AKORA HOLDINGS PTY LTD v LJUBICIC

DECISION: (3) Direct that the notice of appeal filed on 15 November 2007 be treated as validly filed and served and that steps taken with respect thereto be treated as sufficient compliance with the rules.

(5) Order that the appellant pay the respondent's costs of the proceedings in this Court.

CATCHWORDS: APPEALS - interlocutory appeal - leave requirement - appeal "in point of law" - complaint about manner in which Presidential member of Workers Compensation Commission dealt with inferences drawn and facts found by arbitrator - Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 353 - WORKERS' COMPENSATION - application to vary award - calculation of income from cleaning business which constituted worker's earnings - whether legal error in approach adopted by arbitrator - further steps identified to allow for relevant calculation - WORKERS' COMPENSATION - scope of appeal from arbitrator to Presidential member of Workers Compensation Commission - procedural powers available to arbitrator and Presidential member - whether requirement that Presidential member identify error - power of Presidential member to review findings made and inferences drawn by arbitrator - Workplace Injury Management and Workers Compensation Act 1998 (NSW) - ss 352, 354

LEGISLATION CITED: Workers Compensation Act 1987 (NSW), s 55 Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 352, 353, 354

Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Cage Developments Pty Ltd t/as Monaro Mix Specified Concrete v Schubert [1981] 2 NSWLR 227 CASES CITED: Cage Developments Pty Ltd v Schubert [1983] HCA 37; (1983) 151 CLR 584 Cook v Midpart Pty Ltd trading as McDonalds Forster [2008] NSWCA 151 Hampton Court Ltd v Crooks [1957] HCA 28; 97 CLR 367 Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26

PARTIES: Akora Holdings Pty Ltd (Appellant) Franjo Ljubicic (Respondent)

COUNSEL: G Little SC/S B Marsh (Appellant) L King SC/F Austin (Respondent)

SOLICITORS: McCulloch & Buggy (Appellant) Leitch Hasson Dent (Respondent)

LOWER COURT JURISDICTION: Workers Compensation Commission

LOWER COURT JUDICIAL OFFICER: Acting Deputy President Robin Handley

LOWER COURT MEDIUM NEUTRAL CITATION: Ljubicic v Akora Holdings Pty Ltd [2007] NSWWCCPD 160

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40535/07 WCC 16554/04

HODGSON JA BASTEN JA CAMPBELL JA

5 December 2008 AKORA HOLDINGS PTY LTD v Franjo LJUBICIC Judgment 1 HODGSON JA: I agree with Basten JA. 2 BASTEN JA: In 1997 Mr Franjo Ljubicic ("the worker") was injured in the course of his employment. He obtained an award of workers' compensation, which was subject to variation because of a change of circumstances: Workers Compensation Act 1987 (NSW), s 55(1). 3 In October 2004 the worker's former employer, Akora Holdings Pty Ltd ("the appellant"), lodged an application with the Workers Compensation Commission, seeking to vary the award by having it terminated. That application has had a tortuous procedural history in the Commission, the appellant having been twice successful before arbitrators and twice having the orders set aside by Deputy Presidents, who have required that the matter be remitted for further hearing. The present appeal concerns a decision of Acting Deputy President Handley, made on 19 July 2007, revoking the second arbitrator's decision and remitting the matter for redetermination by another arbitrator: Ljubicic v Akora Holdings Pty Ltd [2007] NSWWCCPD 160. 4 The appellant's case in the Commission, as presently relevant, did not turn on medical evidence, but on the discovery of a contract entered into in 2002 by the worker and his wife with an entity known as Corporate Cleaning Utilities. The purpose of the contract was to provide cleaning services at premises in Macquarie Street, Sydney. The amount payable under the contract, calculated on a weekly basis, exceeded the amount of the worker's earnings, but for his injury, at the relevant time. 5 The issue considered by the second arbitrator (Mr Bruce McManamey) was whether the income from the cleaning business constituted earnings of the worker, in whole or in part. A factual difficulty in determining this question arose from the lack of acceptable evidence as to who did the work required under the cleaning contract and what expenses may have been properly off-set against the gross payments. 6 On 12 February 2007, the Commission issued a certificate recording the determination of the arbitrator terminating the award (and hence the compensation payments) from 6 October 2004. An appeal from that decision was available to a Presidential member, pursuant to s 352 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the Workplace Injury Act"). Such an appeal was described as being "by way of review of the decision appealed against": s 352(5). Further evidence could be received by the Commission on appeal, but only by leave: s 352(6). The nature of such a review has been the subject of consideration in this Court on a number of occasions: see Cook v Midpart Pty Ltd trading as McDonalds Forster [2008] NSWCA 151 at [10] (Allsop P, Ipp and Bell JJA agreeing). There is no requirement for the Presidential member to identify an error of law, or probably a specific error of any kind, in order to intervene. 7 The decision of the Deputy President setting aside the determination of the arbitrator was subject to appeal by a party aggrieved by his decision "in point of law" to this Court: s 353(1). Because the order of the Deputy President did not determine the appellant's application, but remitted it for further hearing, it was an interlocutory decision and accordingly the appeal required leave: s 353(4). That fact was belatedly recognised by the appellant which, the day before the hearing of the purported appeal, filed a notice of motion seeking leave to appeal and procedural orders designed to correct the record. No objection to the competency of the appeal having been taken by the worker, it would usually be appropriate to accede to such a motion and to treat the hearing as a concurrent hearing of the leave application and the appeal. However, in circumstances where the incompetent notice of appeal fails to identify with clarity a point of law, the Court will not automatically grant such an indulgence. Where the matter has proceeded to a full hearing it may be appropriate that the orders have the effect that the applicant, if unsuccessful, will not have an opportunity to bring fresh proceedings. 8 In the present case, inadequate attention was given to the requirements of s 353, not only in respect of the leave requirement, but also in respect of the identification of a point of law. The grounds of appeal relied upon were as follows: "1. That the Acting Deputy President erred in law in holding that the Arbitrator was not entitled to draw an inference unfavourable to the Respondent in circumstances where the Respondent had failed to comply with his obligation to provide financial records over a consistent period of time, had given vague and inconsistent evidence concerning his activities and earnings, had concealed from medical examiners the fact that he was working at all and failed to call corroborative evidence from other witnesses who would be thought to have been available to support his contentions.

2. The Acting Deputy President further erred in law in not taking into account the fact that where all the facts are known to one party, then slight evidence in favour of the Appellant's proposition will suffice in the absence of evidence being given to rebut the inference arising from the Appellant's evidence." 9 Despite use of the words "erred in law", these grounds did not identify with any degree of clarity, a point of law. In terms, they complained of the manner in which the Deputy President had dealt with the drawing of inferences and finding of facts by the arbitrator. Yet, on an appeal by way of review, the Deputy President undoubtedly had power to review factual findings made and inferences drawn by the arbitrator. The difficulty in identifying legal error in such an exercise is accentuated by the breadth of the procedural powers available, both to the arbitrator and to a Deputy President, in proceedings before the Commission. Thus, s 354 of the Workplace Injury Act states (in part): " 354 Procedure before Commission (1) Proceedings in any matter before the Commission are to be conducted with as little formality and technicality as the proper consideration of the matter permits. (2) The Commission is not bound by the rules of evidence but may inform itself on any matter in such manner as the Commission thinks appropriate and as the proper consideration of the matter before the Commission permits. (3) The Commission is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. … (7) An assessment or determination is to be made by the Commission having regard to such information as is conveniently available to the Commission, even if one or more of the parties to the assessment or determination proceedings does not co-operate or ceases to co-operate." 10 The interrelationship of ss 353 and 354 demonstrate that the Deputy President was bound to apply legal principle, including the terms of the relevant legislation and any general law principles relevant to the application before him: see Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 at 29-30 (Gleeson CJ and Handley JA) and 40-41 (Kirby P). In so far as the Deputy President did not himself determine the application, but merely set aside the existing decision and remitted the application for redetermination, the scope for error in point of law was limited. If the Deputy President had wrongly identified the law to be applied, a relevant error might have arisen. But the legal principle must be a matter of substantive law and not procedure or evidence, as to which wide scope is permitted by s 354. 11 The first ground of appeal concerned a statement by the Deputy President in his reasons at [32] in the following terms: "In the present case, the Arbitrator referred to the fact that neither Mr Ljubicic's wife nor his son gave evidence in support of Mr Ljubicic and that this failure was not explained, and drew an inference from this 'that their evidence would not have advanced' Mr Ljubicic's case. In my view, while the Arbitrator could infer from this that Mr Ljubicic was, possibly, the principal person performing work under the cleaning contract, the Arbitrator was not entitled to infer from this that the monthly cheque for $3,872.00 received pursuant to the contract was 'all earned by the Respondent Worker' …." 12 The Deputy President then referred to appropriate methods for determining how much of the gross payments were properly attributable to the worker's labour, as discussed by this Court in Cage Developments Pty Ltd t/as Monaro Mix Specified Concrete v Schubert [1981] 2 NSWLR 227 at 230-231. The Deputy President was of the view that the arbitrator had not followed the approach outlined in Cage: reasons at [33]. He further expressed the view that the arbitrator had, thereby, committed "an error of law". 13 Cage Developments was not a case in which error of law was found on the part of a judge of the Workers Compensation Commission. The judgments in the case sought to resolve apparent conflicts between different approaches in judgments of the High Court. Glass JA (with whom Reynolds JA agreed) found that "once incapacity for work has been established as a physical fact it is no answer for the employer to show that earnings accrue to the worker from sources independent of his personal exertion": at p 229. His Honour also considered the means by which the earnings of the worker were to be differentiated from the earnings of the business, where the worker was an independent contractor. Cage Developments does not, properly understood, require a particular result in particular circumstances, nor does it preclude the drawing of an inference that all or most of the earnings of a business are the earnings of the worker, in the absence of evidence which would allow the necessary differentiation to be undertaken. An error in point of law might arise if the arbitrator had failed to appreciate the need to distinguish between the earnings of the business and those of the worker. However, the reasons given by the arbitrator reveal that he did not fail to recognise the legal distinction. To the extent that the Deputy President identified an error of law on the part of the arbitrator that conclusion was itself an error in point of law. Pursuant to s 354 of the Workplace Injury Act, the arbitrator had a wide discretion as to how to resolve the relevant factual question, once the legal issue was correctly identified. 14 Why the Deputy President sought to identify an error of law is obscure: he did not need to do so to justify appellate intervention by him: see [6] above. It appears from the following paragraphs of his reasons that, as a matter of assessing the factual merits of the case, the Deputy President considered that the arbitrator should not have reached the conclusions that he did. Thus, he stated: "34. However, I recognise the dilemma faced by the Arbitrator, and previously by Acting Deputy President Tydd, who were thwarted by Mr Ljubicic's failure to provide specific evidence as to his wife's and their son's involvement in the cleaning business, their earnings from the business, and the costs and expenses of the business, all of which evidence, it is reasonable to assume, is in the possession or under the control of him and his wife. 35. It should be noted that in performing its task, the Commission should avoid unwarranted speculation: Goktas v Goodyear Australia Pty Ltd [2007] NSWWCCPD 1 (' Goktas '), at paragraph 49. In my view, an appropriate way forward for an arbitrator in circumstances where an employer has satisfied the arbitrator that a change of circumstances has occurred, but there is insufficient evidence for the arbitrator to determine the weekly payments payable, is to give specific directions to the parties for the production of evidence and the making of relevant submissions to enable the Commission to perform its task avoiding unwarranted speculation. For example, following the same approach as that adopted by Deputy President Roche in Goktas , the Commission, as a specialist tribunal, could inform itself on what appears to be the applicable award for cleaners and the relevant weekly rates of pay, and direct the parties to make submissions about the applicability and relevance of that award and those rates of pay to the determination of the average weekly amount Mr Ljubicic is earning or would be able to earn in some suitable employment from time to time post injury pursuant to section 40(2)(b) of the 1987 Act. In the event that the parties fail to comply with such directions, the Commission would then be in a position to make a determination of the amount of weekly payments, if any, payable to the worker (section 55(2)(b)) in accordance with Cage ." 15 These last paragraphs explain why the Deputy President set aside the determination of the arbitrator in this case. He considered that, absent further procedural steps, the conclusion reached demonstrated unwarranted speculation in circumstances where the onus of proof lay on the employer and further steps were available which might provide a firmer basis for a conclusion. 16 There was debate between the parties as to the appropriateness of the Deputy President's remarks. The appellant contended that the arbitrator drew the only appropriate inference in the circumstances before him. Counsel for the worker noted that the appellant bore the burden of proving a change in circumstances and that there were undoubtedly other steps (not limited to those noted by the Deputy President) which it might have taken to ascertain the relevant facts, but did not. This debate, however, may be put to one side: there being no suggestion that the approach adopted by the Deputy President was capricious, arbitrary or otherwise manifestly unreasonable, it did not reveal error in point of law. 17 To the extent that the Deputy President purported to identify legal error on the part of the arbitrator, that conclusion may itself be said to reveal legal error on the part of the Deputy President. However, read in context, it was not a material or operative error. If that conclusion were removed from the Deputy President's reasons, it is sufficiently clear that he would still have set aside the decision of the arbitrator for the reasons articulated at [34]-[35]. 18 In support of the second ground of appeal, the appellant sought to rely upon remarks of Dixon CJ in Hampton Court Ltd v Crooks [1957] HCA 28; 97 CLR 367 at 371. That case involved a challenge to a jury verdict in favour of the plaintiff, who had sued for injuries suffered as a result of a slip and fall on a wet floor. The problem for the plaintiff was that proving the circumstances of the fall was not sufficient to provide a basis for a finding of negligence. Some further evidence was required to establish a lack of care on the part of the defendant. As Dixon CJ noted in a well known passage, in circumstances where "the facts can hardly be within the knowledge of the plaintiff and, at all events so far as concerns the care and control of the premises and the precautions taken, must be peculiarly within the knowledge of the defendant", further evidence was required but "very little might have been enough". 19 That proposition does not avail the appellant in the present case. It is not in terms a principle of law at all, but describes a practical approach to the burden of proof, in particular circumstances. It may describe the approach adopted by the arbitrator, but the Deputy President was at liberty not to follow such an approach if he thought it inappropriate in the circumstances. Even if the approach did generally constitute a principle of evidence or procedure to be followed in applying the relevant burden of proof, it did not bind the Commission, which was freed of such constraints by s 354 of the Workplace Injury Act. 20 Quite apart from the operation of s 354, the appellant's complaint, to raise an error of law, must challenge the failure of the Deputy President to accept that a particular finding of fact was the only one open in the circumstances. But where the appellant bears the burden of proof, it will be a most unusual case where it can contend, as a matter of law, that the evidence which it has adduced must be accepted and establishes the point on which it bears the burden: cf Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156 (Glass JA, Samuels JA agreeing). The present is not such a case. Conclusions 21 For these reasons, the appellant has failed to demonstrate an operative legal error. Nevertheless, because the Deputy President did reach a conclusion which may be described as an error in point of law, the application for leave to appeal should be granted. Because that error was not, when read in the context in the Deputy President's reasons, determinative of the outcome of his review, the appeal should be dismissed. The appellant must pay Mr Ljubicic's costs in this Court. 22 I would propose the following orders:

(1) Extend the time for Akora Holdings Pty Ltd to seek leave to appeal to 15 September 2008.

(2) Grant Akora Holdings Pty Ltd leave to appeal from the decision of the Workers Compensation Commission constituted by Deputy President Handley, given on 19 July 2007.

(3) Direct that the notice of appeal filed on 15 November 2007 be treated as validly filed and served and that steps taken with respect thereto be treated as sufficient compliance with the rules.

(5) Order that the appellant pay the respondent's costs of the proceedings in this Court. 23 CAMPBELL JA: I agree with the orders proposed by Basten JA, and with his reasons. A further reason why Cage Developments should not be regarded as requiring any particular methodology to be followed to quantify the present earning capacity of a worker who has been injured but who thereafter performs work for a business of which he is the owner or a part owner arises from remarks in the High Court. An appeal from the decision of the New South Wales Court of Appeal in Cage Developments was dismissed: Cage Developments Pty Ltd v Schubert [1983] HCA 37; (1983) 151 CLR 584. In their joint judgment Gibbs CJ, Murphy, Brennan, Deane and Dawson JJ said, at 587: "… there is no single way in which the actual or potential earnings of such a former worker must be determined. The circumstances of the particular case will indicate what way or ways are open and what evidence is relevant for that purpose and it is undesirable to confine the Commission within the strict limits of artificial rules laid down in advance by an appellate court." **********

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