2. The Respondent is to pay the Applicant's costs.

WORKERS COMPENSATION - Whether disentitled to compensation as a result of wilful and serious misconduct. Whether impairment suffered permanent and serious.

Safety, Rehabilitation and Compensation Act 1988 - s.14

Compensation (Commonwealth Government Employees) Act 1971 - s.27

Transport Commission (Tas) and Neale Edwards Proprietary Limited [1954] HCA 21; 92 CLR 214

Boral Resources(Queensland) Pty Ltd v Pyke 93 ALR 89

Gallard v State Rail Authority of NSW [1992] NSWCC 11; (1992) 8 NSWCCR 280

Grime and Telstra Corporation (Unreported Tribunal Decision No 9473)

Broken Hill Pty Co Ltd v Kuhna (1992) 8 NSWCCR 401

1. By application lodged 11 December 1997 the Applicant sought review of a reviewable decision made 23 October 1997 which affirmed a prior decision of 26 June 1997 which decision was in the following terms, namely:

"I determine that the decision dated 27 June 1994 is revoked and that your claim is disallowed."

2. The decision of 27 June 1994 had accepted liability pursuant to the Safety, Rehabilitation and Compensation Act 1988 for the injuries of dislocated right hip, fractured right patella and fractured right malar bone sustained on 20 November 1987.

3. Although the Applicant's initial claim was accepted on 27 June 1994, in 1997 the Respondent undertook further investigations into that claim. Why it took so long for the Respondent to commence these investigations has not been explained. As a result of further enquiries made by the Respondent it was found that on the Applicant's record with the New South Wales Roads and Traffic Authority, there was contained the following entry: "20-11-1987 - Disobey Traffic Lights T1. $90". It was on the basis of this entry that the Respondent on 26 June 1997 revoked the determination admitting liability, the revocation being based on the grounds that in disobeying the traffic signal the Applicant had been guilty of serious and wilful misconduct.

4. Section 14 of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) states inter alia:

"14. (1) Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment.

(3) Compensation is not payable in respect of an injury that is caused by the serious and wilful misconduct of the employee but is not intentionally self-inflicted, unless the injury results in death, or serious and permanent impairment."

5. As the Applicant sustained his injuries prior to the commencement of the SRC Act, pursuant to ss.124(1A) and (2) of that Act, the Respondent will only be liable if liability can be established pursuant to both that Act and the Compensation (Commonwealth Government Employees) Act 1971 (the 1971 Act). Section 27 of the latter Act is in the same terms as s.14 of the SRC Act, in particular the same disentitling phrase is used, namely: "serious and wilful misconduct".

6. It was common ground between the parties that the Applicant's claim involved an accident in the course of his journey from his place of work to his place of residence and that no point was taken regarding notification of the injury.

7. The circumstances giving rise to the Applicant's injuries are disputed. There is no contention that on 20 November 1987 the Applicant, then aged 21 years and a serving member of the Royal Australian Navy, returned to Garden Island, Sydney, after spending some days at sea. After the Applicant was stood down he went to his motorcycle which was parked outside the gates of Garden Island Naval Base on Cowper Wharf Road, with the intention of travelling to his home.

8. In evidence to the Tribunal the Applicant stated that as he approached the intersection of Cowper Wharf Road and Wylde Street (which later becomes Macleay Street and leads to Kings Cross) a taxi turned across his path and he was unable to avoid colliding with that taxi vehicle.

9. The Applicant has no recollection of events after coming into collision with the taxi but hospital and service records reveal that he was taken by ambulance to St Vincent's Hospital and admitted. On 8 December 1987 he was transferred to the Naval Hospital at HMAS Penguin. After a period as an inmate of that hospital he was discharged to light duties, eventually performing full duties.

10. During the course of his cross-examination the Applicant admitted that he had been travelling at about 40 kilometres per hour immediately prior to the collision with the taxi, having travelled some 30 to 40 feet from where he had parked his motorcycle. He also stated that he had dropped his bike immediately before the collision.

11. We accept the Applicant's evidence regarding his dropping his bike prior to the collision as this is the appropriate action for a motorcycle rider to take. To remain upright would have led to a more severe impact.

12. The Respondent is hampered in this matter as the Applicant did not make an immediate claim for compensation and hence no contemporaneous investigations were made. The only matter upon which the Respondent can point to, in order to suggest serious and wilful misconduct, is that the traffic fine of $90 was not challenged before a Court, but paid.

13. In our opinion the Applicant gave a satisfactory explanation for the payment of the traffic fine. At the time the infringement notice was issued he was still an inpatient at St Vincent's Hospital. The fine was paid forthwith by his mother.

14. The Applicant's belief was that the fine was in fact $50, but he now agrees it was $90. We accept that he did not apply his mind to the full ramifications of paying the fine. As he put it in evidence "I was in hospital, my mother had paid the fine what was the point". This attitude was no doubt encouraged by the fact, as he stated, that no demand was made upon him by the insurer of the taxi cab and his own insurer paid out most of the payments due and owing on his motorcycle.

15. To our mind it is completely understandable that a young man in the Applicant's position did not at that time give thought to the possibility that any compensation claim he might bring, possibly years after the event, would be resisted on the basis that by his mother paying a $90 traffic infringement notice he was admitting that he had indulged in misconduct so serious and wilful as to disentitle him from succeeding in his claim for compensation.

16. Exhibit A8 in these proceedings are the clinical notes pertaining to the Applicant whilst he was in St Vincent's Hospital. These notes reveal that he was, shortly after his accident, visited in hospital by Police who informed him that he was fully responsible for the accident. The Applicant cannot remember being seen by Police and, given the contents of the treatment notes, that he cannot remember this visitation is to be expected. Interestingly enough, the notes do not state that the Police interviewed the Applicant as opposed to informing him that he was to blame.

17. Document T13 of the documents prepared for the Tribunal pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 is a statement by a Mr Swalwell who alleges that he witnessed the accident and that the Applicant had a green traffic signal in his favour as he attempted to pass through the intersection. Although Mr Swalwell had been summonsed by the Applicant's solicitors, he did not appear and we decline to grant an adjournment to another day in order to secure his attendance. The result is that whereas Mr Swalwell's statement is before us, the Respondent has lost the chance to cross-examine him upon his statement. The statement is further devalued by the fact that it was made on 22 July 1997, nearly 10 years after the accident. We consider that we should place no reliance upon this statement.

18. At the end of the day the only conclusion we can draw from the material before us is that we are unable to say whether the Applicant did or did not have a red light against him as he attempted to cross the intersection of Cowper Wharf Road and Wylde Street. Although the Respondent can point to the payment of the traffic fine as prima facie evidence of an admission by the Applicant that he was at fault, we are satisfied that by the mere payment of that fine he did not make a conscious decision to admit fault for all purposes.

19. Even if the Applicant had proceeded against a red light, that would not of itself have satisfied us that he had engaged in serious and wilful misconduct.

20. The term "serious and wilful misconduct" has received judicial interpretation in a number of cases. As was pointed out by the Full Court of the Supreme Court of Queensland in Boral Resources(Queensland) Pty Ltd v Pyke 93 ALR 89 cases relating to misconduct for the purpose of workers compensation are not necessarily a clear guide to the nature of conduct to be considered under contracts of insurance. Similar comments must apply in reverse situations such as the matter before us. In addition, some legislation uses the disjunctive "or" and not "and" as in the Commonwealth Workers Compensation Acts.

21. Notwithstanding the caveats in paragraph 20 above, we would refer first of all to the decision of the High Court in Transport Commission (Tas) and Neale Edwards Proprietary Limited [1954] HCA 21; 92 CLR 214. Commencing at p222 Webb J (with whom Fullagar J agreed) discussed the words "wilful misconduct" as they related to a contract of insurance. The case arose out of a railway accident and at p224 his Honour stated:

"Evidence to support an inference of wilful misconduct must not only be consistent with wilful misconduct but reasonably inconsistent with its absence ..."

"... inadvertence does not amount to wilful misconduct."

22. At p228 of the same case Kitto J said, after discussing a series of English cases:

"The application of these tests in the present case is that in order to prove that the loss arose from wilful misconduct on the part of the driver the respondent had to satisfy the court that the root cause of the accident lay in a positive choice made by the driver to subject his train to the risk of being forced off the rails by excessive speed, he realizing at the time that there was a real danger of such a happening and recklessly choosing to incur it."

23. Transport Commission (Tas) and Neale Edwards Proprietary Limited was followed in Boral Resources(Queensland) Pty Ltd v Pyke supra. At p97 Thomas J said:

"I decline to purport to paraphrase or explain the term `serious misconduct' by reference to degree of gravity or otherwise. It is a classical jury question, and this simply drawn section ought not to be overlaid with legal glosses. Nor do I think that there is any mystery left in the word `wilful'. If an extrapolation is required, it is probably difficult to go past the statements of Cotton LJ and Brett LJ in Lewis v Great Western Railway Co Ltd (1877) 3 QBD 195:

`In a contract where the term wilful misconduct is put as something different from and excluding negligence of every kind, it seems to me that it must mean the doing of something, or the omitting to do something, which it is wrong to do or to omit, where the person who is guilty of the act or the omission knows that the act which he is doing, or that which he is omitting to do, is a wrong thing to do or to omit; and it involves the knowledge of the person that the thing which he is doing is wrong; I think that if he knows that what he is doing will seriously damage the goods of a consignor, then he knows that what he is doing is a wrong thing to do; and also, as my Lord has put it, if it is brought to his notice that what he is doing, or omitting to do, may seriously endanger the things which are to be sent, and he wilfully persists in doing that against which he is warned, careless whether he may be doing damage or not, then I think he is doing a wrong thing, and that that is misconduct, and that, as he does it intentionally, he is guilty of wilful misconduct' (per Brett LJ at 210-11).

`Now, I do not think there can be any doubt at all that wilful misconduct is something entirely different from negligence, and far beyond it, whether the negligence be culpable, or gross, or howsoever dominated. There must be the doing of something which the person doing it knows will cause risk or injury, or the doing of an unusual thing with reference to the matter in hand, either in spite of warning or without care, regardless whether it will or will not cause injury to the goods carried or other subject matter of the transaction' (per Cotton LJ at 2123)."

The matter was further discussed by Ambrose J at p115, namely:

"Whether in the circumstances an employee's misconduct may properly be termed as `serious' will depend upon the nature of the misconduct; one must keep in mind that it is misconduct as an employee and not in any general sense which is relevant under s 66(b). Where, under the terms of employment, specified conduct on the part of an employee is expressly prohibited and warrants instant dismissal it will normally be difficult I should think, to describe that misconduct as being other than serious: the fact that that misconduct also constitutes a criminal offence attracting penalties of imprisonment and/or the imposition of a fine makes it impossible in my view to describe it as other than serious.

`Wilful' misconduct involves merely the doing of acts in fact amounting to misconduct intentionally, with knowledge that those acts will amount to misconduct. In this regard I adopt what was said in Lewis v Great Western Railway (1877)3 QBD 195 at 210-11 per Brett LJ and Transport Commission (Tas) v Neale Edwards Pty Ltd [1954] HCA 21; (1954) 92 CLR 214 at 223 per Webb J and at 227-8 per Kitto J."

Had we been able to find that the Applicant had proceeded through the intersection against the red light, that of itself would not justify a finding of serious and wilful misconduct. As pointed out by Webb J in Transport Commission (Tas) and Neale Edwards Proprietary Limited supra, mere inadvertence does not amount to serious misconduct. Also, as pointed out by Cotton LJ in Lewis v Great Western Railway Co Ltd supra:

"... wilful misconduct is something entirely different from negligence, and far beyond it, whether the negligence be culpable, or gross, or howsoever dominated."

In this matter we simply do not know, assuming it to be the fact, whether the Applicant was inadvertent (or negligent) or whether he intentionally undertook a known risk. The matter was well summed up by O'Meally A-CJ in Gallard v State Rail Authority of NSW [1992] NSWCC 11; (1992) 8 NSWCCR 280, namely:

"In order to remove himself from the application of the section it is not sufficient that Mr Gallard committed an error of judgment. He must have had knowledge of the risk and a determination to proceed in disregard of its consequences."

24. Notwithstanding a finding of serious and wilful misconduct, both ss.14(3) of the SRC Act and ss.27(3) of the 1971 Act excuse that conduct if the Applicant suffers serious and permanent impairment.

25. There is no question that the Applicant suffered a permanent impairment. Dr Middleton, who was called by the Respondent, stated in his report of 23 April 1998 (Exhibit R2):

This man has a permanent impairment, which according to Table 9.2 amounts to 10% loss due to less than half range loss of motion of the hip joint. I note Dr Marnie's assessment of 20%, but I am unable to determine how this figure was arrived at.

I think that this man's disability is due to the development of early osteo-arthritis in his right hip. This is a known complication of dislocation of the hip, but its onset is gradual. Permanency therefore did not manifest itself at the time of the incident, but has subsequently developed. It has been of gradual onset over the years to some extent, the determination of its manifestation is an educated estimate. I would allocate the manifestation of permanency to be at or about April 1990. It is certainly manifest on today's date.

There is no doubt that his present symptoms and abnormal signs are directly attributable to the motor vehicle accident of 20/11/87."

26. Dr Marnie, who was consulted by the Applicant at the request of his solicitors, stated in his report of 14 January 1998 (Exhibit A6):

"Following his fractured patella he has full extension of the right knee but restriction of flexion, this being 5 degrees less than on the left side with pain and crepitus on passive patello-femoral movement, this indicating in addition that he has chondromalacia patellae. These conditions have resulted from his injury on 8.12.87 (sic).

The early osteoarthritic changes in his right hip will progress as the years go by, following his fracture dislocation of the right hip and as a result of that he will probably require total hip replacement at an earlier age than one would expect.

His right knee will deteriorate. Further athroscopy could be required."

27. In Grime and Telstra Corporation (unreported Tribunal decision No 9473) the Tribunal discussed what constituted a serious impairment. It followed a decision of the Victorian Supreme Court Humphries v Poljak [1992] VicRp 58; [1992] 2 VR 129. At paragraph 49 of its decision the Tribunal stated:

"In Humphries -v- Poljak [1992] VicRp 58; [1992] 2 VR 129, the majority of the Victorian Supreme Court, in considering the expression `serious long term impairment or loss of a body function' in paragraph 93(17)(a) of the Transport Accident Act (Vic) 1986, observed that:

`... To be `serious' the consequences of the injury must be serious to the particular applicant. Those consequences will relate to the pecuniary disadvantage and/or pain and suffering. In forming a judgement as to whether, when regard is had to such consequence, an injury is to be held to be serious the question is asked: can the injury, when judged by comparison with other cases in the range of possible impairments or losses, be fairly described as at least `very considerable' and certainly more than `significant' or `marked'? Beyond such guidance, it is, we think, not possible to go. The only other assistance in the resolution of such applications that can be gained will derive from the trends that will emerge from the determination in the future from time to time of a range of applications including those the adjudication of which is now our responsibility ...'."

28. However, as pointed out by that Tribunal at paragraph 51 of its decision, whether an impairment is serious or not is a factual issue. This statement is consistent with the decision of the New South Wales Court of Appeal in Broken Hill Pty Co Ltd v Kuhna (1992) 8 NSWCCR 401 where the Court pointed out that the question of whether a disablement is serious and whether it is permanent are matters of fact.

29. The effect of his injuries upon the Applicant have been described in the reports of Drs Marnie and Middleton cited above. In his report Dr Middleton also opined that the Applicant has osteoarthritis of the right hip and may in later life need a hip replacement.

30. In answer to questions by the Tribunal, Dr Middleton stated that the Applicant's injuries were not minor. In his opinion the Applicant's hip joint injury will deteriorate over time and he is going to have trouble. Although the Applicant can do bench work his injuries will interfere with some other forms of work, for example he could no longer go to sea. He opined that the Applicant's impairment was at the lower end of moderately severe.

31. To our mind whether an impairment is severe or not cannot be judged simply by having regard to the degree of impairment as assessed on either the Comcare or some other series of tables. In this matter the Applicant's injuries have led to a restriction upon his activities, a deterioration over time, and the possibility of further surgical intervention. We are satisfied that the impairment suffered by him is both permanent and serious.

32. The Applicant gave evidence of the restrictions which his injuries place upon his lifestyle and what he can and cannot do. In particular we note that he has limited certain activities, for example walking, as he knows that they will cause pain.

33. Unfortunately there is a conflict between Dr Marnie and Dr Middleton as to the source of the Applicant's disability. However, as Dr Middleton points out, the Applicant's symptoms are entirely appropriate symptoms for a disability of the right hip.

34. Dr Marnie assessed the degree of impairment occasioned to the Applicant under Table 9.5 of the Comcare Tables, whereas Dr Middleton used Table 9.2. As is pointed out in the heading to Table 9.1, either Table 9.2 or 9.5 are to be used but not both. To our mind where a range of movement is able to be measured, Table 9.2 is more appropriate as it gives an objective assessment based on tests carried out by the examiner. We therefore prefer Dr Middleton's use of Table 9.2 and adopt his assessment of impairment, namely 10%. An assessment which to us is entirely consistent with the evidence given by the Applicant.

35. As the Tribunal is not satisfied that the Applicant's injuries were caused by his wilful and serious misconduct and that his impairments are in any event both permanent and serious, the decision under review will be set aside and this matter remitted to the Respondent with the following directions, namely:

1. That the Respondent is liable pursuant to s.14 of the Safety, Rehabilitation and Compensation Act 1988 to pay compensation to the Applicant for the injuries of dislocated right hip, fractured right patella and fractured right malar bone sustained on 20 November 1987, which injuries have resulted in a permanent impairment assessed at 10% on the Comcare Guide to the Assessment of the Degree of Permanent Impairment.

2. The Respondent is to pay the Applicant's costs.

I certify that this and the 10 preceding pages are a true copy of the decision and reasons for decision herein of

Signed: Ian Taylor .....................................................................................