JUDGMENT OF: His Honour President Judge WD Jennings, His Honour Deputy President Judge FK Cawthorne, His Honour Deputy President Judge JP McCusker

Appeal - And Cross Appeal - Approach taken in calculation of worker's notional weekly earnings - Rejection of worker's evidence and evaluation of material as to worker's income considered - Principles in Francese Case considered - Found no question of law - Whether breach of mutuality - Whether expression "recognised as a breach of mutuality" in s 36(1)(g) is limited to a consideration of the worker's obligations to the employer or whether it also includes a consideration of the worker's obligations to the Corporation - Found no breach of mutuality - Appeals dismissed - S 4, s 36, s 53(7), s 84 and 85 of Workers Rehabilitation and Compensation Act 1986.

Francese v Corporation of the City of Adelaide (1989) 51 SASR 522

Mitsubishi Motors Australia Ltd v Love (1992) 59 SASR 339

Rajcevic v WorkCover/NZI Workers Compensation (SA) Ltd (Valley Crest Fruits) [2000] SAWCT 5

Fox v WorkCover Corporation/Allianz Australia Workers Compensation (Australian Recreation Exports Pty Ltd) [2000] SAWCT 194

WorkCover Corporation/Commercial Union Workers Compensation (SA) Pty Ltd (S and K Papanestoras) v Panagaris [2000] SAWCT 193

Giorginis v Kastrati & Another (1988) 49 SASR 371

Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63

The Smith's Snackfood Company Ltd v Zienkiewicz [2002] SAWCT 48

Modbury Public Hospital v Braid [2002] SAWCT 95

Campion v WorkCover Corporation/Royal and Sun Alliance Workers Compensation (SA) Ltd (South Australian Aboriginal Trachoma and Eye Health Program) [2002] SAWCT 108

Zuvela v Cosmarnan Concrete Pty Ltd [1996] HCA 30; (1996) 140 ALR 227

Whiteley Muir & Zwanenberg Ltd v Kerr (1966) 39 ALJR 505

Dowell Australia Ltd v Archdeacon [1975] HCA 29; (1975) 132 CLR 417

Kanoon v Cablemakers of Australia Pty Ltd (1976) WCR 328

Eylward v Select Staff Pty Ltd [2000] SAWCT 192

Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218

RJ Brodie (Holdings) Pty Ltd v Pennell [1968] HCA 73; (1968) 117 CLR 665

Hartwell v Electricity Trust of South Australia (1982) 29 SASR 365

Kelvinator v Jezior (1988) 49 SASR 592

Concut Pty Ltd v Worrell [2000] HCA 64

1 We agree with the decision of His Honour Deputy President Judge McCusker that both appeals should be dismissed generally for the reasons he gives.

2 As for the worker's appeal, faced with unreliable evidence of the worker's actual earnings the learned Deputy President faced a difficult task in determining average weekly earnings which, with respect, he did his best to resolve. There was evidence to support the conclusion that he reached. We agree that none of the submissions challenging that conclusion disclose an error of law.

3 As for the Corporation's appeal, the legal issue involved is a difficult one. It concerns whether the expression "recognised as a breach of mutuality" as it appears in s 36(1)(g) is limited to a consideration of the worker's obligations to the employer, or whether it also includes a consideration of the worker's obligations to the Corporation. In our respectful view no clear answer is evident. That being so and in view of our conclusion that on the facts as found by the learned Deputy President in this case, no breach of mutuality had been established against either of the relevant entities, we would prefer not to express any final conclusion as to the correct construction of the expression and to leave the resolution of this issue for another day.

4 Both WorkCover and the worker appeal from the decision of a learned Deputy President. In WorkCover's appeal it complains of two errors. Firstly the conclusion there was no breach of mutuality. Secondly the reckoning of the worker's notional weekly earnings including the use of s 84 and s 85 of the Workers Rehabilitation and Compensation Act 1986 ("the Act") in reaching the result. The worker appeals contending the reckoning figure should be a significantly higher amount.

5 The worker and his wife, Gabrielle, are the sole proprietors of a company known as Australian Fashion Centre Pty Ltd. They were both employees of the company at various times and in various capacities (par 2 of the learned Deputy President's judgment). The worker sustained injury on 3 September 2000. The Corporation accepted liability and determined the worker was entitled to weekly payments of income maintenance set at $794.39 per week from 4 September 2000.

4 6 The worker disputed the amount of the weekly payments. He contended his average gross income for the purposes of the notional weekly earnings ought to have been set at $1604.00 per week. The Corporation investigated and came to the conclusion that rather than the notional weekly earnings figure being set too low in its earlier determination, it had been set too high. Under its power to redetermine in s 53(7) of the Act the Corporation substituted the amount of $650.00 gross per week. But further it determined the worker had provided false information to the accountants the Corporation had engaged to investigate the matter. For that reason the Corporation ruled the worker had breached mutuality justifying discontinuance of weekly payments in accordance with s 36(1)(f) of the Act (par 5 of the learned Deputy President's judgment).

7 This further determination required explanation. The falsehood claimed is that the worker lied, "in claim forms and elsewhere as to the level of your earnings" (AB Vol 2 at A14, A21). The Corporation seems to suggest that entitles it to relate the operation of the re-determination back to 4 September 2000 (see tr 34, tr 35, AB Vol 2 at A21, A35). The learned Deputy President described the matter in his judgment (par 5):-

"... It therefore issued two further determinations. One was in purported reliance upon s 53(7) in which it determined that the worker's notional weekly earings were if (sic) fact $650 per week but he had a nil entitlement because of his breach of mutuality. The other was made pursuant to s 36 asserting that the worker's entitlement to weekly payments had ceased on account of his breach of mutuality."

8 A suitable starting point to understand the issues is a schedule produced by the worker. He relied on this schedule to justify a gross notional weekly earning of $1604.00 instead of the lower sum fixed by the Corporation. That schedule focused on the period from 5 July 2000 to 3 September 2000, (viz the date of his injury). It is set out in par 15 of the learned Deputy President's judgment as follows:-

9 Therefore this schedule contends the worker received $16297.10 in wages over the immediate ten week period. The learned Deputy President rejected this material as an appropriate or reliable basis to make the reckoning under s 4(1) of the Act. He stated (par 36 - 41):-

"36 The difficulty that I have in this case is that I do not have a complete financial year. In the preceding financial year the worker alleges that he only worked six months. The group tax certificate for the financial year in which the compensable disability was sustained only relates to a period of alleged employment of ten weeks.

37 Such is my lack of confidence in the worker's credibility that I am not satisfied, on the balance of probabilities, that the income therein disclosed represents his actual earnings.

38 In saying this I am mindful of the submission made by Mr Martin, that there is no reason to doubt the accuracy of the evidence given by the worker that in the preceding financial year he worked for six months and his wife worked for six months.

39 But I am also mindful of the fact that the worker gave evidence that would support a conclusion that he manipulated the distribution of income to ensure that the Australian Fashion ended the financial year at a break even point. I think it is also reasonable to infer that he might have manipulated the distribution of income between himself and his wife to minimise their respective liabilities to pay income tax. Thus, I cannot exclude the possibility that the receipt of income by the worker and his wife for 6 months of the year was done deliberately for that purpose. The significance of this, is that I do not think that the group tax certificate for the 1999/2000 financial year can be relied upon as corroboration for what was contended to have happened in the months that followed.

40 Adding to my concerns about the validity of using the income declared in the group tax certificates as a measure of the worker's average weekly earnings is the fact that during the relevant periods Australian Fashion had equipment and engaged other machinists that undoubtedly contributed to the income received by it, which in turn was distributed as wages to the worker and his wife. I think it likely that part of the income ostensibly paid to the worker reflected profits that would ordinarily be due to be paid to him in his capacity as shareholder. In a practical sense it might have made no difference to the worker whether he received the money as a dividend or as wages, but for the purposes of fairly determining the worker's average weekly earnings as a worker, I think it makes a difference.

41 My rejection of much of the worker's evidence, my distrust of the accuracy of the wage records and my reservations about the utility of the group tax certificates are not the end of the matter. I think that s 84 and s 85 of the Act, which collectively release me from the constraints imposed by the rules of evidence and compel me to act according to equity, good conscience and the substantial merits of the case, require me to attempt to strike a figure that fairly reflects the worker's notional weekly earnings."

10 It is important to appreciate the process of evaluation of the material conducted by the learned Deputy President. Firstly he pointed to the group tax certificates and the fact that they were related to a ten week period only. He rejected a contention that they were a true representation of the generality. He then evaluated the risk that the records may have been distorted or manipulated for tax minimisation purposes. Finally he had regard to the fact that some of the monies described as "wages" were, in truth, profits of the business. A central factor in the process of evaluation and reasoning was the poor view the learned Deputy President had formed of the worker's credit and that of his wife (par 34 of his judgment). Because of the latter, the learned Deputy President was warranted in treating this material with caution. However, on the other hand, he rejected the opinion of McLachlin Hodge Mitchell, the chartered accountants engaged by the Corporation. In this regard he stated (par 31):-

"31 The figure of $650 a week arrived at in the McLachlin Hodge Mitchell report is plainly based upon Mr Matthews' supposition as to what he thinks was the rationale behind the distribution of income between the worker and his wife was and what he thinks is a fair figure. In my view that figure should not be relied upon."

11 Having considered those matters the learned Deputy President then proceeded with the task before him. I pause to reiterate the approach required as the Tribunal stated in Francese v Corporation of the City of Adelaide (1989) 51 SASR 522 at 526 (see also Mitsubishi Motors Australia Ltd v Love (1992) 59 SASR 339 at 340). The key was stated by King CJ in Francese in the following terms (at 526):-

"... The emphasis is upon estimating what the worker could reasonably have expected to earn during the period of disability. Average weekly earnings during the previous 12 months are merely taken into account as part of the process of estimation. ...

... The objective of the provisions appears to be to provide to the worker during disability amounts by way of compensation equivalent to the earnings which he could have counted upon receiving if there had been no disability. ..."

12 I refer to decisions where those principles were applied in somewhat related factual circumstances. In Rajcevic v WorkCover/NZI Workers Compensation (SA) Ltd (Valley Crest Fruits) [2000] SAWCT 5 the worker suffered an injury while a casual fruit picker. Had she not been injured her employment would have come to an end some three weeks on. She produced evidence that she would have likely taken work as a cleaner which would have eventuated in employment in the order of 50 hours cleaning work per week. Cawthorne DPJ evaluated the evidence on the basis of likelihoods during the period of disability. In pursuit of the principle in Francese's case His Honour took a broad overview and concluded (par 16):-

"16 ... All in all in my view such a result would be achieved if the hours worked by the worker in the two completed weeks of employment with the employer (namely 36 and 45 - to give a total of 81) were averaged. This would yield a result of an average of 40.5 weekly hours at $9.50 per hour or $384.75 per week which to my mind would satisfy the statutory criteria. ..."

13 In Fox v WorkCover Corporation/Allianz Australia Workers Compensation (Australian Recreation Exports Pty Ltd) [2000] SAWCT 194, the worker conducted the business with her husband and the enterprises were operated by various trusts of which the husband and wife were directors and controlling shareholders. The injury happened on 8 July 1993 and in the previous financial year the worker's return to the Australian Tax Office showed a gross income of $21250. It was accepted by the Acting Deputy President that the worker spent at least an average of 50 hours per week in the business, but the wages paid to the worker in any given financial year were dependent on the profit of the business and tax minimisation strategies. Various approaches to the reckoning were contended by the parties. These included a projection approach dependant on conclusions about the true nature of drawings from the year 1992/1993 (par 11, par 15), an estimate of the costs to the business of employing a person other than the applicant (par 16), and a strict extrapolation from the tax returns submitted for 1992/1993 and 1993/1994 (par 6, par 7, par 10).

14 Thompson ADP, having come to the view that the alternatives provided in s 4(2)(b)(ii) of the Act were of no assistance and the case had to be decided on the words of s 4(1), essentially used the projection approach. In so doing he determined the tax returns, while relevant, were to be given only such weight in the context of the whole of the evidence as they deserved (par 36). He rejected a "value of the work" approach; i.e. what it would have cost to employ a person other than the applicant in the job (par 21). He stated his conclusion (par 42 - 43):-

"42 Doing the best I can I intend to approach this problem by

(i) starting with the drawings of $50500. That should be divided by 2 leaving $25250.

(ii) I then propose to deduct 25 per cent of the drawings which I assign to those drawings generated by the worker's status as a proprietor. Therefore $6312.50 should be deducted from $25250 leaving $18937.50.

(iii) The value of the non-financial emoluments car, telephone etc is approximately $7500. I propose to allow 50 per cent of that as earnings. That is $3750.

43 This gives an annual salary of about $22687.50."

15 In WorkCover Corporation/Commercial Union Workers Compensation (SA) Pty Ltd (S and K Papanestoras) v Panagaris [2000] SAWCT 193 the worker was employed as a taxi driver. He had only briefly been employed by the employer at the time of his injury. It was argued he was actively pursuing a greater number of shifts per week and this had to be brought into the calculation of the loss during the relevant period. Parsons DPJ examined the actuality of earnings to date of injury. Her Honour made conclusions as to what would have happened but for the injury in regard to that work pattern. She then stated (par 20)

"20 I agree with Gilchrist DP in [Loades v. WorkCover Corporation/Mercantile Mutual (SA) Ltd (McLaren Hills Vineyard Contractors) [2000] SAWCT 16], that it is not helpful to focus on contingencies as if the task is akin to determining future loss of earning capacity. Both parties sought to rely on such contingencies. Mr Britton favoured a view of the future where the worker could expect to work six nights a week. Mr Walsh favoured a view of the future where the worker, having resigned, would have trouble obtaining other employment. Whilst the task is a prospective one, it is best to start with what is known about his earnings to estimate what he could reasonably be expected to earn for a week's work had he not been disabled."

Her Honour then proceeded to average the earnings from shifts with the current employer but adjusted it to represent four shifts per week as against the three shifts that had been worked.

16 The learned Deputy President, in the case before us, reached his conclusion in the following terms:-

"42 There is apparently reliable evidence indicating that the worker worked standard hours for a full time employee, namely 38 hours per week. In addition to the worker's statement about this in his record of interview is the statement by Ms Burnett, who was employed by Australian Fashion as a sewing machinist. She said that she worked about 30 hours per week and that her impression was that the worker worked at least those hours and that he worked everyday.

43 For the reasons explained earlier I reject the worker's evidence that he was paid $44 per hour for his work for Australian Fashion. In his record of interview the worker said that he earned $30 per hour whilst working as a consultant with RM Williams. I have no reason to doubt that. He said that he paid the subcontractors that worked for him in the manufacturing side, during the relevant period, between $17 and $18 per hour. Again, I have no reason to doubt that.

44 My impression is that in the labour market, the work that the worker was performing for Australian Fashion would attract a lower salary than that which he was earning at RM Willams as a consultant. But given that there was a supervisory component of the worker's work, it is reasonable to assume that it would have attracted a salary a little higher than that he was paying his subcontractors.

45 Doing the best I can, I think a figure of $25 per hour is a fair estimate of the wage component of the worker's income.

46 This leads me to conclude that a fair assessment of the worker's notional weekly earnings is $950 per week."

17 In its outline the Corporation challenged this conclusion. It sought to have reinserted the amount of $650 gross per week (Outline of Submissions of the Appellant par 10). In the alternative, the initial amount of $794.39 per week (Outline of Submissions of the Appellant par 11). It pointed to the fact that a cheque for $1500 was presented for payment of wages to the worker three days after the date of injury (Outline of Submissions of the Appellant par 13) and that the worker calculated and reserved amounts towards taxation on the basis of the tax applicable to the gross earnings divided by two: ie that all payments assumed an equal division between husband and wife.

18 That Mr Possingham, counsel for the Corporation, in seeking to persuade us the circumstances involved questions of law, argued that in the absence of dependable material from the worker's records, s 85 of the Act could not be used. The approach was exhaustively stated in s 4 of the Act. The problem I have with that contention is that while there is a reference in par 41 of the learned Deputy President's judgment to s 84 and s 85 of the Act there is no reference to that provision being employed in the relevant paragraphs where His Honour explains his reckoning of the notional weekly earnings.

19 Mr Possingham also made reference to Giorginis v Kastrati & Another (1988) 49 SASR 371. That case concerned the due approach when the worker's tax returns were false. For the reasons explained by Mr Martin, counsel for the worker, (tr 64), it has not been shown that the tax returns are false or that they were prepared in a way to mislead the Commissioner of Taxation. I do not understand the learned Deputy President to have reached that conclusion, as opposed to a conclusion that the explanations of the worker could not be relied on for interpreting the record.

20 Mr Possingham submits that the rejection of the worker's evidence that he paid himself $44 an hour for his work for the employer left the learned Deputy President with one option and that was to try and draw what he could from the history of the records up to the date of injury. That is without the help of the explanations of the worker. It was not legitimate to make the calculation by reference to what a supervisory machinist might have earnt working 38 hours per week and having regard to the amount the worker earned as a consultant with RM Williams. That is an approach bordering on speculation rather than the test in s 4(1) of the Act, namely the average amount that the worker could reasonable be expected to have earned for a week's work if the worker had not been disabled. This depended on history not on a relative consideration or of a reasonable evaluation of the work.

21 In this context Mr Possingham argued it was particularly striking that the worker, working a full year (1998/1999), had earned $37920 but when working a half year only (1999/2000) had earned at a rate double the previous year, namely $38890 (Outline of Further Submissions of the Appellant par 5.4, par 5.5, tr 49). In short there were grave incongruities in the whole of the worker's records and evidence on the topic and the consequences of that could simply be visited on the worker: see Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63, 65.

22 Mr Martin accepted that a finding of credit had been made against his client. However he said despite the worker's explanations and evidence being excluded from the exercise there was still cogent objective material which showed a pattern of wages that could be and ought to have been projected through the period of disability. In this regard he referred to the details in the schedule as these were drawn from cheques actually presented and cashed (Applicant/Worker's Outline of Argument par 1, 3.1, 3.2, 3.3, 3.4, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 5, tr 59 - 61). Mr Martin said there was simply nothing to cast doubt on the dependability of this material and as a result it should have been projected, thus allowing the figure of $1604 per week, (Applicant/Worker's Outline of Argument par 12).

23 I have difficulty in distilling a question of law out of any of these submissions. The only possible question of law was the Francese test or that evidence did not exist to enable the findings that were made. In this case the learned Deputy President, on the basis of the available evidence, had to work out two factors. One was a period. The second was a rate that had to reflect on the balance of probabilities the "average amount that the worker could reasonably be expected to have earned for a week's work if the worker had not been disabled". He was faced with a difficult circumstance due to the worker's unreliability and the peculiarities of the accounting. He had to do the best he could with the material he had.

24 In a number of recent decisions of this Full Tribunal reference has been made to the manner in which the reasoning and approach of the case appealed from should occur: see The Smith's Snackfood Company Ltd v Zienkiewicz [2002] SAWCT 48 at par 2, par 5; Modbury Public Hospital v Braid [2002] SAWCT 95 at par 24; Campion v WorkCover Corporation/Royal and Sun Alliance Workers Compensation (SA) Ltd (South Australian Aboriginal Trachoma and Eye Health Program) [2002] SAWCT 108 at par 34. In particular the following statement of principle referred to in Zuvela v Cosmarnan Concrete Pty Ltd [1996] HCA 30; (1996) 140 ALR 227 relying on the dicta of Barwick CJ in Whiteley Muir & Zwanenberg Ltd v Kerr (1966) 39 ALJR 505 at 506 (at 229 - 230):-

"The trial judge, although not depending in any respect on the credibility of any witness, may have preferred one possible view of the primary facts to another as being in his opinion the more probable. Such a finding may, in my opinion, be disturbed by an appellate court but this should only be done if other probabilities so outweigh that chosen by the primary judge that it can be said that his conclusion was wrong. Again, the trial judge, having found the primary facts, may decide that a particular inference should be drawn from them. Here no doubt the appellate court has more room for setting aside that conclusion. But, even in that case, the fact of the trial judge's decision must be displaced. It is not enough that the appellate court would itself, if trying the matter initially, have drawn a different inference. It must be shown that the trial judge was wrong. This may be achieved by showing that material facts have been overlooked, or given undue or too little weight in deciding the inference to be drawn: or the available inference in the opposite sense to that chosen by the trial judge is so preponderant in the opinion of the appellate court that the trial judge's decision is wrong."

25 In the reckoning process involved in s 4 of the Act, given that it is an estimate of what would have been on the balance of probabilities but for the injury, the role of the trial judge is, if anything, greater than when engaged in primary fact finding. I understood both counsel to concede this (tr 50, 71). Despite the force of both counsels' arguments to the contrary, the curious history the learned Deputy President dealt with made it implausible to project for the full year the experience from 5 July to 3 September 2000. The problem for the learned Deputy President as I have noted was the lack of a reliable witness, namely the worker, on the topic. He was left in grave difficulty.

26 I have wondered about the basis for the findings as to the rate of pay per hour (par 44 of learned Deputy President's judgment). However if the worker explained his wages in terms of a rate per hour then it seems logical for the learned Deputy President to adopt that approach without accepting the actual figure proposed by the worker (viz $44 per hour). Therefore it seems to me he had a factual basis available to him and no issue of the Francese test arises. I am unable to discern a question of law.

27 The second issue raised challenges the learned Deputy President's conclusion there was no scope for breach of mutuality in the circumstances. He stated his view as follows (par 29):-

"29 In my view, the worker's alleged lack of cooperation with Mr Matthews and alleged deception concerning the wage records and his salary, even if proved, would not justify the rejection of his claim or the discontinuance of his weekly payments.

28 The legislation on the topic is in s 36 of the Act and reads as follows:-

"36. (1) Subject to this Act, weekly payments to a worker who has suffered a compensable disability must not be discontinued unless-

(f) the worker breaches the obligation of mutuality;

(1a) A worker breaches the obligation of mutuality if-

(a) the Corporation has, by written notice to the worker, required the worker to submit to an examination by a recognised medical expert nominated by the Corporation and the worker fails to comply with the requirement within the time allowed in the notice or obstructs the examination; or

(b) the Corporation has, by written notice to the worker, required the worker to submit to the Corporation a certificate from a recognised medical expert certifying that the compensable disability continues, and the worker fails to comply with the requirement within the time allowed in the notice; or

(c) the worker refuses or fails to submit to proper medical treatment for the worker's condition; or

(d) the worker refuses or fails to participate in a rehabilitation program under this Act or participates in a way that frustrates the objectives of the program; or

(e) the worker fails to comply with an obligation under a rehabilitation and return to work plan under this Act; or

(i) to undertake work that the worker has been offered and is capable of performing; or

(ii) to take reasonable steps to find or obtain suitable employment,

or having obtained suitable employment, unreasonably discontinues the employment; or

(g) the worker does anything else that is, apart from this subsection, recognised as a breach of the obligation of mutuality."

29 His Honour dealt with the matter of mutuality in the following terms (par 27 - 28):-

"27 Mr Possingham made much of my decision in Hagen v WorkCover Corporation (Hallet Brick Transport Pty Ltd) A42/1997 where I held that a deliberate misstatement in particulars provided in connection with a claim for damages at common law against an employer constituted a breach of mutuality that disentitled the worker in that case to weekly payments from the date of the misstatement.

28 What distinguishes that case from this is that the deception, if there is one, was not directly made against the employer. The employer in this case supports everything that the worker says. That is scarcely surprising, given that they are one and the same. Be that as it may, mutuality in this context deals with the relationship between the worker and his or her employer, not as between the worker and the Corporation. Mr Possingham seemed to suggest that based on some principle of equity, good conscience and the like, the worker's alleged dishonesty ought to preclude him from obtaining the benefit of the Act. But, as I explained in Blocki v WorkCover Corporation/CGU (Pyrotech Fire Protection Pty Ltd [2001] SAWCT 145, there is no authority that supports such a proposition."

30 Mr Stanley, counsel for the Corporation, on this issue relied for a breach of mutuality not only on the worker's statement as to "normal gross weekly earnings" in the claim forms (AB Vol 2 at pp A3, A6), but also to the information given to the accountants (tr 3). The Corporation claimed an entitlement to discontinue pursuant to s 36(1)(f) and s 36(1a)(g) of the Act because it claimed an act of dishonesty on the part of the worker in giving false information to the Corporation as to his levels of earnings. This was submitted on the basis that the worker owed an obligation of mutuality not only to the employer but to the Corporation as the insurer of the employer (Outline of Submissions of the Appellant para 3). It was an implication, said Mr Stanley, drawn from the statutory provisions and confirmed by authority.

31 In developing this argument, Mr Stanley relied on the statement by Mason J in Dowell Australia Ltd v Archdeacon [1975] HCA 29; (1975) 132 CLR 417 and in regard to s 11 of the New South Wales Act as follows (434, 435):-

"... the sub-section imports an element of mutuality; that there can be no failure by the employer to provide suitable employment `if the employee refuses, and continues to refuse, to enter his employment, or, if the facts show that the employee's conduct is inconsistent with the necessary degree of co-operation on his part'; that `there must ... be a continuing failure to provide suitable employment in order to entitle a worker to continuing benefits pursuant to s 11(2)'; and that `there cannot be a continuing failure where the circumstances are such that it can be seen that throughout any relevant period the employee is not ready, willing or able to enter the employ of the pre-injury employer'. ...

... Once it is accepted that the provision of suitable employment involves the concept of mutuality in the sense explained, it seems to follow that an applicant for an award under s 11(2) must establish that he for his part was in the relevant period of time ready, willing and able to enter into the employment which he claims the employer failed to provide. It is for the applicant to show a failure on the part of the employer to fulfil his statutory obligation; this he does not begin to do until he demonstrates that there was the necessary degree of co-operation on his side."

32 Mr Stanley went on to argue that misconduct of a sufficiently serious type made it unreasonable to expect an entity, in this respect in a position little different from the employer, to continue its obligations under workers' compensation. Such was the case here. Disloyalty and dishonesty were sufficient to end mutuality. He relied on Kanoon v Cablemakers of Australia Pty Ltd (1976) WCR 328.

33 I am satisfied a question of law exists over whether the obligation of mutuality referred to in s 36(1)(f) and (1a) of the Act extends to the Corporation. This is not put on any suggested basis of subrogation. It is put on the basis of an implication necessarily arising from the legislation (tr 13).

34 Mr Martin challenged this saying firstly there is no finding of dishonesty or deceit (tr 54, 55). Moreover he argued s 36(1a) of the Act is a code: Eylward v Select Staff Pty Ltd [2000] SAWCT 192 at par 12 - 15 and expresses the only occasions on which the Corporation is entitled to expect a duty of mutuality (tr 86). That is a code in the sense that it wholly replaced the existing law upon the subject by provisions in subsections (a) to (f) of the Act, though as a necessary corollary it incorporates the previous law in (g): see Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218.

35 The source of the rule about mutuality is most often attributed to the decision of the High Court in RJ Brodie (Holdings) Pty Ltd v Pennell [1968] HCA 73; (1968) 117 CLR 665. In the joint judgments of Kitto, Taylor, Windeyer and Owen JJ a difficulty was encountered applying the provisions of s 11(2) of the New South Wales Act literally (at 669 - 670). For there to be any "provision" of suitable employment necessarily assumed an element of mutuality. Because of that necessity, to contemplate a circumstance minus a duty of mutuality would mean the provision could not operate. One had to assume the intent of Parliament. As such it arose from legislation imposing on the employer an obligation to provide suitable employment. In other words in workers' compensation legislation it is a statutory construct and has nothing to do with the implied term of co-operation or good faith in contracts of employment at common law.

36 I recognise that in their reasoning in RJ Brodie (Holdings) Pty Ltd v Pennell (above cited), their Honours talk in terms of "the employer and employee entering into and performing their obligations under a contract of service and this involves the co-operation of both employer and employee" and that if such an arrangement between the parties is prevented by the employee's conduct being "inconsistent with the necessary degree of co-operation on his part". But reference to such aspects of the employment relationship was not the source of the duty. It was the statutory provisions and the implication needed for effective operation of them.

37 The assumption of the legislation attributed to s 11(2) of the New South Wales Act, was attributed to s 67 under the Workers Compensation Act 1971: see Hartwell v Electricity Trust of South Australia (1982) 29 SASR 365. The concept was then carried into s 35(2) of the 1986 Act in Kelvinator v Jezior (1988) 49 SASR 592. In so doing Cox J stated (at 598):-

"... Nevertheless the same element of mutuality in the contract of employment underlies all three provisions. Conduct on a worker's part, independent of any injury, there is inconsistent with the degree of cooperation that is essential to an effective working relationship may take his case outside the ambit of s 35. Perhaps it is more difficult to fasten on particular words in s 35(2) in which the notion of mutuality is implied, but that does not matter. Besides, the expression `reasonably available' is probably adequate for that purpose. It is hardly to be supposed that an employer, in order to avoid having a partial incapacity treated as a total incapacity, is obliged to restore an injured worker to the payroll when it is plain that worker will behave in a fashion that is fundamentally destructive of the required mutuality - by persistently disobeying instructions, say, or by assaulting his fellow workers or by repeatedly flouting the safety rules. ..."

38 In so concluding Cox J rejected notionally an argument based upon the absence of, "any obligation on the employer to provide or make available work to the worker". With respect that seems conceptionally a very similar analysis to that adopted by the learned Deputy President in this case. By that I mean it is my understanding of the analysis by Cox J that such mutuality was distinct from and differently sourced than a mutuality arising from the relationship at common law of an employer and employee (Concut Pty Ltd v Worrell [2000] HCA 64 per Kirby J at par 51(3)). In short while the reasoning at times seemed to favour one as against the other as the source, in the end Cox J rules "mutuality" is a statutory construct. Therefore something which should logically be attributed and in like manner where the critical want of mutuality is shown to exist qua the Corporation. I therefore agree with Mr Stanley's submission on the point.

39 However while Mr Stanley's argument as to the statutory construct of mutuality when used in workers' compensation has persuaded me, I am not satisfied that there was in this case a finding of the requisite deceit or fraud by the learned Deputy President. Nor was there, on the available evidence, a factual basis that would have justified that finding. Mr Martin has taken us through the material. He argues, rightfully, that par 26 of the learned Deputy President's judgment is careful to avoid a conclusion of deliberate falsehood (tr 57). The very use of the words in par 28, "deception, if there is one", makes this plain. It is one thing to find the worker's evidence unsatisfactory and lacking the requisite credibility to form a basis for fact finding. It is another to conclude an attempted fraud by the worker. The latter finding was quite clearly not made. As such the conclusion of the learned Deputy President resolves the matter against the appellant on the ground of a breach of mutuality.