Workers Compensation - Proceedings to obtain compensation - Determination of claims - Procedure - Procedure before hearing - Whether "reasonably arguable case exists".

Workers Rehabilitation and Compensation Act 1988 (Tas), s81A, (2A) and (3).

Judgment Number: [2007] TASSC 90

ST HELENS OYSTERS PTY LTD v IAN JAMES COATSWORTH

1 The issue that goes to the core of this appeal is whether the learned Commissioner who constituted the Workers Compensation and Rehabilitation Tribunal erred in law in determining that no reasonably arguable case existed concerning the liability of the appellant, the employer, to pay weekly compensation or benefits to the respondent, the worker.

2 This issue fell for determination pursuant to the Workers Rehabilitation and Compensation Act 1988, s81A, which relevantly provides:

"(1) An employer who disputes liability to pay compensation by way of weekly payments for an injury referred to in section 81(1)or benefits under Division 2 of Part VI must, within 84 days of receiving the claim for compensation in respect of the injury to the worker ¾

(a) serve the worker with written notice that the employer disputes liability ¾

(i) to pay compensation by way of weekly payments; or

(ii) to pay any benefits payable under Division 2 of Part VI in respect of the injury; and

(b) inform the worker of the reasons for disputing liability; and

(2) The referral of a matter to the Tribunal is to be accompanied by ¾

(b) all evidentiary material on which the employer intends to rely at the hearing of the matter.

(2AA) ...

(2A) Where a matter is referred to the Tribunal under subsection (1), the Tribunal may authorise the Registrar to determine whether a reasonably arguable case exists concerning the liability of the employer to pay-

(b) the cost of any benefits payable under Division 2 of Part VI in respect of the injury to the worker.

(2B) The Registrar is to advise the Tribunal of the Registrar's determination.

(2C) The Tribunal may make an order giving effect to the Registrar's determination.

(3) The Tribunal must ¾

(a) if the Tribunal considers that weekly payments should be made, order the employer to make weekly payments from such date as the Tribunal determines; or

(b) if the Tribunal considers that the cost of any benefits payable under Division 2 of Part VI in respect of the injury to the worker should be paid, order the employer to pay the cost of the benefits from such date as the Tribunal determines; or

(c) if the Tribunal considers that a reasonably arguable case exists concerning the liability of the employer to pay compensation by way of weekly payments, determine that compensation is not to be paid by the employer; or

(d) if the Tribunal considers that a reasonably arguable case exists concerning the liability of the employer to pay the cost of any benefits payable under Division 2 of Part VI in respect of the injury to the worker, determine that the cost of the benefits is not to be paid by the employer.

(4) The fact that the Tribunal has determined under subsection (3) that weekly payments should be made, or that the cost of any benefits payable under Division 2 of Part VI in respect of the injury to the worker should be paid, is not to be taken into account by the Tribunal in any other proceedings under this Act.

(5) ...

(6) For the purposes of this section, the Tribunal or the Registrar may conduct any hearing the Tribunal or the Registrar considers necessary by any appropriate means including, but not limited to, a telephone conference."

3 With reference to s81A, in Walker v J & A Freeman Building Services [2006] TASSC 90, Crawford J said at pars22 and 23:

"Section 81A(1) is intended to provide a measure of relief to an employer who claims to have a case that it has no liability to pay weekly compensation and seeks to be relieved of the obligation imposed by s81. It obliges the employer, within a time limit, to refer the matter to the Tribunal and to establish that it has a reasonably arguable case. Indeed, it is a condition precedent, a prima facie absolute obligation, which must be fulfilled before an employer is entitled to dispute liability to commence making weekly payments following receipt of a claim. Precise Timbers Pty Ltd v Burgess at 134 and 137 ...

Section 81A provides a relatively speedy process for assessing whether an employer, who wishes to dispute liability to pay weekly compensation, has a reasonably arguable case in that regard and for the making of consequential orders of an interim nature pending eventual resolution of the dispute, should it be found that the employer has or has not a reasonably arguable case. That a speedy process is intended is demonstrated by subs(2)(a), which requires the employer to lodge with the Tribunal all evidentiary material on which the employer intends to rely at the hearing, and by subs[(2A)], which permits the Tribunal to authorise the Registrar to determine whether a reasonably arguable case exists concerning the liability of the employer to pay weekly compensation. If the employer has such a case, the Tribunal will determine under subs(3)(c) that weekly compensation is not to be paid by the employer. If the employer does not have such a case, the Tribunal will order under subs(3)(a) that the employer make weekly payments. In either case, the determination or order is essentially an interim one if the unsuccessful party wishes to fully contest the question of liability later."

4 In this case the worker is one of two directors of the employer, a private company which operates oyster leases in the St Helens area. A report dated 14 March 2007 that was provided by the worker in relation to his claim for compensation included the following information:

• details of how it occurred were "my inability and frustration was built up as a result of bureaucratic failure to resolve environmental issues causing oyster losses and poor growth outcomes";

•

it was first noticed or identified on "5/3/07 because incapacitating";

•

it occurred "At work - working at normal work place";

•

it was solely due to "this occurrence";

•

there were no other causes for it.

A medical certificate provided by Dr Herman that accompanied the worker's claim included the following information:

• he examined the worker on 5 March 2007 when he presented with symptoms of "Stress/Anxiety/Depression";

• the worker stated that the condition was caused by "a disease, symptoms of which became evident on /12/07 (sic) (gradually building up)";

• the worker stated that the disease occurred under the circumstances of a "severe downturn in oyster production, business causing severe anxiety, stress and depression";

• the disease was consistent with the stated cause and was a new condition.

5 The employer served a notice disputing liability for the worker's claim. Pursuant to s81A(2)(b), the employer was obliged to accompany that notice with all evidentiary material on which it intended to rely at the hearing of the matter. The material provided by the employer was a statement from Mr Nicholas D'Antoine, the only director of the employer besides the worker. In 1996 Mr D'Antoine had formed a group of investors to purchase 50 per cent of the shares in the employer from the worker's family trust. Mr D'Antoine's statement was to the effect that the employer had traded reasonably well until 2000 when profitability began to wane because the growth rates of oysters was lower than expected and there were continuing deformities. Ongoing production difficulties led to the shareholders in the employer deciding in March 2006 to sell the business, a decision which the worker and his wife initially did not favour, but later agreed to. A six hectare undeveloped lease was successfully sold by the employer in October 2006 and following this sale the group of investors that Mr D'Antoine represented said that no further salaries would be paid after 31 December 2006. The worker's wife, who processed the salaries, ceased doing so prior to that date. Between October 2006 and December 2006 it had been agreed to sell the balance of the oyster farm by tender. Mr D'Antoine said that the cessation of salaries on 31 December effectively amounted to the termination of the employment of the worker and his wife, and that thereafter Mr D'Antoine took over the bookwork of the company. He said that the worker did not do any work for the business after December 2006 and was looking elsewhere for employment. Between 5 March 2007 and 9 March 2007 the worker telephoned Mr D'Antoine and told him of the compensation claim he, the worker, was making against the employer.

6 Pursuant to s25(1)(b), if in any employment a worker suffers an injury, which is a disease arising out of and in the course of his employment and to which his employment contributes to a substantial degree (was the major or most significant factor), then the worker's employer is liable to pay compensation to the worker. Pursuant to s25(1A)(c), compensation is not payable in respect of a disease which is an illness of the mind or a disorder of the mind which arises substantially from a reasonable administrative action taken in a reasonable manner by an employer in connection with a worker's employment.

7 The employer's notice disputing liability to pay the worker compensation included the following grounds:

"Any injury suffered by you is an illness of the mind which arises substantially from reasonable administrative action taken in a reasonable manner by the employer in connection [with] your employment. ... [T]he shareholders, which included you agreed that the employer's business should be sold. It was also agreed that payment of wages to you would cease from the 30th December 2006.

You did not suffer any injury or disease that arose out of and in the course of your employment with the employer under which your employment with the employer contributed to a substantial degree. ... You suffered your injury as a result of the failure of the employer company, of which you and your wife held a 50% shareholding in rather than as a result of any work that you were doing in the company's business."

8 This notice and the information referred to raised two grounds concerning the liability of the employer for the worker's claim. Firstly (reversing the order of the above grounds), that the worker's disease did not arise out of his employment, and that if it did, then his employment did not contribute to it to a substantial degree, that is, it was not a major or significant factor in the disease, it being attributable to the failure of the company in which the worker and his wife (through their family trust) held a 50 per cent share. Secondly, that if the first ground failed then, in any event, compensation was not payable as the disease arose substantially from the termination of the worker's employment, which was a reasonable administrative action taken in a reasonable manner by the employer in connection with the worker's employment.

9 In J & A Freeman Building Services v Walker [2006] TASSC 45; (2006) 15 Tas R 313 par28, Tennent J equated the phrase "a reasonably arguable case" contained in s81A with "a prima facie case". It has been said of the phrase "a reasonably arguable case" contained in s81 that it is an expression with which members of this Court are well familiar (Walker (supra) Crawford J par19) and guidance as to the application of the phrase can be found in authorities dealing with applications for an extension of time (J & A Freeman Building (supra) Tennent J, pars22 - 24 and Walker (supra) Slicer J par53). Whilst, in general terms, I agree with these observations, it is important to keep in mind that the phrase being applied is as set out in s81A and its meaning must be construed in the context of that provision and its purposes and the purposes of the Workers Rehabilitation and Compensation Act. In North Ganalanja Aboriginal Corporation v Queensland [1996] HCA 2; (1996) 185 CLR 595, the High Court dealt with an appeal in relation to an application made under the Native Title Act 1993 (Cth) for a determination as to native title to land. That Act, s63, included a provision that "the Registrar must accept [the application], unless he or she is of the opinion that prima facie the claim cannot be made out". At 652, Kirby J said:

"The meaning of the critical expression ('that prima facie the claim cannot be made out') must be derived from the words used by Parliament as understood in their context and for the achievement of the apparent purpose to be attributed to Parliament. The duty of fidelity to the legislative language has been emphasised many times in this Court, including recently See, eg, Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518. Where a phrase such as a 'prima facie ... claim' or 'prima facie case' is used, it may be helpful to have regard to earlier decisions which have considered such expressions in different statutory contexts. As to 'prima facie case' see, eg, May v O'Sullivan [1955] HCA 38; (1955) 92 CLR 654; Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at 622; American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396; A v Hayden [No 1] (1984) 59 ALJR 1 at 4f; 56 ALR 73 at 77f; Bunker v Mahoney [1917] VLR 65 at 67; Re State Public Services Federation; Ex parte Attorney-General (WA) [1993] HCA 30; (1993) 178 CLR 249 at 303. At a general level, there is not much dispute that, by directing the attention of the Registrar to form the opinion whether 'prima facie the claim cannot be made out' the Act requires him or her to reach that opinion 'at first sight' or 'based, or founded, on first impression'. But generalities must give way to the specific context of the language of the Act. Remarks made concerning similar expressions in earlier cases arising under other legislation must be subordinated to the meaning to be ascribed to the phrase used in the present context_._"

10 The phrase "a reasonably arguable case" was introduced into s81A in substitution for the phrase "a genuine dispute" by the Workers Rehabilitation and Compensation Amendment (Miscellaneous) Act 2004, s24. The test embodied by the latter phrase had been construed as embodying a subjective element, that is, whether the employer's rejection of liability was genuine; Haas Investments Pty Ltd v Viney [2001] TASSC 147, par10 and State of Tasmania v Gregson [2002] TASSC 76, pars5 and 6. By substituting a test that involves reasonableness for a test that involved genuineness, the amending legislation removed that subjective element from the test and replaced it with an objective element. Whilst the focus of the objective element is on the arguability of the case, that focus inevitably extends to the case itself. A case will not be reasonably arguable unless the case itself is reasonable in the sense that there is a reasonable prospect of the claim being rejected following a final hearing. By the same amending legislation, the period prescribed by s81A(1) within which an employer may dispute a worker's claim was increased from 28 days to 84 days. This increase recognises the added burden placed on an employer by the introduction of the new test. Employers have been allowed more time within which to investigate a worker's claim and, in the event that it is disputed:

• formulate the reasons for disputing the claim and inform the worker of the same, s81A(1)(b); and

• compile and deliver any evidential material upon which the employer intends to rely on the hearing of the matter, s81A(2)(b).

These amendments have no bearing on the nature of the determination to be made. It is a preliminary determination that results in interim orders. The very notion of a "reasonably arguable case" like the very notion of a "prima facie case", precludes a final determination of a disputed question of fact. See North Ganalanja (supra) at 639. On the face of s81A, a reasonably arguable case will exist concerning the liability of an employer to pay a worker if it is reasonably arguable on the material available in relation to the claim or identified deficiencies or weaknesses in the claim that, following a contested hearing it may be rejected.

11 I return to the two grounds for disputing the liability of the employer for the worker's claim set out in par8 above In his report of 14 March 2007 the worker said that his condition was solely due to an occurrence he described as being: "my inability and frustration was built up as a result of a bureaucratic failure to resolve environmental issues causing oyster losses and poor growth outcomes". In his certificate, Dr Hermann said that the worker stated that the circumstances under which the disease occurred were a "severe downturn in oyster production, business causing severe anxiety, stress and depression". Dr Hermann said the disease was consistent with this cause. Accepting that these matters were the sole cause of the worker's disease, this does not assist in determining whether it arose out of or in the course of the worker's employment, or whether there was another, or other, causes for the disease such as his interest in the employer and its business, which failed in consequence of the matters about which he was concerned. The learned Commissioner said with respect to this issue:

"I also reject this as a basis for a reasonably arguable case finding. As I have already indicated, it is the worker's claim that his illness resulted from a downturn in oyster production caused by the bureaucracy's failure to resolve environment issues. The employer has not, in the making of this reference directly responded to this case put by the worker. He has not adduced any medical evidence which asserts the worker's illness to be to have a cause other than that contended by him. I have ... closely examined Mr D'Antoine's statement. It does not, in my view contain any direct evidence that the worker's illness was attributable to the failure of the business. Conjecture on the part of the employer to this effect is not enough. It needs instead to make out, as I have already said, a prima facie case. It has failed to do so."

This passage involves a misconception of the employer's position. The employer in substance accepts the worker's claim that his disease resulted from such matters as a downturn in oyster production caused by the bureaucracy's failure to resolve environmental issues. The contention advanced by the employer is that, accepting the role of these matters in the worker's disease, they impacted on the worker through the collapse of the employer, a company in which the worker and his wife held a 50 per cent interest via the family trust, rather than through his employment. To substantiate this contention it was not necessary, as was suggested by the learned Commissioner, for the employer to adduce medical evidence that the worker's disease was brought about by anything other than a downturn in oyster production caused by the bureaucracy's failure to resolve environmental issues. On the material before the learned Commissioner, the issue as to how these matters impacted on the worker was an open question. The material did not address this issue, save for the worker's statement that his disease occurred "At work - working at normal workplace". Arguably this statement is inconsistent with the worker's earlier statement that his disease was first noticed on 5 March 2007, a date some three months after the date when, Mr D'Antoine says, the worker's employment was terminated. Insofar as Dr Herman says that the disease built up gradually, it may well be that more fulsome evidence from the doctor will explain this ambiguity. The doctor's certificate does not, however, purport to address this ambiguity or a number of other issues. Pursuant to s69(1), it was necessary for the worker's claim to be "supported by a certificate in a form approved by the [WorkCover Tasmanian] Board signed by a medical practitioner". There is no evidence as to what form has been approved by the Board, although, from the fact that the Commissioner acted on the certificate provided by Dr Herman, it is reasonable to assume that it was in accordance with an approved form. The certificate is headed "Worker's Compensation Medical Certificate Form 1" and presents as an approved form. The information required by the form does not include an opinion as to whether the worker's disease arose out of and in the course of his employment and to which his employment contributed to a substantial degree, s25(1)(b). This is said to be because s69(1) simply requires that the existence of a worker's total or partial incapacity be supported by a medical certificate in an approved form. In State of Tasmania v Parsons [2002] TASSC 59; (2002) 11 Tas R 26 at par78, Crawford J, agreed with by Cox CJ, said:

"However, I respectfully agree with his Honour that s69(1) did not require a medical certificate to deal with any question of causation. The certificate was required to support only the existence of a total or partial incapacity for work. I agree that the words 'the existence of such total or partial incapacity' in the subsection should not be interpreted as meaning the existence of a total or partial incapacity for work that results from any injury suffered by a worker. The ordinary, natural and grammatical meaning of the words does not suggest such an interpretation. Further, the legislature could hardly have expected a medical practitioner, in the usual case, to be able to certify that a particular incapacity was caused by a particular injury that almost certainly, the practitioner did not witness. At best, all the practitioner could certify would be that the incapacity was consistent with having resulted from a particular injury claimed to have occurred by the worker. "

12 The absence of any requirement for Dr Herman's certificate to address causation does not assist the worker in overcoming the deficiency in this aspect of his claim. The employer is perfectly entitled to point to the absence of evidence to show that the worker's disease was caused in circumstances necessary for the substantiation of a claim and rely on that deficiency to show that a reasonably arguable case exists concerning liability. On the limited information before the learned Commissioner it was not possible to determine what role the worker's employment played in the matters to which the worker attributed his disease. It may be that for the worker, the loss of a 50 per cent equity in the business of the employer was a more traumatic consequence of those matters than the impact they may have had on him arising out of and in the course of his employment. As it was not possible for the learned Commissioner to reach anything of the nature of a final conclusion in relation to this issue, the only conclusion open to him was that there was a reasonably arguable case concerning the liability of the employer to pay the worker.

13 As to the second ground for disputing liability set out in par8 above, the learned Commissioner said:

"My review of the relevant evidence leads me to conclude that the employer has fallen a long way short of establishing, prima facie, a case that the worker's illness was substantially caused by the reasonable administrative actions of the employer, specifically its decision to sell the business and to cease paying wages. It follows that I reject this ground as a basis for a reasonable arguable case of finding."

14 It is notorious that the genesis for conditions such as stress, anxiety and depression may be multifaceted. The causes may be many and varied and it can be very difficult to identify the most significant causative factor. In the context of litigation, a final determination as to the existence of such a condition and the causative role of any factor, almost invariably turns upon the adjudicator's assessment of the veracity and reliability of the complainant. Accordingly, when a worker claims to suffer from a condition of this nature in circumstances where there are a variety of potential causes for the condition, an employer may show a reasonably arguable case concerning liability by providing evidence of plausible potential causes that are inconsistent with liability. In this case the evidence advanced by the employer includes evidence that notice of the termination of the worker's employment was given in October 2006 and the employment ceased on 31 December 2006. According to the worker's report, and Dr Herman's medical certificate, it was not until 5 March 2007 that the worker became unfit for work by reason of his disease. Against this background the employer, in effect, contends that in the event that it is established that the workers disease arose out of and in the course of his employment, then it arose substantially from the employer's decision to terminate the worker's employment, a decision which the employer says was a reasonable administrative action taken in a reasonable manner by it in connection with the worker's employment. If this contention is substantiated, pursuant to s25(1A)(c), the employer will not be liable to pay compensation to the worker. Unchallenged material before the learned Commissioner provided a basis for a finding, following the hearing of the claim, that the worker's employment was terminated and that the termination was a reasonable administrative action taken in a reasonable manner in connection with the worker's employment. As already explained in relation to the first ground for disputing liability, on the limited information before the learned Commissioner, it was not possible to determine what role the worker's employment played in his disease. Of necessity this means that it was not possible to determine whether such role as his employment played arose substantially from its termination. In these circumstances, on the limited material before the learned Commissioner, there was a reasonably arguable case that the employer could rely on s25(1A)(c) to avoid liability to the worker.

15 For this appeal to succeed, the employer must establish that the learned Commissioner erred "in point of law", s63(1). This will be so if the material, or more pertinently, deficiencies in the material before the learned Commissioner, necessarily lead to the conclusion that a reasonably arguable case existed. See Protective Security Pty Ltd v Bedelph [2004] TASSC 128; (2004) 13 Tas R 354, Crawford J, pars22 - 26 and Tanase v Acme Engineering (Tas) Pty Ltd [2006] TASSC 100, Underwood CJ at pars21 - 26. For the reasons I have given in relation to the grounds I have addressed, I so conclude.

16 The appeal is allowed. The determination of the learned Commissioner in [2007] TASWRCT 26, made on 10 July 2007, is quashed. Subject to hearing from the parties, there will be an order that in lieu of that determination it is determined that a reasonably arguable case exists concerning the liability of the employer to pay compensation to the worker by way of weekly payments or benefits and that such compensation not be paid by the employer. Again, subject to hearing from the parties, there will be an order that the worker pay the employer's taxed costs of the appeal, and that the worker be granted an indemnity certificate pursuant to the Appeal Costs Fund Act 1968, s9.