Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: StateCover Mutual Ltd v Smith [2012] NSWCA 27
• Hearing dates: 7 February 2012
• Decision date: 05 March 2012
• Before: Beazley JA at [1]; Campbell JA at [6]; Macfarlan JA at [13]

Decision

(1) Order that the appeal be dismissed.

(2) Order that the appellant pay the second respondent's costs of the appeal.

(3) Order that the appellant pay the first respondent's costs of the appeal incurred up to and including the date upon which the first respondent filed a submitting appearance.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: WORKERS COMPENSATION - appeal - whether Commission erred in point of law - whether any evidence capable of supporting finding that nature and conditions of employment constituted a substantial contributing factor in relation to worker's injury; WORKERS COMPENSATION - whether insurer who was not formally a party to proceedings before Commission entitled to appeal under s 353 Workplace Injury and Workers Compensation Act 1998; COSTS - appeal costs - whether party who filed submitting appearance entitled to costs of appearing at hearing to seek costs order when had not previously sought consent to such an order
• Legislation Cited: Civil Procedure Act 2005; Workplace Injury Management and Workers Compensation Act 1998
• Cases Cited: Dasreef Pty Ltd v Hawchar [2011] HCA 21; 85 ALJR 694; ICI Australia Operations Pty Ltd v WorkCover Authority of New South Wales [2004] NSWCA 55; 60 NSWLR 18; Kostas v HIA Insurance Services Pty Ltd t/as Home Owners Warranty [2010] HCA 32; 241 CLR 390; Steinberg v Federal Commissioner of Taxation [1975] HCA 63; 134 CLR 640; Tubemakers of Australia Ltd v Fernandez (1976) 50 ALJR 720; Woollahra Municipal Council v Jeffries [1981] 1 NSWLR 377
• Category: Principal judgment
• Parties: StateCover Mutual Ltd (Appellant); Dennis Alfred Smith (First Respondent); QBE Workers Compensation (NSW) Ltd (Second Respondent)
• Representation: Counsel: S G Campbell (Appellant); L Morgan (First Respondent); I D Roberts SC/E Wood (Second Respondent); Solicitors: Bartier Perry (Appellant); White Barnes (First Respondent); Sparke Helmore (Second Respondent)
• File Number(s): CA 2011/12888

Decision under appeal

• Citation: Smith v Parkes Shire Council [2010] NSWWCCPD 130
• Date of Decision: 2010-12-17 00:00:00
• Before: Deputy President Roche
• File Number(s): A1-2597/10

Judgment

1 BEAZLEY JA : I have had the advantage of reading in draft the reasons of Macfarlan JA. I agree with his Honour's reasons and orders save as to his Honour's reasons in respect of the costs of the first respondent's application made on 7 February 2012.

2 Macfarlan JA has considered that the first respondent should not have his costs of making the application on that day as it does not appear that any prior request had been made to the other parties for consent to an appropriate costs order. Whilst that would have been a reasonable step for the first respondent to take, I do not consider that the failure to do so should result in the first respondent being deprived of his costs.

3 On 7 February 2012, the first respondent appeared by his counsel and indicated that he wished at an appropriate time to make an application for his costs. The Court considered that the matter should be dealt with immediately rather than direct that the parties file written submissions, a course that would usually have been followed.

4 When the matter was argued, the appellant resisted the application for costs with considerable vigour. The arguments raised by the appellant against a costs order make it unlikely, in my opinion, that a letter requesting the appellant to pay the first respondent's costs would have resulted in an agreement to do so. In those circumstances, I do not see that there is a basis to deprive the first respondent of the costs of making the application. The probability is that those costs were going to have to be incurred at some stage.

5 Accordingly, I would propose that Order 3 proposed by Macfarlan JA should include the costs of the first respondent's appearance on 7 February 2012.

6 CAMPBELL JA : As there is a difference of opinion between the other judges on the bench concerning the appropriate order as to costs, I should state my reasons concerning that question.

7 In substance the appeal has become a dispute between two insurers as to whether the now undoubted injury of Mr Smith was occasioned only during the period one of them was on risk, or was also contributed to by events during the period that the second of them was on risk. There was at one time a cross-appeal that challenged whether Mr Smith had suffered a compensable injury at all, but that cross-appeal was withdrawn on 6 July 2011. Mr Smith consented to that withdrawal, on the basis that each party pay its own costs of the cross-appeal.

8 Mr Smith had filed an appearance in the appeal, but in September 2011 he filed a different notice of appearance, whereby he submitted to any order of the court save as to costs. The submitting appearance was filed after Mr Smith's solicitors had sought, and obtained, the agreement of the appellant's solicitors that they would not seek costs as against Mr Smith. However, at no time did they seek agreement concerning payment of Mr Smith's costs of the appeal.

9 Counsel for Mr Smith appeared on the hearing of the appeal. As he readily conceded, the only point of his appearance was to seek an order for payment of Mr Smith's costs.

10 As its terms make clear, the obligation in s 56 Civil Procedure Act 2005 to take steps to achieve the "just, quick and cheap resolution of the real issues in the dispute or proceedings " lies on the parties, as well as the court. In my view it is excessive to brief counsel to appear on the hearing of an appeal, when counsel will be able to offer nothing that assists either his client or the court concerning the substance of the dispute that is to be argued, and when the sole purpose of the appearance is to seek costs, if the elementary precaution of first seeking agreement concerning those costs has not been taken.

11 Counsel for the appellant had no notice that counsel for Mr Smith would appear. Once Mr Smith's counsel sought costs, counsel for the appellant opposed the application. He opposed it even if the costs concerned were those of the appeal alone (ie, not the cross-appeal) and were confined to the time of Mr Smith filing the submitting appearance. For the reasons given by Macfarlan JA, Mr Smith should receive his costs of the appeal up to the time of filing the submitting appearance. However, I do not regard the fact that the appellant's counsel opposed Mr Smith's application as sufficient to justify Mr Smith appearing by counsel at the hearing when no previous agreement concerning costs had been sought.

12 For these reasons I agree with the order that Macfarlan JA proposes concerning costs. Otherwise I agree with his Honour's reasons, and with his proposed orders.

13 MACFARLAN JA : This is an appeal by StateCover Mutual Ltd, a workers compensation insurer, against a decision dated 17 December 2010 of Deputy President Roche of the Workers Compensation Commission. The appeal is brought pursuant to s 353 of the Workplace Injury Management and Workers Compensation Act 1998 ("WIMA") which permits a party to any proceedings before the Commission who is aggrieved by a decision of a Presidential member "in point of law" to appeal to this Court.

14 The appeal arises out of the determination of a claim for workers compensation made by Dennis Alfred Smith. Mr Smith was employed by Parkes Shire Council ("the Council") as a labourer from about 1992 until March 2008. "His duties required him to perform a full range of heavy physical activities, including shovelling, lifting and squatting" (Roche DP Determination [1]).

15 Mr Smith alleged that he suffered injuries to his right knee and lower back as a result of incidents that occurred in the course of his employment on 11 April 2001 and 31 March 2005. He also alleged, more generally, that as a result of the physical nature of his duties in the period from April 2001 to March 2008 he suffered "an aggravation, exacerbation and acceleration" of these injuries ([2]). Mr Smith claimed that he has significant permanent impairment of his back and right knee as a result of these matters.

16 His claim was rejected in its entirety by an arbitrator acting on behalf of the Commission. On appeal, Roche DP found that Mr Smith had suffered the injuries he alleged on 11 April 2001 and accepted Mr Smith's more general contention that he suffered an aggravation of those injuries in the course of his employment in the period to March 2008. However he rejected Mr Smith's claim that he suffered injuries in an incident that occurred on 31 March 2005.

17 Until 30 June 2001 GIO General Ltd ("GIO") was the Council's workers compensation insurer. QBE Workers Compensation (NSW) Ltd, the second respondent to this appeal, subsequently assumed GIO's potential liability in respect of that period. The appellant insured the Council in respect of the period commencing on 1 July 2001. It was thus not on risk when the incident of 11 April 2001 occurred but was on risk for most of the subsequent period in which Roche DP found that the injuries were aggravated.

18 The appellant now appeals to this Court to challenge the finding that Mr Smith's injuries were aggravated in the period April 2001 to March 2008 by reason of the nature and conditions of his employment. The appellant submits that there was no evidence before Roche DP capable of supporting this finding. If this is the case, it is clear that Roche DP erred "in point of law" and that the appeal should be allowed (see Kostas v HIA Insurance Services Pty Ltd t/as Home Owners Warranty [2010] HCA 32; 241 CLR 390 at [26] - [32]).

THE APPELLANT'S ENTITLEMENT TO APPEAL

19 Mr Smith's claim for compensation was, of necessity, brought against his employer, the Council. The Council was however insured by different insurers at different times. Understandably both the arbitrator and the Presidential member of the Commission permitted the insurers to be represented before them to enable them to seek to advance their differing interests. It does not however appear that any formal order joining them as parties was made in the Commission, at either level.

20 The appellant contended before this Court, without objection by the respondent, that it was nevertheless entitled to appeal in its own name. It relied upon the authority of the decision of this Court in Woollahra Municipal Council v Jeffries [1981] 1 NSWLR 377 where a situation similar to the present arose. In that case no order was made by the Commission joining the insurers as parties but they took part in the proceedings before the Commission as if they were parties, as appears to have occurred in the present case. Mahoney JA said in Jeffries :

"In these circumstances, I think it is to be taken that they had become parties to the proceeding before the Commission in the strict sense of the term. I think that, where parties have acted as the parties did in the present case, it is to be taken, at the least, that the court, sub silentio, exercised the power to make them parties" (at 388).

21 Hutley JA's view appears to have been similar. Both he and Mahoney JA considered nevertheless that the Commission should have made a formal order joining the insurers as parties.

22 It is unnecessary to do more in the present case than note this issue as the respondent did not object to the competency of the appeal and for the reasons that I give below, I consider that the appeal should in any event be dismissed. However I do observe that it would be wise for insurers who find themselves in a similar position in future cases to apply to the Commission for a formal order joining them as parties to ensure that their right to appeal is put beyond doubt.

THE RELEVANT EVIDENCE

23 The evidence that Roche DP relied upon to support the challenged finding comprised evidence of Dr Warwick Huntsdale, an orthopaedic surgeon, and lay evidence of the applicant, Mr Smith.

24 Roche DP summarised the relevant evidence given by Mr Smith as follows:

"Mr Smith also experienced a 'deterioration in the condition' of his back and right knee in late 2007 and early 2008. He said that his knee became 'much more painful and stiff', and that his 'back was becoming much worse'. He experienced pain and sensory changes in both legs, 'particularly in the course of bending, twisting, turning and lifting movements in the course of [his] work" (Determination [25]).

25 The relevant parts of Dr Huntsdale's report are as follows:

" OPINION

...

In answer to the specific questions you have asked:

What is Dennis' current diagnosis?

I believe that Dennis has degenerative lumbar spinal disease in his back.

He has quite probably some medial meniscal tearing associated with some degenerative change in his knee and in all probability he has left rotator cuff pathology.

Is the pain he is experiencing now directly related to the injury in 2001?

I believe the pain that he has now is related to his degenerative change; I think it unlikely that it is related to the specific injury which occurred in 2001. It is more the nature of his aging.

...

Medical liability

Is work a substantial contributing factor?

I believe his work was a substantial contributing factor, both the nature and conditions of his service and the injury he sustained to his knee and back.

Are there any pre-existing factors for this injury?

I believe Mr Smith probably did have some pre-existing degenerative changes in his knee and back which have been aggravated by his injury.

Does the worker have the injury/condition claimed?

I believe he does.

Could the injury have occurred as stated?

I believe it did occur as stated.

Is the worker still suffering from a work-related injury?

I do not consider that he continues to suffer from a work-related injury. I believe, given the time lapse from the original injury, any aggravation should have ceased by now and his current symptoms in his knee and back are due to degenerative changes.

SUMMARY

In summary, Mr Dennis Smith has lumbar degenerative disease and osteoarthritis of his knee. These are constitutional conditions which I believe have been aggravated and to some extent, contributed to by the type of work that he has done over the years. He sustained an aggravation of both these conditions in an injury which occurred at work in 2001 but given the time lapse since the accident, I believe symptoms he has now are related to his ongoing constitutional disease and not the work injury. I note no specific injury to the left shoulder."

26 In its written submissions the second respondent contended that the challenged finding could also be supported by the following evidence given by Dr John Bentivoglio:

"I consider all of Mr Smith's ongoing symptoms in his back and right knee have developed as a result of his employment with Parkes Shire Council and specifically the injury to his person in April 2001" (Report dated 19 October 2009 p 9).

THE DETERMINATION OF ROCHE DP

27 Roche DP's consideration of the aggravation injury that Mr Smith alleged resulted from the nature and conditions of his employment included the following:

"107. I accept that Mr Smith's duties were heavy and that they were liable to place a strain on his back and right knee. Whether they caused an aggravation injury, whether employment was a substantial contributing factor to the aggravation, and whether the effect of the aggravation is continuing is another matter.

...

109. After noting that the back and knee had become progressively more painful since 2001, and that Mr Smith's duties involved general labouring, digging, and laying sewer lines, Dr Huntsdale concluded that the degenerative lumbar disease and osteoarthritis in the right knee had been aggravated and, to some extent, 'contributed to by the type of work' that Mr Smith had done and as a result of the incident on 11 April 2001. Dr Huntsdale's evidence on this point is both probative and logical. There is an aggravation of a disease if it is made more grave or more serious in its effects upon the patient ( Federal Broom Co Pty Ltd v Semlitch (1964) 110 CLR 626 at 637 and 639).

110. Dr Huntsdale's evidence is essentially consistent with Mr Smith's evidence that his symptoms continued after April 2001 and deteriorated in late 2007 and early 2008. His knee (in particular) became much more painful and stiff and his back 'was becoming much worse'. He said he experienced pain and sensory changes into both legs, 'particularly in the course of bending, twisting, turning and lifting' in the course of his work. Though Mr Smith's evidence could and should have been set out in more detail, his statement provides clear and unchallenged evidence of a deterioration in his condition as a result of his duties with the Council. That evidence is rational and consistent with the histories recorded by all the specialists who have seen Mr Smith. I have no hesitation in accepting it.

...

112. It follows that I accept that, in addition to the personal injuries received on 11 April 2001, Mr Smith also suffered an aggravation of his lumbar spinal disease and of the osteoarthritis in his right knee under s 4(b)(ii) of the 1987 Act as a result of the heavy physical duties he performed with the Council up to March 2008.

113. However, I do not accept Dr Huntsdale's further statement that Mr Smith's present symptoms relate to 'ongoing constitutional disease and not the work'. This assertion is not supported by any reasoned explanation (other than the reference to the passage of time) and is inconsistent with Mr Smith's evidence (which I accept) that the symptoms in his back and right knee have not resolved or decreased with the passage of time, but have continued and increased in 2007 and 2008. It follows that the effect of the aggravation is continuing.

114. Dr Huntsdale has poorly expressed his opinion on whether work was a substantial contributing factor to the injury. However, reading his opinion in context, the doctor seems to be saying that both the incident on 11 April 2001 and the nature and conditions of Mr Smith's service (his duties) were a substantial contributing factor (to the injury). Whether employment is a substantial contributing factor to an injury is not solely a medical question but is a question for the Commission based on an assessment of all the evidence, lay and expert ( Awder Pty Ltd t/as Peninsular Nursing Home v Kernick and anor [2006] NSWWCCPD 222 at [31]). In a case involving an aggravation injury under s 4(b)(ii), employment must be a substantial contributing factor to the event giving rise to the aggravation, acceleration, exacerbation or deterioration ( King v Commissioner of Police (2004) 2 DDCR 416). Having regard to the whole of the evidence, I am satisfied that Mr Smith's duties up to March 2008 were a substantial contributing factor to the aggravation injury to his back and right knee."

CONSIDERATION OF THE APPEAL

28 The appellant contended, and the second respondent did not dispute, that this Court should conclude that Roche DP erred "in point of law" in making the relevant finding if the appellant could demonstrate that there was no medical evidence capable of supporting the finding. The second respondent did not contend that the present was a case where the common experience of the decision maker was sufficient to support the finding (see Tubemakers of Australia Ltd v Fernandez (1976) 50 ALJR 720 at 724 - 725) or that the Commission, as a specialist tribunal, was entitled to, and did here, use knowledge acquired as a specialised tribunal to make the finding (see generally ICI Australia Operations Pty Ltd v WorkCover Authority of New South Wales [2004] NSWCA 55; 60 NSWLR 18 at [216] - [234] and Dasreef Pty Ltd v Hawchar [2011] HCA 21; 85 ALJR 694 at [44] - [47]). Nor did the second respondent submit that the lay evidence of Mr Smith was, alone, capable of supporting the finding.

29 Before turning to Dr Huntsdale's evidence, I note that I do not consider that Dr Bentivoglio's evidence (see [26] above) was capable of supporting the challenged finding. In the statement relied upon, Dr Bentivoglio was in my view simply saying that Mr Smith's ongoing symptoms resulted from the injury he suffered in April 2001. He was not saying that in his opinion these symptoms resulted in a more general sense from Mr Smith's employment by the Council.

30 Roche DP took the view that there was an inconsistency in Dr Huntsdale's report. He considered (Determination [113]) that at the end of the third sentence of the report's Summary (see [25] above) Dr Huntsdale expressed the opinion that Mr Smith's symptoms were not related to the nature and conditions of his employment from 2001 to 2008. For myself, I would not read the sentence in that way. In its context in the report and particularly bearing in mind what I consider to be an expression by Dr Huntsdale earlier in his report of the view that there was such a relationship, I would read the words "the work injury" at the very end of that sentence as referring only to the 2001 occurrence (to which Dr Huntsdale had referred earlier in the sentence), and not to the overall effect of Mr Smith's ongoing work.

31 Whether my view as to this is correct is not however important. Either Dr Huntsdale did not in that sentence express the view that there was no relevant relationship or, if he did, the view was rejected by Roche DP. It was not contended that Roche DP was not entitled to reject that evidence.

32 As both parties recognised that rejection of evidence of a proposition does not constitute evidence of the contrary proposition (see for example Steinberg v Federal Commissioner of Taxation [1975] HCA 63; 134 CLR 640 at 684 and 694), the critical question is therefore whether Dr Huntsdale elsewhere in his report expressed the contrary opinion, that is, that the nature and conditions of Mr Smith's employment from 2001 to 2008 substantially contributed to his present condition.

33 In my view, Dr Huntsdale did express that opinion. In answering the first question stated under the heading "Medical Liability" in his report (see [25] above) Dr Huntsdale described both "the nature and conditions" of Mr Smith's service and "the injury he sustained to his knee and back" as substantial contributing factors to his condition. Bearing in mind the various references elsewhere in the report to "the injury" as that suffered in April 2001 (see for example the second of the questions set out in Dr Huntsdale's report under the heading "OPINION") I consider that the latter factor should be understood as a reference to that specific occurrence. The former factor was a reference to the general character of Mr Smith's duties in the period from April 2001 until the cessation of his employment by the Council in March 2008. What Dr Huntsdale said was at least capable of being so understood. Roche DP's construction of the report in this way was accordingly open to him and justified his finding that Mr Smith's duties up to March 2008 were a substantial contributing factor in causing his present condition.

34 I do not consider that Dr Huntsdale's answer to the second question under the heading "Medical Liability" constituted a clear statement that the nature and conditions of Mr Smith's employment between 2001 and 2008 did not substantially contribute to his current symptoms. The reference in that answer to "the original injury" appears again to have been a reference to that sustained in April 2001. By his statement that "any aggravation should have ceased by now" Dr Huntsdale appears to have been saying that the April 2001 occurrence should have ceased to have any impact by the time of his report. This statement did not exclude the possibility that the nature of Mr Smith's ongoing work duties substantially contributed to his present condition.

35 Furthermore, his observation that "current symptoms in [Mr Smith's] knee and back are due to degenerative changes" in response to the fifth question under the heading "Medical liability" is not inconsistent with the view that I find Dr Huntsdale expressed earlier that the nature and conditions of Mr Smith's employment were a substantial contributing factor in relation to his current condition. Dr Huntsdale's statement that the current condition is "due to degenerative changes" did not mean that the degenerative changes were not, as Dr Huntsdale had earlier indicated, aggravated by the nature and conditions of Mr Smith's employment.

36 The same comments are applicable to the similar opinion expressed by Dr Huntsdale at the end of the third sentence of his Summary that Mr Smith's present symptoms "are related to his ongoing constitutional disease".

37 For these reasons I consider that there was evidence capable of supporting the finding of Roche DP that is challenged. As a result he did not err "in point of law" and the appeal should be dismissed with an order that the appellant pay the second respondent's costs of the appeal.

THE FIRST RESPONDENT'S COSTS

38 Counsel for Mr Smith, the first respondent to the appeal, appeared at the hearing of the appeal for the purpose only of seeking an order that one of the other parties pay Mr Smith's costs of the appeal.

39 As counsel recognised, Mr Smith is not entitled to his costs of a cross-appeal that was filed by the second respondent as that cross-appeal was discontinued with the consent of the other parties (including the first respondent) that was given upon the express basis that each party would pay his or its own costs of the cross-appeal.

40 So far as the appeal proper is concerned, Mr Smith filed an appearance submitting to such order as the Court might make, other than as to costs. The qualification to the appearance had the effect of preserving Mr Smith's entitlement to apply for an order for costs, as he has now done. There is in my view no reason why the unsuccessful party on the appeal, the appellant, should not be ordered to pay Mr Smith's costs of the appeal up to and including the date upon which he filed a submitting appearance. I do not consider that the costs should extend to cover the application for costs made orally at the hearing of the appeal as it does not appear that Mr Smith made any prior request to the other parties for consent to an appropriate costs order.

41 I add that the appellant contended that the agreement between the parties concerning the cross-appeal impliedly precluded Mr Smith from making an application for his costs of the appeal proper. The agreement concerning the cross-appeal was evidenced by handwriting on a form of Notice of Discontinuance of the cross-appeal. That agreement did not in express terms affect Mr Smith's right to apply for costs of the appeal proper. Nor do I consider that it impliedly did so. It was concerned solely with a different aspect of the proceedings on appeal.

ORDERS

42 For the reasons that I have given, I propose the following orders:

(1) Order that the appeal be dismissed.

(2) Order that the appellant pay the second respondent's costs of the appeal.

(3) Order that the appellant pay the first respondent's costs of the appeal incurred up to and including the date upon which the first respondent filed a submitting appearance.

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Amendments

28 March 2012 - Commencement para for Campbell JA changed from [2] to [6].
Amended paragraphs: Coversheet

Decision last updated: 28 March 2012