Solicitors for appellant: Dobson Mitchell and Allport

Solicitors for respondent: Murdoch Clarke Cosgrove and Drake

ZEEMAN J This is an appeal against an order of the Workers Compensation Commissioner that the appellant pay the respondent's costs of and incidental to a reference to the Commissioner made by the respondent pursuant to the Workers Compensation Act 1988 ("the Act"), s86(4). Before dealing with the grounds of appeal it is necessary to examine the history of the matter which led to the making of the reference and the manner in which the Commissioner dealt with it.

2. It is common ground that on 15 May 1993 the respondent suffered personal injury by accident whilst engaged in the duties of his employment with the appellant when he twisted his back whilst lifting a carton containing bottles of beer and that as a result he became incapacitated for work. The appellant accepted that it was liable to make a weekly payment of compensation on the basis of total incapacity and such a payment commenced from the date upon which the respondent suffered his injury. Such a payment was still being made when, in June 1994, the appellant caused to be served upon the respondent a notice of intention to terminate the weekly payment pursuant to the Act, s86(3)(a) and a copy of a certificate purportedly satisfying the requirements of s86(1)(c).

3. The certificate was given by an orthopaedic surgeon, Mr E D McIntyre, by which he certified as follows:

2 I examined Mr Garwood on the 8th March, 1994.

3 On the 6th May, 1994, I viewed a short video tape of Mr

Garwood alighting from his car and lifting what appeared to

be a reasonably heavy eski.

4 In my opinion Mr Garwood has substantially recovered from

the effects of the injury in respect of which he has been

receiving weekly payments of compensation being back strain

suffered at work on Saturday 15th May, 1993 and described in

the workers report dated 31st May, 1993.

5 The grounds upon which I expressed the above opinion are

as follows:

(a) My examination revealed that Mr Garwood was a somewhat

overweight plethoric middle-aged man who sits somewhat

awkwardly but is able to stand and walk reasonably normally.

(b) His lumbar spine has a normal contour and he is able to

flex it to about 70 degrees so that his finger tips reach

just above his ankles. Extension of his lumbar spine causes

him considerable discomfort. He is locally tender over the

L5/S1 facet joints. Straight leg raising is restricted to 45

degrees on the left side by pain, however he can sit with his

legs out straight in front of him and there is some

inconsistency here. Apart from very slight change in

sensation over the L5 dermatome, both his lower limbs I found

to be neurologically intact.

(c) Plain x-rays and CT scans show obvious changes of

degeneration, particularly in the lower two lumbar vertebra.

There is quite marked osteoarthritis in the posterior joints

at these two levels.

(d) In my opinion any symptoms which Mr Garwood currently

suffers are substantially due to the degenerative changes in

his lumbar spine that pre-existed his accident at work in

May, 1993.

(e) In my opinion, any symptoms which he may suffer as a

result of the May, 1993 incident at work would not prevent

him from returning to his pre-accident work as a bar manager

which I understand involves the occasional lifting of

cartons."

4. On 6 June 1994 the respondent, wishing to dispute the termination, filed an application by which he referred the matter to the Commissioner pursuant to s86(4). The reference was heard by the Commissioner on 9 and 10 May 1995. This is another case where it is appropriate to express concern at the length of time which elapsed from the filing of the application until the hearing of the reference. Although some short part of the delay may properly be attributed to the parties, it appears that largely the delay was occasioned by the inability of the Commissioner to hear the reference on an earlier date. The termination of a weekly payment potentially has disastrous consequences for a worker. Contrary to the position in some other jurisdictions, an employer is entitled to terminate a weekly payment at the expiration of 10 days from the giving of notice in accordance with s86(3), even if the worker has referred the matter to the Commissioner within that period (Goscombe v Cadbury Schweppes Pty Ltd [1993] TASSC 35; (1993) 3 Tas R 19 at 26). It follows that justice requires that a reference under s86(4) is dealt with promptly.

5. Having heard the reference, on 7 June 1995 the learned Commissioner determined that the respondent had not substantially recovered from the effects of the injury in respect of which the weekly payment had been made and ordered that the appellant resume the making of that weekly payment from the date of termination. The appellant did not appeal against the making of that order. Nevertheless, it is necessary to have regard to the reasons expressed by the learned Commissioner. Whilst the appellant, as it must, accepts the decision of the learned Commissioner to order the resumption of the weekly payment, it challenges his reasoning and submits that reasoning discloses error which resulted in the exercise of the discretion as to costs miscarrying.

"1 The Commissioner erred in law in that he held that it was

incumbent upon an employer to ensure that the case for

termination of an entitlement is a strong and justifiable

one.

2 The Commissioner erred in law in that he held that for

the employer to succeed on the Reference pursuant to Section

86(4), the employer had to show that it was more than

probable that the ongoing incapacity was being caused by

degeneration in the spine.

2A That the Commissioner erred in law in that he held that

as a result of the worker being clearly not fit to return to

his pre-injury duties, the worker had not substantially

recovered from the effects of the injuries.

3 The Commissioner erred in law in that there were no

special circumstances of the case so as to justify the order

for costs.

4 The Commissioner erred in law in that he held that the

following matters were special circumstances when they were

not;

(a) That an employer's case for termination prior to

termination had to be a strong and justifiable one;

(b) That the employer could have judged when any disability

from which the worker was suffering was due to a degenerative

spine;

(c) That it was for the employer to show on the Reference

that it was more than probable that the ongoing incapacity

was being caused by degeneration in the spine;

(d) That the employer had not devised and put in place a

rehabilitation program for the worker;

(e) That the evidence in its totality produced at the

hearing fell far short of convincing him that the worker's

symptoms were caused by degenerative changes to the back; and

(f) That the employer had agitated the issue of the worker's

capacity for work when he was 'clearly' incapacitated for the

work in which he was engaged at the time of the injury.

5 The Commissioner erred in law in the exercise of his

discretion in that he took into account irrelevant

considerations namely those maters referred to in ground 4

(a) to (f).

6 The Commissioner erred in law in the exercise of his

discretion in that he took into account that the orthopaedic

surgeon who issued the terminating certificate had based that

certificate upon a false premise and false understanding of

the worker's duties when there was no evidence to that

effect; and further, that issue was not a special

circumstance in any event."

7. On the hearing of the reference before the learned Commissioner the respondent presented his case first. He gave evidence and called a number of witnesses, including two medical specialists. That procedure was adopted notwithstanding that, as the parties accept, the appellant carried the onus of proof (Ryan v McCain Foods Aust Pty Ltd A24/1995 (unreported, available on SCALE)). Nevertheless, in the course of his reasons the learned Commissioner correctly directed himself as to the onus of proof. There seems to be no reason for not adopting the normal practice on the hearing of a reference before the Commissioner, namely that the party who carries the primary onus of proof presents his case first. The fact that a reference pursuant to s86(4) must be made by the worker provides no reason to depart from that rule (cf Phillips v Commonwealth [1964] HCA 22; (1964) 110 CLR 347 at 350; Sportsman's Hall Hotel Pty Ltd v Commissioner of Stamp Duties (1990) Tas R 21 at 25-26; McCaughey v Commissioner of Stamp Duties (1946) 46 SR (NSW) 192 at 207).

8. I confess to having found the reasons expressed by the learned Commissioner for upholding the reference to be somewhat difficult to understand. It is far from clear that the learned Commissioner directed his mind to the basic issue which arose on the evidence before him, namely whether the respondent's undoubted continuing incapacity for work had a sufficient causal relationship with the injury suffered by him in the course of his employment with the appellant. To some extent that may be explained by the last of the reasons expressed by Mr McIntyre in his certificate, being a reason based on a complete misunderstanding of the nature of the duties required to be performed by the respondent in the course of his employment, which resulted in much of the evidence being concerned with the nature and extent of the respondent's incapacity as distinct from the cause of the incapacity. However, it is unnecessary to analyse the reasons expressed by the learned Commissioner because the evidence before him did not admit to a result other than that the weekly payment should continue.

9. There was no real dispute concerning the essential facts. The respondent was employed as a bar manager by the appellant. Notwithstanding what may be suggested by that title, the duties of the position were such that the respondent was required to perform all types of bar work, including the carrying and stacking of large numbers of cartons of beer and the carrying of barrels of beer. As part of the performance of the duties of his employment on Saturday 15 May 1993, the respondent was restocking bar refrigerators. Whilst in the process of lifting a carton containing 10 bottles of beer, the respondent twisted his back and felt what he described as a knife-like sensation of excruciating pain in the lower back. He found it difficult to move and stopped work immediately. On the following Monday he consulted a general practitioner. He was certified as unfit for work and the appellant commenced payment of weekly compensation on the basis that the respondent was wholly incapacitated for work.

10. Prior to this occurrence, the respondent had been suffering from lumbar spondyliosis, a naturally occurring degenerative disease, which was of long standing but had been largely asymptomatic. The occurrence on 15 May 1993 rendered that condition acutely and chronically symptomatic. It is correctly accepted by the parties that an injury by accident which renders symptomatic a pre-existing condition previously asymptomatic may amount to a compensable injury (see, eg, Darling Island Stevedoring and Lighterage Co Ltd v Hankinson [1967] HCA 10; (1967) 117 CLR 19; Day v Standard Waygood Ltd [1941] HCA 38; (1941) 65 CLR 204, Lewis v Port of London Authority (1914) 111 LT 773).

11. Despite Mr McIntyre's certificate also having raised the nature and extent of the respondent's incapacity, whatever its cause, it was the appellant's submission before the learned Commissioner that the accepted incapacity of the respondent no longer had a sufficient causal connection with his injury. In order to succeed on the reference it was necessary for the appellant to establish that the respondent had substantially recovered from the effects of the injury in the sense that continuing incapacity could no longer be said to result from the injury (Osborne v EST Hotel Enterprises Pty Ltd (1992) 1 Tas R 318 at 330). The appellant could not succeed on the reference unless it established that, notwithstanding that the injury had been the trigger for making the previous asymptomatic condition symptomatic, the stage had been reached whereby that condition would, in any event, have become symptomatic to the extent of producing incapacity for work.

12. There is substantial merit in the submission made by the appellant that the learned Commissioner failed to appreciate that it was his task to consider the case in that way and that he primarily directed his mind to the nature of the incapacity then suffered by the respondent, rather than its cause. However I do not consider that any such failure on the part of the learned Commissioner is capable of affecting the outcome of the present appeal. The evidence adduced by the respondent unequivocally supported the proposition that had it not been for the injury the respondent might well have continued to suffer little by way of symptoms from his condition. In particular that evidence came from Mr Hunn, a neurosurgeon, and Mr Binns, an orthopaedic surgeon.

"But for the incident in which he hurt his back when lifting

a carton of beer at work in May, 1993, it is likely that he

would have gone on for an indefinite period having the same

minor symptoms that he had experienced previously. There is

certainly no reason to think that his pattern of discomfort,

or its effect on his work or lifestyle, would have been any

different between May, 1993 and May. 1995 than it had been

over the period leading up to the May, 1993 injury.

In my view the effect of the lifting injury of May, 1995

(obviously intended to be a reference to 1993) has been to

render acutely and chronically symptomatic the underlying

degeneration in Mr Garwood's lumbar spine. The underlying

degeneration rendered him more vulnerable to incapacity from

a lifting injury such as that which he sustained, but it is

the lifting injury itself which has caused the acute and now

chronic symptoms of which Mr Garwood has complained since the

date of the injury."

"Traumatic injury such as that which an individual might

sustain during heavy lifting can result in an underlying

degenerative spinal condition becoming acutely and

chronically symptomatic. On the history provided to me, that

is precisely what has occurred to Mr Garwood as a result of

the injury he sustained whilst lifting at work in May, 1993.

But for that injury there is no reason to believe that Mr

Garwood would not still be able to attend to the full range

of duties as a Bar manager, without difficulty. He had after

all no problems attending to his work in the years leading up

to the May, 1993 injury notwithstanding the degeneration

present in his lumbar spine over that period."

15. For the contrary proposition, the appellant relied upon the evidence of Mr McIntyre. His evidence fell far short of being capable of supporting a finding that the respondent's then incapacity did not have a sufficient causal connection with the injury. In the course of evidence-in-chief Mr McIntyre adopted the contents of a proof of evidence. That proof contained the following statements of fact and opinion:

"This man had a soft tissue injury to a spine already the

seat of obvious degenerative changes in May of last year. I

do not consider the episode in 1988 as having any real effect

on his present condition. I would be of the opinion that he

could return to bar work provided of course that somebody

could manage the lifting of cartons that is obviously

necessary from time to time. I would quite agree with Mr

Batten's statement that his present symptoms are arising from

a degenerative lumbo sacral disc along with some nerve route

irritation. This has obviously been triggered off by an

episode in the work place in May of last year.

He does have some ongoing low back pain and nerve route

irritation as a result of the May, 1993 incident. However,

in my opinion he has substantially recovered from the effects

of the May, 1993 incident to the point where he would be able

to return to work as a bar manager provided he only had to

lift cartons on an occasional basis.

In my opinion a substantial quantity of Mr Garwood's present

symptoms are due to the degenerative changes in his back that

pre-existed the August, 1988 and May, 1993 incidents.

On 6th May, 1994, I viewed a very short video surveillance

of Mr Garwood alighting from his car and lifting what

appeared to be a reasonably heavy eski.

After viewing that very short clip of surveillance, I would

have to say that Mr Garwood has probably substantially

recovered from the effects of the injury that he suffered in

May, 1993.

I think that he is probably fit to return to his normal

employment as a bar manager and this would include the

occasional lifting of cartons. Provided he did not have to

lift cartons on repetitive occasions throughout his normal

working day, he would be able to return to work as a bar

manager.

On the surveillance film I saw Mr Garwood bend down from the

waist to about 90 degrees with some flexion of the knees. He

certainly bent far more freely than he did when I examined

him at the beginning of March, 1994."

16. The opinions expressed in that proof raise more questions than they answer. The opinions that the relevant injury did not have any effect on the respondent's then condition and that the respondent's then symptoms obviously had been triggered off by that injury leave open the critical question, namely whether the respondent would have suffered from his then symptoms had he not suffered his injury.

17. Not surprisingly that matter was the subject of cross-examination of Mr McIntyre. The following exchanges occurred:

"I'm sorry, yes, I'm sorry, we're '95 now - Has resulted in

his underlying degeneration becoming chronically symptomatic?

... I don't quarrel with the statement that it has been made

worse by this incident, yes.

But for this incident he may not have the constant pain that

he has now? ... He may not, but he will have some."

18. That last answer represented the highest at which the appellant's case was put. It was incapable of founding a positive finding that the cause of the respondent's incapacity was then to be found elsewhere than in his original injury. There was no basis upon which the learned Commissioner could have determined other than that the termination of the weekly payment should not be permitted to stand. The appellant carried the burden of proof and it failed to discharge that burden. Whether the learned Commissioner actually determined the reference by means of such reasoning process is a matter of no relevance for present purposes. It follows that the respondent's application for costs properly fell to be determined upon the basis that the evidence before the learned Commissioner was such that it was not open to him to do other than order that the weekly payment continue.

19. The parties accept that the correct approach to be taken to an application for costs pursuant to the Act, s59(1), as it stood at the relevant time, is that laid down by Wright J in Evans v Knight A89/1991 (unreported, available on SCALE) at 2, which has been followed in Trident Seafoods Pty Ltd v Dransfield A64/1993 (unreported, available on SCALE) and Guiney v Bury A59/1994 (unreported, available on SCALE). On such an application the Commissioner must first consider whether there are some special features arising from the circumstances of the case making it appropriate that the general rule that each party to a reference pays his own costs should not apply. If, and only if, the Commissioner is so satisfied does he acquire a broad discretionary power to make such order as to costs as he sees fit.

20. The learned Commissioner correctly directed himself as to the relevant test when he referred to the three authorities which I have mentioned. He then discussed some features of the case and principles which he thought were relevant. He did not clearly state what he considered to be the special features of the case giving rise to the power to make an order for costs although it may be inferred that he mentioned some aspects of the case only because he considered them to be such special features. Grounds 4 and 6 of the notice of appeal assert that the learned Commissioner erred in concluding that certain matters amounted to special circumstances relevant to the question of whether he had jurisdiction to make an order for costs.

21. It may well be that some parts of those grounds are well founded but I find it unnecessary to consider them. Whatever may have been identified by the learned Commissioner as being special circumstances giving rise to a jurisdiction to make an award of costs, it is not open to doubt that there were such special circumstances. Quite apart from any other circumstance, the fact that upon the case as it was presented by the appellant before the learned Commissioner it was not open to the Commissioner to conclude that the appellant had discharged the onus of proof which it bore, so that the learned Commissioner could not do otherwise than to uphold the reference, was a circumstance which permitted the making of an order for costs against the appellant.

22. The appellant submitted that, having obtained a certificate which on its face satisfied the requirements of s86(1)(c), it was entitled to test its liability to continue to make a weekly payment by examining and cross-examining witnesses. It relied on observations made by Wright J in Evans v Knight (supra) at 3. That submission overlooks the fact that the appellant carried the burden of persuading the Commissioner that it was appropriate for the weekly payment to be terminated. I observe that Evans v Knight was a case where the worker carried the burden of proving that a weekly payment should be commenced. Where an employer acts under s86(3) and then, on the hearing of a reference under s86(4), presents a case upon the basis of which it may be said that the worker has no case to answer there are special circumstances which permit of the making of an order for costs against the employer.

23. The present case had other features which amounted to relevant special circumstances. Those features flowed from an incorrect appreciation by Mr McIntyre of relevant matters of law and fact which led him to certify to matters which, it would appear from his cross-examination, he would not have certified to had he had a correct understanding of those matters. Mr McIntyre had no proper understanding of the nature of the duties required to be performed by the respondent in the course of his employment. Evidence of those duties was given by the respondent and by a director of the appellant who was called by the appellant. In substance they were agreed that significant manual work, requiring substantial physical exertion, formed part of the respondent's duties. The opinion expressed in par5(e) of the certificate relies upon Mr McIntyre's erroneous understanding that only a small amount of physical work was required and that arrangements could be made for that to be done by some other person. Not only was Mr McIntyre's understanding erroneous, had the appellant directed its mind to the matter when it caused the certificate to be served on the respondent it could not but have appreciated that Mr McIntyre was relying on such an erroneous understanding.

24. Mr McIntyre said that he thought that "substantial recovery" for the purposes of his certificate was recovery which was in the region of seventy-five per cent or better. Recovery to this extent does not necessarily amount to substantial recovery for the purposes of s86(1)(c). The word "substantially" as it appears in s86(1)(c) ought to be interpreted in the same way as "substantial" in the Act, s25(1)(b) (cf University of Tasmania v Cane A43/1994 (unreported, available on SCALE)). For the purposes of s86(1)(c):

(a) a worker has substantially recovered from the effects of

an injury when there no longer are any effects thereof other

than effects which are no more than trivial or

inconsequential; and

(b) a worker's incapacity is no longer substantially due to

an injury where the incapacity no longer is causally related

to the injury except to a trivial or inconsequential extent.

25. It is not open to the appellant to seek to avoid liability for costs by saying that it had a certificate which on the face of it satisfied the requirements of s86(1)(c). The appellant retained Mr McIntyre. It was a matter for it to correctly instruct him as to relevant facts, particularly as to the nature of the duties required to be performed by the respondent. It was a matter for it to ensure that Mr McIntyre was correctly instructed as to the meaning attributed by the law to the word "substantially" appearing in s86(1)(c) rather than leave it to him to form his own view as to its meaning. A failure of the appellant to take these steps gave rise to the real risk that Mr McIntyre might give a certificate which he would not have given had he been correctly instructed. The reliance by the appellant upon the certificate given in the circumstances of this case constituted a sufficient reason to give rise to the jurisdiction to make an order for costs.

26. The proper exercise of the jurisdiction clearly possessed by the learned Commissioner could not reasonably have led to a result other than that the respondent have his costs. The appellant acted on a certificate which was tainted in the manner I have described. Had Mr McIntyre properly appreciated the relevant law and facts it is unlikely that he would have given a certificate. The case presented by the appellant on the hearing of the reference was such that it was incapable of justifying a termination of the weekly payment. The respondent was put to the expense of a reference to the Commissioner when the appellant should never have proceeded under s86(3). This was not a case of the learned Commissioner having to resolve disputed issues of fact or of having to choose between conflicting medical opinions with the outcome of the reference depending on the findings made. To have refused the respondent his costs in those circumstances would not have been a proper exercise of the Commissioner's discretion.

27. It is unnecessary to give any consideration to the remaining grounds of appeal. Even if they are well cannot affect the conclusion which I have reached that an order that the respondent have his costs was required on a proper exercise of the discretion conferred upon the learned Commissioner. Any error in the reasoning process which led him to that conclusion becomes irrelevant. No challenge is made to the quantum of the costs ordered. It follows that the appeal must fail.