BLAYNEY ABATTOIRS PTY LIMITED v O'DEA SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL KIRBY P, SHELLER JA and POWELL JA 11 September, 5 October 1995 [1995] NSWCA 48 WORKERS' COMPENSATION — incapacity — meaning of — whether "4ncapacity" within s16(1)(b) of Workers Compensation Act 1987 involved necessary concept of economic loss — whether it refers to reduced physical capacity by reason of physical disability for work in labour market — held: (1) The "incapacity" referred to may not necessarily attract compensation, depending on the loss of earning power. Arnotts Snack Products Pty Limited v Yacob (1985) 155 CLR 171 appld; (2) No error was shown in the reasoning of the primary judge (Geraghty CCJ); (3) Award for weekly compensation affirmed. Kirby P. I agree with Sheller JA. Sheller JA. INTRODUCTION From | July 1988 the first appellant, Blayney Abattoirs Pty Limited, employed the first respondent, Robert John O'Dea, in the abattoirs at Blayney. The second appellant, QBE Workers Compensation (NSW) Pty Limited, was the employer's insurer from | July 1988 to 15 June 1990. The second respondent, Heath Workers Compensation (NSW) Pty Limited, was the employer's insurer from 15 June 1990 and continuing. The worker was employed at the Blayney abattoirs in 1963 and with some relatively short and immaterial interruptions has worked there ever since. During this time he was employed by various other owners of the abattoirs before the first appellant took over. In 1960, before starting at the abattoirs, hebroke his left wrist playing football. In 1968 he began working as a slaughterman. In 1992 the worker filed an application for determination under the Workers Compensation Act 1987 (the Act). In the amended form of the application schedule C, the worker, relevantly, alleged that he was partially incapacitated from 25 July 1989 to date. On 29 September 1994 his Honour Judge Geraghty made an award, on the basis of partial incapacity, of weekly compensation at various rates from 25 November 1991 against the first appellant. He ordered the first appellant to pay the worker $9,171.75, as lump sum compensation under s 66 of the Act for a 15 percent loss of use of the worker's left arm below the elbow and $15,000 as lump sum compensation under s 67 for pain and suffering, $8,000 thereof to be apportioned in respect of past pain and suffering. His Honour made appropriate orders for interest, the payment of the worker's s 60 expenses and the payment by the first appellant of the worker's costs. The medical reports disclosed two principal problems in the worker's left lower arm and wrist. — . carpal tunnel syndrome for which in 1987 Dr Mutton had operated with the result that the symptoms associated with this condition appear to have been cured; . osteoarthritis of the left wrist since 1979. 2 UNREPORTED JUDGMENTS Geraghty CCJ said that the worker had sustained a fracture when playing football at the age of fourteen and since his employment with the various employers at the Blayney Abattoirs his condition had gradually deteriorated. At the time of hearing he had well established degenerative changes in the left wrist, which, according to the judge, all the doctors agreed had beenaggravated, accelerated and exacerbated by the duties he was carrying out as a slaughterman at the Blayney abattoirs. The worker alleged that: 1. as the result of the nature and conditions of his employment as a slaughterman, he had sustained an incapacity for work and disability in the left lower arm; and 2. a disease, namely osteoarthritis, had been aggravated and exacerbated, thereby falling within the definition of injury in s 4 (b) (ii) of the Act. His Honour said there was no doubt the worker was incapacitated as a slaughterman. The issue to be decided was when did this incapacity arise and, accordingly, which insurance company, the second appellant or the second respondent, was liable. A further issue was as to when the loss of efficient use arose and what assessment should be placed on the incapacity and loss; see ss 65 (1), 66 and 67 of the Act. His Honour made the following relevant findings: 1. The applicant was injured in the course of his employment, that injury being by way of a disease to the left wrist, aggravated, accelerated, exacerbated in circumstances in which the duties as a slaughterman contributed to the process and, therefore, comes within the definition of "injury" pursuant to section 4 (b) (ii). 2. The applicant is right hand dominant. 3. The deemed date of injury is 29 August 1989, when the applicant was examined by Dr Waks. This finding of deemed date of injury is made pursuant to section 16. 4. The applicant is partially incapacitated, and has been from 28 August 1989."The parties had agreed on the amounts of the worker's actual earnings and the earnings of comparable employees for the period in question. Geraghty CCJ concluded that the worker's present earnings truly reflected his capacity to earn and said that, having regard to the circumstances, the differences between the actual earnings of the worker and the earnings of comparable employees as agreed by the parties, were proper amounts for weekly amounts of compensation and made an award according. His Honour then said: As a result of the injury sustained, the applicant has suffered a permanent loss of efficient use of the left arm below the elbow of 15%. APPEAL By consent and with the leave of the Court, the appellants filed an amended notice of appeal. Broadly speaking the appeal falls under two heads. First that his Honour erred in holding that the worker's injury, consisting in the aggravation or exacerbation of osteoarthritis, was deemed to have happened on 29 August 1989 or put another way that that was the time of the worker's incapacity within the meaning of s 16 (1) (a) (i) of the Act. The appellants, or certainly the second appellant, contended that the date of injury was some time after the second respondent came on risk, that is to say on or after 15 June 1990. The date suggested was 25 November 1991. The second head of appeal was his Honour's URJ BLAYNEY ABATTOIRS PTY LIMITED v O'DEA (Sheller JA) 3 alleged failure to give sufficient reasons for his conclusion that the worker had suffered a permanent loss of efficient use of the left arm below the elbow of 15 percent. DATE OF INJURY The appellants referred to the following facts. In 1968 the worker started his duties as a slaughterman. In 1979 his left wrist and arm were aching, swellingand 'playing up'. On 31 October 1979 he consulted Dr Jones. Thereafter he suffered constant pain and symptoms in the left wrist and arm which remained about the same. In September 1987 Dr Mutton operated. The worker was off work for two and a half months and paid compensation. The operation relieved a pins and needles sensation but did not otherwise affect the condition of the left upper limb. On 29 August 1989 Dr Waks examined the worker and recommended change of duties to avoid aggravation of arthritic changes. In November 1989 the worker ceased his slaughterman's job and from December 1989 to September 1990 worked tutoring new slaughtermen. By September 1990 he was working 'trimming' in the chiller and did some work on the chain. He left arm was painful and he had frequent resort to first aid. On 25 November 1991 he started as a leading hand supervising and driving fork lifts. In his report of 31 August 1989 Dr Waks expressed the following opinion: Mr O'Dea has osteoarthritic changes in his left wrist confirmed by x-ray as well as clinically by restricted movement and pain in the wrist. It is possible that these changes have been caused by his 25 years working at the Abattoir. If not specifically caused by the heavy manual duties that he has performed over this time then the condition would definitely have been aggravated by these duties. He appears at present to be able to cope with his restricted duties and I consider him fit to continue performing these duties. I believe that he should be permanently placed on duties that do not involve repetitive heavy work with both hands as I believe that this will aggravate the arthritic changes. He should ideally be put onto supervisory and/or clerical administrative type duties. In view of his age his prognosis remains guarded and if he continues with heavy work he could sustain further damage to the wrist. As such, formal rehabilitation in the form of retraining could be required. I do not believe that operative treatment is indicated at the present time. On 16 October 1989 Gayle Wyatt, an occupational therapist, after referring to Dr Waks" advice that to avoid further aggravation or osteoarthritic changes to the right wrist the worker should be permanently placed on duties that did not involve heavy repetitive work with both hands and his recommendation ofsupervisory and/or clerical administration type duties, said that such work could not be provided to the worker. Various other suitable duties on the mutton chain were discussed but these were part of a three man rotation and involved other unsuitable work. Ms Wyatt commented that suitable duties for the worker on the mutton floor were few in number. Subject to one submission put on behalf of the appellants, to which I will return, it seems to me beyond argument that at the time Dr Waks saw the worker he no longer had the physical capacity to work as a slaughterman. In Arnotts Snack Products Pty Limited v Yacob (1985) 155 CLR 171 at 177-8 four members of the High Court rejected the concept of incapacity for work in the Workers Compensation Act 1926 as meaning incapacity resulting in actual economic loss. It followed that the concept of partial incapacity for work was that of reduced physical capacity, by reason of physical disability, for actually doing work in the labour market in which the employee was working or might reasonably be expected to work. In this sense the respondent worker was partially incapacitated 4 UNREPORTED JUDGMENTS for work as a result of an injury namely, the aggravation or exacerbation of a disease to which his employment was a contributing factor; s 4 (b)(ii) of the Act. Mr Hislop QC, who appeared for the appellants, submitted that, despite what the High Court had said, incapacity, within the meaning of s 16 (1), meant incapacity entitling the worker to compensation. This, it was said, did not occur until November 1991 and hence that was the time of the incapacity. In support of this submission Mr Hislop relied upon the terms of s 16 (1) (b) which, he said, focused upon the payment of compensation. According to the submission, Pt 3 Division 2 of the Act was directed to the economic loss aspect of incapacity rather than simple physical incapacity itself. In my opinion the Act distinguishes between the concept of incapacity and the question whetherincapacity is compensable and, if so, by whom; see, for example, ss 16 (2) and 40 (1). In Arnotts Snack Products Pty Limited v Yacob at 177 their Honours said that incapacity may not necessarily attract compensation under s 11 (1) of the 1926 Act because it resulted in no loss of earning power. The same can be said of s 40 (1) of the 1987 Act. The appellants relied upon statements in the judgment of Clarke JA in MLC Insurance Limited v Pinto (1994) 10 NSW CCR 101 at 106-7. With all respect there is nothing in his Honour's judgment which supports the appellants" submission. In the alternative the appellants submitted that there was evidence of further aggravation during the period after August 1989, particularly when the worker was trimming in the chiller, and that this incapacity, which occurred after the second appellant went off risk, was the relevant incapacity. With all respect this argument has no merit. The evidence was and his Honour accepted it that the incapacity to work as a slaughterman occurred in August 1989. No ground is shown for interfering with this finding. LUMP SUM PAYMENT The appellants submitted that his Honour gave no reasons for concluding that the first respondent suffered a permanent loss of efficient use of the left arm below the elbow of 15 percent. His Honour referred in some detail to the evidence of four doctors on this topic. Dr Marnie had first seen the worker in March 1992. He opined that the osteoarthritic changes in the radio-carpal and inter-carpal joints were definite and would not be related to the worker's childhood injury but would be related to the heavy, forceful, and repetitive work done with his wrists over the years. He said that as a result of the repetitive use of his wrists the worker had a 15 percent permanent impairment of his left lower arm. Dr Meachin in a report of 22 November 1993 did not agree with Dr Marnie's opinion that the developed arthritis in the left wrist was truly work related. In his opinion the worker developed arthritis in his left wrist as a result of a combination of the fracture at the age of fourteen and the nature of his work at Blayney Abattoirs for many years after. He agreed that the worker had a 15 percent disability of his left lower arm below the elbow. Dr Christie examined the worker in November 1993. In his opinion his problems stemmed from the fracture of his left wrist at the age of fourteen. He thought the present condition of the wrist was due approximately 60 percent to the fracture that occurred at the age of fourteen and 40 percent to his work from 1968 to 1989. He thought that he had a 12 percent loss of efficient use of his left arm. URJ BLAYNEY ABATTOIRS PTY LIMITED v O'DEA (Sheller JA) 5 Dr Aroney saw the worker on 30 November 1992. In his opinion the progression of the osteoarthritis was an age related problem rather than work related. He said: As for any permanent impairment of the left arm I would be willing to concede that the pre existent disease of osteoarthritis probably accounts for 10 percent loss of efficient use of the left arm as a whole but that this is, in my opinion, totally age related not work related. His Honour's conclusion involved the acceptance of the opinions of Drs Marnie and Meachin as to the degree of impairment and a preference for Dr Marnie's opinion as to the extent to which the worker suffered the loss of the efficient use of his left arm as the result of the aggravation or exacerbation of the disease; s 66 (1). His Honour gave no reasons for this choice. The appellants relied upon this Court's decision in Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247. However in that case Mahoney JA at 272 pointed outthat there is no ground for reversal 'in the fact that, having made clear the facts on which he based himself, the learned judge did not detail the steps by which he proceeded from those facts to his final conclusion.' The appellants advanced no reasons why his Honour should have preferred the evidence of the doctors who took a different view from that of Dr Marnie. None of the doctors gave oral evidence. As is nowadays the common practice the parties tendered the reports and left it to the judge to read them and reach his own conclusion. The appellants urged that his Honour's acceptance of a permanent loss of efficient use of 15 percent as a result of the injuries sustained, that is to say the aggravation or exacerbation of the disease in the course of employment, was inconsistent with the following statement in his judgment: The second continuing problem, a problem which has existed since before 1979 and still exists, is osteoarthritis of the left wrist. The applicant sustained a fracture when playing football at the age of 14 and since his employment with the various respondents his condition has gradually deteriorated. He now has well established degenerative changes in the left wrist, which all doctors agree have been aggravated, accelerated, exacerbated by the duties he was carrying out as a slaughterman for the Blayney Abattoirs. The appellants pointed to the distinction between an injury being a disease which is contracted by a worker in the course of employment (s 4 (b) (i) of the Act) and the aggravation or exacerbation or deterioration of 'any disease' where the employment was a contributing factor to the aggravation, acceleration, exacerbation or deterioration (s 4 (b) (ii) of the Act). As I understand the argument, it was that by concluding that this was an aggravation case, his Honour must or should have accepted that part of the impairment found resulted, as Drs Meachin and Christie thought, from the fracture of the wrist when the worker was a boy. With respect I think this argument involves too great a refinement of the evidence and particularly the medical evidence. All this proceeded on the basis that at the age of fourteen the worker fractured his wrist and that osteoarthritic changes followed. To the extent to which those changes resulted in permanent impairment or loss of efficient use of the left arm, his Honour accepted that this resulted from work related aggravation. No reason is shown for interfering with this conclusion. In any event Schedule 6 to the Act, Pt 6 'Provisions relating to compensation for non-economic loss (Table of Disabilities)', cl 6 states that if a loss mentioned in the Table to Division 4 of Part 3 resulted both from an injury received before 6 UNREPORTED JUDGMENTS the commencement of that Division and an injury received after that commencement, the loss shall for the purposes of determining the amount of compensation payable in accordance with Pt 3 of the Act, be treated as having resulted from the injury received after that commencement; see Clutha Limited v Danswan (1993) 9 NSWCCR 225; NSW Department of Technical Education v Pitt (1993) 9 NSWCCR 309; JA Crockett Pty Limited v Cox (1994) 10 NSWCCR 622. In my opinion no ground has been shown for disturbing his Honour's conclusion that a 15 percent loss of the efficient use of the left arm below the elbow resulted from the aggravation or exacerbation of the osteoarthritic condition and the quantification of the amount payable under s 66 accordingly. The appeal against the award under s 67 depended upon the s 66 award being shown to be too high. It, too, should be dismissed. ORDERS In my opinion the appeal should be dismissed with costs. Powell JA. I agree with Sheller JA Appeal dismissed with costs. Counsel for the appellant: J D Hislop QC Solicitors for the appellant: Curwood and Partners Counsel for the first respondent: P Webb QC/P M O'Rourke Solicitors for the first respondent: White Barnes Counsel for the second respondent: M J McAuley Solicitors for the second respondent: John Sharpe