Guppy v Victorian WorkCover Authority & Anor [2010] VSCA 164

1 I have had the considerable advantage of reading in draft the reasons for judgment of Emerton AJA. For the reasons which her Honour gives, I too would allow the appeal and give the appellant leave to bring proceedings in respect of the second injury.

3 The appellant, Mr Guppy, is a 36 year old man from regional Victoria who is married with a young family. Throughout his working life, which commenced when he left school at the age of 16, he has undertaken manual labour of one kind or another.

4 In circumstances that will be described more fully in the course of this judgment, Mr Guppy injured his back on 21 May 2001 whilst in the employ of Malcolm McClure Pty Ltd ('McClures'), an earthmoving and road construction firm. He was off work for approximately three weeks, returned to work on light duties, but continued to experience pain in his back. On medical advice, he ceased work and left McClures in September 2001.

5 In early 2004, Mr Guppy approached Bendigo Access Employment Inc ('Access') in the hope that Access would assist him to find suitable employment, given his physical limitations. Access is a job network agency specialising in assisting disabled people to return to or find work. In April 2004, Mr Guppy commenced work on a part-time basis for Access. On 19 August 2005, he suffered a further injury, which was an aggravation of the earlier injury, in the course of his employment with Access. After a short time off work, he returned to work at Access. His employment with Access came to an end in 2007 and he has not worked

6 In November 2008, a judge of the County Court of Victoria heard applications brought by Mr Guppy pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 (Vic) ('the Act') for leave to commence proceedings for damages in respect of the injury sustained while working for McClures ('the first injury') and the injury sustained while working for Access ('the second injury'). The applications were heard together. The particulars of injury in each application were:

(a) injury to low back at the L5/S1 level;

(b) lumbar sacral prolapse;

(c) aggravation of spinal degeneration;

(d) lumbar disc prolapse and/or extrusion impinging on nerve roots;

(e) sciatica affecting both legs;

(f) anxiety and depression;

(g) pain and suffering attendant upon the back injury.

7 Mr Guppy submitted that each injury was a serious injury as defined in s 134AB(37) of the Act, being a permanent serious impairment or loss of back and/or spinal function.

8 The learned judge below accepted that, as a result of the first injury, Mr Guppy had suffered a loss of earning capacity of 40 per cent or more. His Honour also accepted that that situation was likely to continue into the foreseeable future. His Honour granted leave to commence common law proceedings against McClures for both pain and suffering and pecuniary loss and damages. However, he dismissed the application in respect of the second injury, that is, the injury that Mr Guppy sustained while working for Access.

9 Mr Guppy now appeals against the dismissal of his application against Access, as he is entitled to do by virtue of s 134AD of the Act. He has filed a Notice of Appeal containing grounds of appeal, inter alia, that on the weight of the evidence and on the balance of probabilities, he has suffered a serious injury within the meaning of sub-paragraph (a) of the definition of 'serious injury' in s 134AB(37) of the Act. He contends that the learned judge below erred in finding that he had not suffered a serious injury to his low back of the relevant kind in that, on the weight of the evidence and on the balance of probabilities, Mr Guppy suffered injury to his low back on 19 August 2005 that was an aggravation of a pre-existing condition. It is said that the aggravation, of itself, caused Mr Guppy to suffer 'very considerable' consequences with respect to pain and suffering and loss of earning capacity.

10 It is not necessary to have regard to the grounds for appeal in any greater detail, as s 134AD of the Act provides that on the hearing of an appeal to this Court from a decision made on an application under s 134AB(16)(b), this Court should 'decide for itself' whether the injury is a serious injury. The Court must do so on the evidence and other material before the judge who heard the application, and on any other evidence which this Court may receive under any other Act or rules of court.

11 Counsel for Mr Guppy advised the Court that in order to establish that the second injury was a serious injury, Mr Guppy relied on the consequences of the impairment with respect to loss of earning capacity. He did not rely on the consequences of the impairment with respect to pain and suffering, as changes in Mr Guppy's daily living were not sufficient to establish a serious injury on that basis.

12 The question for this Court is therefore whether the loss of earning capacity that is the consequence of the second injury is such as to qualify the second injury as a 'serious' injury.

13 Section 134AB(37) of the Act relevantly defines 'serious injury' as 'permanent serious impairment or loss of a body function'.

14 The method for determining whether the impairment or loss of body function is 'serious' is contained in a suite of paragraphs in s 134AB(38). In the circumstances of the second injury, those paragraphs operate in the following way:

• the term 'serious' is to be satisfied by reference to the consequences to Mr Guppy of the impairment with respect to loss of earning capacity when judged by comparison with other cases in the range of possible impairments (para (b));
• the impairment shall not be held to be serious unless the loss of earning capacity consequence is, when judged by comparison with other cases in the range of possible impairments, 'fairly described as being more than significant or marked, and as being at least very considerable' (para (c));
• the Court shall not grant leave[1] on the basis that Mr Guppy has established the loss of earning capacity required by para (b) unless he establishes, in addition to the requirements of para (c), that he has a loss of earning capacity of 40 per cent or more, measured as set out in para (f), and that he will continue permanently to have a loss of earning capacity which will be productive of financial loss of 40 per cent or more (para (e));
• for the purposes of para (e), Mr Guppy's loss of earning capacity is to be measured by comparing his gross income from personal exertion (expressed at an annual rate) which he is earning, or is capable of earning, in suitable employment as at the date of the hearing of the application by the County Court (November 2008), with the gross income (expressed at an annual rate) that Mr Guppy was earning, or was capable of earning, from personal exertion (or would have earned or would have been capable of earning from personal exertion) during that part of the period within 3 years before and 3 years after the injury as most fairly reflects his earning capacity had the injury not occurred (para (f)).

15 Counsel for the respondent drew the Court's attention to the fact that para (f) has recently been amended by s 57(8) of the Accident Compensation Amendment Act 2010 (Vic) ('the amending Act'). As a result of that amendment, para (f) has been divided into two sub-paragraphs, (i) and (ii), which describe the two elements that must be compared (i.e. post-injury income and pre-injury income). The description of the pre-injury income is unchanged; however, post-injury income is described as the worker's gross income from personal exertion which the worker is earning 'whether in suitable employment or not' or capable of earning in suitable employment as at that date, whichever is the greater.

16 For the reasons set out at the conclusion of this judgment, the applicable para (f) is the one that was in force at the time of the decision below. As Mr Guppy's post-injury employment does not give rise to any issues about suitability, the amendment to para (f) is not, in any event, material for the resolution of this appeal.

17 The effect of the requirements in s 134AB(38) is that to establish that he has suffered 'serious' injury, Mr Guppy must first satisfy the test in paras (e)(i) and (ii), that is, he must establish that his post-injury earning capacity is at least 40 per cent less than his pre-injury earning capacity and that he will continue permanently to have such a loss of earning capacity. In addition, Mr Guppy must satisfy the test in para (c), that is, he must establish that the loss of earning capacity consequence of the second injury can be fairly described 'as being more than significant or marked, and as being at least very considerable', when judged by comparison with other cases in the range of possible impairments.

18 In this case, the injury in question (the second injury) is an aggravation of the first injury. Counsel for Mr Guppy correctly described the parameters within which the Court's consideration of the second injury must take place. The second injury - as an aggravation of the first injury - must itself qualify as a serious injury, that is, the additional impairment caused by the aggravation must bear consequences of sufficient magnitude (more than significant or marked, and at least very considerable) for the second injury to qualify as a 'serious' injury.

19 This is consistent with Petkovski v Galletti,[2] in which the Appeal Division of the Court held, in relation to broadly equivalent provisions of the Transport Accident Act 1986 (Vic), that where there was an aggravation of a pre-existing condition or injury, the applicant was required to establish what injury was caused by the accident. An analysis had to be made of the extent of impairment of a body function before and after the relevant injury, and the additional impairment had to involve serious long term impairment of body function.[3]

Mr Guppy's earning capacity before and after the second injury

20 Mr Guppy was apparently a fit and healthy young man until he sustained the first injury on 30 May 2001. He consulted a physiotherapist straight away, but as his condition did not improve, he saw a doctor, who certified him as unfit for work until about 13 June 2001. Although Mr Guppy returned to work at McClures on light duties and reduced hours, the pain in his back persisted, and he started to suffer pain in his left leg. He consulted Dr Snow at the Bendigo Medical Centre, who referred him to a specialist, Mr Huw Williams, in September 2001.[4] As a result of Mr Williams' opinion, Dr Snow put Mr Guppy off work. Mr Guppy last worked for McClures on 18 September 2001.

21 After leaving McClures, Mr Guppy did not work for some time.

22 In his affidavit sworn on 23 August 2007, Mr Guppy deposed that in February 2004, he attended an interview with Access in the hope that Access would be able to find an employer prepared to take him on and train him in an appropriate employment area. Access itself offered him employment, which commenced on a part-time basis in April 2004. Mr Guppy described his position at Access as an 'on-call casual supervisor of the garden crew'. He principally worked on a small urban farm run by Access known as 'Peppergreen Farm'. He worked three to four days per week for around six hours per day, working with and overseeing work done by the crew, which largely consisted of people with disabilities.

23 In his oral evidence, Mr Guppy said that the amount of work at Access fluctuated. Some weeks he worked a full working week. Sometimes his back prevented him from working so much. This is borne out by the record of his working hours, to which I shall refer in more detail presently.

24 Mr Guppy deposed that in late February 2005, while still working for Access, he obtained additional work with A & J Couriers, a local delivery firm. He worked as a courier after work on most days, totalling around ten hours per week. The courier work involved driving a small hatchback car to deliver a variety of things, from documents to headlights, in the Bendigo area. For six weeks or so in July and August 2005, Mr Guppy also used the delivery car to do some after hours work delivering pizzas and takeaway foods.

25 Mr Guppy's evidence in the County Court was that he did the courier work between 2.30 and about 5.30 in the afternoon after he had finished work at Access. After that he waited at home for calls to deliver pizzas. He earned about $150 per week from the courier work and between $30 and $50 per week from the pizza delivery.

26 Mr Guppy deposed that his work at Access was reduced in early 2005. By mid-2005, he was working Tuesdays and Thursdays from 8.30am to 2.30pm, a total of 11 hours per week. He was mainly doing tree planting, gardening (including supervision of other staff) and some car washing. The heavy nature of some of this work was difficult for him, and he had to take a number of days off because his back was playing up.

27 It is clear that in early to mid- 2005 Mr Guppy's general practitioner, Dr Snow, recommended that Mr Guppy reduce his hours at Access. Dr Snow is the author of a report dated 8 June 2005, which refers to the need for Mr Guppy to undertake modified duties and to avoid activities such as bending at the waist, twisting the spine, lifting and sitting for long periods. Dr Snow reported that Mr Guppy frequently described exacerbation of pain following periods of modest physical work, and that Mr Guppy had been exceeding his (Dr Snow's) recommendations in terms of the restrictions he should follow. However, Dr Snow noted that Mr Guppy was coping well with his small parcel delivery run, and that Mr Guppy was fortunate that his back tolerated frequent movement in and out of the car. Dr Snow opined that Mr Guppy was not capable of performing any more work than he was then doing and that Mr Guppy should reduce the component of manual work.

28 The second injury occurred in late August 2005 in the course of his duties with Access, when Mr Guppy tried to lift a motor mower on and off a vehicle on his own. He was off work for around three to four weeks.

29 Mr Guppy returned to work at Access on light duties on around 20 September 2005. By early 2006, he was working ten hours per week, spread over three days. The work consisted mainly of wood splitting and the supervision of others doing the same work. By July 2006, Mr Guppy was still working for Access ten hours per week, but only on Tuesdays and Thursdays. In his evidence, Mr Guppy said that he found this difficult, especially at the end of the day.

30 Mr Guppy did not resume his courier work or pizza delivery after the second injury.

31 Mr Guppy's work at Access came to an end on 17 August 2007, when he was told that there was no further work available for him. He has not worked since.

32 A handwritten document tendered in evidence below, which the parties apparently accepted as accurate, sets out Mr Guppy's working hours at Access from 27 April 2005 to 26 August 2007 for fortnightly periods ('the Access work summary').

33 The Access work summary shows that between May and December 2004, Mr Guppy usually worked more than 40 hours per fortnight. He frequently worked more than 50 hours per fortnight and during one fortnightly period, he worked 81 hours. From the beginning of 2005 until 10 April 2005, Mr Guppy worked between 15 and 46 hours per fortnight, and usually more than 20. However, for three fortnightly periods between 27 March 2005 and 8 May 2005, Mr Guppy worked only 10 hours per fortnight (or 5 hours per week). Thereafter, his hours of work increased: in the five fortnightly periods leading up to the second injury, Mr Guppy worked 15 hours, 20 hours, 16.5 hours, 28 hours and 20 hours.

34 Mr Guppy submits that the Court should assess his pre-injury earning capacity on the basis of his hours of work over the 12 month period prior to the second injury. The Access work summary shows his average working hours to be 17 hours per week over this 12 month period. In the alternative, he submits that the Court should consider the hours worked in June, July and August 2005, during which time he averaged 10 to 12 hours per week at Access.

35 For its part, the respondent contends that the Access work summary shows that in the eight fortnights prior to the second injury on 19 August 2005, Mr Guppy worked only an average of 16.18 hours per fortnight, or just over 8 hours per week. The respondent says that this is consistent with Dr Snow's observation that Mr Guppy was working in excess of Dr Snow's recommendations, and with Mr Guppy's evidence that in March 2005 he was cutting back on work because of the pain he was experiencing.

36 It is common ground that Mr Guppy's pre-injury earning capacity should also be assessed having regard to the 10 hours of work per week that he performed as a courier.

37 As a result, the difference between the parties on the question of Mr Guppy's pre-injury earning capacity is narrow: Mr Guppy says that it was 20 to 22 hours per week (10 to 12 hours Access and 10 hours courier) 'plus pizza'; the respondent says that it was 18 hours per week (8 hours Access and 10 hours courier) 'plus pizza'. The respondent queried (albeit faintly) the reliability of the evidence of the pizza delivery income but, for the reasons that follow, nothing turns on the pizza delivery income in any event.

38 As was conceded by counsel for the respondent, Mr Guppy's pre-injury earning capacity should be assessed on the basis of the work that he actually did, even though there was evidence that he was doing more than his doctor thought sensible. On this basis, the Court should take into account the full picture shown by the Access work summary, and not just the period from March 2005 onwards, when Dr Snow told Mr Guppy to reduce his hours. Having regard to this larger picture, Mr Guppy's pre-injury work capacity for Access was 17 hours per week, well in excess of the 10 to 12 hours per week which he put forward.

39 I therefore have no difficulty accepting an assessment of Mr Guppy's pre-injury earning capacity for Access based on 10 to 12 hours of work per week. The figure could well be higher; despite the 'handbrake' on Mr Guppy's working hours applied by Dr Snow in early 2005, an assessment of 10 to 12 hours per week is conservative. Even if regard is specifically had to the figures for March to August 2005, as the respondent urges, these figures show that Mr Guppy was beginning again to do more hours in the period leading up to the second injury.

40 I therefore find that Mr Guppy's pre-injury earning capacity was at least 20 to 22 hours per week.

41 It is uncontroversial that when he resumed work after the second injury, Mr Guppy was able to work between 10 and 12 hours per week at Access. However, he did not resume work as a courier.

42 There is some dispute about why Mr Guppy did not resume his work as a courier. Mr Guppy deposed that as a result of the 'flare up' in his back condition - the second injury - he had to leave the work at A & J Couriers as and from 19 August 2005. A report prepared by Dr Snow on 15 April 2006 recorded that Mr Guppy had performed some courier work on 22 August 2005 but could not continue and that, despite improvements, Mr Guppy could not resume working as a courier because he was initially unable to sit. In the County Court, Mr Guppy was asked whether he could have done some courier work when he was put off by Access in August 2007. He said, 'no'. He said that his back 'just couldn't handle it' and that getting in and out of the car aggravated his back condition.

43 This is consistent with a vocational assessment prepared by Katrina Henderson of Evidex Pty Ltd on 28 March 2007, that Mr Guppy was unsuitable for work as a courier/delivery driver because he would have difficulty frequently getting in and out of the car or van and driving for the duration of the shift, even if the trips were short.

44 However, the respondent submitted that the real reason for Mr Guppy ceasing the courier work was his domestic responsibilities following the birth of his daughter in July 2006, when his wife suffered post-natal depression. The Court was referred to a passage in the transcript of the hearing in the County Court in which the following exchange occurred:

Counsel: ... well, what stopped you looking for some work delivering pizzas for a few hours a night, on the nights you weren't working with Access?

Mr Guppy: Because my back's - with the day to day care of the children and all that, it's just been very hard, as far as my back goes.

Counsel: So it's really because of the day to day care of the children and what you have to do there that stops you taking on those extra duties?

Mr Guppy: Well, yes.

45 Elsewhere in cross-examination, Mr Guppy agreed that for the 'couple of years' preceding the County Court hearing, he had been required at home to look after the children.

46 In my view, the preponderance of the evidence shows that, after the second injury, Mr Guppy had difficulty getting in and out of the delivery vehicle and was therefore not able to resume the courier work or pizza delivery. The evidence that he gave in relation to his family responsibilities does not derogate from the evidence that he had to leave the work with A & J Couriers because of his back condition. The particular answer relied on by the respondent in relation to the demands of his family life should be regarded as displaying Mr Guppy's 'willingness to please', which the judge below commented on. It ought to be given slight weight.

47 In a practical sense, then, the second injury resulted in the loss of the courier work. The work for A & J Couriers amounted to almost half of Mr Guppy's pre-injury income. The 40 per cent reduction in income required by sub-s (38)(e)(i) is, in my view, satisfied. Furthermore, I am satisfied on the evidence that Mr Guppy will most likely continue permanently to have that loss of earning capacity, as required by sub-s (38)(e)(ii). It is not necessary to take into account the loss of the pizza delivery work to reach this conclusion.

48 The foregoing analysis is based on the number of hours worked by Mr Guppy, rather than on his 'gross income' expressed at an annual rate as required by sub-s (38)(f). In this case, however, the reference to hours worked amounts to the same thing: Mr Guppy was paid $15.94 per hour for the work that he performed for Access and he was paid $15 per hour for the courier work. As there is little or no difference between these hourly rates, a relative loss of earning capacity can readily be calculated on the basis of the number of hours worked.

49 Once the threshold of a 40 per cent reduction in earning capacity has been met, it is necessary to consider whether the second injury complies with the requirements of sub-s (38)(c). The consequences of the injury must be more than significant or marked, and must be at least very considerable, when judged in comparison with other cases in the range of possible impairments or losses of body function. It was submitted by the respondent that it was not enough for Mr Guppy to show that he has experienced a 40 per cent loss of earning capacity in hours or dollars. That was a necessary but not a sufficient condition. As sub-s (38)(c) makes clear, a claimant must also establish that the loss of earning capacity satisfies the 'very considerable' test.

50 In most cases, satisfying the '40 per cent test' will (without more) mean that the 'very considerable' test is satisfied, that is, the consequence of the injury by reference to earning capacity will be 'at least very considerable'. However, the respondent submitted that in an aggravation case, the Court needs to look very closely at whether the loss of earning capacity consequences do satisfy the 'very considerable' test. The respondent's main argument was that Mr Guppy was starting from a low base. Because of the first injury, so it was said, he already had a heavily reduced working capacity. That meant that a relatively small further reduction in hours might well satisfy the 40 per cent test. It was another matter whether the loss in question satisfied the 'very considerable' test. Counsel for the respondent gave the example of a person who was working (say) 4 hours per week before the injury, which was reduced to 2 hours per week as a result of the injury. Although this would represent a 50 per cent loss of earning capacity, that consequence could hardly be described as 'very considerable'.

51 There may be circumstances in which such an argument would succeed, but this is not such a case. I am satisfied that in Mr Guppy's case, the 40 per cent loss of earning capacity satisfies the 'very considerable' test. For an already impoverished person to lose 40 per cent of his already reduced work capacity is a consequence that must on any measure be viewed as 'very considerable'.

52 Accordingly, Mr Guppy's appeal should be allowed and Mr Guppy should have leave to bring proceedings for the recovery of damages against Access in respect of the second injury.

53 The legal process on which Mr Guppy has had to embark to assert his right to bring proceedings for damages against Access has been a long one, and one which can hardly have contributed to improvements in his health. Moreover, it has required three judges of this Court to engage in the mathematical exercise of counting and adding up working hours and considering whether 'pizza' should form part of the answer. At a call-over hearing on 6 April 2009, Ashley JA expressed concern to the parties' representatives about the appeal going ahead. He suggested that the appeal might be made redundant by appropriate agreement, as Mr Guppy could make it clear that he had no intention of 'double dipping' in respect of his claims against McClures and Access, and that his concern was 'to avoid being caught between two stools'. His Honour observed that Mr Guppy seemed to be a man who had been grievously injured, he was a young man, and that something ought to be done to bring finality to the litigation. Now, following a full hearing and detailed consideration of the matter, it may be regretted that his Honour's prescience was not heeded.

54 Although nothing turned on it, I should briefly state whether the amended para (f) of s 134AB(38) forms part of the statutory framework for the current appeal.

55 Section 191 of the amending Act inserts transitional provisions in the Act, including s 325(3), which provides that s 134AB, as amended by s 57(8) of the amending Act, applies in respect of a serious injury application which is to be 'determined' or 'resolved' on or after the commencement date. The commencement date for s 57(8) of the amending Act is 5 April 2010.

56 Whether the amended para (f) applies in the current appeal depends on whether this Court 'determines' or 'resolves' Mr Guppy's serious injury application on the appeal for the purposes of s 325(3) of the Act (as amended) when it decides to allow or dismiss the appeal.

57 On any view, the learned judge below 'determined' Mr Guppy's serious injury application. That determination was subject to appeal under s 134AD. Although the Court of Appeal is charged with deciding for itself whether an injury is a serious injury, it nonetheless conducts what is described as an 'appeal' from the determination below. The determination below, along with the filing and service of the notice of appeal from that determination, enlivened the jurisdiction of the Court of Appeal in this matter.

58 In my view, the relevant determination for the purposes of s 325(3) must be the determination made below: if a different version of para (f) applied on appeal from the version that applied when the application was determined below, the Court of Appeal could be required to decide the application 'for itself' on a very different basis. Although s 134AD provides that the Court of Appeal may receive evidence (under any other Act or rules of court) in addition to the evidence and other material before the judge below, it is not contemplated that the Court of Appeal determine the serious injury application on an entirely different basis from the Court below. Moreover, the amendment to para (f) arguably involves a diminution of the rights of the injured worker, in that it requires post-injury earning capacity to be assessed on the basis of employment, whether suitable or not. A construction of s 325(3) that has the effect of 'moving the goal posts' to the detriment of the injured worker when he or she exercises his or her right of appeal to the Court of Appeal is untenable.

59 The task of construing the transitional provisions in the Act (as amended) in the context of an appeal under s 134AD is a curious one, because the amending Act also contains a significant amendment in the form of the repeal of s 134AD. The amendments were not intended to form part of a regime in which an appeal under s 134AD plays a continuing part. This is another reason for preferring a construction of s 325(3) which requires the Court of Appeal, in the remaining s 134AD appeals that it has to hear, to apply the same statutory provisions as the Court below.

[2] [1994] VicRp 32; [1994] 1 VR 436 ('Petkovski').

[3] Ibid 443-4 (Southwell and Teague JJ). Their Honours observed that the Transport Accident Act 1986 (Vic) did not affect the long-established principle that a person injured could be compensated for, but only for, such disabilities as were proved to have resulted from the relevant accident. There appeared to be some question in the mind of the learned judge below as to whether Grech v Orica Australia Pty Ltd (2006) 14 VR 602 ('Grech') rather than Petkovski was the authority that he should follow. While it was clearly appropriate for the learned judge to follow Petkovski, there is no inconsistency between Petkovski and Grech.

[4] An x-ray taken in September 2001, reported on by a Dr Cleeve, showed that at the L5 level there was a large central to the left-sided disc prolapse laterally, with displacement of the nerve root on the left. An MRI undertaken in March 2002 showed left posterior-lateral lumbo-sacral disc herniation without evidence of disc degeneration at that time. Left S1 neural compression was present.