Welcome to the March 2012 issue of the Edwards Michael Lawyers eBulletin.

Appeal Win for Employers Mutual on “deemed worker” issue

Employers Mutual recently succeeded in an appeal from an Arbitrator’s decision in relation to a “deemed worker” issue: Sekuloska v Sekuloski [2012] NSWWCC PD 10.

The Claimant and the insured were married and jointly owned a property which they renovated with funds drawn down from a joint loan account.  They agreed that the Claimant would undertake some of the renovation work himself and be paid a daily rate out of the loan funds.  The insured obtained an Owner Builder Permit and took out a workers compensation policy.  Other members of the family performed work on the renovation for which they were paid.

The Claimant alleged that he was a “deemed worker” within the meaning of Schedule 1, Clause 2 of the 1998 Act, on the basis that he had contracted to perform work having a value in excess of $10 other than in the course of a trade or business carried on by him and that he did not employ workers.  He succeeded before the arbitrator on the basis that he had a reasonable expectation of payment in accordance with the agreement made with the insured, his wife.

Employers Mutual appealed the Arbitrator’s decision on the bases that (a) there had not been a legally binding contract between the Claimant and the insured as there had been no intention to create legal relations in all the circumstances, (b) no consideration had passed in that the Claimant was in fact being paid out of his own money (the joint loan funds), and (c) the claimant did not undertake the work in consequence of the promise of payment, but rather because it was in his own interest to undertake renovations of his own home using loan funds for which he was jointly liable.

Deputy President Roche upheld the insurer’s appeal on the issues raised.  He considered that there was a presumption against an intention to create legal relations in family or domestic arrangements; that there could have been no consideration for the contract in circumstances where the Claimant was in effect being paid with his own money; that the Claimant did not undertake the work in consequence of the promise of payment and would have done it in any event; and that the terms of the alleged contract were too vague in that it was open to the Claimant to determine what work he did, when he did it, and the manner in which it was to be carried out.

The circumstances of this case were unusual but it nevertheless it serves to highlight that care must be taken to examine the circumstances of an arrangement giving rise to an allegation of “deemed worker” to ensure that the fundamental elements of a legally binding contract have been established.

Another Appeal Win for Employers Mutual: Insufficient medical information for weekly compensation claim

Recently, Deputy President Bill Roche considered this issue in Kohlrusch v. Macquarie Education Group Australia Pty Ltd [2012] NSW WCC PD 15, a determination on an Appeal from the decision of the Registrar’s Delegate.

Part 7 of the Guidelines for Claiming Benefits provides that an insurer has a reasonable excuse for not commencing provisional liability payments if “there is insufficient medical information”.  The injured worker’s solicitor filed an Application for an Interim Payment Direction which was refused by the Registrar’s Delegate on the agreed relevant issue between the parties, namely, whether the reasonable excuse of “insufficient medical information” was “current/relevant”.  On hearing the parties, the Delegate of the Registrar refused to issue an Interim Payment Direction.

The worker’s appeal from the Delegate’s refusal was considered by Deputy President Roche on 22 March 2012.  Essentially, the worker’s solicitor provided medical information to the insurer in the nature of medical certificates from Dr Lawrence where it was argued on behalf of the insurer that the certificates provided insufficient “medical information to establish there is an injury” as required by the Guidelines for Claiming Benefits, because they provided no findings and a doubtful diagnosis.

Deputy President Roche stated [at 53]:

“While it was not necessary for Dr Lawrence to provide a detailed history in a medical certificate, the issue in this case is not whether Ms Kohlrusch has established an entitlement to compensation, but whether, because it did not have enough medical information, the insurer had a reasonable excuse for not commencing provisional payments.  Though the insurer was misguided in believing that a psychiatric injury can only exist if there is a diagnosis that comes within DSM-IV, the Delegate’s finding that the medical evidence provided by Ms Kohlrusch was insufficient, was open to him.  This conclusion follows regardless of the additional medical evidence the parties obtained.”

The Deputy President observed [at 54]:

“While it is correct that a worker does not have to establish that his or her condition comes within one or more of the descriptions in DSM-IV, which is only “a ‘diagnostic manual’ for clinical use” (Spigelman CJ in State of New South Wales v. Seedsman [2000] NSWCA 119 at [114]), where a doctor has used an unknown term (such as that used by Dr Lawrence in her WorkCover certificate of 3 August 2011), an insurer has a reasonable excuse for declining provisional payments.”

The Deputy President also briefly considered the issue of whether the filing of an Application for Expedited Assessment in this instance was appropriate, as at the time of the Teleconference before the Delegate the worker had been off work in excess of 12 weeks, being the maximum period of weekly benefits that can be paid pursuant to an Interim Payment Direction, and her incapacity was continuing.  The Deputy President stated:

“In other words, the actual period of incapacity was longer than 12 weeks.  In these circumstances, to deliberately restrict the claim to a shorter period, though not expressly forbidden by the legislation, could be considered to be an abuse of process.  In Saldanha v. Fujitsu Australia Ltd [2010] WADC 43, an abuse of process was found when a worker arbitrarily split a longer claim into two shorter claims to obtain procedural benefits that applied to shorter claims.  Without deciding it, it may be that a similar situation has occurred in Ms Kohlrusch’s case.  The practice of deliberately restricting a continuing claim to 12 weeks to obtain a perceived procedural advantage is, at the least, inappropriate and should stop.”

Whether the filing of an Application for Expedited Assessment represents an abuse of process is very much a matter dependent upon the facts of a particular claim.  In this instance, the solicitor was under instructions to proceed with an Application which was “not expressly forbidden by the legislation”.  The only procedural advantage with respect to the claim was the fact that the solicitor at the time wrongly (in light of the subsequent determination) placed reliance on the medical certificate of Dr Lawrence, rather than a more detailed report from that source or from a specialist Psychiatrist.

More on Causation from the High Court

In Strong v Woolworths Limited [2012] HCA 5, a slipping case involving a shopping centre, the High Court recently considered the issue of causation, although in reality the case concerned the onus of proof, the sufficiency of evidence, and the inferences available to be drawn where scant evidence exists.

The Claimant had suffered injury after slipping on a chip and the Defendant had conceded that there had been a breach of the duty of care in that the cleaning system was inadequate.  In order to succeed, however, the Claimant had to establish on the balance of probabilities that she would not have suffered injury but for the breach of duty and this required a determination as to how long the chip had been on the floor.

The Claimant slipped on the chip at about 12:30pm and the evidence indicated that it could have been dropped at any time after 8:00am.  An adequate cleaning system would have detected and removed the chip by 12:10pm and the question was whether it was more probable than not that it had been dropped prior to that time, as if it were dropped after that time an adequate cleaning system would not have detected it in any event.

The Claimant won at first instance but lost before the Court of Appeal, as that Court did not consider it was open on the evidence to conclude that the chip had been on the ground long enough to have been detected by an adequate cleaning system, particularly having regard to the fact that there was no evidence, such as that the chip was dirty or cold, to suggest that it had been there for a long time.  The Court of Appeal also gave weight to the circumstances that the accident occurred at lunchtime, that it was likely that the chip had been purchased for lunch, and that the adjacent food court had heavier traffic during the lunch hour.

The High Court rejected the reasoning of the Court of Appeal on the basis that it constituted “speculation” and held that a finding that the chip had been present for more than 15 minutes was open on the basis that, in the absence of any evidence suggesting how long it had been there, it was probable that it had been dropped during the far larger proportion of time between 8:00am and 12:10pm rather than in the relatively short period immediately prior to the injury.

In a dissenting decision, Heydon J embarked upon a detailed analysis of the nature of shifting evidential burdens and held that, in the absence of any direct evidence as to how long the chip had been present, it was not possible for the Claimant to discharge the onus which rested upon her.  His Honour did not consider that a “mere mechanical comparison of probabilities” enabled a court to reach the required actual sense of persuasion that one possibility was any more probable than another.

During the course of its consideration the High Court discussed the test of causation provided by s.5D of the Civil Liability Act 2002 and compared the concepts of a necessary condition to the suffering of harm as required by the section (the “but for” test) and the position at common law that causation will be established where the breach of duty is a material contributing factor to the harm suffered, although in the context of the decision these observations should probably be regarded as obiter dicta.

Credit Issues in Workers Compensation Commission

In Workers Compensation Nominal Insurer v Adnan Al Othmani [2012] NSW CA 45, the Court of Appeal considered the issue of whether a Presidential Member is constrained by an Arbitrator’s findings in relation to credit issues.

The claimant suffered serious injuries, including paraplegia, when he fell from a roof whilst attempting to fix a leak on premises he rented from the owner of the premises.  He alleged that there was an agreement that he would be paid $1,000.00 by the owner to fix defects in the premises.  The Arbitrator found that there were discrepancies in the claimant’s evidence and she preferred the evidence of the owner that there had been no offer for payment to fix a leak in the roof or to carry out other work around the property.

Mr Al Othmani’s appeal to a Presidential Member was successful.  The Presidential Member conducted her own assessment of the evidence and accepted that the owner offered to pay the claimant the sum of $1,000.00 to fix a number of defects in the property, including the work on the roof he was undertaking at the time of the injury.  She found that Mr Al Othmani was a “deemed worker” within the meaning of Clause 2, Schedule 1 of the 1998 Act.

The Court of Appeal determined that the Presidential Member was not obliged to exercise the same restraint in dealing with credit findings as an Appellate Court in circumstances where the member conducts his or her review on the papers, including the transcript of hearing before the Arbitrator.

The Court also held that whilst the Presidential Member had erred in law by incorrectly stating that the Arbitrator had applied a subjective test in declining to find that a contract existed, the error did not affect the Presidential Member’s ultimate conclusion that the contract rejected by the Arbitrator was made out.

The Court emphasised the requirement of Section 352 for the Presidential Member to conduct a review in order to reach the “preferable and correct” decision.

Section 151Z Recovery for International Aircraft Incident

In United Airlines Inc v Sercel Australia Pty Limited [2012] NSW CA 24, the NSW Court of Appeal considered a Section 151Z recovery action by a New South Wales employer in respect of injury to its employee, who was in the course of his employment, sustained when he was struck by an object that detached from the interior of an aircraft as it was braking after landing in Houston, Texas.

United attempted to argue that the Section 151 recovery action was caught by a two (2) year time limit imposed by the Civil Aviation (Carriers’ Liability) Act, 1959 (Cth) or, in the alternative, that New South Wales law did not invoke a recovery right in respect of injury sustained in Texas.

The Court found against United in relation to both issues.  Firstly, it held that the time limitation only applied to the right to damages or liability imposed by the Convention for the Unification of Certain Rules Relating to International Carriage by Air:

“The conformance with the Convention was as to monetary limit.  The time bar, being inapt for such an action, was not picked up by Parliament…”.

In relation to the jurisdictional issue, the Court held that the action by the employer is not an action in tort, rather it is a claim under a statutory indemnity governed by the law of New South Wales.  It held that the statutory indemnity permits recovery for injuries sustained outside New South Wales in accordance with New South Wales law.