time, to terminate, for the future, the entitlement of a worker to agree with the employer to redeem the latter's liability under the workers' compensation statute, subject to the approval of the Compensation Court of the agreement thus struck. Under the transitional arrangements the specific provisions made in respect of s15 redemptions under the 1926 Act were contained in Schedule 6, Pt4. They were as follows: "6(1) S15 of the former Act continues to apply to a liability in respect of a weekly payment of compensation for a period of incapacity for work resulting from an injury received before the commencement of Division 2 of Pt3 of this Act. (emphasis added). The appellant argued that, by force of these provisions, the worker could only redeem his entitlements to workers' compensation if his case was one brought exclusively under the 1926 Act. From this, it was argued, the inference could be drawn that, when the worker and the first and second employers went before Judge Thompson they were representing to him that the case was one, exclusively, of entitlements under the 1926 Act. Otherwise, so it was argued, Judge Thompson would have had no jurisdiction to exercise the powers under s15 of the 1926 Act which continued in force only for cases involving continuing incapacity derived solely from a 1926 Act injury. For the future, in respect of injuries to which the 1987 Act applied, no entitlement to redeem would arise and hence Judge Thompson would have no jurisdiction to approve a redemption involving an incapacity derived from the injury to which the 1987 Act attached. 6 UNREPORTED JUDGMENTS In an attempt to circumvent these arguments and to uphold the jurisdiction which Judge Thompson purportedly exercised, counsel for the first and second employers urged that there were distinct and severable incapacities suffered by the worker or at least that it was open to his Honour to so find on the facts. The first and second employers had redeemed the worker's separate entitlements in respect of that part of his overall incapacity which was attributable to the injuries with the first and second employers. Those employers, so it was said, had left him with a disability. But it was one in which he had been able to continue working with the appellant and for a considerable period. Thus (so it was argued) whatever "injury" the appellant had done, it had added a new and additional "layer of incapacity". It was for that incapacity that Judge Herkes had entered his award against the appellant on the basis of a continuing entitlement to compensation for partial incapacity. So considered, Judge Herkes' award was sustained by the entitlement enjoyed by the worker to compensation in respect of the new and additional "layer of incapacity", payable under the 1987 Act. The difficulty with this argument is that it involves a wholly unreal interpretation of this worker's incapacity and of Judge Herkes' description of it as an "aggravation" of "the condition of his lower back". The worker had undoubtedly received serious injuries with the first and second employers. They had left him in a position in which his back was extremely vulnerable to further trauma. His symptoms never entirely disappeared. He therefore had a degree of incapacity, in the physical sense, when he started working with the appellant. Any "injury" which he suffered with the appellant may have increased that incapacity. But it did so by adding to symptoms which he already had. I do not believe that it would have been open on the medical evidence in this case, to delineate rigidly, in the artificial way suggested for the first and second employers, the elements contributing to the worker's incapacity. So far as the worker was concerned it was pain and weakness of the back. The incapacity was, for him, whole and undivided. It was for the first and second employers' contribution to that incapacity that they negotiated their settlement with the worker and secured the approval of Judge Thompson to that settlement. Rejection of attack on redemption jurisdiction Can it be said that Judge Thompson's award is therefore avoided as being beyond his jurisdiction by reason of the terms of the transitional provisions? I think not. It was certainly open to the first and second employers to endeavour to achieve a redemption of the worker's claims against them. To suggest that, when the worker and the first and second employers went before Judge Thompson, their conduct amounted to an "election" on their respective parts to opt exclusively for a claim against the first and second employers and to abandon the claim against the third employer (the appellant) flies in the face of what happened, as the agreed facts disclose. Far from abandoning the claim against the appellant, having settled his claim against the first and second employers, the worker immediately returned to the fray against it. Nor can the appellant complain about what occurred before Judge Thompson. By its representatives, it was aware of the proposed settlement between the worker and the first and second employers and of the application to Judge Thompson for approval of that settlement. No action was taken by the appellant to seek to intervene in the proceedings before Judge Thompson. If, as it now contends, its interests were affected by what his Honour did, it would undoubtedly have had standing in law to demonstrate such effect and to object to the purported redemption of the worker's claim against the first and second URJ UNITED DAIRIES v FELLETTI (Kirby P) 7 employer. Instead of objecting, the appellants' representatives allowed those proceedings to take their course. It is possible that they made an strategic decision that it would then be easier to resist the worker's claim with the departure of the two employers whose injuries had apparently initiated the worker's continuing incapacity which he certainly had when he commenced work with the appellant. However that may be, no suggestion was made for the appellant to Judge Thompson that he lacked jurisdiction to entertain the application for approval of the redemption proposed between the worker and the first and second employers. I fully realise that it is easy to overlook or misread transitional provisions such as those appearing in the Workers Compensation Act 1987. Even for practitioners regularly appearing in the Compensation Court it is unlikely that such provisions would have been engraved upon their minds. However, when it is suggested that an election or inconsistent assertion of rights occurred on the part of the worker, it is necessary to look to precisely what occurred. That fell a long way short of the suggested election or conscious assertion of rights inconsistent with the claimed entitlement of the worker to continue the demand under the 1987 Act. This therefore remained on foot against the appellant. Caveat as to the limited effect of the redemption secured The only jurisdiction which Judge Thompson had, however, was to approve the redemption of the worker's claims against the first and second employers insofar as they arose under the 1926 Act. S15 of the 1926 Act applies only to claims for compensation which originally found their source in that Act. It has no operation in respect of claims for compensation which have arisen under the 1987 Act. So far as the latter claims are concerned, they would appear to remain wholly unaffected by what Judge Thompson did. This is true in respect of the worker's claim against the appellant which arose after the commencement of the 1987 Act. It alone applied to the worker's "injury" with the appellant. But it may also be true in respect of any claims which the appellant may have against the first and second employers for contribution by them to the obligation of the appellant to pay weekly compensation to the worker. Provision is made both under the Act and under the Compensation Court Rules for the joinder of parties who should be joined for the purpose of contributing to an obligation of an employer to pay compensation. At this stage no action has been taken by the appellant against the first and second employers for any such contribution to the award of compensation made by Judge Herkes against the appellant to which the appellant may be entitled. There is nothing in the settlement between the worker and the first and second employers that purports to, or could, exclude any rights which the appellant may have in law against the first and second employer. As has been pointed out repeatedly both in the High Court of Australia and in this Court the redemption rests wholly upon the contract. It is not founded on an award or order of the Compensation Court. All that the Compensation Court did was to approve the redemption. The redemption only binds the parties to it. It has no effect, as such, on the rights of another party, viz the appellant. Under the Act the appellant is entitled to seek review of the decision of Judge Herkes. In any such review, it may be entitled to seek the joinder of the first and second employers for contribution. I make no further comment on this possibility save to point it out. 8 UNREPORTED JUDGMENTS The attack on the validity of what Judge Thompson did (assuming that such attack could properly be raised in this appeal from the award of Judge Herkes) is not made out. The award of Judge Thompson and the redemption which it sanctioned are both sustained, but within the limits explained above. Other criticisms of the award fail as inadmissible No other valid criticism of Judge Herkes's award was made for the appellant relevant to the limited jurisdiction of this Court in this appeal. In the end, therefore, the issue before the Court was a grievance on the part of the appellant that the award entered by his Honour was, in the circumstances, surprising and unjust to it. The answers which should be given to such complaint are two. First, the complaint is not one of law (or the admission or rejection of evidence) but of fact. And at the relevant time, the facts were reserved exclusively to the decision of Judge Herkes. But secondly, and in any case, the award was open to Judge Herkes on the evidence. It cannot be said entirely to lack an evidential foundation. Most especially it was sustained by the opinion expressed by Dr Bornstein that the work which the worker had done with the appellant had caused a significant exacerbation of his preexisting back condition, causing in turn continuing incapacity for which he was entitled to compensation. Yet even apart from Dr Bornstein's second report, Judge Herkes could have reached his conclusion of an entitlement in the worker to a continuing award for partial incapacity upon the basis of the worker's own evidence and the other medical evidence. The worker had, after all, been able to return to remunerative employment with the appellant following his two earlier work injuries and the major spinal operation which ensued. In such circumstances, it would have been open to Judge Herkes to conclude, on the facts, that something happened whilst the worker was with the appellant which amounted to an "injury" within the meaning of the 1987 Act and that such injury had caused a degree of continuing partial incapacity for which the worker was entitled to an award under that Act. Such a conclusion would be unassailable in this Court. Far from being perverse it would be open on the facts and an entirely rational result to arrive at. It is beyond disturbance by any order of this Court confined as it is (relevantly) to errors of law and the admission of evidence. Conclusions and orders The result is that none of the attacks on the award of Judge Herkes have succeeded. The award is sustained. The orders which I would therefore propose are: 1. Appeal dismissed; and 2. The appellant to pay the costs of all respondents to the appeal. Meagher JA I agree with Kirby P. Handley JA I agree with Kirby P. ORDERS 1. Appeal dismissed; and 2. The appellant to pay the costs of all respondents to the appeal. COUNSEL: Appellant: J Poulos QC/G Beauchamp Ist Respondent: G Rich URJ UNITED DAIRIES v FELLETTI (Handley JA) 2nd and 3rd Respondents: H Sperling QC/P Perry SOLICITORS: Appellant: RC Balding and Co 1st Respondent: Tonkins 2nd and 3rd Respondents: Bruce and Stewart Turton