Masonic Memorial Homes Inc v Monsma and Elderly Citizens Homes of SA Inc [2004] SAWCT 112

3 In his first decision, the learned Judge at first instance reversed a determination of Masonic Homes that had rejected a claim for compensation by the worker in respect of a left knee disability and determined that the worker's claim should be accepted. In that same decision he confirmed a determination by ECH rejecting the worker's claim for compensation against it, and confirmed Masonic Homes' rejection of the worker's further claims against it in relation to alleged disabilities to her right wrist, right knee, mid-back and lower back.

4 In his second decision, the learned Judge made a number of findings and directions relating to the fixing of the worker's notional weekly earnings that Masonic Homes had been found (by his first decision) liable to the worker for. He also quantified the worker's s 43 entitlement in respect of her claimed permanent disability of the left knee, fixed at $21,172.60. He also ordered that Masonic Homes pay the costs of the worker against both respondents, and that Masonic Homes also pay the costs of the respondent ECH.

5 In his third decision, the learned Judge fixed the worker's entitlement to average weekly earnings from December 2000 at $656.54, noting that this was 80 per cent of her notional weekly earnings. He further directed that "the proceedings from 17 October 2003 onwards be treated as a separate set of proceedings and not just simply as a spill over from the first set of proceedings, so that no diminution in costs should apply".

6 Masonic Homes appealed each of the aforesaid three decisions. Many grounds of appeal were raised. In the course of the hearing of the appeal on 4 and 5 March 2004, one particular ground of appeal drew our attention and counsel were invited to address the Tribunal on that and on the consequences of a finding by us that that particular ground was made out by the appellant (see appeal tr 81, 148).

7 The appellant's outline of argument identifies its grievance on this particular issue:

4.1 The findings set out in paragraph 48.3 (a), (b) and (c) of the judgment (at 4 AB 864.7) reflect a misunderstanding on the part of the learned Deputy President of the limits of his decision-making powers. Even accepting that the Workers Compensation Tribunal is a `specialist Tribunal', the learned Deputy President was required to make findings in accordance with the evidence presented. In not doing so, his findings are unsustainable. The learned Deputy President appears to have drawn upon his own experience of having `had a bad knee for the last 20 years' (3 AB 787.8)."

8 It is clear from the learned Judge's reasons for judgment that his comments and findings in par 48.3 of the first decision were based on his own knowledge of the "subject matter", presumably referring to the subject of knee injuries, and that this knowledge formed the basis, or at least was a significant factor, in his preferring the opinion of the orthopaedic surgeon Mr Henningsen over that of the orthopaedic surgeon Associate Professor Bauze as to the contribution of the worker's employment at Masonic Homes to her ongoing left knee condition.

9 The relevant paragraphs in his judgment are as follows:

"44 As to the medical evidence there is not a great deal of difference except perhaps on a critical point of causation between Mr Henningsen and Mr Bauze:

* Both agree that arthritis is a progressive degenerative disease.

* Both agree that it exists in both left and right knees of the applicant.

* Both agree that it is worse in the left knee than the right.

* Both agree that walking up and down stairs should be avoided.

45 Mr Henningsen relates the symptoms in the left knee to the gradual progression of the arthritis therein that was caused by or permanently aggravated by the employment injuries.

46 Mr Bauze says that the left knee shows `constitutional degeneration', but he said the constitutional degeneration was aggravated by the original work injury - however that plays an insignificant role in the natural history of the degeneration of the knee.

47 Both opinions on causation are from highly qualified and expert witnesses and is an exercise in retrospective speculation, albeit informed.

48 I prefer the opinion of Mr Henningsen. I do so because:

1 He is the treating doctor and is looking at the patient from the point of view of operative treatment.

2 The condition of the left knee is worse than the right knee. I gather it is significantly worse.

3 This is a specialist Tribunal. I am entitled to call into (sic) my knowledge of the subject matter. It is commonly accepted by practitioners in the field of industrial medicine:

(a) Knee injuries are always serious injuries. They affect a major weight bearing joint in the body.

(b) Such injuries invariably reoccur and are aggravated. Such injuries very seldom improve.

(c) If there has been surgical intervention (and here there were two operations by Mr Menz) the natural process of degeneration is accelerated. All that an arthroscopic examination and chrondoplasty does is to temporarily relieve the symptoms. The articular surfaces of the knee continue to degenerate.

(d) On 21 September 1993 Mr Menz found p 78 `quite a large area of deep chrondral damage in the inter-condylar groove'.

`Both these areas unfortunately are quite significant and may cause her some ongoing problems but hopefully most of her symptoms will settle.' (TB 78)

`she has developed a chronic synotivis within her knee joint'. (TB 80)

`It is possible she may suffer a recurrence of aggravation of the degeneration in the knee joint if she returns to normal work duties.'

`there are no contributing factors to her condition ... the prognosis here is good although it must be a little guarded considering the degeneration within the knee joint. Overall her knee is not too bad and I believe that she should be able to return to her normal work duties if she is careful.' (TB 85)

51 What Mr Menz prophesied a decade previously was accurate. Mr Henningsen comes in at the end of the process when the knee has broken down.

53 I do not think that Mr Bauze has given sufficient weight to the employment injuries and the period 1995 to 1998 when the applicant could manage the work. He hasn't given sufficient weight to the difficulty she had in Barossa/Gambier wards.

54 I hold that the incident of 17 December 2000 is as Mr Henningsen put it, one of medial meniscal trauma against a background of slowly progressive osteoarthritis.

55 Therefore the determination of MMH of 2 April 2001 should be set aside and the claim should be accepted."

10 And then later, as part of his reasoning in fixing the worker's s 43 entitlement for her left knee disability (adopting Associate Professor Bauze's assessment of 30 per cent over Mr Henningsen's figure of 20 per cent):

"76 I already stated my own views on knee injuries. I regard them as being invariably serious."

11 An issue on this appeal is whether the learned Judge's reliance on his own knowledge on the subject of knee injuries, without informing the parties or giving them any opportunity to be heard on the matters upon which he relied, deprived the parties, relevantly Masonic Homes given the outcome, of natural justice. A further consideration arises as to whether the learned Judge's reliance on his own knowledge was critical to the outcome in any event. Mr Warren, counsel for the worker, submitted that there was evidence before the court that supported the findings of the learned Judge in any event, so that, as he put it, irrespective of any infelicitous expression by the learned Judge, there was sound evidence before him anyway that supported the findings and conclusions that he reached.

12 It is generally accepted that a judge may take judicial notice of indisputable or notorious facts. Where the matters are controversial, or may be controversial, however, it is generally considered necessary for the parties to be given an opportunity to be heard.

13 Bray CJ in Cavanett v Chambers (1968) SASR 97 at 101 observed:

"It is one thing to use the section [s 67 of the Evidence Act 1929] for the purpose of discovering or verifying objective facts or figures about which there can be no real dispute, such as historical or geographical data of an uncontroversial nature or mathematical tables of life expectancy or interest calculations. Cf Arnold v Norris (1936) SASR 287, though even there I think the principle of Chambers v Sampson unreported Supreme Court of South Australia judgment delivered 14th March 1966 should be observed and the parties should be given notice of the Court's intention and an opportunity to be heard on the result of its researches. It is quite another thing for the tribunal of its own motion to seek to inform itself out of court on a question of fact or opinion vital to the issue and by no means free from controversy. This is, of course, doubly objectionable if done without the parties having any opportunity to state their views on the specific authorities consulted. But in my view, even if they are offered this opportunity, the Court should not embark on such investigations except by consent. It would be preposterous to suppose, for example, that in a claim for damages or workmen's compensation where divergent medical opinions have been expressed by expert witnesses on each side, the Court should be at liberty without consent to pursue independent inquiries of its own on the point through medical journals or text books not referred to by the witnesses."

14 In WorkCover Corporation/Vero Workers Compensation (SA) Ltd (AL Akhurst) v Kalb [2004] SAWCT 61 the Full Bench of the Tribunal found that the judge at first instance had wrongly relied upon his own knowledge in making a finding that suitable work was not commonly available to a person in the worker's circumstances. The Full Bench said at p 16:

"49 Another concern that we have with the judgment under appeal relates to the trial judge's finding, that in any event, the suitable work was not commonly available to a person in the worker's circumstances.

50 With respect, we have two difficulties with this conclusion. First, although it is not expressly stated, we proceed from the assumption that the trial judge's preference for Ms Stevens' evidence regarding psychological factors that might impact upon the worker's capacity to adapt to employment at Kitto Lighting was relied upon in reaching this conclusion. For the reasons just explained, the deficiencies in the trial judge's reasons vitiate this finding.

51 Secondly is the fact that in reaching this conclusion the trial judge relied upon his own knowledge and he did not inform the parties that he intended to do. This was not simply a case of the trial judge saying: `I am permitted to know that these jobs exist' or `I am permitted to know that these are typically the range of duties involved in these types of jobs'. A member of the Tribunal will routinely hear evidence about particular jobs and the duties involved in those jobs and these matters will usually be non-controversial. It would be a waste of time and money for the Tribunal to insist that on issues like these, evidence needs to be called and if the matters are non-controversial there cannot be a complaint that there was a denial of natural justice because the parties were not informed beforehand.

52 What was involved here was something quite different. To say that particular employment does not commonly exist one would need to have some knowledge of how many jobs of this type are available. That will rarely be notorious. It will usually involve some sort of survey identifying how much of this employment does exist and an expression of an opinion as to the relative availability of that work. Somebody expressing such an opinion could be legitimately questioned about the extent of the survey that he or she undertook and the basis upon which the opinion is expressed. It is the sort of matter that would usually require evidence and if the Tribunal proposes to rely upon its own knowledge, unless it is notorious, it should inform the parties of its intention to rely upon its own knowledge and give the parties the opportunity to comment. That did not occur here."

15 Were the findings set out in par 48.3 of the learned Judge's reasons, said to be based on his own knowledge, so notorious or non-controversial that ordinary fairness would not require that the parties be given the opportunity to comment? Is it notorious fact that knee injuries are always serious injuries, that they invariably reoccur and are aggravated, or that they very seldom improve? Is it notorious fact that the natural process of degeneration is accelerated by surgical intervention? Is it notorious fact that an arthroscopic examination and chondroplasty only temporarily relieves symptoms, with the articular surfaces of the knee continuing to degenerate?

16 We think not. Moreover, if the learned Judge proposed to rely on his own knowledge of such medical matters, we think the parties should have been informed of his intentions and given an opportunity to question the accuracy and relevance of those propositions to the case at hand: see Cross on Evidence Vol 1 at [3135]. In Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174, a case involving a similar task to the one involved in the matter before us, Ipp JA with whom Bryson JA and Stein AJA agreed, stated the obligation on the Tribunal in the following terms:

"77 ... If his Honour relied on facts known to him outside the evidence led at the trial, it was incumbent on him to inform the parties of the material to which he intended to have regard and to give them an opportunity to deal with it. This he did not do. In my view, this was a further error."

17 Mr Warren submitted that the learned Judge ought not be taken to have meant exactly what he said in par 48.3:

"... the matters outlines (sic) in (a) to (c), they reflect nothing more than generalised knowledge of the Tribunal and they ought not to be read in a strictly literal sense because it would be an absurd proposition to consider that His Honour started from the foundation point that all knee injuries were serious injuries and that's the end of the matter. If that is the case, then we simply must lose, but it is so absurd as to not be a relevant inference, we would say". (tr 160)

"... if Your Honours ultimately consider that indeed His Honour meant exactly what he said, that `all knee injuries are serious injuries and invariably recur' then I think the appeal is almost certain to succeed". (tr 161)

18 Mr Warren's submission is a difficult one to sustain, the more so where, as here, the meaning of the words used by the learned Judge are plain and clear. If the plain meaning of words is to be ignored because it might be considered absurd that the learned Judge meant what he said, what meaning is to be imputed into the mind of the learned Judge? That can only be speculation.

19 It cannot be the role of an appellate court to speculate on what might or might not have been in the mind of the trial judge: see per Lord Denning in Baldwin and Francis Ltd v Patents Appeal Tribunal [1959] AC 663 at 693. An appellate court, like the parties for whom the judgment is written, has only the written reasons of the trial judge to go on.

20 Mr Warren next submitted that even if the learned Judge did err in taking into account extraneous material that he ought not have, there was in any event evidence before the Tribunal to support the findings that he made and relied upon. In those circumstances, Mr Warren submitted, the outcome would not have been any different had the learned Judge informed the parties of his views. There had been no operative denial of natural justice. Whilst counsel for Masonic Homes at trial did not know that the learned Judge was going to rely in part on his own knowledge, he was aware of the evidence that had been put before the Tribunal and had had the opportunity to address/rebut that evidence as he saw fit.

21 Mr Warren identified evidence from the oral testimony of the various medical practitioners called which he submitted established (1) that the worker's injury was a serious injury; (2) that knee injuries are affected by weight bearing; (3) that such injuries can be aggravated and can recur; and (4) that surgery does not cure degeneration. It is readily apparent that the learned Judge's relevant findings went beyond these propositions. For example, it is one thing to say that knee injuries can be aggravated or can recur, but quite another to say that they invariably do so. There is no evidence before the Tribunal that Mr Warren could point to, or that we could find, in support of the proposition that surgical intervention accelerated the natural process of degeneration.

22 In the absence of clear evidence supporting the findings relied on by the learned Judge, it is difficult to accept Mr Warren's submission that counsel for Masonic Homes was on notice anyway and ought not now be heard to complain that the learned Judge ignored or overlooked that evidence but instead chose to rely on his own knowledge. There must be an element of speculation, perhaps even a large element, as to whether the learned Judge would have still preferred the opinion of Mr Henningsen had he not relied on his own knowledge.

23 Mr Warren next submitted that even if there had been demonstrated a breach of natural justice, there had been no miscarriage of justice as consideration of the evidence overall, including that of Associate Professor Bauze, led to only one conclusion and that was that the worker's employment at Masonic Homes was a contributing factor in her ongoing left knee condition. Thus, the learned Judge's stated preference for the opinion of Mr Henningsen over that of Associate Professor Bauze was of no consequence and the appeal should be dismissed.

24 The difficulty with this submission is that the learned Judge's reasons do focus on a critical point of difference between the evidence of Mr Henningsen and the evidence of Associate Professor Bauze, that being their divergent views about the contribution of the worker's employment at Masonic Homes to her ongoing knee condition (viz par 46). It is evident from his reasons that the learned Judge saw it necessary to choose between the two divergent opinions. A stated ground for preferring the opinion of Mr Henningsen over the opinion of Associate Professor Bauze was the learned Judge's reliance on his own medical knowledge and in particular the findings set out in par 48.3 that have been identified.

25 The learned Judge's finding on this issue was clearly critical to his decision to set aside Masonic Homes' determination of 2 April 2001. The reasonable possibility that a different outcome may have resulted if the learned Judge had confined his consideration to the evidentiary material that was put before him cannot be excluded.

26 That is sufficient for us to conclude that the appeal must be allowed. The matter will unfortunately need to be re-heard. It is not the function of this Full Bench to re-evaluate the evidence and substitute its own findings of fact for those of the trial judge: SA Police Department v Barber [2001] SAWCT 100.

27 Mr Walsh of counsel for ECH submitted that Masonic Homes had no standing in action 5303 of 2001 and so could not appeal the learned Judge's findings and decision in relation to that action. He noted that no order had been made consolidating action 5303 of 2001 with the other two actions.

28 Action 5303 of 2001 concerned the worker's disputation of ECH's decision of 19 July 2001 which rejected the worker's claim for compensation against it following aggravation of her left knee injury at home on 17 December 2000. The learned Judge dealt with this dispute in his first decision, confirming ECH's rejection of the worker's claim for compensation, at the same time dealing with the worker's claims against Masonic Homes. This followed a hearing conducted over several days in which all three parties, the worker and the two employers, fully participated. It resulted in the delivery of the one judgment.

29 On the matter of costs, the learned Judge treated Masonic Homes and ECH as "joint respondents to one dispute": par 73 of the second decision. He ordered that Masonic Homes "pay the costs of the worker against both respondents" (par 74) and that it also "pay the costs of the respondent ECH" (par 85).

30 In reaching these conclusions, the learned Judge had regard to the history of the litigation, noting that:

"53 Both matters proceeded in tandem through the chamber list. No consolidation order was sought or made. No order for separate trials was sought or made. The trial proceeded as if technically a sequence order had been made to the effect that the evidence in one trial was to be the evidence in the other.

54 Procedurally, the applicant was cross-examined by Mr Saies and then Mr Walsh.

55 The applicant's medical expert was cross-examined by both respondents.

56 The ECH medical expert was cross-examined by the applicant and Mr Saies."

31 The learned Judge concluded that s 89(d) and (e) were each applicable:

"67 I am of the view that ECH is a `party to the dispute' within the meaning of s 89(d) and 89(e). The dispute in its widest form is whether the knee disability is compensable and if so by whom and to what extent (including s 43 and s32 issues)

68 Dispute 2482/01 nominates Masonic Homes as the respondent.

69 ECH is a party by virtue of s 89(e) because that is precisely what the text of the MMH determination asserts.

70 ECH is a party by virtue of s 89(e) because it has an interest in the outcome of the dispute narrowly defined, even though no formal notice was given to the Registrar.

71 In the case s 85 should be applied ie whatever the ambit of that section, it applies in its narrowest to procedural matters and the failure to give notice to the Registrar is such a matter because:

(i) On one view ECH was brought into the matter at the instigation/invitation/suggestion of MMH

(ii) MMH knew of ECH's involvement from the inception of the proceedings in the Tribunal since April 2001 and at no time suggested that it was disadvantaged by the procedure adopted.

72 I agree with Mr Saies that the practical way of dealing with this matter is to treat the respondents as joint respondents. The alternative of treating the costs issue as divisible between the two separate disputes is cumbersome and productive of further delays for the worker and the ultimate resolution of this matter.

73 I propose to treat the respondents as if they were joint respondents to one dispute.

74 I therefore order that the respondent MMH pay the costs of the worker against both respondents."

32 The reference to s 89(e) in par 69 of the above extract was obviously meant to be a reference to s 89(d). Masonic Homes' determination of 2 April 2001, the subject of action 2482 of 2001, had rejected the worker's claim on the basis that the worker's injury sustained in its employ was "not the current disability" but a "prior disability", and that she had sustained a "secondary disability whilst working at ECH."

33 Both Mr Saies and Mr Walsh had argued before the learned Judge on 17 October 2003 in support of the application of s 89(d) and (e). Mr Walsh had submitted:

"Section 95 is the section which deals explicitly with the question of costs and our standing to make an application for costs comes from section 89. It's our submission that so far as the dispute between the worker and Masonic Homes is concerned, we're a party by virtue of the interpretation of section 89D (sic) and/or section 89E (sic). Insofar as section 89D (sic) is concerned, the dispute is certainly about a compensable disability. It has been alleged by Masonic Homes that ECH is the employer from whose employment the disability arose.

That allegation is made clear by virtue of the worker's evidence at page 56 of the transcript. She told us that she lodged her claim for compensation against Masonic Homes in the first instance because she believed her condition to have been caused by the various incidents which occurred while she was employed by Masonic Homes. It's made abundantly clear by the determination of Masonic Homes dated 2 April 2001, which is found at page 9 of volume 1 of the book of documents.

The determination refers to the worker's report form - I assume that's the claim for compensation - dated 30 January 2001 and other information. It goes on to assert:

`Therefore it is our belief you have sustained a secondary disability whilst working at ECH. The walking on hard floors at ECH over the preceding six months establishes probable cause. It arose out of employment and employment with ECH contributed to your current disability'.

`Under section 52(4)(a) a claim for compensation must be given either to the employer where the worker is at the commencement of the incapacity, or to the WorkCover Corporation. You should therefore lodge your claim with ECH as they were your employer at the commencement of incapacity 17 December 2000.'

The determination goes on to reject the claim. So we say that by virtue of the worker's evidence and that determination, section 89D (sic) applies. If it doesn't, section 89E (sic) certainly applies; we have a direct interest in the dispute in that the dispute which exists between ECH and the worker has been joined in that the evidence given before the Tribunal is evidence with respect to the dispute with Masonic Homes and the dispute with ECH."

34 If the two disputes were joined in the sense noted by Mr Walsh, Masonic Homes' interest in the dispute between the worker and ECH cannot be any less than ECH's asserted interest in the worker's dispute with Masonic Homes.

35 Before us on appeal, Mr Walsh took a somewhat different line, submitting that whilst the disputes were conveniently and appropriately heard together at first instance, without protest by himself or anyone else, the disputes remained separate actions. There had been no order consolidating the proceedings. Separate statements of issues had been filed as between the worker and ECH and as between the worker and Masonic Homes.

36 Masonic Homes, Mr Walsh submitted, had no standing to appeal the learned Judge's decision on the dispute as between the worker and ECH. Moreover, even if the learned Judge was found to have wrongly relied on his own knowledge, that per se could not affect the integrity of his findings exonerating ECH in respect of the worker's claim against it because on all of the evidence, including the evidence of Associate Professor Bauze and Mr Henningsen, the learned Judge's finding was the only reasonable finding that he could have made.

37 Mr Saies submitted that his client was a party to the dispute in action 5303 of 2001 within the definition of "party" in s 89 of the Act, and had a right to be heard and to participate in that dispute as a party. The various disputes were, he submitted, inextricably linked and it was clear from the conduct of the hearing and the tenor of the judgments that the learned Judge had regarded the proceedings as consolidated. The learned Judge's order that Masonic Homes pay the costs of ECH, Mr Saies submitted, was a further indicator that he regarded the proceedings as being consolidated.

38 Mr Saies submitted that far from the evidence being all one way and exonerating ECH, the very contrary was the case. There was, he submitted, no evidence letting ECH off the hook, save for the evidence of Associate Professor Bauze, and it was Associate Professor Bauze's evidence that the worker's condition should be attributed to constitutional degeneration and not her employment with either employer.

39 Mr Warren, noting that the worker had not appealed the learned Judge's first decision finding confirming ECH's rejection of the worker's claim for compensation, expressed concern at the possibility of both Mr Saies and Mr Walsh's arguments being accepted and of the worker's disputes with Masonic Homes (only) being remitted back to the learned Judge. The worker, having failed in her claim against ECH, would then be left with only Masonic Homes to pursue.

40 Mr Warren said that if that became a possible scenario, his client would likely be advised to file a belated notice of appeal against the learned Judge's confirmation of ECH's rejection of the worker's claim. This in fact was done on 13 April 2004 and the matter has been adjourned sine die pending the decision on this appeal.

41 Mr Warren indicated that he was not in a position at the appeal hearing to respond to Mr Walsh's arguments in support of preserving the learned Judge's decision upholding ECH's rejection of the worker's claim.

42 Whilst separate statements of issues were filed as between the worker and Masonic Homes and as between the worker and ECH it is clear that the hearing was conducted on the basis that the evidence led in one dispute was evidence also in the other. The learned Judge's description of the two employers as "joint respondents to one dispute" reflects both the procedural conduct of the hearing and the shared relevance of the evidence to each dispute. The mutual interests of the two employers in the disputes relating to each claim was sufficient to qualify them as parties to each dispute within s 89(e) of the Act, and to give Masonic Homes standing in action 5303 of 2001 to appeal the learned Judge's findings, in so far as s 86 allows, in relation to that dispute. To regard the disputes as other than interlocked has a quality of unreality about it.

43 The learned Judge dealt with the worker's claim against ECH in just eight sentences, only one of which referred to the medical evidence. If he relied on his own knowledge about knee injuries to determine the legal liability of Masonic Homes and to assess the worker's entitlement to lump sum compensation pursuant to s 43, it is reasonable to suspect that he may have relied on his own knowledge of knee injuries to determine the liability of ECH. There is no assurance that his decision in respect of ECH was not also tainted by the same extraneous information that was not made known to the parties. It would be illogical and unfair to treat his consideration of the evidence to arrive at his decision in respect of ECH as somehow discrete from his consideration of the evidence to reach his decision in respect of Masonic Homes.

44 The appeal is allowed. The matters will need to be reheard.