FUGEN HOLDINGS PTY LIMITED v HOWLE [1999] NSWCA 103

New South Wales Court of Appeal CITATION : FUGEN HOLDINGS PTY LIMITED v HOWLE [1999] NSWCA 103 FILE NUMBER(S) : CA 40186/98 HEARING DATE(S) : 15 April 1999 JUDGMENT DATE : 15 April 1999

PARTIES : FUGEN HOLDINGS PTY LIMITED v DAVID JOHN HOWLE JUDGMENT OF : Priestley JA at 1; Giles JA at 36; Studdert J at 37

LOWER COURT JURISDICTION : Compensation Court LOWER COURT FILE NUMBER(S) : CC 12768/97 LOWER COURT JUDICIAL OFFICER : His Honour Judge Walker

COUNSEL : Appellant - J.D. Hislop QC / G.J. Parker Respondent - J. Glissan QC / G. Edwards SOLICITORS : Appellant - McCulloch & Buggy Respondent - Taylor & Scotts CATCHWORDS : Workers compensation ; procedural fairness ACTS CITED : Workers Compensation Act 1987 section 67 DECISION : Appeal allowed - new trial ordered

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40186/98 CC 12768/97

PRIESTLEY JA GILES JA STUDDERT AJA

Thursday, 15 April 1999

FUGEN HOLDINGS PTY LIMITED v HOWLE

1 PRIESTLEY JA: This is an appeal by an employer against an award made by Walker J in the Compensation Court on 9 March 1998. The worker had injured himself at work on 26 July 1996. He filed an application for compensation on 9 July 1997. 2 Included in the number of claims in the application was a claim for compensation pursuant to s 67 of the Workers Compensation Act. In the application it was said to be "s 67 $16,550 representing twenty-five per cent of a most extreme case". Section 67 is the section in the Act which says that a worker who has suffered losses of specified kinds is entitled to receive compensation in an amount not exceeding $50,000, as the Act stood at the relevant time, by way of compensation for pain and suffering resulting from the loss resulting from a compensable injury of the kind dealt within s 67 subs 1. 3 Walker J, after hearing the various claims made by the worker, made a number of awards the only one of which it is necessary to mention here was the award pursuant to the s 67 claim. That award was for an amount of $30,000. The difference between what was originally claimed and what was awarded was the basic reason for the appeal in circumstances which I will briefly describe. Those circumstances fall into two parts. What happened before the trial and what happened at the trial. 4 Before the trial medical reports and other documentation were served upon the employer by the worker's legal representatives. They appear in the blue appeal book and as I understood the argument today it is not disputed that the documents in the blue appeal book did come to the attention of the employer's solicitors before the trial. 5 The particular documents that are relevant are these. There was a letter of referral by a Dr McDonald who worked in either a company or a partnership of doctors who, according to their letterhead, were consultants in rehabilitation medicine. This first letter, dated 2 June 1997, was directed to the Penrith Therapy Centre, mentioned the injury suffered by the worker, referred him to that centre for pain management counselling, and observed that his injury had caused some mood disturbance. 6 A letter written by Dr McDonald a little later to another medical practitioner also referred to the worker having had some significant mood disturbance and said that for this reason Dr McDonald had referred him to a clinical psychologist for pain management counselling. 7 A letter of 6 August 1996 written to the same doctor, mentioned that things had improved emotionally with the assistance of a clinical psychologist, and a letter written in November 1997, again to the same medical practitioner, recorded that the worker was managing to control his pain by various measures and emotionally was coping reasonably. 8 At the trial the worker gave evidence concerning his emotional disturbances. In summary, he gave evidence in examination in chief of mood swings, of depression, of having had suicidal thoughts and of having become much more irritable with his wife and children than he had been before his injury, and that he suffered feelings of regret because of the way he occasionally showed irritability with his family by, as he said, rousing on them when there was really no need for it. 9 There was no complaint or objection by counsel for the employer when this evidence was led in chief. In cross examination counsel for the employer asked a few questions concerning the visits by the worker to the psychologist. It was in the course of the cross examination that an error that had crept in in examination in chief was corrected. The person to whom Dr McDonald had sent the worker was Dr Solomon, a clinical psychologist. In examination in chief he was referred to as a psychiatrist, towards the end of the cross examination it was the worker himself who corrected this misapprehension on the part of the barristers, saying that Dr Solomon was a psychologist. It was agreed during the course of the hearing today that that appeared to be the case. 10 Then it appears from the judge's reasons that submissions were made to him on 23 February, and that in the course of the submissions counsel for the worker submitted to the court that if the judge were to accept the worker's evidence as given then it really warranted an eighty per cent finding in regard to its relationship to a most extreme case under s 67, rather than the twenty-five per cent that had been claimed in the worker's application. The judge recorded that this submission provoked great concern from counsel for the employer who argued that the employer had come to court to meet a case pleaded at twenty-five per cent. The judge also recorded that counsel for the employer submitted that as a matter of law it was not open to the worker to seek an award under s 67 greater than that claimed in his application. 11 After the submissions had been made, the judge reserved his decision. He delivered his judgment not long afterwards on 9 March. In his reasons for judgment, after going through the facts of the case and in regard to s 67 recording what had happened in the course of the addresses of the respective counsel, he dealt with the questions whether he had power to make an award greater than that claimed in the application for determination and whether he had power as a matter of law to permit an amendment of the application during the course of hearing. He held that the court did have power to do both those things. Those conclusions have not been challenged in the appeal. 12 He had recorded that counsel for the employer had argued that the worker could not claim a higher figure at that stage in the hearing, in the submissions, without amending his pleadings and that if the judge were to accede to that request, procedural fairness would require an adjournment of the case to allow the employer to meet the amended claim. 13 When he came to deal with that aspect of the case in his reasons, he said that if the applicant had for the first time adduced evidence of his emotional condition at the hearing, he would have had no hesitation in granting an adjournment for the respondent to qualify a psychiatrist. But he said the employer became aware of significant mood disturbance in June 1997. This was a reference to the letters of Dr McDonald that I've earlier referred to. He went on: "In those circumstances it was hard to see how, because the worker gave greater details of a condition of which the employer was aware, that could be grounds for adjournment even if it might allow the court to award a more generous assessment." 14 Earlier he had said much the same thing when he was recording submissions that had been made about this aspect of the case. He said that the employer had been provided with the rehabilitation consultant's report of 6 June 1997, which mentioned significant mood disturbance and reference to a clinical psychologist but the employer had not availed itself of the right to have the applicant psychiatrically assessed. 15 I pause here to mention one matter that caused some discussion in the course of the appeal. At one part of his reasons the judge had said there was in the end no application to adjourn the proceedings - that is at p 17 of the red appeal book. But at p 19 of the red appeal book he had said that the employer was well aware of the applicant's emotional problems and was not, in his opinion, prejudiced by his decision not adjourn the proceedings to allow further evidence. 16 The way in which these two statements may be read as standing together involves me in running briefly again over the sequence of events at the trial. In summary, evidence was led from the worker without objection concerning his mood swings and other matters of emotional disturbance. There was no objection by counsel for the employer. 17 At that point counsel for the employer knew what was being claimed was I can call for short a twenty-five per cent claim under s 67. 18 Then in the course of the submissions counsel for the worker claimed eighty per cent; he wished to make the twenty-five per cent claim an eighty per cent claim. 19 Counsel for the employer immediately protested. As the judge recorded it, it seems to me that he made his position perfectly clear. He was objecting to the claim being enlarged, he was doing so on the ground that there was no power to do for various reasons which were probably not sound, but was saying if the judge were to go ahead and allow the claim to made on the enlarged basis, then procedural fairness required that he should have an adjournment. 20 At that point he was not, as I read it, simply saying I ask the court for an adjournment, which I infer is what the judge meant in the first of the two apparently conflicting statements mentioned above; instead counsel was opposing the attempt, which turned out to be successful on the worker's part, to enlarge the claim from a twenty-five per cent claim to an eighty per cent claim and pointing out that, in his submission at any rate, he would be entitled to an adjournment if his submissions in that earlier respect were not accepted. 21 In the circumstances it seems to me that what was said by counsel was plainly a conditional application for an adjournment, the condition being that if his primary submissions were unsuccessful, he would be asking for an adjournment. That is the way matters were left when the judge reserved his decision. 22 Then in the second passage that I quoted earlier in which the judge spoke as if he were refusing an application for an adjournment, it seems to me the judge was acting correctly, in that, having decided to allow the enlargement of the claim he needed to consider the conditional request for an adjournment, the condition now having become a reality. 23 This brings me to the central part of this appeal. As I have said, there was no submission here against the power of the judge to amend the claim and no submission against his power to award a figure larger than any referred to in any of the medical evidence, so long as he thought there was other evidence outside the medical evidence justifying the larger figure. 24 I think I omitted to mention a few minutes ago in going through the judge's reasons for judgment that it was in the course of delivering his judgement that having given his reasons for his opinion that he had the powers which I have just been referring to, he went on to say that he then and there amended the worker's claim to be in terms an 80 per cent claim. 25 His reasons for saying that he did not think an adjournment needed to be granted in the circumstances, were, as I have already indicated, substantially that, in his view, the employer knew before the hearing started that there was going to be some sort of a claim in regard to the s 67 aspect of the case based on mood swings and the need to have been referred to a clinical psychologist. 26 At this point I should mention in fairness to counsel, that in the course of argument this morning there were some observations from the bench indicating that counsel at trial, who did not appear in the appeal, may have been at fault in not objecting to the enlargement of the worker's evidence in regard to emotional swings and the like when the worker was being examined in chief. 27 On reflection I don't think that counsel deserves criticism for having taken that attitude. At the time when the questions were asked, the claim was a twenty-five per cent claim. It seems to me that it was well within proper conduct of the case from counsel's point of view to take the attitude that while this evidence might well justify the court in allowing the twenty-five per cent claim as asked, since that was all that was being asked for counsel would not protest because of the view that it would be quite a good result for the employer if it escaped with only a twenty-five per cent s 67 award against it. The basis for that being a proper approach on the part of counsel would be counsel's well justified belief that this was a twenty-five per cent claim. 28 In my opinion the trial judge was right, at least to some extent, in saying that the employer was aware of the worker's s 67 claim being one in which there would be reference to emotional distress and mood swings suffered by the worker as a result of the loss for which he was claiming. 29 However, the trial judge does not seem to have taken into account that, although the employer may have been on notice of the nature of the claim, a very significant aspect of the claim was that it was a twenty-five per cent s 67 claim. That was what the employer had gone to the trial to meet and the judge did not, in my opinion, take into account that from the employer's point of view there was a very significant difference between a twenty-five per cent claim and an eighty per cent claim; and, the employer had had no reason, until submissions were being made by the worker's counsel, to think he had to meet an emotional distress case in support of an eighty per cent s 67 claim. 30 In my view the judge should have taken that into account. His not doing so indicates that he did not fully appreciate or take into account the major change in the worker's case under s 67, which was happening, moreover, as late as in the course of addresses; and in my view his failure to take that aspect of the case into account vitiated his discretionary decision in relation to an adjournment. 31 In the same way as counsel for the employer today did not contest the legal propositions concerning the power of the trial judge to make an amendment and to find a percentage result greater than that supported by the medical evidence alone, counsel for the worker readily acknowledged that a denial of natural justice or a failure of procedural fairness, as denial of natural justice is mostly referred to these days, when it occurs, is an error or law and an error of law is sufficient to ground an appeal to this court from the Compensation Court. 32 In the circumstances of this case where the judge's discretion concerning the allowance of an adjournment miscarried, the result was that the employer was deprived of an opportunity of dealing with a new case raised against the employer at a stage when the employer could not possibly deal with it as matters stood before the trial judge. 33 Although it may not be right to say that it was absolutely mandatory for an adjournment to be given in the circumstances, in my opinion the need for an adjournment to be granted was so strong that the refusal of the adjournment, even in the somewhat roundabout way in which it eventually turned out to be the refusal of an adjournment, amounted to a denial of procedural fairness in the requisite sense. 34 The result is that in regard to the s 67 award, which I repeat is the only aspect of the judge's orders and awards that was challenged in the appeal, there has to be a new trial. 35 In formal terms, this court needs to set aside that award, uphold the appeal against it and order a new trial limited to the s 67 claim; the employer would be entitled also, in my opinion, to the costs of the appeal. 36 GILES JA: I agree 37 STUDDERT AJA: I also agree. 38 PRIESTLEY JA: The orders of the court are as I suggested they would be. 39 GLISSAN: Might I have leave to take your Honours back to the appeal of Howle in relation to one matter, to make an order that the respondent pay the appellant's costs. Would your Honours make that subject to an order of providing for the Suitors' Fund, if suitably qualified. 40 PRIESTLEY JA: Yes. This seems to be exactly the sort of case where we should grant a Suitors' Fund certificate, and we do accordingly. **********