Zebra Stoneworks Pty Ltd v Ferreira

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40951/00 CC 45230/98 MASON P HEYDON JA IPP AJA

1 MASON P: I will ask Ipp AJA to deliver the first judgment. 2 IPP AJA: This is an appeal against a decision of Bishop CCJ in the Compensation Court whereby he ordered the appellant to pay the respondent, "on the basis of total incapacity", weekly compensation at the rate of $525.50 from 20 December 1998 "and continuing", together with medical and other expenses under s 60 of the Workers Compensation Act 1987 and costs, as adjusted. 3 The appellant relies on four grounds of appeal. The first is that Bishop CCJ wrongly precluded the appellant "from relying upon any ground pleaded in its answer other than the denial that the respondent was a worker". The second is that the learned judge wrongly precluded the appellant from calling evidence or making submissions on the issues of incapacity or economic loss. The third is that the learned judge erred "in determining that the respondent was entitled to a weekly award in the sum of $525.50 contrary to the evidence before the court as to the respondent's worker's earnings". The fourth is that the learned judge "denied the appellant procedural fairness in that he accepted the tender of medical evidence in the respondent worker's case but refused to accept the tender of medical evidence on behalf of the appellant". 4 Essentially the issues that arise stem from a decision made by Bishop CCJ that the sole issue that the appellant was entitled to raise in the application for determination was whether or not the respondent was a worker, or deemed to be a worker, employed by the respondent at the relevant time. Having concluded that this was indeed the sole issue before him, Bishop CCJ refused to allow the appellant to lead any evidence on any other issue. After determining that the respondent was "a direct employee" of the appellant at the relevant time, his Honour made the orders the subject of this appeal. 5 His Honour's decision so to limit the issues requires some elaboration. 6 The respondent was injured on 22 July 1997 when he was assisting in the placement of a large marble slab into position above a fireplace opening. In the course of the work the marble slab fell and struck the respondent on the head, neck and back and knocked him to the ground. 7 The respondent claimed workers compensation from the appellant and the appellant paid him weekly compensation from the date of the injury to 20 December 1998. 8 On 9 November 1998 the appellant's insurer wrote to the respondent informing him that it had decided to cease paying "ongoing workers compensation benefits" because the respondent did not "fall within the legal definition of a 'worker'". The insurer stated: "We will keep paying you workers compensation benefits up to 20 December 1998 so long as you give us medical evidence that you are still incapacitated and unfit for work." 9 The respondent made an application for determination which, in its amended form claimed weekly payments of $525.50 to himself and his dependant wife and children. The particulars to the respondent's application alleged that his current weekly wage rate and his average weekly earnings were $1,200 gross. 10 The appellant filed an answer to this application. The appellant denied liability and alleged that the respondent was not a worker, that he did not receive any injury as alleged and if he did so the injury did not arise out of or in the course of his employment with the appellant, that he did not have dependants as alleged, that any incapacity from which he may have suffered was unrelated to his employment with the respondent and that payments of compensation that had been paid were paid under a mistake of fact and without admission of liability. In addition, the appellant stated that it relied on s 11A of the Act and asserted that the respondent was not entitled to compensation "for the alleged psychological, stress anxiety or depression type injury because employment was not a substantial cause of the injury." 11 It was submitted on the respondent's behalf that the issue of incapacity was not an issue on the pleadings. For the reasons that I expressed later it is not necessary to decide this question. 12 On 13 October 1999 the application for determination came on for hearing in the Compensation Court before Campbell CCCJ. The appellant was represented by Mr Perry and the respondent by Mr Bauer, both of counsel. Mr Bauer informed the court that he was ready to proceed but that Mr Perry wanted to make an application. Mr Perry thereupon applied for an adjournment as "a very significant witness on the issue of worker or non-worker" was seriously ill and not available to testify. 13 The following exchange then occurred: "HIS HONOUR: What is the position of this witness? The issue is worker, the witness is what? PERRY: Yes your Honour. He is the managing director of the respondent. HIS HONOUR: It might be a bit hard to resist Mr Bauer if-- BAUER: Your Honour, if the issue is confined to worker, I now understand that to be the position, because that was the basis on which compensation was stopped after 18 months, then that would be so. Perhaps it can just remain in the list your Honour. There are two matters of subpoenas to produce documents, one to Zebra and two to GO. We would like to have access to the documents if they have been produced."

14 In this exchange Mr Bauer made it clear that his understanding was that, if the application proceeded, "the issues would be confined to worker". Mr Perry did not say anything that contradicted this. I would emphasise that Mr Bauer did not say that he understood that, at the next hearing, the issue as to whether the respondent was a worker or not would be decided as a preliminary point and the further issues raised by the appellant's answer would be determined later. Mr Bauer said, rather, in effect, that he understood the sole remaining issue between the parties to be whether the respondent was a worker as defined. As he explained, "that was the basis on which compensation was stopped after eighteen months". It was on that basis that Mr Bauer suggested that the matter "can just remain in the list". 15 Mr Bauer then informed Campbell CCCJ that there were good reasons "why this case should go on as quickly as we can". The following exchange then occurred: "HIS HONOUR: I would be inclined to think the proper way to proceed in any event would be to take the applicant's case as far as can be done, although I appreciate Mr Perry you said you were lacking instructions, so that it may be a matter of the applicant's evidence-in-chief, the medical evidence, so much otherwise. PERRY: The issue of worker your Honour . "

16 By replying, "the issue of worker your Honour", Mr Perry was reminding the learned judge that the remaining issue was whether the respondent was a worker and therefore medical evidence would not be needed. 17 At that stage in the proceedings another matter was interposed. Thereafter the respondent's application was called once more. Mr Bauer informed Campbell CCCJ that the parties had asked for a special date for the hearing and had been given 10 November 1999. The following exchange then occurred:. "BAUER: He asked the matter go to that date for the hearing of the - as a special fixture of the whole matter. The matter is reduced now to the question of the worker. HIS HONOUR: Very well. Now can I ask you this, have you reached an agreement about what is the proper order for costs today? BAUER: Yes we have your Honour. We will leave it to be argued on the next occasion. HIS HONOUR: Very well. Then it is really the respondent's [appellant's] application, is it not? BAUER: I think it is your Honour. PERRY: It is fair to say that your Honour."

18 Importantly, Mr Perry did not dissent when Mr Bauer said "the matter is reduced now to the question of worker." Campbell CCCJ's observation that "then it is really the respondent's [appellant's] application" is also relevant. It implies that the learned judge considered that it was for the appellant to show that the respondent was not a worker. Both Mr Bauer and Mr Perry agreed with his Honour's observation. 19 Mr Perry raised the issue of "some reports that have been recently served" and the following exchange thereupon occurred: "BAUER: I would like to just note for the transcript your Honour the fact that a medical report was served late can hardly bear on the issue of worker, but any rate-- HIS HONOUR: Mr Perry is very ingenious Mr Bauer, and it may be thought that something will flow from it. In any event you can deal with that next time." BAUER: Certainly your Honour."

20 This last exchange confirms Mr Bauer's understanding that the sole remaining issue was whether the appellant was a worker (and therefore any further medical report would be irrelevant) and it also confirms that the learned judge was of the same view. Mr Perry in all this did nothing to disabuse the minds of either the learned judge or Mr Bauer. 21 In my opinion, the exchanges between Campbell CCCJ, Mr Bauer and Mr Perry on 13 October 1999 were such that it was quite plain that Mr Perry, on behalf of the appellant, had tacitly abandoned all issues raised by the appellant's answer save the question whether or not the respondent was a worker. It follows that in regard to the abandoned issues the appellant was to be taken to have admitted the respondent's allegations in his application for determination: see Pt 16 r 2 of the Compensation Court Rules. The issue whether or not the respondent was a worker was the sole issue that remained for determination. The next hearing date of 10 November 1999 was obtained on that basis. 22 On 1 November 1999 the appellant's solicitor wrote to the respondent's solicitors concerning material that was relevant to the question whether the respondent was a worker. In particular, the appellant's solicitor stated: "Also please find enclosed by way of re-service the report of Dr Kevin Bleasel dated 12 November 1998. I refer you to the following whereupon the applicant confirms to D Bleasel that the work with the respondent, "was not full time work but he was called to work when it became available'". The letter went on to say that: "Although it is strongly denied that your client was an employee of our client in either a direct or 'deemed' sense, this is not the only issue".

And stated: "The Court will need to determine what the effect of the injury of 22 July 1997 was and on this issue we intend to bring evidence and make submissions".

23 Any possibility of the respondent admitting by silence the correctness of the proposition that there was more than one issue to be considered on 10 November 1999 was dispelled when the respondent's solicitor replied on 2 November 1999, saying that the suggestions in the letter of 1 November 1999 would be "vigorously opposed" and observing: "The adjournment of the last hearing date was sought on the basis that the witness for the respondent with respect to the 'worker' issue, the one issue remaining, was suddenly unavailable. The applicant agreed to the adjournment on that basis. Your letter amounts to an attempted restatement of the basis for the adjournment."

24 On 10 November 1999 the matter came before Bishop CCJ. Mr Bauer commenced by informing his Honour that the single issue in the case was whether the respondent was a worker. That was disputed by Mr Sweeney of counsel who then appeared on behalf of the appellant. Bishop CCJ remarked that, on his examination of the transcript of the proceedings before Campbell CCCJ, "there was a statement by Mr Bauer to which there was no demur whatever by [the appellant], that the only issue was worker". Mr Sweeney replied: "I would submit that if there was any equivocation of the adjournment application before Judge Campbell then it was certainly made clear by the letter that followed some 3 weeks later, admittedly, but nevertheless well before today that there was an issue as to incapacity". 25 The learned judge, however, said to Mr Sweeney, "I am against you". 26 Mr Sweeney in effect submitted to Bishop CCJ, firstly, that no abandonment occurred on 13 October 1999, secondly, in the alternative, if there had been an abandonment, the letter of 1 November 1999 made it clear that incapacity was still a live issue. Mr Sweeney did not apply for leave to withdraw the admissions that had been made tacitly on 13 October 1999 and did not apply for leave to raise incapacity as an issue afresh. 27 The proceedings before Bishop CCJ concluded after his Honour asked Mr Bauer "just for the record" whether he was in a position to meet the issue of incapacity. Mr Bauer referred to Dr Bleasel's report which the appellant had served on the respondent and said: "We will certainly be proposing to file and to tender all the evidence which we have medically". 28 In formal reasons delivered at the conclusion of the proceedings on 10 November 1999 Bishop CCJ said: "There was some debate at the outset of this matter as to whether it was open in view of the circumstances for the [appellant] to raise the issue of incapacity at this hearing. I ruled for reasons that I recorded on the transcript that it was not open to the [appellant] to do this and that the only issue for the determination of the Court is the question of whether or not the [respondent] was a worker. If any issues as to incapacity arise, they will have to be dealt with in some other fashion." 29 His Honour proceeded to rule that the respondent was a worker as defined and awarded him compensation at the rate of $425.50 per week as claimed. Mr Sweeney then submitted that the award in favour of the respondent "should only be on an interim basis, pending a determination of the incapacity by this Court. Mr Bauer objected to this and pointed out that according to Dr Bleasel's report the respondent, in any event, was "totally incapacitated". Mr Sweeney then said: "There is at the moment no findings, I suppose, to review, which may create its own difficulty".

30 The learned judge said that he would consider "making an addendum to the judgment saying that the award that I have entered, based upon the only medical material before the Court is on the basis of total incapacity and that I make no findings about current weekly wage rates or anything along those lines". Mr Bauer said that an order in those terms would not trouble him. 31 Bishop CCJ proposed relying on the report of Dr Bleasel. Mr Sweeney pointed out that he had assumed that that report was tendered in relation to the issue concerning whether the respondent was a worker. The learned judge replied: "I would take the view that if it is an exhibit before the Court, it is evidence before the Court".

32 His Honour then said that he would like to add one further clause to the judgment, namely: "The award that I have just pronounced is on the basis of the total incapacity based on the report of Dr Bleasel which is before the Court. In coming to this finding of total incapacity I have refrained from making any findings on current weekly rates or probable earning figures". 33 The principal submission advanced on appeal is that the appellant "neither concurred with the respondent's counsel that the only issue to be agitated was 'worker' or waived its rights to litigate other issues when the matter was adjourned on 13 October 1999". 34 I disagree. In my view, as I have said, it is quite plain that on 13 October 1999 Mr Perry, for the appellant, accepted that the sole issue that remained between the parties was whether the respondent was a worker as defined. Generally, he led Campbell CCCJ and Mr Bauer to believe that the matter would proceed on that issue alone, As I have mentioned, the adjournment was granted on that basis. Both Campbell CCCJ and Mr Bauer made it plain that they understood that to be the case. Mr Perry remained silent, thereby acknowledging that their understanding was correct. 35 The appellant sought to place some reliance on the letter of 1 November 1999 but that was too late. The appellant had already abandoned all issues raised in its answer, save for the question of whether the respondent was a worker. Accordingly the argument that the letter of 1 November 1999 "preserved the appellant's rights to litigate the issue of 'incapacity'" cannot be upheld. The appellant, through Mr Perry, had made it clear that it had conceded the question of capacity as well as all other issues except that concerning the respondent's status as a worker. 36 For the appellant to be entitled to raise the question of capacity afresh the appellant would have had to have made an application for leave to do so, Pt 16, r 2 of the Compensation Court Rules. Such an application would ordinarily have had to be based on affidavit evidence explaining the reasons for the earlier abandonment and providing good reason for allowing the appellant to withdraw in effect the admissions made by the abandonment that occurred on 13 October 1999. No such application was made. 37 Accordingly, I would reject the first ground of appeal, namely, that Bishop CCJ erred in holding that the appellant was precluded from relying upon the additional grounds pleaded in its answer. In my view the appellant had abandoned those grounds during the hearing of 13 October 1999. 38 It follows that I would also reject the second ground of appeal, namely, that the appellant was wrongly precluded from calling evidence or making submissions on the issues of incapacity or economic loss. 39 I turn now to the third ground of appeal which is based on the decision of Bishop CCJ to order the appellant to pay the respondent a weekly sum of $525.50. 40 It is true that there was other evidence before the Court as to the respondent's earnings. This evidence had been led in the course of determining the issue as to whether the respondent was a worker. In my view, however, the learned judge was entirely correct in ignoring that evidence. On 13 October 1999 the appellant, by accepting that the sole issue that remained for determination was the status of the respondent as a worker, abandoned its contentions as to the rate of weekly compensation to which the respondent was entitled. In other words, the appellant is to be taken as having admitted the respondent's claim that, subject to him being a worker as defined, he was entitled to the amount claimed, namely weekly compensation of $525.50 per week. From then on, any evidence on the issue was irrelevant. 41 The fourth ground of appeal asserts that the appellant was denied procedural fairness by reason of the fact that the learned judge accepted the tender of medical evidence from the respondent but refused to accept the tender of medical evidence on behalf of the appellant. I accept that the learned judge wrongly accepted the tender of medical evidence by the respondent. His Honour was wrong in this respect because, by reason of the fact that on 13 October 1999 the appellant had abandoned its contentions as to incapacity, it was to be taken as having admitted that the respondent was totally incapacitated. Any evidence in support of the respondent's incapacity was therefore irrelevant. Nevertheless, the fact that his Honour did admit evidence was immaterial. No question of procedural unfairness arises as, by reason of the appellant's admission of incapacity, the issue was no longer alive. 42 In the circumstances, I would dismiss the appeal and order the appellant to pay the respondent's costs of the appeal. 43 MASON P: I agree. 44 HEYDON JA: I agree. **********

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