Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Fairfield City Council v Arduca [2015] NSWCA 166 Hearing dates: 13 March 2015 Decision date: 18 June 2015 Before: McColl JA; Meagher JA; Sackville AJA Decision: Leave to appeal refused. Order the applicant pay the respondent's costs of the application for leave to appeal. Catchwords: WORKERS COMPENSATION – Workers Compensation Commission – review of Arbitrator's decision by Presidential member – whether applicant employer denied procedural fairness before Arbitrator – where employer relied on s 57 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) as disentitling worker to weekly compensation – where question raised as to reasonableness of worker's failure to continue in employment – whether provision of "suitable duties" under injury management plan was put in issue WORKERS COMPENSATION – Workers Compensation Commission – review of Arbitrator's decision by Presidential member – where Presidential member determined whether applicant employer had given notice disputing liability in accordance with s 74 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) – whether when doing so Presidential member failed to engage with substance of employer's argument Legislation Cited: Workers Compensation Act 1987 (NSW), s 43A Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 47, 57, 74, 254, 261, 288, 353 Cases Cited: Mateus v Zodune Pty Limited t/as Tempo Cleaning Services [2007] NSWWCCPD 227; 6 DDCR 488 Category: Principal judgment Parties: Fairfield City Council (Applicant) Giuseppe Arduca (Respondent) Representation: Counsel: J S Emmett (Applicant) B G McManamey (Respondent) Solicitors: Leigh Virtue & Associates (Applicant) Villari Lawyers (Respondent) File Number(s): 2014/184077 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Workers Compensation Commission Citation: [2014] NSWWCCPD 31 Date of Decision: 29 May 2014 Before: Deputy President Kevin O'Grady File Number(s): A1-304/13 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] On 16 October 2008, the respondent was injured at work, suffering bilateral inguinal hernias. After returning to work and performing 'light duties' as proposed by an injury management plan, the respondent resigned on 19 April 2010 "due to ill health". On 22 April 2010, the applicant employer disputed liability for those injuries alleging that the respondent had unreasonably elected to retire rather than comply with its injury management plan as required by s 47 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (WIM Act). The respondent referred this dispute to the Workers Compensation Commission. In two decisions, an Arbitrator found in favour of the respondent. Those decisions were affirmed by a Presidential member on appeal. The applicant employer sought leave to appeal against those decisions. That appeal was limited to questions of law. The issues before the Court were: Whether the applicant employer was denied procedural fairness in relation to the Arbitrator's conclusion that s 57 of the WIM Act did not disentitle the respondent to weekly compensation payments; and Whether the Presidential member failed to address the applicant's argument that its letter of 13 October 2011 had sufficiently complied with s 74 of the WIM Act in relation to its reliance on the respondent's non-compliance with s 254 of that Act. The Court held, refusing leave to appeal: In relation to (i): The question before the Arbitrator was whether the respondent's failure to continue in his employment was unreasonable. That question turned on whether the respondent could undertake the duties assigned under the injury management plan without further injury: at [24]. The respondent adduced evidence that he could not: at [19]-[21]. There was no denial of procedural fairness in the Arbitrator concluding that those duties were not "suitable" in that sense. In relation to (ii): The Presidential member considered the whole of the applicant's letter of 13 October 2011: at [32]. That letter did not comply with s 74 as it did not raise the issue of the respondent worker's alleged failure to comply with s 254 sufficiently clearly: at [35]. There was no constructive failure to address the applicant's argument as to the efficacy of that letter and its entitlement to rely on the worker's non-compliance with s 254 of the WIM Act. Judgment 1. THE COURT: The applicant employer seeks leave under s 353 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the WIM Act) to appeal from a decision of a Presidential member of the Workers Compensation Commission: Fairfield City Council v Arduca [2014] NSWWCCPD 31. The right to appeal under s 353 is limited to questions of law and, in this case, leave to appeal is required as the decision below was interlocutory: s 353(1), (4). 2. The decision of Deputy President O'Grady affirmed two interlocutory decisions of the Commission constituted by an Arbitrator. By the first of those decisions on 11 December 2013, the Arbitrator found that the respondent was entitled to weekly compensation payments for bilateral hernia injuries resulting from a work accident that occurred on 16 October 2008. Orders were then made to enable the amount of those weekly payments to be quantified. The Arbitrator's second determination, made on 11 February 2014, confirmed the findings of the first and fixed the quantum of those weekly payments. Although the applicant seeks leave to appeal from both determinations, the subject matter of the proposed appeal was addressed and decided by the first. Background facts 1. On 16 October 2008, the respondent injured his back and groin whilst lifting heavy storm water grates on to the back of a truck. Subsequent investigations showed that he had suffered bilateral inguinal hernias. From that time until he resigned his employment with the applicant on 19 April 2010, the respondent worked intermittently. He returned to work on 19 January 2010, performing 'light duties' as proposed by an injury management plan established by the applicant. On 8 April 2010 the respondent's general practitioner, Dr Sanki, recommended that he cease that work. The respondent did so, resigning on 19 April 2010 "due too ill health". That resignation was effective immediately. 2. On 22 April 2010 the applicant wrote to the respondent noting his decision to resign "rather than elect to continue to participate in your Injury Management & Return to Work plans, directed at returning you to your employment". That letter continued: We are also required to notify you that, in these circumstances, further compensation benefits are not payable, having regard to the provisions of s 57 of the Workplace Injury Management & Workers Compensation Act 1998. 1. Section 254 of the WIM Act provides that neither "compensation nor work injury damages are recoverable by an injured worker unless notice of the injury is given to the employer as soon as possible after the injury happened". Section 261 then provides for the making of a claim for compensation, in the case of injury, within six months after it happened. A failure to give notice or make a claim within the time provided by these sections is not a bar to the recovery of compensation if, in the case of the notice there are "special circumstances", and in the case of the claim, s 261(4) is satisfied. 2. On 1 July 2011 solicitors acting for the respondent served a notice of claim on the applicant in respect of the hernia injuries. The applicant's solicitor gave a notice disputing liability for that claim on 13 October 2011. That notice purported to be given under s 74, subs (1) of which provides that if an insurer (which relevantly includes the applicant as a self-insurer) "disputes liability in respect of a claim or any aspect of a claim" it must give notice of that dispute to the claimant. The applicant's letter (the relevant parts of which are set out in [29] below) stated that it disputed liability to pay medical, hospital and treatment expenses as well as lump sum compensation and relied on "Sections 57, 74, 254, 255, 260, 261 and 323" of the WIM Act. 3. On 14 December 2012 the respondent worker (named as applicant) referred those disputes concerning his claims for weekly benefits compensation and compensation for permanent impairment to the Commission for determination, as provided by s 288 of the WIM Act. The issues in the proposed appeal 1. Before the Arbitrator the applicant resisted the respondent's claim on several bases. One was that the respondent had failed to comply with his obligations under an injury management plan, with the result that by the operation of s 57(1) he lost his entitlement to ongoing weekly payments of compensation. The Arbitrator rejected that argument. In its appeal to the Deputy President the applicant contended that it had been denied natural justice because in rejecting that argument the Arbitrator decided that it had not provided the respondent with suitable work duties, thereby addressing an issue which was not raised between the parties. The Deputy President rejected that aspect of the appeal. His decision to do so is the subject of proposed grounds of appeal 1 and 2. 2. The applicant also argued before the Arbitrator that the respondent had not given notice of his injury in accordance with s 254. One of the applicant's grounds of appeal to the Deputy President was that the Arbitrator failed to consider this argument. The Deputy President accepted that the Arbitrator had overlooked this argument due to a "misconception" of the applicant's submissions: [2014] NSWWCCPD 31 at [73]. He then proceeded to deal with the question (which also was not addressed by the Arbitrator) whether the applicant had given a notice complying with s 74 in relation to its reliance upon s 254. He noted that before the Arbitrator and on the appeal, the respondent had relied upon the absence of such a notice in answer to the applicant's reliance upon s 254. Addressing that question, the Deputy President concluded that s 74 had not been complied with in relation to that basis for disputing liability for the hernia injuries. That decision is the subject of proposed grounds of appeal 3 and 4. Proposed Grounds 1 and 2: the applicant's reliance upon s 57 The reliance upon s 57 1. Section 57(1) provides: If a worker fails unreasonably to comply with a requirement of this Chapter after being requested to do so by the insurer, the worker has no entitlement to weekly payments of compensation during any period that the failure continues, subject to subsection (2). 1. It was agreed by counsel for the applicant that the relevant Chapter requirement was imposed by s 47(2) and was that the worker "comply with obligations imposed … by or under any injury management plan for the worker". Such a plan is defined in s 42(1) as: … a plan for co-ordinating and managing those aspects of injury management that concern the treatment, rehabilitation and retraining of an injured worker, for the purpose of achieving a timely, safe and durable return to work for the worker. [emphasis added] The Arbitrator's first determination 1. The Arbitrator accepted that, by its letter dated 22 April 2010, the applicant had provided adequate notice of its contention that s 57 disentitled the respondent to ongoing weekly payments. The Arbitrator correctly formulated the question which then arose as being whether the applicant had successfully discharged its onus of establishing that 'the [respondent] failed unreasonably to comply with the [applicant's] injury management and return to work plans': [192]. 2. The Arbitrator concluded this issue in favour of the respondent worker, reasoning as follows: [193] A consideration of this question involves an analysis of the respondent's [applicant's] injury management and return to work plans and whether the respondent [applicant] provided the applicant [respondent] with suitable work. Then one needs to consider whether the applicant [respondent] unreasonably refused to co-operate with the plans. … [195] Copies of the injury management and return to work plans are not in evidence. The reports from Prowork recommended that a suitable return to work plan be devised and presumably that involved the applicant [respondent] resuming suitable duties in the nursery for 20 hours per week. [196] It is unclear from the evidence when the applicant [respondent] was transferred from the nursery to the cleaning duties. He seemed to cope with the nursery work and it could not be said that he had failed to co-operate with the respondent's [applicant's] injury management and return to work plans, whatever they were, when he was working in the nursery. He was later transferred to a cleaning position that involved bending, lifting, prolonged standing, walking over uneven ground and lifting bags of rubbish. [197] According to the applicant's [respondent's] unchallenged evidence, these duties aggravated his lower back and groin pain. He also developed respiratory problems because he was exposed to grass. His supervisor was informed of his difficulties but she did not offer any alternative duties, not even the work in the nursery. [198] What comprises suitable duties is defined in s 43A of the 1987 Act as it existed prior to the 2012 amendments. … … [199] The cleaning work provided to the applicant [respondent] may well have been consistent with the 5 kg lifting restriction identified in the WorkCover certificates, but the respondent [applicant] was on notice that the applicant [respondent] was experiencing difficulties with the tasks. The work was not only aggravating his left groin pain but also his back. Despite this knowledge, the respondent [applicant] chose to retain the status quo and told the applicant [respondent] that there was no other suitable work available. [200] On the basis of this evidence, I am not satisfied that the respondent [applicant] complied with its obligation to provide the applicant [respondent] with suitable duties. It forced his hand and this led to his resignation. The decision of the Deputy President 1. Before the Deputy President the applicant argued that the Arbitrator's conclusion at [200] involved a denial of procedural fairness because the question of whether the applicant had provided "suitable duties" for the respondent was not raised as an issue before the Arbitrator. The applicant argued that it was not given the opportunity directly to address that issue and lead evidence contesting the respondent's position that he was unable to perform the light duties required of him under his injury management plan. 2. The Deputy President rejected this argument, concluding at [59]: The appellant's reliance upon the provisions of s 57 required a determination of the reasonableness of Mr Arduca's conduct in ceasing the work provided by the appellant. Argument raised by him required a determination of the suitability of that work. The appellant's argument concerning this aspect of the Arbitrator's reasoning and its assertion of relevant error is rejected. 1. Before this Court the applicant contended that the Deputy President's failure to hold that it had been denied procedural fairness before the Arbitrator involved an error of law because it revealed a failure to understand the requirements of procedural fairness. Did the Deputy President err in concluding there was no denial of procedural fairness? 1. To establish that the respondent was not entitled to weekly payments of compensation after 19 April 2010 the applicant had to establish that he had failed unreasonably to comply with its injury management plan. 2. Notwithstanding that it bore that onus, the applicant did not lead any evidence as to what its injury management plan required of the respondent or address the alleged unreasonableness of the respondent's actions in resigning rather than continuing to undertake the tasks that plan required. Indeed the applicant's submissions before the Arbitrator disavowed any criticism of the respondent's decision to retire, relying instead on the mere fact that he had elected to do so (tcpt 18/11/13, p 19): The [respondent] doesn't [take reasonable steps to meet his obligations], and again I say that without scintilla of criticism. He has elected to retire, good luck to him. But the operation of section 57 is that he is excluded from being entitled to weekly compensation. And that, with respect, puts the matter at an end, he has no entitlement. 1. That submission ignores the requirement that the worker's conduct be unreasonable and was made in the face of the respondent's evidence, and that of Dr Sanki, that he could not perform the light duties assigned to him without experiencing physical discomfort and further injury. 2. The respondent, by his statement of 27 November 2012, gave the following evidence: 76. On 19.1.10 I returned to light duties, 4 hours per day, 5 days per week with a lifting restriction of 5 kgs and standing/travelling as required. Again, I was sent to collect rubbish in parks and the work aggravated my lower back and groin pain, as well as my allergies. … 80. On about 8.4.10 I attended Dr. Sanki and he recommended I cease work and gave me a letter to this effect. 81. On 19.4.10 I resigned from my employment with the Respondent. I gave the Respondent a copy of the letter from Dr. Sanki. 1. Dr Sanki's evidence, by his short letter dated 8 April 2010, was: I recommend that Mr Giuseppe Arduca stops working as from today the 8.4.10 because of the following:- 1. Bilateral inguinal hernia repair with left inguinal inguidynia causing him a lot of problems in standing, walking and bending following the repair. 2. Chronic lower back pain caused by disc lesions in the lower back with stiffness in the movements of his lumbar spine and bilateral radiculopathy causing weakness in both lower limbs. 3. Chronic abdominal bloating and pain with dyspepsia, which has not been amenable to any form of treatment despite adequate treatment by the Gastroenterologist and several Gastroscopies and Colonoscopies. I recommend that this patient is totally disabled and unable to continue with his present job on account of his education, experience and the ability to work. He is therefore to be given his superannuation as he is fit for retirement at the moment. He is partially and permanently disabled. 1. This evidence, and the respondent's submission that he had made "genuine efforts to comply with the return to work programme" (tcpt 30/09/13, p 5) raised an issue as to whether the respondent was able to comply with his obligations under the injury management plan without aggravating his hernia condition. If he was not able to do so, it could hardly be said that his failure to comply was unreasonable. The respondent's evidence, supported by that of Dr Sanki, was that he could not perform the 'light duties' which his work required without further aggravating that condition. 2. Counsel for the applicant accepted that the respondent's capacity to comply with the injury management and return to work plan without injuring himself was in issue and that the Arbitrator was entitled to make the findings he made at [197] and [199] (extracted in [13] above). Those findings were that the worker was unable to perform the duties which had been assigned to him safely so as not to aggravate his existing conditions or cause further injury. The applicant maintained, however, that it had nevertheless been denied procedural fairness because there was never an issue flagged as to whether it had provided "suitable" work. 3. The Arbitrator may have confused matters by referring to "suitable employment", as defined, until its repeal in 2012, by s 43A of the Workers Compensation Act 1987 (NSW), and by framing his findings in those terms. However, his conclusion that he was not satisfied that the applicant had provided the respondent with "suitable duties" was another way of stating that the duties which the respondent was required to perform under the injury management plan aggravated his existing injuries, thereby rendering the respondent's failure to continue in that employment not unreasonable in the terms of s 57. 4. The rules of procedural fairness required that the applicant be given the opportunity of ascertaining the relevant issues and addressing them by evidence. That happened before the Arbitrator. The ultimate issue was whether the respondent's failure to continue in his employment was not unreasonable. That issue turned on whether he could do so without further injury. The employer bore the burden of proof, and despite the evidence adduced by the respondent that he could not continue in his employment, the applicant led no evidence that really contradicted it. In the course of addressing that issue there was, at worst, a minor infelicity of expression in the Arbitrator's reference to "suitable duties". It necessarily followed from his earlier conclusions that the respondent's refusal to continue in that work was not unreasonable. There was no denial of procedural fairness and no error on the part of the Deputy President in so concluding. 5. Leave to appeal on proposed grounds 1 and 2 should be refused. Proposed Grounds 3 and 4: the applicant's argument concerning the efficacy of the s 74 notice The issue before the Deputy President 1. As we have explained above, the Deputy President addressed whether the applicant was able to rely upon an asserted failure of the respondent to give notice of the hernia injuries in accordance with s 254 of the WIM Act. The respondent argued that this question must be answered in the negative because that ground for disputing the applicant's liability to pay compensation for those injuries had not been the subject of a notice complying with s 74. It was accepted between the parties in this Court that if the employer did not give such a notice sufficiently promptly, the employer could not dispute the worker's claim on the basis of non-compliance with s 254. Accordingly, whether that position correctly states the effect of s 74 does not arise. 2. Section 74 relevantly provides: (1) If an insurer disputes liability in respect of a claim or any aspect of a claim, the insurer must give notice of the dispute to the claimant. (2) The notice must contain the following: (a) a statement of the reason the insurer disputes liability and of the issues relevant to the decision, (a1) a statement to the effect that the worker can request a review of the claim by the insurer, (b) unless paragraph (c) applies, a statement to the effect that the worker can refer the dispute for determination by the Commission, … (2B) A notice under this section must be expressed in plain language. 1. The applicant relied upon a letter from its solicitors to the respondent's solicitors dated 13 October 2011. Referring to the respondent's notice of claim dated 1 July 2011, that letter stated: … the reasons that liability is declined (limited to our client's period of risk as a self insurer after 1 July 1996) are as follows:- 1. Your client has not sustained injury. 2. Any medical condition is not causally connected to any injury. … 8. Your client has not given notice of injury nor claimed compensation benefits in accordance with the requirements and the time limits imposed by the legislation. … [What follows appears at the top of page 2 of the letter] The issues relevant to this dispute are those identified above and the sections of the legislation on which our client relies in declining liability include Sections 4, 9, 9A, 33, 36, 37, 38, 38A, 40, 60, 66 and 67 of the Workers Compensation Act 1987 and also Sections 57, 74, 254, 255, 260, 261 and 323 of the Workplace Injury Management and Workers Compensation Act 1998. … The decision of the Deputy President 1. The Deputy President concluded that this letter did not satisfy s 74 in relation to the appellant's reliance upon any failure of the respondent to give notice under s 254. He reasoned as follows: [75] In a very broadly stated notice issued by the appellant's solicitor on 13 October 2011, the only reference relevant to any question of notice of injury (s 254 of the 1998 Act) appears in, what may be described as, a "catch all" paragraph which stated as follows: "The issues relevant to this dispute are those identified above and the sections of the legislation on which our client relies in declining liability include Sections 4, 9, 9A, 33, 36, 37, 38, 38A, 40, 60 and 67 of the Workers' Compensation Act 1987 and also Sections 57, 74, 254, 260, 261 and 323 of the Workplace Injury Management and Workers' Compensation Act 1998." [76] The question of "notice of injury" had not been, otherwise, specifically raised. There was, as argued by Mr Arduca at the hearing before the Arbitrator, no specific reference to failure to notify concerning the hernia injury. That question, having regard to the Arbitrator's misapprehension, had not been addressed by him. … [78] Mr Arduca's complaint concerning the absence of particularity in the s 74 notice is, in my opinion, well founded. It is well established that proper compliance with the provisions of s 74 requires more than a mere recitation of a section or sections of the Acts upon which reliance is placed by an employer or insurer (see Mateus v Zodune Pty ltd t/as Tempo Cleaning Services (2007) 6 DDCR 488). Did the Deputy President err in concluding that the notice did not comply with s 74? 1. The applicant argues that the Deputy President "appears to have overlooked the express reference to failure to give notice in accordance with the requirements of the legislation, on the first page" of the letter dated 13 October 2011 in the paragraph numbered 8. It is submitted that in doing so the Deputy President failed to engage with the substance of its argument and thus erred in law. 2. In our view, it cannot be concluded that the Deputy President overlooked the contents of this paragraph. The reference in the introductory words in [75] of his reasons to a 'very broadly stated notice' is reasonably understood as being to the whole of the notice including the very general statements on the first page. Those statements recite most, if not all, of the possible reasons for declining a claim of liability to pay workers compensation. Several of them could not have applied to the respondent's claim. For example, there was no issue as to his not having sustained any injury. That paragraph of the Deputy President's reasons then correctly records that the only reference to any failure to give notice of injury in accordance with s 254 (described as one of the issues "identified above") is in the "catch all" paragraph at the top of the second page. It is then observed at [76] of the reasons that the question of "notice of injury" had not "otherwise" been specifically raised. That language also indicates that the Deputy President has made a finding having regard to the whole of the letter. 3. Accepting that a notice given under s 74 must be "expressed in plain language" (s 74(2B)), what the Deputy President was concerned with was whether the notice was in boilerplate form and did not specifically flag the issue or issues on which the applicant wished to rely, notwithstanding that in March 2009 it had admitted liability to pay compensation for the hernia injuries. 4. If, contrary to our view, the Deputy President overlooked the terms of paragraph 8 when considering the efficacy of the notice, there was no error in his ultimate conclusion that it did not comply with s 74. Although paragraph 8 referred to the respondent not having given "notice of injury", it did not specify the injury referred to. That was significant in relation to the respondent's claim because it referred to two injuries: Date of Injury: 9.3.1995: Injury to the back and right leg. 16.10.2008: Injury to lumbar spine and bilateral hernias. 1. The failure of the applicant's letter to specify the injury for which timely notice had not been given was problematic. The applicant Council was a self-insurer from 1 July 1996. It had, until April 2010, unconditionally accepted liability to pay compensation for the hernia injuries. Although the applicant's letter of 13 October 2011 was expressed as directed to its liability as a self-insurer, in the light of its prior admission of liability for those injuries it was not obvious that it was now denying liability because notice of them had not been given "as soon as possible" and asserting that there were no "special circumstances" falling within s 254(3). As Deputy President Roche observed in Mateus v Zodune Pty Limited t/as Tempo Cleaning Services [2007] NSWWCCPD 227; 6 DDCR 488 at [45], an employer's obligations under s 74 are not satisfied by a document that leaves "the worker to work out exactly which issues are disputed". 2. There are two further matters which are relevant to whether the applicant can successfully rely upon a failure to comply with s 254(1). For that reason, they are also relevant to whether leave to appeal should be granted. The first is that the Arbitrator found the respondent had given oral notice of his injury to the applicant on 16 October 2008, which is prior to the notification on 13 February 2009 that the applicant argues was too late: first determination at [46], [184]. The second is that, even if the applicant established that there was a failure to give notice under s 254(1), that non-compliance may not be a bar to recovery of compensation, given that the applicant subsequently admitted liability and does not appear to have been prejudiced by any delay: s 254(3). These factors weigh strongly against any grant of leave to argue grounds 3 and 4. 3. Leave to appeal on those grounds also should be refused. Orders 1. The orders of the Court are: 1. Leave to appeal refused. 2. Order the applicant pay the respondent's costs of the application for leave to appeal. *********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 June 2015