BETWEEN : HOUSING INDUSTRY ASSOCIATION LIMITED (004 631 752)

Appeal - Error of law - Workers' compensation - Statutory interpretation - Workers Compensation and Rehabilitation Act 1981 - Meaning of "discipline" - Meaning of "unreasonable and harsh" - Whether Magistrate considered discipline of respondent as a whole and in context rather than as individual features in isolation - Inadequate reasons - Finding open on the evidence

Workers Compensation and Rehabilitation Act 1981, s 5, s 18, s 84ZI

Appellant : Dibbs Barker Gosling (Formerly McAuliffe Williams & Partners)

Ansett Australia v Burgess, unreported; Compensation Magistrate (CM­29/99); 1 July 1999

Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334

Brutus v Cozens [1972] UKHL 6; [1973] AC 854

Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410

Central Metropolitan College of TAFE v Heaton, unreported; Compensation Magistrate (CM­91/01); 20 November 2001

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280

Comcare v Chenhall (1992) 37 FCR 280

Fleming v The Queen [1998] HCA 68; (1998) 197 CLR 250

Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21

Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1

Jackson v Work Directions Australia Pty Ltd t/as Work Directions Australia (1998) NSWCCR 70

Jenkins v Western Australian Department of Training [1999] WASCA 199

Krakouer v The Queen [1998] HCA 43; (1998) 194 CLR 202

Kushwaha v Queanbeyan City Council [2002] NSWCC 25

Lloyd v Faraone [1989] WAR 154

Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

Summit Homes v Lucev (1996) 16 WAR 556

Tran v Claydon [2003] WASCA 318

Vetter v Lake Macquarie City Council (2001) 202 CLR 439

Woolfe v State of Tasmania [2001] TASSC 66; (2001) 10 Tas R 205

1 STEYTLER J: I have had the advantage of reading the reasons for decision of Le Miere J. I am in entire agreement with them and they reflect my own reasons for joining in the order made at the end of the hearing to dismiss the appeal.

2 EM HEENAN J: I have had the advantage of reading the reasons for decision of Le Miere J. I agree with those reasons and they fully explain my own decision to join in the order made at the end of the hearing to dismiss this appeal.

3 LE MIERE J: This is an appeal from the decision of a Compensation Magistrate dismissing an appeal by the appellant from a decision of a review officer. The review officer ordered the appellant to pay the respondent weekly payments of compensation for the period 12 June 2000 to 9 August 2000 together with statutory allowances. The review officer also granted the respondent liberty to apply in relation to any entitlement after 9 August 2000.

4 At the conclusion of the hearing of the appeal the Court ordered that the appeal be dismissed with costs. These are my reasons for joining in that decision.

5 The respondent was employed by the appellant as a field officer responsible for overseeing the training and safety of apprentices. He reported to the manager responsible for apprentices, Ms Humfrey.

6 On 17 April 2000 Ms Humfrey handed to the respondent a letter entitled "Staff Disciplinary Action - Written Warning". The letter stated that it "confirms the discussion in relation to work performance and conduct which had been found to be unacceptable in terms of your position as an apprentice field officer for the following reasons". The letter went on to set out the conduct of the respondent which the appellant had found to be unacceptable and to state: "You are therefore advised that should your conduct continue to be unacceptable, you may risk further disciplinary action".

7 The respondent was angry and distressed by the letter. He considered the statements in the letter to be untrue. He spoke briefly to his state manager and then left work. He went straight to his general practitioner, Dr Pendergast. Dr Pendergast described the circumstances of the consultation this way: "This patient attended the surgery today in a distressed state as a result of allegations made against him which he

believes to be untrue, unfair and grossly misrepresent matters documented in the written statement."

8 The respondent has not returned to work. The respondent applied to the Conciliation and Review Directorate for an order for weekly payments of compensation on the basis that he was totally incapacitated for work.

9 Section 18 of the Workers Compensation and Rehabilitation Act 1981 provides that if a disability of a worker occurs, the employer shall, subject to the Act, be liable to pay compensation in accordance with Sch 1.

10 Disability is defined by s 5 of the Act to mean, amongst other things, a disease contracted by a worker in the course of his employment at or away from his place of employment and to which the employment was a contributing factor and contributed to a significant degree. However, a proviso to the definition excludes from the meaning of disability a disease caused by stress if the stress wholly or predominantly arises from a matter mentioned in subs 5(4) unless the matter is mentioned in par (a) or par (b) of the subsection and is unreasonable and harsh on the part of the employer. One matter mentioned in par 5(4)(a) is the worker's discipline.

11 The upshot of the statutory provisions is that if the respondent contracted a disease caused by stress that arose predominantly from his discipline he is not entitled to compensation unless the discipline is unreasonable and harsh on the part of the appellant employer.

(1) The respondent suffers from a disease contracted in the course of his employment.

(2) The respondent's employment with the appellant was a contributing factor and contributed to a significant degree to the contraction of that disease.

(3) The disease was caused by stress which predominantly arose from disciplinary action, being the issue of a formal warning notice of 17 April 2000.

(4) The discipline was unreasonable and harsh on the part of the appellant.

(5) In view of those findings the respondent has established an entitlement to compensation.

13 The appellant appealed to the Compensation Magistrate asserting that the appeal involved a question or questions of law. The Compensation Magistrate found that none of the grounds of appeal were made out and dismissed the appeal.

14 The appellant now appeals by leave to this Court from the decision of the Compensation Magistrate.

15 The grounds of appeal were amended at the commencement of the hearing of the appeal. The effect of the amendment was to delete grounds 2 and 3 and the particulars to ground 6 of the appeal. Counsel for the appellant stated that those grounds were argumentative, but that the appellant maintained the argument set forth in those grounds.

16 Ground 1 is that the learned Compensation Magistrate erred in law in the manner in which he dealt with grounds 1, 2(a) and (b), 3 and 5 of the appeal from the review officer to the Compensation Magistrate's Court.

17 Ground 4 is to the effect that if the learned Compensation Magistrate had dealt with grounds 1, 2(a) and (b), 3 and 5 of the appeal from the review officer to the Compensation Magistrate's Court in the correct manner, the learned Compensation Magistrate should have held that the review officer had not correctly directed himself. Ground 4(e) is that the appeal should be allowed on the basis that the review officer had failed to give adequate reasons, and that this was an error of law amounting to a substantial miscarriage of justice.

18 The appellant directed a number of arguments to these grounds of appeal. First, the Compensation Magistrate erred in law in construing the word "discipline" in par 5(4)(a) of the Act. Secondly, the Compensation Magistrate erred in law in construing the phrase "unreasonable and harsh on the part of the employer" in s 5 of the Act. Thirdly, the Compensation Magistrate erred in law in directing himself in that he was required to consider whether the appellant's discipline of the respondent, when viewed as a whole and in context, was unreasonable and harsh, and not merely whether individual features of the appellant's conduct, or individual features of the letter the appellant gave to the respondent, were unreasonable and harsh when viewed in isolation.

19 The first of those matters concerns the meaning or interpretation of the word "discipline" in par 5(4)(a) of the Act. I am not at all sure that the appellant raised that matter before the Compensation Magistrate in the same way that it was raised in this appeal. In any event, in my view the point has no merit.

20 The word "discipline" is to be given its ordinary meaning. It must be interpreted in context. The context in which it appears is as follows. The effect of s 18 of the Act read in conjunction with the definition of "disability" in s 5, is that a worker who in the course of his employment contracts a disease caused by stress is entitled to compensation. The proviso to the definition of disability limits the instances in which a worker who contracts a disease caused by stress will be entitled to compensation. Thus a worker is not entitled to compensation where the disease was caused by stress that arose wholly or predominantly from the matters set out in par 5(4)(a), unless there has been conduct that is unreasonable and harsh on the part of the employer. The matters set out therein include the worker's dismissal, retrenchment, demotion, discipline, transfer or redeployment.

21 That is the context within which the word discipline is to be defined. It should therefore be given its ordinary meaning in an employment context. It is not helpful to attempt to define the outer boundaries of what is included within "discipline". However, it clearly includes the issue of a written warning such as the written warning of 17 April 2000 given by the appellant to the respondent.

22 Whether the discipline of the worker is unreasonable and harsh only falls to be determined if the disease contracted by the worker was caused by stress that wholly or predominantly arose from the discipline of the worker. In this case, the review officer found that the respondent's stress predominantly arose from discipline, being the issue of the formal warning notice to him on 17 April 2000. Accordingly, it was that discipline that the review officer had to determine to be unreasonable and harsh in order for the respondent to be entitled to compensation.

23 The review officer made no error of law in the manner in which he approached the relevant discipline. The Compensation Magistrate made no error of law in the manner he dealt with the appeal so far as the meaning or interpretation of discipline in par 5(4)(a) of the Act is concerned.

24 The second question of interpretation addressed by the appellant is the meaning of the expression "unreasonable and harsh".

25 Those words are to be given their ordinary meaning. The Compensation Magistrate gave careful consideration to a submission to him that the review officer had erred in law in construing or interpreting the words "unreasonable and harsh" and applying them to the facts of this case. The learned Compensation Magistrate said at par 40 of his reasons for decision:

"In this case the review officer apparently accepted that the words 'unreasonable' and 'harsh' in the s 5 definition of 'disability' should bear their ordinary meanings. Given the dictionary meanings set out above, there is in my view nothing in the reasons for decision to suggest that he proceeded on some other basis and neither in my view could it be said that the only conclusion open to him was that the appellant's conduct was not unreasonable and harsh. As a matter of fact, then, the review officer's decision, whilst obviously not meeting with the appellant's approval, is not subject to challenge in this jurisdiction, even if I were to regard it as not the conclusion I would have arrived at were I in the review officer's position."

26 The Compensation Magistrate made no error of law in arriving at that conclusion.

27 The third matter addressed by the appellant is that the review officer focused on particular aspects of the written warning or of the discipline of the respondent and thereby erred in law in that he should have considered the discipline of the respondent by the appellant as a whole and in context.

28 The appellant supported its argument by reference to the judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ in Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59; 212 CLR 411. In that case the registered proprietor of an Australian Standard patent under the Patents Act 1990 (Cth) sued for infringement. The invention the subject of the claims of the patent was for the formulation of a tablet which combined three elements: the active ingredient and two coatings. The respondent cross-claimed for the revocation of the patent on the ground of obviousness. For the respondent to succeed on its cross-claim it had to establish that the invention, so far as claimed in any claim of the complete specification was obvious and did not involve an inventive step having regard to what was known or used in Australia on or before the priority date. The objection was upheld by the trial Judge and on appeal in the Full Court. The Full Court held that to establish obviousness it was sufficient that it should be apparent to the addressee that it would be worthwhile to try each of the integers that was ultimately successfully used. A majority of the High Court upheld the appeal. In the course of their judgment the majority held that in relation to an invention that was a combination of elements interacting with each other to produce a new product, obviousness was to be determined by reference to the claimed combination of integers not to each of the integers taken individually. Counsel for the appellant referred to the following extract from the judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ at [6]:

"The question for decision concerns the ingenuity of the combination, not of the employment of any one or more integers taken individually. Astra complains that this analysis by dissection is what the Patent has wrongly been subjected to by the Full Court."

29 Counsel for the appellant argues by analogy that the discipline of the respondent by the appellant was wrongly subjected by the review officer to analysis by dissection.

30 In my view, the analysis of the written warning of 17 April 2000 by the review officer is not analogous to the analysis by dissection of a patent referred to in Aktiebolaget Hassle v Alphapharm and the statements by their Honours in Aktiebolaget Hassle are not helpful to the resolution of this appeal. Their Honours' statement must be seen in the context of the legislation and issues in that case. Whether the discipline of the respondent by the written warning of 17 April 2000 is unreasonable and harsh on the part of the appellant employer is far removed from the issue of whether the invention of a tablet combining three elements was obvious and did not involve an inventive step, having regard to what was known or used in Australia on or before the relevant priority date.

31 In my view, the review officer did consider the discipline of the respondent by the appellant as a whole and in context. The review officer found at par 65 and 66 of his reasons for decision that the discipline of the respondent was procedurally unreasonable and harsh. The review officer then went on to consider the statements in the written warning letter that the respondent's work performance and conduct had been found to be unacceptable and the specifics of that unacceptable conduct. The review officer concluded that, having regard to statements in the written warning that did "not accurately describe the worker's conduct", were not "truly representative of the factual situation", and were "unsupported by the evidence", the discipline was both unreasonable and harsh.

32 In substance, the appellant's argument is that the reasoning whereby the review officer reached his conclusion of fact was unsound. The review officer gave undue weight to the statements in the written warning that he found to be unsupported by the evidence and insufficient weight to the points in the warning that were substantiated. However, even if those criticisms of the review officer are correct, it does not amount to error of law. At common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference, in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, no error of law has taken place: Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 per Mason CJ at 356.

33 In this case the question whether the discipline of the respondent was unreasonable and harsh on the part of the employer was a question of fact and degree.

34 This issue was addressed by the learned Compensation Magistrate at par 41 and par 42 of his reasons for decision:

"41. I should add that the appellant's submission that to focus on specific aspects of an employer's conduct is to perpetrate an error of law seems based on an apparent expression by the Compensation Magistrate of his approval, by way of quotation, of the following remark by the review officer in Catholic Care v Wrafter (at p 14):

'Each of the matters referred to, if looked at in isolation, may not be such as to support a finding that the discipline was unreasonable and harsh but I believe these are to be viewed cumulatively and as such these matters demand a finding that the discipline was unreasonable and harsh.'

42. In my view that case is authority for the proposition, not that discrete aspects of a particular matter must be viewed cumulatively, but rather that they can be. In my view, the learned Compensation Magistrate's decision, in the particular circumstances of that case, was that that review officer was not in error in finding that a number of comparatively minor factors might cumulatively achieve the gravity of being 'unreasonable and harsh'. The situation in this case is the opposite. The review officer seized upon components which were in his view unreasonable and harsh in their own right to colour the whole. As a matter of logic, I do not see why a procedure or a document should not be regarded as unreasonable and harsh solely on the basis of one or more in particular of its aspects or components, and I do not regard the learned Compensation Magistrate's decision as precluding such a possibility. The question of whether a matter is unreasonable and harsh must depend on the circumstances of the particular case. In this case the review officer felt that because of the descriptions of two 'prime' issues, the appellant's production of the formal warning notice in the form in which it was presented to the respondent was unreasonable and harsh. As it happens, the way in which the review officer expressed that finding (in par 85 of his reasons, above) inclines me to the view that he was considering the document as a whole, but in any event his finding in my opinion involves no error of law."

35 In my view, the learned Compensation Magistrate made no error of law in failing to find that the review officer made any error of law in that regard. To the contrary, I agree with the conclusions of the learned Compensation Magistrate at par 41 and par 42 of his reasons for decision.

36 Ground 4(e) is that the appeal should be allowed on the basis that the review officer had failed to give adequate reasons, and that this was an error of law amounting to a substantial miscarriage of justice.

37 Section 84ZI of the Act provides that where the review officer makes a decision and a party to the proceedings requests the review officer to do so, the review officer is to give that party in writing, amongst other things - (a) the officer's findings of fact; and (b) the reasons for the officer's decision.

38 In Mitchell v Canal Rocks Beach Resort [2002] WASCA 331 Roberts-Smith J, with whom Templeman J generally agreed and Sheppard AJ agreed, said that the test to be applied was set out by the Full Court in Kaiser v Burswood Resort (Management) Ltd [1999] WASCA 292 at [9]:

"The test is whether the reasons are so deficient as to fail to expose the reasoning of the court in such a way as will enable a party having a right of appeal conferred by statute to challenge the reasoning on appeal. If that is the result, then the deficiency in the reasons itself constitutes an appealable error of law in that the result is effectively to deprive the party of the right of appeal."

39 In par 66 to 84 of his reasons for decision the review officer set out his findings of primary fact in relation to the discipline. The review officer stated at par 85 that the descriptions of the two prime issues stated in the warning notice to constitute the respondent's unacceptable conduct were "inconsistent with the evidence" and the review officer found that for that reason the warning letter was unreasonable and harsh. That finding should be read with the review officer's finding at par 66 that the discipline of the respondent by the appellant was also unreasonable and harsh on procedural grounds.

40 That is a sufficient statement of the review officer's reasons. It enables an appeal court to examine the decision and the reasons for it. The Compensation Magistrate made no error of law in failing to find that the review officer had failed to give adequate reasons for his decision.

41 Ground 5 is that the Compensation Magistrate erred in law in failing to hold that the review officer had erred in law in concluding that the appellant's discipline of the respondent was "unreasonable and harsh", when the facts as found, and as apparently found, by the review officer as to that disciplinary action were not reasonably capable, when viewed as a whole, and in the context of all the surrounding circumstances, of supporting that conclusion.

42 To make out this ground the appellant must show that the only finding open on the evidence was that the discipline was not unreasonable and harsh and hence that the review officer erred in law in finding that it was and the Compensation Magistrate erred in law in failing to find that the review officer had erred in law.

43 In my view, the finding of the review officer was open on the evidence. It is not to the point whether the finding of the review officer was the correct or preferable finding. The review officer found that the conduct of the respondent stated in the written warning to have been found to be unacceptable was in a number of respects "unsupported by the evidence". The review officer found that two of the three prime specifics of unacceptable conduct set out in the written warning letter were "inconsistent with the evidence". On both findings of primary fact, whether the discipline was unreasonable and harsh was a matter of fact and degree. It was open to the review officer to find that the discipline was unreasonable and harsh.

44 Ground 6 is that the Compensation Magistrate erred in law in rejecting ground 7 of the appeal from the review officer to the Compensation Magistrate's Court. Ground 7 of the appeal from the review officer to the Compensation Magistrate's Court was that the review officer erred in law in failing to make a finding as to the specific nature of the respondent's alleged disease in circumstances where: (a) there was a dispute on the medical evidence as to the nature of any such disease and (b) the nature of any such disease was relevant to the nature or extent of the respondent's incapacity, if any, resulting from the disease.

45 The Compensation Magistrate dealt with this ground of appeal at pars 18 to 20 of his decision:

18. In par 87 of his reasons, the review officer set out the s 5 definition of "disease".

19. In par 88 of his reasons, the review officer noted Dr Terace's statement that the respondent met the criteria for a recognised psychiatric condition, and also his diagnosis of panic disorder.

20. Unsurprisingly, in par 89 of his reasons, the review officer found that the respondent suffered from a disease. I can discern no error of law in that finding, and cannot see what further steps the review officer was required, or even could have been expected, to take with regard to the establishment of the existence of a disease. By necessary implication, the disease which the review officer found to exist was that nominated by Dr Terace, ie, a panic disorder, identified by Dr Terace as a recognised psychiatric condition. This ground is without merit."

46 I can discern no error of law in the finding of the Compensation Magistrate. To the contrary, I agree with the learned Compensation Magistrate.

47 None of the grounds of appeal are made out and the appeal must be dismissed.

• Background
• Statutory Framework
• Findings of Review Officer
• Appeal to Compensation Magistrate
• Appeal to this Court
• Grounds 1 and 4
• Inadequate Reasons
• Ground 5
• Ground 6
• Conclusion